WTF people?
Have you all lost your minds??? SPX gained over $1Tn this week, AFTER the $1.7Tn IPO on Friday (“value” created out of nothing)while $742.4M of Institutional Capital flowed OUT of the market – yes OUT!!! Basho and I already wrote a special post about how closely we are now mirroring the Dot Com bubble so this is just venting – not ranting…
Well, whatever – as Marc Anthony sort of said, I come here not to praise the rally – but to profit from it and I learned my lesson in 1999 – when I was RIGHT – ALL YEAR LONG – that the rally was ridiculous — but I still missed out on a 100% gain, before the 150% drop that came right after.
This is the problem with bubbles, you always look at the left side of the chart and imagine you could have had the gains, while also ignoring the right side of the chart and imagining you would have nimbly avoided the even steeper losses. Unfortunately, that’s not how real investing works – or we’d all be having this discussion on our mega-yachts…
That was the action in 2021 and 2022 on Tesla and it’s back to $402 this morning, after failing the $500 line last year and $200 again last March. How much is the company really worth with a $200-$500 trading range? Well, they have $100Bn in Revenues and they should make $6.6Bn (6.6%) but the current $1.5Tn valuation is 227 TIMES what the company makes in a year – does that seem a little silly to you – I really can’t tell anymore as SPCX is more like 1,000x their HOPED FOR earnings, yet people are in a frenzy for it.
So SPCX sold $75Bn worth of shares (more like $85Bn as they snuck more shares in on top of the original allocation but it didn’t go to Retail Traders – they got LESS than promised) and what do they do 3 days later? They turn around and SPEND $60Bn to buy Cursor, which is a software development environment that lets you use AI to edit, search, and navigate huge codebases using natural language instead of only traditional editors.
They DO have 7M users (mostly free) and they did raise money at a $30Bn valuation last year and are maybe going to do about $6Bn in revenues in 2026 so don’t think of $60Bn as SPCX overpaying for Cursor, think if it as “only” 10x revenues while SPCX is trading at 100x revenues – so this is BETTER – comparatively…
And it’s an all-stock deal so it’s just funny-money anyway and not cash but it does show you what Elon thinks of the $75Bn worth of paper he just sold to you – worth about half when he has to buy an actual company with it!
Perhaps he should have let his friend Trump negotiate it but, OOPS!, Trump just gave Iran $300Bn – that’s their ENTIRE GDP to “rebuild” – that would be like someone giving the US $30Tn but, unlike the US, which also has $40Tn in debt – Iran has none – so good deal Donald!
Trump is giving Iran the equivalent of 4 SpaceX IPOs to stop making him look like an idiot and, with less than 5 months to go until the elections – we’ll be able to see if it works pretty soon.
What is working is Oil is down to $76 this morning with Brent at $79.86 and Gasoline at $2.89 – the lowest it’s been since March 12th. Of course, on January 1st gas was $1.71 (wholesale futures) so it’s still 69% higher than it was but hey – PROGRESS!, right?
Is there REALLY a deal or will the be the 39th time Trump has claimed the war is ending when it really doesn’t? I would say we’ll have to see but really there’s not even a way to see what’s actually happening now – let alone in the future. Never has so much misinformation come from the Oval Office – even Nixon sometimes told the truth…
Other than generating record profits for oil companies – what has this war actually accomplished? We already bombed out Iran’s nuclear program in February. We are now reopening the Strait of Hormuz that Trump closed with his war – that’s NOT an accomplishment – that’s cleaning up Trump’s mess…
Anyway, enjoy Jimmy Kimmel while you can as Trump has sicced the SEC on Disney/ABC – looking to have another late-night show host removed from his presence. With FOX taking over ROKU and HBO under PSKY – there aren’t many places left to go if you want to make jokes about the President.
CBS (PSKY) replaced Stephen Colbert with “Comics Unleashed” and lost 85% of their dominant late-night audience so you KNOW this censorship isn’t being done for “financial reasons” and, if the Washington Post were not now controlled by Jeff Bezos – they might still have real reporters who could “follow the money” to see who profits from such an idiotic move.
Perhaps it’s… Jeff Bezos, who also has to kiss Donald’s ass to get NASA contracts for his rocket company? Perhaps it’s all the Republicans who hope to get elected in November and would like the Libs to stop owning them? The list of Billionaires who profit from a Republican Congress is almost endless – the very fact that PSKY was allowed to take over HBO/Time-Warner and control 30% of US Media says it all right there.
I’ll ask Hunter to report further in that this weekend.
Meanwhile, while we still can, let’s assume the war is ending and gas stays low and that begins to ease inflation. We just got VERY STRONG Retail Sales numbers this morning – up 0.9% from 0.4% in April vs 0.6% expected by our Leading Economorons (no surprise there).
Of course, 0.45% of that 0.9% is INFLATION – which we just saw in the CPI and PCE and the real problem with Retail Sales is the Top 10%, who have added $12Tn in stock market wealth in the past 12 months, are spending like madmen and distorting the entire curve and energy costs up 60% are doing the rest of the heavy lifting.
1/3 of all US Household Wealth is in stocks and 87% of that wealth is held by the Top 10% and MOST of that is held by the Top 1% and STILL, where else are they going to put all that money – other than back into equities?
- Housing is about to collapse (see yesterday’s podcast above)
- Commodities just dropped 20%
- Bonds aren’t keeping up with inflation
- Private Equity has become a liquidity trap with several near-collapses recently
That’s the backdrop: Trillions in new wealth concentrated at the very top, few viable alternatives and a market that keeps pulling the same money back into the same assets – until something breaks.
This is why we’re hedging and this is why we’re rotating our portfolio assets into things that should survive a correction. We JUST saw how quickly the market can pull back yet – just as quickly – traders have already forgotten that last week even happened.
Trump speaks from the G7 today and, more importantly, Warsh speaks from the Fed and he won’t be giving Trump the rate cut he wanted for his birthday but he will set the tone for the stock market’s summer with Juneteenth on Friday and July 4th two weeks from Saturday.
Happy 250th America – 300 is looking like a long shot…
