Wile. E. Coyote and the Intergenerational SPX Short

Jan 6, 2020

SPX/GDP is at a double top with its March 2000 peak. The NASDAQ 100 meanwhile, for which that 2000 chart has been the go-to example for "what a bubble looks like and how an 85% drop is a typical bubble retracement target” for the past 20 years, is just 15% away from reaching that same threshold.

There's a large bear graveyard built over the past decade that includes some very smart people. That said, we are in a literal new paradigm if SPX climbs meaningfully higher from here, where the market will have decided that US equities have a higher relative value to the economy than since the bubble of the 1920s (the FRED GDP dataset on TradingView doesn't go back that far, but by looking it up elsewhere some back of the envelope math says that the market then was around 2x as high relative to GDP, and that was in a world where barely regulated stock market "investing" on 10x leverage was a national fad).

I acknowledge here a few counterpoints - transaction costs have been competed down to near zero, interest rates are historically low, and US tax structures have been shaped over the past few decades to massively benefit stock investing. The argument can therefore be made that perhaps equities really are worth more relative to the economy than in past scenarios because some of the factors in the denominator have meaningfully changed. This is basically the Warren Buffet argument of the past few years that equities are attractive so long as interest rates are this low.

...but this is a market that is basically pricing zero risk that anything bad ever happens to the US economy. Like…really? It’s been true so far, yes, but we’re getting asked increasingly to suspend our disbelief to justify this.

For the bull case to be correct, we have to accept that we are in a “new paradigm” where the following things are true:

- At 10 years and counting, the longest continuous economic expansion in US history still has at least several years left. This is something that hasn’t ever happened in nearly 250 years of US history which includes all post-Industrial Revolution history and no major wars fought in the homeland since the 1860s to periodically destroy US infrastructure and set it back as was typical in Europe.

- The Fed turning 180 degrees on monetary policy in 2019 is a good thing that should not possibly be read as a sign that there’s any underlying weakness in the US economy.

-The repo market completely blowing up, and requiring emergency “not-QE” measures from the Fed on a scale that’s wiped out nearly all quantitative tightening in a fraction of the time… should definitely not be read as a sign that there’s any major risks out there below the surface. Nope. Never. The repo market blowing up is not something that normally ever happens, but it’s definitely completely meaningless that it did.

-The Fed definitely for sure knows what it’s doing. Now, I don’t subscribe to Fed conspiracy theories and it’s legitimately an institution where America still actually hires real genius experts in the field rather than political flunkies for all the top positions. Still, the track record of central banks foreseeing the next crisis rather than trying to fight the previous battle echoes that of the TSA.

-There is no chance that ETF passive investing has inflated a bubble by indiscriminately propping up dumb valuations of companies that would normally be culled.

-The Fear and Greed index can casually make ATHs because actually everyone is directionally correct at the same time right now.

-It doesn’t matter that a con artist is in the White House basically running government as an empty seat with a clown car of Republican C-listers in his administration because he’s too vain to appoint any of the competent people who said mean things about him in the primaries, resulting in the most corrupt administration since Gilded Age machine/patronage politics. So far, this has basically gotten us boilerplate Republican tax policy and an indiscriminate flamethrower to regulations, so it’s worked well for equities in the short term. The problem is that it’s also getting us stuff like bizarre trade policy and a dramatically increased chance of a black swan event. Of recent note is the risk of war and related instability given recent escalation with Iran. Frankly, the world has yet to see what an offensive cyberwar or things like systematic attacks against the power grid would do to a modern developed economy.

- None of the parade of horribles coming in the 2020s matter. Seriously, it’s going to be a slog with a lot of chickens coming to roost and seemingly nobody’s talking about it. Student loan defaults are projected to reach 40% in the middle of the decade, which basically means the taxpayer will eat this in what has proven the worst, least direct, traumatic to an entire generation or two, and least efficient way to subsidize higher education imaginable. Trump’s tax cut was front-loaded and is structured to raise tax brackets faster than before due to changing the inflation metric used, with a giant expiration cliff hits in the middle of the decade. Somehow we’re going to deal with all this well after looting the top of the economy for a tax cut that overwhelmingly benefited those who were already getting the most out of the equities run.

- There will be no consequences to the relative value of equities from hardening to the political left seen in largest generation in America, set to be the plurality generational voting block in 2020 and exist for a window as an outright majority by the end of the decade. Millennials were already the most liberal living generation in America before Trump. One of the most ominous charts I’ve seen recently is the spread of consumer confidence between younger and older Americans, which had for decades always shown younger Americans to be more confident/optimistic, but which has now violently reversed. The Trump era has awaken a sleeping giant.



I think this market is going to turn the second something bad finally happens (the Wile E. Coyote moment) and the way that it catches participants off-guard will be that it cascades into a much faster and sharper drop than people expect. Live by the stock buyback, die by the reduced liquidity when people get scared and start moving towards the exits.



If you'd like to learn more about the indicators used to produce the charts on the left, check out SharkCharts.live, which has descriptions and a playlist of several hours of my explanatory videos.

I am an amateur and you shouldn't take anything I say as financial advice. I'm interested in any feedback.



*Realizing that the TradingView audience is international, for those unfamiliar with the American pop culture references to "Wile E. Coyote" - he is an antagonist character from classic Looney Toons cartoons who among other tropes, frequently chases his target too far over cliffs, ends up walking out on the air for a few steps, and then only when the moment happens that he looks down and realizes he is over the cliff does he start falling to the ground.

Jan 14, 2020

Note

WSJ tweeted an article this morning with the description, "Federal Reserve officials are considering lending cash directly to hedge funds through clearinghouses to ease stress in the repo market. But that could be a tough sell for policy makers."

The Fed merely extended this program for another quarter until April already.

Look, for as long as their interventions "work", this market can continue up. Certainly, while I've been positioning my longer term retirement assets into bonds, I've been scalping the bull trend this week. At this point though, volatility on shorter timeframes is starting to spike and today I stopped looking for bull scalps and instead started betting on at least a 1h-4h mean reversion and on a VIX spike soon. VIX, for what it's worth, is just about sitting on it's floor of about 12 from all of 2019. IV percentile on the index ETFs and futures option chains is still very low.

It increasingly looks to me like the wider market is losing its appetite to buy without at least a better dip. My thesis with this idea is that we're close to those dips failing to rally back higher, if not already there.

Jan 14, 2020

Note

"China tariffs to stay on until after election despite trade deal."

HAH

Jan 17, 2020

Note

Price has started pretty much only moving in parabolic advances. Good for scalping, not so great for sustainability on high timeframes. Skimming through near-expiration /ES options chains tonight and a whole lot of puts keep showing asks below theoretical value.

This is (bear) capitulation. It ends wherever there are no more greater fools, which is hard to predict because it's not really about clever people figuring out the correct technical level to sell. It's about bulls just running out of momentum somewhere and the retrace cascading into a larger and sharper drop than everyone has gotten acclimated to.

Looks like I'm not getting my VIX spike this week in particular unless the next 12h are the interesting ones. Obviously, we should scalp bull while it's available and easy, but we should do it while remembering that the point at which even the diehard bears have decided not only to give up but to also join the madness and play bull for now is as good a sign as any that we're just about there.

As long as volatility is this cheap, I plan to buy some as a hedge. Frankly, I can be wrong for a couple months straight at these prices before it's -EV to have been buying volatility.

Feb 25, 2020

Note

Two days in a row with red candles on par with January 2018.

This was an idea on a timescale that means that this idea won't get definitively proven right for at least months unless things go very very straight line in historic proportions. More typical of stock market crashes is 1-2 years to find bottom. So, this means it's also awhile before I can truly claim victory.

That said, I think odds are pretty darn good now that this idea doesn't get stopped out before the first target (and realistically given timescales what should be considered the main target).

Mar 9, 2020

Note

I predicted this market move would surprise people by how fast it happened due to reduced liquidity, but even I'm surprised. Last time we moved down this fast, banks were literally failing. It was the peak of the free-fall, *NOT* the beginning.

Safe havens, particularly bonds, are parabolic, and things are still getting worse.

I didn't specifically predict Wuhan coronavirus to be the trigger, but I did say we have a competence problem in this administration, and their handling of this sequence of events is so egregious that it has already generated a whistleblower complaint and has public health experts pulling their hair out.

Crude gapped down 30%, /ES hit its overnight trading halt at -5%, and EURUSD gapped up > 1%. These swings are going to be outright destructive and while the path may get extremely choppy, it's hard to imagine that we're not on track to test down to the 200 W SMA.

Apr 6, 2020

Note

Heading into the first week of April, this chart has become outright historic.

By the middle of the month, it had tanked to the 2100s - 2/3 of the way to my monthly chart target that I expected maybe we'd get to after a year+ of bear market. Then we bounced hard into a dead cat rally that has now tested and failed the W 200 SMA two weeks in a row. I'm writing this on a Sunday night as the futures have rallied a couple percent higher, suggesting that we still have some ranging to do yet.

America is about to have its most tragic month in post-WWII history. NY seems to be plausibly be plateauing at a death rate of 500+ daily, which if it's even a plateau may drag out for weeks, and that is just the first state to get hit really hard. However, it is on the verge of running out of ventilators and that rate could would likely start spiking again substantially in a shortage/triage crisis.

Less reporting focus has been on the fact that outbreaks have become increasingly widespread across the Midwest and more rural communities. This means that the US will start staring down a simultaneous problem across many major cities, as well as pockets of regional disasters where the local resources cannot keep up nor have the ability to scale as easily as major cities.

This all adds up to the largest American tragedy most have been alive to witness and it's too early to figure out where the turning point may be.


...but the stock market is not the economy and it's forward-looking. Moreover, the stock market already gave the harshest, fastest selloff ever (not yet the deepest, but even 1929 had a dead cat bounce before dumping a second time to actually reach ~-50% over 2 months) . You can argue that exactly what got priced in is Q1-Q2 and that this news is already accounted for in price.

I have a pretty hard time believing we can go through a month this tragic and expect a stock market rebound on that backdrop, but ranging and compressing? Yes. That scenario is one where this news gets digested as we wait to get more information about how worried we should be about Q3-Q4, and absence of more news would be "bullish" (and by that I mean a much larger dead cat, not that the bear market would be over).

Here's the thing though: anything that involves pushing back above the W200 means going back into a price area that describes the past few years. You could call that a return to normalcy with perhaps a garden-variety recession... which I think is crazy just with what we know already:

- It is unlikely that this pandemic past its peak isn't an ongoing, rolling seasonal issue until we have an effective vaccine probably sometime next year (and a much darker timeline involves this being like a new seasonal flu that mutates every year needing new vaccines but is 10x as deadly).

Apr 6, 2020

Note

- We don't just have a stock market bubble that popped, but also a corporate debt market bubble and a housing bubble. Among the scariest stories I've seen in the past few weeks is that mortgage lenders are expecting a worse wave of defaults than 2008.

- Thus far aid to small businesses has been a joke, and possibly as many as half of them would really struggle to open back up if they can't make money for several months straight. A large pool of money was included in the CARES Act but despite the fact that this administration claims it's going to be available quickly (they say a lot of things that aren't true), small businesses reportedly are finding it nearly impossible to even put in applications to major banks. Time is of the essence on stuff like this if your goal is to have small businesses keep making payroll while their income is zeroed out.

- The federal response has been incompetent from the start and remains so, with the latest blunders involving the Trump Administration directing medical supplies to or away from states based on political retribution rather than need. Like, seriously, if Trump had just gotten out of the way of his own CDC officials at any point in this, they would have put the ship back on course and he'd get credit. It's stunning, really, how bad this administration has done, and it's specifically failing in ways that a generic Republican administration under a President Romney or President Rubio wouldn't have. Both Bush Jr. and Obama specifically built up the CDC's capacity to deal with exactly this kind of crisis - it was a nonpartisan, uncontroversial, basic administrative competence issue.

-"money printer go brrrrrrr" has become the meme of the crash. The Fed is certainly pulling out all the stops faster than it ever has before. At some point though, you just have to have a lot of faith in (genuinely extremely intelligent) central bankers to believe that they will forever be able to hold the dam in place. In all this chaos, it's really easy for endless money to get routed to into assets that system hasn't realized yet are in worse shape than they thought *especially* if the reason they fail is because the length of time and the scale of the knock-on effects of the pandemic are underestimated.

Apr 6, 2020

Note

So what do I think and what prediction am I going to put in writing? I think that that this dead cat could be over without doing much more than testing the W200 if anything else about the fundamentals starts eroding - anything that signals that Q3/Q4 aren't going to see an orderly snapback after quarantine. I think it's pretty unlikely that it's too wrong to short now because the risk of getting squeezed hard on a backdrop of worsening American mass tragedy is probably low - there's a window for us to range and wait to see if that next fundamentals shoe drops.

I would be wary though that the dead cat could push higher - certainly mean reversion on distributions in the 1h-4h timeframes would do so - but long is a minefield. So, I like shorts on retests of the W200, and if we push higher, new attempts at shorts as soon as we struggle to pass a volatility pivot between 2700-3000.

I'd also be wary of long options / long VIX / long volatility approaches. IV crush before any downtrend resumption, and/or a downtrend that occurs more slowly and consistently than before thus at lower realized volatility, is a huge risk for overly greedy bears right now. It's not necessarily the case that long volatility is wrong given just how bad some of the potential icebergs in front of us are, so much as I would want those two trades to be sever-able such that the long volatility trade can be closed cheap if its wrong. Low-volatility bearish erosion would actually be one of the easiest markets to trade (in my opinion), so you definitely don't want to shoot that opportunity in the foot by getting, say, stuck in long puts that underperform because of volatility crush.

It's not necessarily the case that long volatility is wrong given just how bad some of the potential icebergs in front of us are, so much as I would want those two trades to be sever-able such that the long volatility trade can be closed cheap if its wrong. Low-volatility bearish erosion would actually be one of the easiest markets to trade (in my opinion), so you definitely don't want to shoot that opportunity in the foot by getting, say, stuck in long puts that underperform because of volatility crush.

May 8, 2020

Note

One month later - we reached mid-2900s, the higher part of the range I thought possible if we passed the W200, and have indeed seen VIX and IV crush. I was taken by surprise by just how fast we got to 2900.

We've now ranged in this area for several weeks and I'm getting very confident that we're about to roll over.

Bond market is starting to show more volatility again with a sizeable move on 5/7 that saw every maturity go parabolic intraday. Almost overnight there's now a recognition that negative rates are on the table. At no point has the bond market agreed with the stock market rally, which is ominous because the bond market is well known to be almost entirely "smart money".

There's been some chatter about a surge in retail interest in stock trading since late 2019 when brokers all went to free trading, and a surge of new accounts and interest in the midst of the crash. Retail, as always, came late to the party and is downright delusional about the risks here.

The excuses for why stocks should be rallying this far despite 20+% unemployment and fundamentals otherwise comparable to nothing since 1929-1946 increasingly sound like the excuses for Binance shitcoins in the first half of 2018. NDX hit the milestone yesterday of going green on the year, as if nothing happened and there are no actual consequences to any of this.

There's been a lot of "well the stock market is forward-looking so as long as the next 6 months - 2 years is better than X" type articles out of Bloomberg/CNBC, which, just, what the heck? The argument is supposed to be that the pandemic is now priced in and things will get relatively better from stratospheric rates of decline so we don't need to go down again? Well, if we were trading SPX at 2100 still, or even maybe near the W200, I could be convinced that prices were reflecting the damage of COVID-19. Price is at levels that were new ATHs all of a year ago for SPX and all of January for NDX. Apparently war with Iran wasn't "priced in" at those levels, but the damage wrought by a pandemic that put 1/5 of the US labor force out of work and is leading around 1/3 of them not to pay their rent/mortgages was totally priced in. Who knew?

I didn't think when I wrote the original article that the initial crash would be so sharp and so deep as to be historic compared to anything other than Black Monday. I didn't seriously believe that the long-term bull market trend since WWII, which I give a pivot for of around 1500 SPX, was at risk. Now I have to look at this picture and seriously say that the only historical analog on the chart is 1929 - with a much faster, more efficient market matching that pattern at 1/3 -1/2 the pace. The initial decline in 1929 was -50% in 2 months followed by +50% over the next 6, then a 3-year steady bear market with stairs that consistently sold off much further than the rallies back. The initial SPX decline in 2020 was -35% in 1 month and +35% in the next 2, which is where we are now. Valuations on the eve of all this were half that of 1929 and comparable to 2000. We'd like to think that we're not going to make the same central banking mistakes of yesteryear where central banks in a pre-Keynesian world tightened dramatically to protect their gold pegs, but we sit on the verge of negative rates and implied Taylor Rule fed funds rate somewhere around -8% right now - it's plausible that we can have "money printer go brrrrr" and "brrrrr" is nonetheless too slow to imaginably fill the hole in global USD supply brought on by the a global collapse.

Suffice to say if you read this far - I think this is an opportunity to take the generational short all over again.

May 20, 2020

Note

We've continued to range up to the high 2900s... and NDX is just a couple percent away from ATH. Given revisions to forward earnings and projected GDP declines, this is now depending on your measure either the absolute most expensive market since either the top of 2000 or 1929.

We are back in the realm of "literal new paradigm" to go higher.

Just to step back a second here and appreciate the forest from the trees - if you told someone a year ago that unemployment was 20-30%, forward earnings were decimated, and *insert depression-level statistics here*, would you have ever imagined that NDX would be pushing ATH again on that background?

Put/call ratio is now back down to mid-Feb levels. Heck, it's hard to find a metric that doesn't look at this scenario and say expensive / overbought / toppy - other than, I guess the relentless short-term trend.

For the past week or so every EOD volume spike in the cash session has been selling - some days less than others, but all sells. Overnight has been reversing. Open has generally seen pushes higher on declining daily volume, and we're now seeing atypically high volume spikes intraday whenever selling takes place.

If we've come this far, we're obviously in bubble-pricing world and trend needs to be respected until it actually breaks - but this is where I'm looking for low leverage short entries to attempt to catch the reversal soon after it begins, and where even scalping long makes me nervous. Treasuries are holding their ground. VVIX has decoupled from VIX, and even VIX is showing more ability to hold up in the face of intraday climbs. Monthly options expiration came early in May because the 1st was a Friday, and that happened last week, so we've cleared that potential hurdle against a volatility spike.

A clean short-term trend is what it is though, and it's illustrating with an exclamation point why the first backtest of a new trend is so much easier to play than the reversal itself. There are plenty of other markets doing crazy things right now while we wait patiently as long as we have to for it to start falling apart; I'd like to think with all these other signs that might only be day(s) away, but bubbles aren't rational by definition, so, patience is a virtue.

May 20, 2020

Note

I think there's one other thing worth adding to this:

If NDX is pushing ATH while there's 20-30% unemployment, we need to start think about longer-term political risks to holding equities because this is how cause a solid majority of an electorate to lose faith in the stock market as an institution. People are going to see the rich get richer even though they're losing their jobs, missing rent / defaulting on mortgages - and it's not going to make any sense to them, because it actually just makes so little sense that even the smart money is signalling in the bond market that they completely don't believe in this rally.

The econ 101 point of financial/capital markets is supposedly to allocate capital. Any standard textbook explanation of how stocks are valued - is that they're supposed to reflect some multiple of expected earnings over the 10-year window with growth potential commanding a higher multiple and variations depending on industry/sector.

That's not happening right now. At all. Cartoonishly not happening. It hasn't been happening for awhile now - 2019 kept grinding higher until it was one of the best years of all time despite earnings getting revised down every quarter. Now COVID-19 has decimated what even those earnings estimates were supposed to be. So what were last year's prices even supposed to mean if missing them in epic fashion in the context of a depression-level demand shock means... NDX is at Feb 2020 levels? There are articles with the thesis that, "well the market is forward-looking and since things can't really get worse than Q2 with its 30-40% annualized GDP decline, future quarters will be better so the market is buying based on that". It's a contradiction - if the markets are forward-looking, when were they pricing in any of the forward risks that were realized? For all of 2 weeks, then nevermind, back to ATH? The argument doesn't make sense, because at this point the market is levitating way over the cliff in no relation to fundamentals or the massive risks on the horizon from not getting the most optimistic imaginable outcome on COVID-19.

...and when people don't have jobs and are struggling but the stock market keeps going to the moon, political messages around things like raising capital gains taxes, increased regulation, and a general change in priorities are going to be appealing. People have believed for a long time now that, at its core, the stock market does useful things for the country and that people should be incentivized to put their money into it. This extreme divergence from Main Street reality is going to start seriously testing that, because frankly, what it's going to look like to most people is that those wealthy enough to have stocks are getting a bailout.

Jun 3, 2020

Note

Indices are still grinding higher, but there has been one notable change in recent weeks: it's coming inverse to a drop in DXY.

I'm not quite sure what to make of that, to be honest - but it does mean that NQ is now within spitting distance of ATH and basically where it was the week that it made it in Feb. For the privilege people are paying something around 30% more in forward P/E to own it. Certainly, it feels much like Jan-Feb where the constant Fed-fueled grind supported some long scalping but a longer-TF bear bias.

COVID-19 numbers are (finally?) starting to rise again outside of the US coasts. This took longer after "reopening" than I honestly expected, but it's finally here. Notably, we ground higher in Jan-Feb for a while past when it started to become clear that there would be some impacts, but when things turned they turned hard.

Jun 25, 2020

Note

Arizona is approaching peak New York per capita COVID-19 cases. Texas and Florida are not far behind. A dozen or so states are waiting in the wings behind them.

I don't know how we'll talk about this bear market rally several years from now other than that it will not be kind. It didn't take any particular genius to figure out that the US was handling COVID-19 absurdly poorly but here we are, about to start Q3, having just set a new record for cases nationwide - and NDX made a new ATH this week. All you ever needed to do was listen to the health experts instead of the politicians and the entertainment "news" that gets passed off as business news these days to figure out that we should be at least handicapping this possibility into prices.

Whatever the market has been pricing instead of the fundamentals of an economy with 15-20% unemployment and huge obvious risks - we have reached the point where the health crisis on Main Street is getting too large to ignore. We can likely count on our hands the number of days before a state (probably Arizona) is forced to capitulate and shut back down because the hospitals are past surge capacity and people face triage. The first time around, the private sector reduced most of its activity ahead of the actual shutdown - hence there isn't a "choice" here to make about whether or not to "save the economy", just a choice about when we're going to have an organized response to spend several months to get infections back under control to the point that you could actually sustain reopening.

I've been telling anyone who'll listen that we're going to lose 2 months doing the whole lockdown thing all over again because we didn't do it right the first time. Eyeballing the numbers, this is probably at least a 1T loss of economic activity that we're going to eat just as the first-order direct economic shock of 2 months back in deep quarantine, to say nothing of the follow-on costs of a deepening depression, and, perhaps most galling and tragically, the long-term health maintenance costs.

Let's talk for a second about that last part - the long-term health costs: the further we get into the pandemic, the worse the information we get about the long-term consequences of *surviving* COVID-19 - months later, survivors typically still have reduced pulmonary function and we're seeing kidney problems, heart problems, and even brain / neurological problems. Even scarier to me, is that there's now some pretty substantial published data showing that a majority of asymptomatic cases when screened showed findings on chest X-ray.

Anyone who has told you "we overestimated how bad this was and overreacted" is not a serious person who is actually aware of what's being published in medical journals. It's not pretty, and since this is still such a young disease, the longer-term effects are being discovered in real time (from the experience of SARS and MERS, we would expect at least some permanent increases in respiratory issues amongst those who survive this). Stay safe, take this seriously, wear masks when you have to go out in public.

"Everything bubble" seems to only get more appropriate the further we get into 2020.

...but I digress. The point of all this is that after 3 months of relentlessly going up based supposedly on magical thinking about viruses work, we're starting to see the private sector front-run and shut things back down. At some point Wile E. Coyote always looks down.

Jul 17, 2020

Note

This idea has at this point just turned into my continuous exasperation that seemingly nothing matters.

To wit: I've been utterly vindicated about disastrous mismanagement of COVID-19. The US is continuing to see increasing daily cases. Daily deaths are clearly climbing up again after plateauing - as have initial jobless claims. All signs point to a "recovery" that has now stalled as a result. Meanwhile, we are not currently on track to have a 4th stimulus package that is commensurate with the fact that we now actually have an even bigger problem than we did in the spring, with a strong risk that we see a 3rd peak in the fall.

Today the Trump Administration barred sending COVID-19 data to the CDC and is tightening control of that information. Just think about that. There's literally no good reason you'd do this - the only "benefit" is that the administration can more easily obfuscate how bad it is. We want, for the sake of an effective policy response by state and local authorities, for this information to be as fast, freely available, and high quality as possible. This flies in the fact of all of that. Many states have great state-level data, but some have had questionable discrepancies from the beginning and in a few states with GOP control there have been credible accusations of intentionally trying to cover up / minimize what their data says.

In other words - the Trump Administration and some GOP-run state governments are *still* treating a worsening crisis like it's just a PR problem 6 months on (NOT ALL - some GOP state governments - such as Ohio - have taken this seriously from the get-go and frankly, when all is said and done, I think those governors are going to be the face of the GOP that rises from this disaster's ashes). I'll spare anyone reading this my further frustrations, but just say that it's 6 months in and we still don't have scaled testing, enough of all PPE, effective contact tracing, or a fundamental seriousness about the fact that this isn't going to just go away on its own with no effort or sacrifice to get it under control.

With respect to markets though - we're running out of reasons why we can be at and maintain these prices. We ran out of *good* reasons months ago. Now we're just plain running out of viable explanations for where the liquidity is supposed to come from. I've been watching DXY more carefully this month because its inverse correlation with SPX has been strengthening - and its now sitting near its lows for the past 2 years. Treasuries and Eurodollar continue to slowly grind higher with no sign that the bond market thinks this is over.

I'm increasingly strained for ideas as to what we could be waiting for, but put/call ratios are very low, an absurd inflow into QQQ has happened which I read as a contrarian to say that it's taking unsustainable inflows to support these prices, and China appears to have had a blow-off equities top and some bank runs. We've overextended this so far out based on such absurd valuations and already-disproved optimistic assumptions that it's hard to see how this ends other than with the bottom abruptly falling out on any random day.