Unlike some of my younger readers, there are those of us who remember the grand old British Overseas Airways Corporation and their disastrous DeHavilland Comet nightmare. Here is a quick documentary review for those who missed it:
Thus why I say, the current market conditions are leading to an epic, if not totally fatal crash of not just our equity markets, but commodities, corporate bonds, and other investment vehicles not discussed in the polite public markets.
For once, I shall not get technical and stick to history and perspective on what is happening now. The number of zero or negative revenue stocks which are worth billions of dollars in market cap is once again reaching absurd levels. Anything which may, could, possibly, hint at, or mentions a “cure” for a disease with a 99.5% survival rate is now worth 1000x its net valuation even if they only make paper gloves or toilet paper for Somalia.
The absurdity knows no bounds.
For example, here is the range on Bitcoin (Symbol: BTC) on a 5 hour chart, covering the insanity of this December:
Now look at Bitcoin today:
Seriously though, it’s not a bubble. Yet.
Meanwhile, stocks like Tesla are not given a second glance:
Next up, is what I call a “tech” company which masquerades as a car company for all the tax benefits and carbon credit freebies finally achieved what they said they would two years ago:
Tesla new car production capacity goals per Elon Musk:— Vala Afshar (@ValaAfshar) June 3, 2016
— 500,000 by 2018
— 1,000,000 by 2020
Oops. Wolfstreet’s article sums it all up(a must read):
Tesla Finally Almost Hit 500,000 Deliveries, Two Years Behind its Promise, for a Global Market Share of… 0.7%
But keep in mind, there are no bubbles if one listens to or watches ‘mainstream’ financial media.
Tesla is an easy mark, the small caps are also, and of course screaming the word “cryptocurrency” means that I’m just a hunter looking for the next bubble to puncture. Every bit of evidence I am presenting is simply from one perspective. But let’s review a few charts that might indicate something much, more wicked.
The Russell 2000, as illustrated by the IWM ETF, is so far outside of its normal range one would think alarm bells would be going off:
Instead the world hears the song “Don’t Worry, Be Happy” as the financial media continues to promote their agenda to sucker in more Hoodies and Stoolies.
The Russell 2000 index is just the tip of the iceberg however.
So a company, with no sales, no earnings, and no real product on the market being manufactured yet, was able to rise from $9.74 per share up to a high of $132.73 in less than 4 months. But it’s not a bubble.
Hell, the chart from YahooFinance verifies the insanity:
This beauty has an EPS of -$22.53 per share with a market cap of $16.18 million. The chart for AeroCentury is something to behold:
So in one day a stock with no earnings skyrocketed up $32 per share, on record volume, and then cratered back to $10.75 per share to finish the year. I could go on, and on, and on and list dozens if not hundreds of equities like this.
“But there is no bubble.”
Do I dare go back to crypto and highlight Ripple (XRP)? What about the commodity markets? Should a peek into Copper or Lumber provide some insight? What are the markets warning us about and just what is the path the world is on as viewed from the stock markets?
According to Goldman Sachs (via ZeroHedge), the world will go on and the rally only briefly disrupted:
Here Are Goldman’s Top Trades And Themes For 2020
My favorite part is this one (excerpted from ZeroHedge):
According to Goldman, the risk of a global recession in the next 12 months has dropped from 30% recently to 20%, and remains more limited than suggested by the flat yield curve, “which partly reflects a structural decline in the term premium, and the low unemployment rate, whose predictive value for inflation and aggressive monetary tightening has fallen.” Goldman also points out the absence of significant private sector financial deficits in all but a few advanced economies.
So with 40% of the Western nation’s populations facing a total economic lockdown, the geniuses at Goldman who think their boy (Biden) will not follow suit can not result in a two to three quarter recession?
Good luck with that.
So with the stock markets enjoying irrational exuberance, a lack of real fiscal stimulus to Main Street, and actual unemployment now north of 25% America is not going to be a part of the global recession?
Now that the left is about to be back in power, remember, unemployment checks will “create jobs” as Nancy Pelosi once stated:
Unemployment benefits are creating jobs faster than practically any other program, House Speaker Nancy Pelosi said Thursday….. “It injects demand into the economy,” Pelosi said, arguing that when families have money to spend it keeps the economy churning. “It creates jobs faster than almost any other initiative you can name.”
Thus the insanity is not just in the markets, our politics, or statistics, but in reality. Unless one is taking some seriously mind altering substances, this can not and will not continue. Thus when this jaded, older, and now wiser observer says that a top is in or soon will be in EVERYTHING, take my word for it or gamble like a drunken sot, I do not care.
But for the survivors of 1987, 1998, 2000, and 2008 remember these words well:
The powers that be, financial, religious, nor political do not care about you, the little guy or gal. The speculative frenzy, the hoodies, 18 year olds giving me option plays, nay, those are just signs of the time. But the greed and vile evil methodology for seizing control and harvesting the money from the foolish is the sign one has to be on the lookout for; and we are at that point in time.
If it all crashes because of their incompetence, they are protected because you will be forced to submit to subsidizing their idiocy.
Never forget and trade accordingly.