Torched Shorts, again!
After 12 years of “fixed”, for a financial system that blew up in 2008, 2020 certainly provided a nice back drop to make it even more “fixed”.
Stimulus turned to recovery funding and no amount has been too large.
For those closest to said stimulus 2020 has proved to be at minimum a minor hinderance and, for many, an absolute gift of financial largesse (see IPO’s and market size of companies mentioned below).
With more and more “stimuli” looking for a productive home and a global backdrop of 18 TRILLION of negative interest rate paper, investors are just being pushed further and further out the risk horizon in search of return, so far in fact, they’ve truly lost sight of land.
Nothing describes it better than last week’s IPO fever.
Last week was classic 2020 as US Private equity Firms exited billions of equity to unsuspecting “investors”. FOMO investors piled into the latest Unicorn IPO’s of Doordash (restaurant food order and delivery) and Airbnb.
The day one IPO result of these two loss making enterprises? Dordash, a 75% lift to a market cap of 38 BILLION and Airbnb soared to a day one close market capitalisation of USD100BILLION.
To put this in context for Australian investors, Airbnb is now the same size as CSL but bigger than BHP!
Neither of these companies hold a candle to the USD530BILLION market capitalisation of the incredible loss-making Tesla.
Poor old Toyota just isn’t woke enough, must have too many legacy issues, like real profit, for a market capitalisation of 190billion, even with a suite of Hybrid and EV’s rolling into production each year for the foreseeable future!!
As each week passes the insanity of financial markets sends more short seller wannabe’s to the mad house for psychological counselling.
Their shorts have been torched.
Remember folks, the worse the economic numbers get, the better it is for stocks as the bigger the dose of next “stimulus” is going to be.
Buckle Up! Things are going hyper!!
Nothing like a spot of Covid Euphoria
And what in the hell is going on here??:
From March 16th to April 27th, the U.S. M1 Money Supply increased $773 billion… six weeks. Why on earth has the M1 Money Supply increased $810 billion… in TWO WEEKS!!!
Again, something very serious must be going on that we don’t know about because this is certainly unprecedented.
Do you know how much $810 billion equals? That turns out to be four years of global gold mine supply totalling 440 million or 40 years of global silver mine supply of 32 billion oz. This is beyond stunning to see this much of an increase without any news release by the U.S. Treasury or Federal Reserve.
Of course, it made sense to see the M1 Money Supply to increase after the pandemic shutdowns and stock market meltdown… BUT WHY NOW???
We’re going to leave the theme’s of 2021 investing with this backdrop (in the pictures above) for our next note but we somehow think, where CBanks may have “failed” in the past, 2021 may just be their year.
Even China is well in on this act. In their words, “to keep the banking system ample”!
There’ll be no rest for this bloke over Christmas!
The most important part of the above pictorial backdrop of this week’s note is its ramifications for investors in 2021.
Needless to say, if you think 2020 was busy for central banks imagine what 2021 will be like with the three main mandates of:
- Interest rate suppression at any cost, too much debt for rates to rise, print any amount.
- As much recovery/stimulus as possible, print any amount.
- New Green commitment to everything, no matter what cost, any amount is good. (by itself the, according to a Bloomberg report this morning, the US thinks it’ll cost them 3 trillion over the next 2 years alone!!)
We’ll let you ponder this backdrop before dropping to subscribers how (and what) we are looking at for 2021 asset allocation.
If you got this far, we hope you’re thankful for the early Christmas present of more pictures and less words!!
Until next time.
