The MAX Pain Trade

The max pain trade is listening to Trump tell the country to stop complaining about high fuel and food prices while his disastrous war drags on and he plunders the country for billions of dollars. Because he feels no pain.

War lost

Back in June at the Palace of Versailles in France, Trump signed a peace treaty declaring the war with Iran over. A few weeks later he violated his own agreement and went back to bombing Iran. For at least six times in the past 18 months, Trump has asserted that Iran's nuclear capability has been completely destroyed. And yet, seven months from the onset of this war he is still using the exact same nuclear threat as the rationale for propagating his disastrous war. What it comes down to is that Trump can't admit he lost the war, therefore the entire world is now being dragged into the largest energy crisis since 1973.

Global Fuel crisis in progress

Iran is in total control of this war now. The Houthi attack on Saudi last week cemented Iran's grip on global energy markets. For all of the talk about Iran backing down due to the U.S. blockade, seven months later they show no sign of capitulation. Meanwhile, global oil reserves are now scraping the bottom of the barrel. These reserves were the only thing that has kept energy prices from exploding higher. To date, only diesel has made a new high relative to the March war spike. However, it's only a matter of time before all other fuels are making new highs as well.

Mid-terms lost

Republican poll numbers are now 100% INVERSELY correlated with the price of diesel as Trump's base begins to throw in the towel. As of this writing, Democrats have a 60% probability of a full sweep of Congress. Trump is backed into a corner and becoming increasingly unhinged as the election approaches. Over this past weekend he unveiled the designs for a "Triumphal Arch" that will include drones and sniper positions.

Global tightening in progress

Pundits mostly focus on the global energy crisis, but the global rate hikes we saw last week are ALSO a direct result of this disastrous war. The Fed was extremely hawkish - hiking rates for the first time since 2022 and declaring more rate hikes are coming, because inflation is far from contained.

What we see in this chart, is that a spike in fuel prices attended each major tightening cycle. And with each tightening cycle, global stocks fell below the 200 week moving average. But right now stocks are still at all time highs.

Why? Due to the AI bubble, which I will discuss next.

AI Risk Ignored

The AI warnings that came out last week from AI top executives were completely ignored. Trump declared AI risk a Democrat hoax. The same as climate change.

However, the tanking of GOP mid-term prospects means that the risk of stringent AI legislation is increasing in the background. Not to mention the very real risk of a cybersecurity attack, the ongoing regional data center pushback, and of course the risk of financial dislocation.

Speaking of financial dislocation, throughout all of this maelstrom, the Anthropic mega IPO is still on track for Q4. Recall in my last blog post I included a mock IPO registration (S1) that included "existential risk to humanity" as a known risk:

“If we build it the wrong way, the probability of something bad happening is very high”

"As much as the investment community and other tech executives want to see these warnings as a kind of reverse-psychology marketing tactic, Anthropic and its idealistic CEO should be taken at their word"

"Shareholder value won’t always be the company’s top priority."

Therein lies the problem: One rogue cyber attack and the entire AI bubble will collapse like a cheap tent as regulators rush to over-correct their mistake of under-regulating, while the masses panic and demand action.

Breadth Collapse

Another widely ignored risk is the collapse in market breadth, which is now the worst in stock market history at an all time high.

In summary, nothing is working in the U.S. right now. NOTHING. It's a clusterfuck from end to end

And yet, the wealthy are not panicking because they have over-allocated all over their capital to their societal termination bubble. They believe that protects them from Trump's TARD-O-NOMICS.

Only until the plug gets pulled on AI.

And then their imaginary wealth will be vapourized.