BY GARY KALTBAUM- JANUARY 27, 2021
None of this happens without him. None of this happens without her. None of this happens without their predecessor, the original Mr. Bubble. None of this happens without all the lemmings around the globe following in their footsteps. We have been telling you for months that we thought there was a chance of a melt-up in certain parts of the markets. But we have also been telling you for months that it would be the late innings. We have been telling you for months that those late innings come with massive froth and speculation and actually used the words “akin to 1999!” 1999 now looks like a piker.
Today, he speaks. Will he be asked about the bubbles he and his counterparts have created? Will he be asked about:
The massive insider selling via sales and secondary offerings that now number 400-500 in just the past few months.
A crap load of IPOs with no sales. That’s NO SALES. A crap load of IPOs with valuations of 100x sales, 200x sales and higher. THAT’S SALES, NOT EARNINGS.
Margin debt (leverage) exploding to the upside at a record pace. You all remember leverage. The leverage that almost destroyed the financial system when a bunch of crooks leveraged mortgage backed securities 10x, 20x, even 30x, which guaranteed what we saw in 08. You remember that leverage where so many committed fraud but not one indicted. You remember that leverage where rating’s services rated crap AAA when it shouldn’t have rated ZZZ. You remember the emails by some at the rating’s services calling the products “shit!” (Just quoting them!) You remember those leveraged products created by a certain gargantuan investment bank that created these products, sold these products to others and then immediately shorted them for their own account. (We would be in jail for a long time if we did that)
Junk bond yields at their lowest ever and by far. This begs the question how it helps the poor and the downtrodden to print money and buy up the bonds of Apple?
Global debt heading for $300 trillion. That’s $300 trillion. But don’t worry! Debt is fine when rates are low. Of course, rates are low because they keep printing money (debt) to keep rates down. Such logic!
Screwing Aunt Mary and Uncle Bob out of their risk-less income investments by keeping rates at 0% while bubbling up everything else around them. Or maybe we can just quote Mr. Bubble who once said something to the effect that Aunt Mary and Uncle Bob should just make it in the market. Of course, in some areas around the globe, when you deposit money at the bank, you have to give the bank a toaster.
The SPACs…yes, those lovely SPACs. You remember in 99 when mutual fund companies changed their name from “technology” fund to “internet” fund just to raise more assets. Or how about companies adding “.com” to their name just because they knew their stock price would go higher. Welcome to the SPACs. Wall Street being wall street again foisting a bunch of #%@%@ onto an unwary but now very greedy public. By our rusty abacus, we think there is now about 150-200 trading with another 200 expected real soon. But don’t worry. there are no bubbles. Just because many are being merged with companies that have been invented out of thin air in the recent past just to merge, just because most all are doing the same thing…electric vehicles, batteries and solar cells, just because they are doubling, tripling and even more out of the box even though some have not even merged with any companies…don’t worry…there are no bubbles. There’s no bubbles when 200, 300, 400 companies say they are all going to produce the same products. Just give us a $5-10 billion valuation even though we have no sales and no hope for sales until 2025. Don’t worry, there are no bubbles. And just in case you don’t think these people raising money for these SPACs do not know what they are doing, one of them came out with the symbol “LMAO and LMFAO.” You think we are making that up?
He doesn’t see any bubbles. She doesn’t see any bubbles. Hear no evil. See no evil. Speak no evil. These people are actually called economists while not only have they no problem with massive debt and deficits but are calling for “going big” even from here. They think everything is fine as long as they can just go deeper into debt and print unimaginable amounts of money. They think they are omnipotent because while not in office, one of them takes $250,000 for speeches from the same Wall Street they were supposed to oversee and now oversee again. Yeah…that’s the ticket.
Gamestop…Yes, it is being caused by massive short squeeze but it is also being caused by people actually buying. We are receiving calls from people we do not know asking if they should buy a stock at $150 that was $20 recently. But this doesn’t happen without the gargantuan, massive, unimaginable, over-the-top, never can be believed amount of conjured up out of thin air easy money creating what we have been worried about…one of the most if not the most massive asset bubbles in history… and the people that created all this are still running the joint. But it is not just going to be Gamestop…AMC theaters closed at less than $5 last night…currently trading this morning over $16. Yes…that AMC where sales were down 90% last quarter. This is just part of the outcome we outlined for you in past months, just a lot crazier than even we thought.
When we look back on these SPACs down the road, many will have dropped not 50% but 90-100% as we will find a lot of chicanery. When we look back, we will find out many had absolutely no chance and that it was just money people again taking advantage of an unwary public that are starting to believe 50% gains in a week is the norm. When we look back on these massive short squeezes, eventually, their valuation will matter. Most all will go back to where they came from. When we look back on this massive leverage, we will have added another piece of evidence on how market cycles work. Remember, leverage is your greatest of friends in a bull market but your worst of enemies when things turn because leverage has to come off or even worse, is forced to come off first before the real money is even sold. You are seeing some hedge funds implode on these short squeezes because of the leverage.
Will anyone ask him or now her about all this? If someone does ask and he gives his usual flippant answer, will the question just get discarded but will some other hero press him?
We have been calling for a potential melt-up for months. But the biggest of melt-ups have been saved for mostly a load of crap. We cannot believe how many “no sales” or close to “no sales” stocks have skyrocketed on just a mention by a faceless someone on a website…but that is an outcome. There is going to be a lot of money lost when this music stops…and it will eventually will.
THE OVERALL MARKET
The good news so far is that major indices remain above important moving averages. A break and then and only then would we start getting real worried about the market but for the first time in a while, over the past few days, we have seen deterioration in quite a few names and sectors. If it worsens, we will let you know. Many are saying the weakness is because of forced selling by hedge funds who have lost big in these short squeezes. They could be right. We’ll just watch the price action. A break of moving averages will lead to a correction of some import but not sure the end is here just yet. We are not sure just yet that there are not a lot more fireworks to come as he will continue to print $125 billion/ month along with the lemming at the ECB that is doing the same. That’s $250 billion/month of printed money. That’s 0% rates. That’s negative rates. We are talking crap loads. Recall that the original Mr. Bubble only printed $85 billion/month and saw stocks soar on just that amount. These numbers do not include Japan and everyone else in the same bowl of soup.
We will need to see more cards come out of the deck. As always and as he has done since Christmas of 2018, if markets head lower, he will just go easier which means announcing more money printing. We will know the music has stopped and there are no chairs left when the markets stop listening to those moves from a man that refuses to let markets be free, let price discovery be real and get away from markets being addicted from debt, deficits and easy money. Just remember that every economic statistic, every data point and every asset price is now fully addicted to these massive debts, deficits and money printing. There is no way he and they can ever roll it back. It is now unfortunate the two most important money people in the world who have created and enabled all of this with the original Mr. Bubble are now running the joint. We shake and shudder about what the culprits may do if markets do indeed one day swoon in a meaningful fashion.
A lot more to come on this. This was actually our very short version.