Monday, February 8, 2021

2021: Year Of the Explosion

Global markets have begun a new tradition of melting up into February and exploding. After which amnesiac gamblers rejoin "No one saw it coming". Why should this year be any different...

I am assuming this phenomenon has something to do with Chinese (Lunar) New Year making people go crazy. Forgetting how things turned out the year before. In the past four years, only Feb. 2019 was the outlier, because the market was coming off of the 2018 implosion. Of course the 2021 explosion is patent pending. 

But, so far so good on the melt-up side of things:

The Barron's cover story this week was the impending Alzheimer's crisis. Too late, it's already here. It's attended by the ADHD crisis, and the social media mindless Borg crisis. Under Trump, Facebook and Twitter almost imploded democracy. He couldn't have done it without them. Mark Zuckerborg's sum total contribution to society is propagating QAnon conspiracy theories. After the Capitol was ransacked, there were 147 Republican Congress members who came out of hiding from their own mob and refused to certify Joe Biden's presidency, per the GOP's new election over-turning strategy known as "certify and die". Their specious claim was that the election results were compromised. Election results obtained via the exact same election systems that got THEM elected. According to their own dumbfuck logic they should be decertified and sent back to the used car lot from whence they came. According to the QAnon wing of the party, no politician is legitimate except their own King of the Assholes, Circus Donny. Rupert Murdoch has finally achieved FULL Idiocracy.

All of which mental health deficiencies are what keep causing this society to recycle the same failed policies over and over again each time expecting a different result. Among the conclusions Janet Yellen reached last week while evaluating Disney markets is that it's "too soon" to say if changes are needed to address recent volatility. Nothing could be further from the truth. It's TOO LATE to fix broken markets, which happens to be the exact opposite of too soon.

As I write, markets are going FULL batshit in the February melt-up tradition. Recall that two weeks ago Gamestop was trading in the $100 range until Elon Musk tweeted the word "Gamestonk" which vaulted the stock to $480, after which it crashed. Most people were wiped out, with a few well-publicized exceptions who made millions. Incidentally, the guy who was leading the entire pump and dump made $33 million at the peak, but it turns out he is a registered broker with FINRA. So not only will he be barred from the financial services industry he will likely be sued into penury.

“An average Joe can go on a website and say, ‘I like XYZ stock.’ A broker can’t do that,” said Ms. Light, a former chief counsel for enforcement at Finra."

Moving on from Gamestonk, more recently Elon Musk has been pumping Bitcoin on a regular basis. Today we learned that Tesla bought $1.5 billion of the crypto currency. So it can come as no surprise, that BitCasino just hit a new all time high. Recall that Bitcoin's last meteoric rise peaked in December 2017, a full month before stonks peaked. This time, it appears that all markets are 100% correlated to meltdown.

In my opinion there is no way Bitcoin will ever be a serious currency because it's far too volatile and its voracious electricity consumption grows in relationship to the price. Currently it's operating at a Pakistan level of ongoing energy waste. If you are waiting to buy it, wait until it crashes 80% again first. 

To put the cherry on top of this annual Asian-led market melt-up, the CIO of Ark Funds is now known as the "Money Tree" in Korea:

"In South Korea, retail investors are swarming to buy thematic products and Cathie Wood has become something of a celebrity

“Performance leads to inflows,” said Mohit Bajaj, director of ETFs for WallachBeth Capital. “All their funds have done very well, which had led to such huge amounts of money going into them."

In summary, markets have now achieved ludicrous mode:

"GameStop mania was a wake-up call, but now the capital markets have truly reached ludicrous mode"

Tesla shares and bitcoin both traded higher after the [$1.5 billion] announcement. This follows social media posts by the auto maker’s influential boss, Elon Musk, that already had helped drive bitcoin’s price to a record."

That adds to the speculative fervor already gripping Tesla’s stock price in a feedback loop. Indeed, the manager of the most popular active fund recently, Cathie Wood of ARK Invest, has made big bets on both Tesla and a trust that owns bitcoin, fueling a record pace of inflows"

This Ark Robotics fund below is at the happy intersection of EV/autonomous vehicles/Tesla, and of course artificial intelligence the true impetus behind this entire momentum rally: