The sign of the times

Pekelo

Pekelo

The market is in a never ending bubble, braindead ideas are CPOing. At one point this is going to end. So what are the shoeboy sign of the times? :

1. Fastest growing subreddit is r/wallstreetbets, where people are literally just gambling.
2. Robinhood introducing partial stocks.
3. Robinhood's infinite margin and "no question asked" option trading.
4. Incredibly stupid ideas coming into the market and drawing not just venture capital but public money. Yes, Moviepass and WeWork completely make business sense. The new pets.com in town is called Chewy. But this time it is different...
5. Tesla at ATH is a tech company (you get a free car with the software) and we care about rockets landing instead of profitability. Let's not even mention their vaporware.
6. SEC oversight is nowhere but lets buttfuck the Indian autist for "crashing" the market.
7. Outright fraud is either tolerated or goes years without discovery. Yes Theranos, we are waiting for the movie.
8. Cryptos getting respect and their prices are still incredibly high.
etc.etc.

Here is an interesting view from Reddit:

"I personally think the trigger that’ll fuck everything up is Wework. Once wework collapses SoftBank will die along with it. I’m pretty certain SoftBank is bankrupt or near bankrupt even at this point, at least very illiquid. Them having to sell sprint at barely a profit suggests that. SoftBank itself is like most of the corporate bond market in japan. When it collapses you’re going to see the 250% sovereign debt to gdp ratio start mattering and Japanese rates will start going up finally due to market forces. At that point while the central bank keeps trying to plug a swimming pool with a fucking bottle cap, you’ll see it cascade around the word with defaults and rising rates. First will be japan, then Europe, then China and finally the US."
 
Good points.

However, if something is too obvious it tends to move in the opposite direction. Like the German (and most of europe actually) 10y yield in the summer months.

It will be interesting to witness how the whole debt situation gets resolved.
It's a popular opinion nowadays that central banks are propping up the markets everywhere even though central banks have no power at all. It's the regular people that trust, accept and allow to finance debt with printed money because either they don't know what it is or don't care.

You think central banks control interest rates ? If regular people actually stop buying goverment bonds (or get out from pension funds that buy them) rates will be 10%+ tomorrow and central banks can do nothing about it. Only in times of calm, central banks SEEM to have lots of decision power. But the system is very craftly set up, making it mandatory for most people to invest in pension funds and the CB's can model the real money inflows to bond market.

Think about it, goverments rely 100% on rollover to finance their debt. 100% ! Why would an investor accept 0 or negative rates if goverments NEED to refinance ? You can basically ask whatever rate you want because there is no exit for them. So the game is exeptionally crafty :)


"I personally think the trigger that’ll fuck everything up is Wework. Once wework collapses SoftBank will die along with it. I’m pretty certain SoftBank is bankrupt or near bankrupt even at this point, at least very illiquid. Them having to sell sprint at barely a profit suggests that. SoftBank itself is like most of the corporate bond market in japan. When it collapses you’re going to see the 250% sovereign debt to gdp ratio start mattering and Japanese rates will start going up finally due to market forces. At that point while the central bank keeps trying to plug a swimming pool with a fucking bottle cap, you’ll see it cascade around the word with defaults and rising rates. First will be japan, then Europe, then China and finally the US."
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Don't bother thinking what the trigger is. That's as good as gambling and thinking next roll will be on the red. Markets have been talking about debt and japan for decades basically.

Gov debt is the final boss, therefore it's the toughest. And for the sake of the future noone will admit to being bankrupt anyway so it even makes sense for a complete surprise force majure event to take your mind off of it.
 
There is NO SOLUTION. That is the solution.

The mantra of the day is "Roll with the punches and f*** the rest!" At least we had some leverage to work with in 2008. I dunno what else they have when the market crashes this time. Negative interest rate? Yeah, right.
 
Its important and useful to separate economic crash from market crash. The economy is healthy, but recessions are always part of the ebb-and-flow. Even when we have an economic recession at some point in the future ... are there any signs that it will look or feel like a "crash" ?

People talk about the financial markets being in a bubble mostly because P/E's are above their historic norms ... although its hard to tell what the "norm" should be with rates as low as they are. Even if financial markets pull back closer to their historical P/E "norms" ... will that look or feel like a "crash" ?
 
by historical definition a 40%-50% pullback is considered a "crash"

Funnily, back in 1930's with this great market "crash" all it was was a simple pullback from the frenzy buying. Market just went back to it's range before the frenzy that lasted couple of years.
 
Pekelo said:
japan, then Europe, then China and finally the US
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I doubt this will be the order though. My bet is China, US, Japan, Europe. Assuming the Brussels sprouts don't pass any idiotic laws.
 
Pekelo said:
Here is an interesting view from Reddit:

"I personally think the trigger that’ll fuck everything up is Wework.
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Some videos I've watched say the Repo crisis in September was because either Deutsche Bank was in trouble, or HSBC. Both of these are interesting collapses to consider as well.
 
Seaweed said:
Some videos I've watched say the Repo crisis in September was because either Deutsche Bank was in trouble, or HSBC. Both of these are interesting collapses to consider as well.
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When have Deutsche Bank not been embroiled in a financial crisis, in one form or another? As far as I can remember, they were in just about all of the past crises. It's hard not to classify them as the poster child of modern-day financial idiots.
 
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