FOMO Crash

The world is perfect except for the humans screwing it up. There is no cause for pessimism aside from the people around us acting irrationally because they "expect" something they won't get. Gratitude is the primary driver of happiness. These are the thoughts that keep me sane in this period of mass insanity. Unfortunately, this also means that we live in a very dangerous time in which expectations and reality are going in OPPOSITE directions.

Economists are calling this the K-shaped economy: Going up for the wealthy and down for everyone else.

I call it a K-shaped explosion waiting to happen. There is no way that consumer sentiment is going to catch-up to stocks that are going late cycle parabolic. When the bubble bursts it's all going to catch down very quickly and then consumer sentiment will plumb new lows that were previously unthinkable.

It will be a reversal of fortune in the blink of an eye.

From the chart above we can infer that social mood is ALREADY turning dark and it's about to turn much darker. Consider that if you post something on Twitter (X) who will see that and who won't. The people reading those posts - even if they are trolls - are a very fortunate person who has the spare time and inclination to take in a variety of opinion and news from across the WORLD. In other words, they have both mental and financial spare capacity. Most people today have NEITHER spare capacity. They are at the ragged edge of existence. Which is why when I go on my Apple News feed I am inundated with curated mainstream sugar coated crap. That's all that MOST people can handle right now. Pollyannah bull shit.

Which means that the deeply stoned masses are in NO WAY prepared for what is coming. And ironically that was the message in Barron's this weekend as well:

"Even as America and Iran waver on the cusp of war and oil prices become weaponized, the S&P 500 index is near record highs. This suggests that generational experiences since the 2008-09 financial crisis have changed investor sentiment in ways that aren’t well understood...If the past 20 years have rendered fear irrelevant, could risk be mispriced?"

We raise these concerns at a time when investor reactions often seem incongruous with reality. After diplomatic negotiations between America and Iran collapsed in Islamabad, investors shrugged it off."

In my last blog post I asserted that this war could continue longer than expected because it already HAS gone on longer than expected. And yet the breakdown in talks last weekend led to a VERTICAL rally in stocks that was stoked by hedge funds force unwinding their hedges which was accelerated by monthly options expiration and what is called a "gamma squeeze". A gamma squeeze means that if a put option hedge expires then options market makers on the other side of the trade will unwind their position by buying (shorted) stock. That whole process went into overdrive early on Friday when Trump asserted that the Strait of Hormuz is WIDE OPEN now. When that news broke I watched Friday morning as the S&P 500 sky-rocketed to new all time highs.

At Friday close the Nasdaq Composite had scored its longest uninterrupted rally since 1992. And semiconductors have had their biggest 13 day run since March 2000 the Y2k top.

And yet it was all based on TOTAL BULL SHIT that was propagated by mainstream business media. Who apparently STILL don't see the need to fact check human history's most prolific liar.

The Strait of Hormuz IS NOT open for business. In other words a totally fabricated "peace deal" invented by Trump caused a late cycle market melt-up:

"In terms of capital flows, more than $172.2 billion in cash flowed out last week, setting a new record."

According to Bank of America data, the market transitioned from oversold to overbought in just 11 trading days, marking the second-fastest such shift since 1982."

In summary, let's not say that there is NO FEAR in this market.

There is one kind of fear: Fear of Missing Out: