MAGA CRASH

We are witnessing the largest economic policy reversal in U.S. history, which was not priced in ahead of time, hence the stock market is crashing from the all time high. This past week, investors who were counting on Trump's criminal enterprise continuing ad infinitum just went through the windshield when voters slammed on the brakes against RECORD corruption.

I downloaded the chart below on the eve of the election. It shows the S&P Tech ratio relative to the S&P 500. The AI bubble was clearly larger than Y2K both in absolute and relative terms, and was already starting to roll over. Meanwhile, consumer sentiment hit an all time low mid-year 2026. In other words, peak wealth for the casino class attended peak economic pessimism for the working class. It was the largest divergence between market fantasy and economic reality in U.S. history.

Now note consumer sentiment in Y2K at the peak of THAT bubble - consumer sentiment made a 30 year high at the same time the Y2K bubble peaked. Consider what this AI crash now portends for consumer sentiment that was already at all time lows BEFORE the crash.

The trillion dollar question is, why were investors so surprised by the results of this mid-term election and why was it not already priced in?

Let me state for the archaeological record that the past two years has been the biggest fucking gong show in history. We've never witnessed such abject stupidity, wide open corruption, and non-stop lying in my entire lifetime (58 years). So the fact that America's wealthy elite were caught off guard by the results of this election is testament to how corrupt they have become. Democrats could have run ANYONE in these elections and still won by a record margin. What this election represented was a massive repudiation of Trump's reign of corruption.

Empirically speaking, the writing was on the wall all year long. The Democrats were favored to win the House by a wide margin during all of 2026 - soaring above 90% levels back in September. Democrat odds of winning the Senate were less certain for most of the year, but also sky-rocketed in September.

The chart below shows that the Democrat odds of winning the Senate have been tracking the price of diesel one to one. The chart also shows that the offramp to this Democrat landslide was back in June when Trump signed the peace treaty at the Palace of Versailles. Back then Democrat odds were only 42%. But then Trump surprise attacked Iran for the third time, after which diesel and Democrat odds sky-rocketed and never looked back.

The Iran war plus the trade war were by far the biggest drivers of Democratic political gains. Both of those "wars" were deeply unpopular across America, regardless of political affiliation.

History will say with great irony that the Iran war caused a political regime change within the U.S. But don't take my word for it:

As far as the AI bubble implosion, the bubble peaked back in June at the same time as the mega SpaceX IPO -the largest IPO in history. However, due to the mid-November Anthropic IPO, NO ONE on Wall Street has admitted that the bubble is ENDING. Quite the contrary, they were still upgrading their rosy S&P 500 price prediction going into the elections:

"The winner of the midterm elections will be the U.S. stock market"

"That’s the take from Morgan Stanley’s chief stock-market strategist, Mike Wilson, who said the midterms are a classic “clearing event” whose outcome won’t really matter"

The chart below I downloaded on the day of the election i.e. BEFORE the results were known. Democrats have been stridently anti-AI throughout this mid-term campaign so how could the outcome of the election not matter if AI stocks were already imploding ahead of the mid-terms with the Democrats heavily favored to win?

Democrats are now planning a total reversal of AI policy:

"Democrats are planning to unleash a flood of new legislation targeting artificial intelligence systems and data-center development when they take control of the US Congress in January, lawmakers, congressional aides and advocates said.

The plans would mark a sharp shift from the Republican-led Congress, where lawmakers largely focused on promoting AI development"

Another widely ignored risk was the TWO YEAR collapse of the global bond market due to commodity inflation emanating from the AI bubble and the Iran war. These end of cycle inflation pressures were deja vu of the 2008 housing crash, but only on a larger magnitude. Per Economics 101, the last thing one should do in an over-leveraged economy is spike oil prices and force central banks to tighten.

AGAIN.

All of the above tells the story of how we got here, but the trillion dollar question is what happens next?

Wall Street is already out in full force playing down this AI crash as a minor correction, however that's for those who enjoy bull shit piled on top of bullshit. Make no mistake, this policy u-turn has ended the AI bubble. Which means that the biggest source of S&P earnings growth for the past three years will now go in REVERSE. One by one Wall Street investment banks will be forced to downgrade their S&P Tech earnings forecast all the way from Strong Ponzi down to Strong Sell. Throughout this AI Super Bubble, S&P 500 forward earnings estimates have been predicated upon finding the next greater fool willing to throw their capital down the KNOWN shit hole of Artificial Intelligence.

In summary:

This is NOT a "Blue Wave" crash as many market pundits are now claiming, including Trump himself.

The election was merely the wafer thin mint that exploded the fat man TEN YEARS into an orgy of biblical greed known as "MAGA".

That fat and happy investors assumed would NEVER end.