Tag Archives: Wall Street

How to Identify a Bubble: Wall Street Says It’s Not a Bubble, by Charles Hugh Smith

Wall Street tends to do a lot better than its clients. From Charles Hugh Smith at oftwominds.com:

The post-bubble-crash phase is already being prepared: ‘no one could have seen this coming’–except anyone who paid attention to anything other than self-interested shills.

It’s really pretty simple to identify a speculative bubble of epic proportions in stocks: if Wall Street says it’s not a bubble, it’s a bubble. As I explained in The Smart Money Has Already Sold, from the long view the entire game of “investing” (wink-wink) boils down to one dynamic:

Wall Street and the Federal Reserve inflate an unprecedented debt-funded speculative bubble and then lure retail “investors” (i.e. gamblers) in with the promise that the enormous gains are just starting, there’s so much more easy money ahead, etc. Then Wall Street distributes (sells over time so as not to alert the complacent herd of retail punters) its shares of overpriced rubbish (“investments”, heh) to bagholders, and then to everyone’s surprise (or not), the market suddenly crashes as the unsustainable bubble pops.

Wall Street has long practice in how to reassure the herd: since insiders have juiced the market higher for years at every dip (with the Fed’s free trillions offering a helping hand), the bagholders have been well-trained to buy the dip even as the wheels come off the whole “this time it’s different” scam.

Human psychology being what it is, desperate retail bagholders cling to the delusional belief that a recovery to new highs is just around the corner, because that’s what the market has done for 13 straight years.

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SPACs Are Lining Up as the Next WTF Chart of the Year , by Wolf Richter

With SPACS (Special Purpose Acquisition Companies) you invest first and find out what you’re investing in later. If this seems strange and perverse, it is because it is, a phenomenon one only sees at the tippy-top of long running bull markets. From Wolf Richter at wolfstreet.com:

Who’s going to be the sucker? Even the SEC, which has been asleep through all this, warns retail investors. But in the current mega-bubble craze, no one gives a hoot about anything anymore.

SPACs – Special Purpose Acquisition Companies, or more descriptively, “blank check companies” that have no operations – have accomplished a huge feat that fits seamlessly into the current mega-bubble craze.

So far this year, as of today, 260 SPACs went public and raised $84 billion with their IPOs, according to data provided by SPACInsider. This is a big moment because it exceeded the total amount raised during the entire year 2020 of $83 billion, which itself had been six times as large as the prior full-year record in 2019. At this pace, SPACs are forming the next WTF chart of the year:

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Former BlackRock ESG Chief: American Public Is Being Duped By “Greenwashing”-Wall-Streeters, by Tyler Durden

Trust Wall Street to turn a buck off of the latest social and political totems without actually doing anything to solve the underlying problems. From Tyler Durden at zerohedge.com:

Over a month ago we first exposed the “Green Scam”. ESG, or Environmental, Social, and Governance, has become the virtue-signaling tour de force for asset mangers to skim even greater margins off retail dupes under pressure from their liberal peers. And since the green movement was here to stay, so was the wave of pro-ESG investing which every single bank has been pitching to its clients because, well you know, it’s the socially, environmentally and financially responsible thing.

There is just one problem. Instead of finding companies that, well, care for the environment, for society or are for a progressive governance movement, it turns out that the most popular holdings of all those virtue signaling ESG funds are companies such as…. Microsoft, Alphabet, Apple and Amazon, which one would be hard pressed to explain how their actions do anything that is of benefit for the environment, or whatever the S and G stand for. It gets better: among the other most popular ESG companies are consulting company Accenture (?), Procter & Gamble (??), and… drumroll, JPMorgan (!!?!!!?!).

Yes, for all those who are speechless by the fact that the latest virtue-signaling investing farce is nothing more than the pure cristalized hypocrisy of Wall Street and America’s most valuable corporations, who have all risen above the $1 trillion market cap bogey because they found a brilliant hook with which to attract the world’s most gullible, bleeding-heart liberals and frankly everybody else into believing they are fixing the world by investing in “ESG” when instead they are just making Jeff Bezos and Jamie Dimon richer beyond their wildest dreams, here is Credit Suisse’s summary of the 108 most popular ESG funds. Please try hard not to laugh when reading what “socially responsible, environmentally safe, aggressively progressive” companies that one buys when one investing into the “Green”, aka ESG scam.

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The Hunter Biden Criminal Probe Bolsters a Chinese Scholar’s Claim About Beijing’s Influence With the Biden Administration, by Glenn Greenwald

The legacy media did a spectacular job of ignoring the Hunter Biden revelations just before the election. From Glenn Greenwald at greenwald.substack.com:

Professor Di Dongsheng says China’s close ties to Wall Street and its dealings with Hunter both enable it to exert more power now than it could under Trump.

Hunter Biden with his father, Joe (Photo: Teresa Kroeger/Getty Images)

Hunter Biden acknowledged today that he has been notified of an active criminal investigation into his tax affairs by the U.S. Attorney for Delaware. Among the numerous prongs of the inquiry, CNN reports, investigators are examining “whether Hunter Biden and his associates violated tax and money laundering laws in business dealings in foreign countries, principally China.”

Documents relating to Hunter Biden’s exploitation of his father’s name to enrich himself and other relatives through deals with China were among the cache published in the week before the election by The New York Post — revelations censored by Twitter and Facebook and steadfastly ignored by most mainstream news outlets. That concerted repression effort by media outlets and Silicon Valley left it to right-wing outlet such as Fox News and The Daily Caller to report, which in turn meant that millions of Americans were kept in the dark before voting.

But the just-revealed federal criminal investigation in Delaware is focused on exactly the questions which corporate media outlets refused to examine for fear that doing so would help Trump: namely, whether Hunter Biden engaged in illicit behavior in China and what impact that might have on his father’s presidency.

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Wall Street is firmly in Wonderland, by Edward Chancellor

Anything resembling fiscal rectitude and propriety on Wall Street are things of the past. From Edward Chancellor at reuters.com:

LONDON (Reuters Breakingviews) – Alice was tired of studying for the CFA exams, the figures in the spreadsheet were blurry, she laid her head on the desk…

Her first day at Tweedle Asset Management was going to be a busy one. She was escorted around the offices by a young staffer named Otto. Their first visit was to the bond team. Fixed income was Alice’s keenest interest.

“Do you hold bonds for income?” she eagerly asked. Everyone laughed. “Are you dreaming?” the desk head replied rudely. “The coupon is subtracted from the principal, not paid out. If it’s income you want, you should take out a Danish mortgage, they pay very well. Or sell short Swissies.”

“But why own a bond, if it doesn’t pay interest?” replied Alice, who’d read her Homer and Sylla assiduously.

“As long as yields continue declining, even at negative rates we hold bonds for capital gains. If you want dividends, go ask the equity folks.”

“I see,” said Alice doubtfully, hoping that stock market investors would prove more sensible. At least they valued investments by discounting future income streams. But on opening a door marked “Fundamental Active Equity”, she came across an empty trading floor.

“Oh, we closed down that team last month – they’d been underperforming for decades,” said Otto.

“What was their problem – did they buy overpriced stocks?” Alice asked, keen to show off her knowledge of Fama and French.

“That’s exactly what they didn’t do!” replied Otto scornfully. “They stuck with value, and as everybody knows value sucks. If you want to outperform, you’ve got to show your FANGs.”

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Could Wall Street Lose the Election? by Charles Hugh Smith

Popular anger with Wall Street is rising, perhaps because Wall Street is filled with grifters and crooks. From Charles Hugh Smith at oftwominds.com:

Two simple regulations would drive a stake through Wall Street’s corrupt, evil heart.

While the corporate media is focused on the presidential election, perhaps the more interesting question is: could Wall Street Lose the election? That is, could Wall Street face potentially fatal restrictions regardless of who wins?

If this seems farfetched, consider the history of abrupt social-political-financial turn-arounds that surprised the mainstream. Off the top of my head I would point to Big Tobacco and environmental controls on Big Industry.

For decades, Big Tobacco was politically invulnerable. Big Tobacco greased the political machinery with huge contributions to politicos and massive lobbying campaigns to deny the self-evident reality that smoking was hazardous to human health.

Every effort to change this political dominance was thwarted with ease–and then suddenly, Big Tobacco fell out of favor. Politicians who had collected millions of dollars in Big Tobacco bribes–oops, I mean campaign contributions–without any blowback were suddenly in the spotlight as enablers of an industry that had remorselessly killed millions of its customers while claiming that tobacco’s health effects were still a matter of debate and/or choice.

Practically overnight the political walls protecting Big Tobacco crumbled as all the lies and political complicity that had long been accepted as “normal” were denormalized.

Big Industry encountered little political resistance to its decades-long dumping of industrial waste into the nation’s waterways and air until 1970. Images of American rivers catching fire changed public perceptions and eventually even Big-Business-friendly Republicans supported environmental regulations that cost Big Industry tens of billions of dollars in new costs.

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Here’s Why the Fed Hasn’t Yet Invoked Its 13(3) Emergency Powers to Stem a Stock Market Crash, by Pam Martens and Russ Martens

Whatever happened to the Fed put? From Pam Martens and Russ Martens at wallstreetonparade.com:

Stock Price Chart of Citigroup Versus Goldman Sachs, Bank of America, JPMorgan Chase and Morgan Stanley Since February 14, 2020

Stock Price Chart of Citigroup Versus Goldman Sachs, Bank of America, JPMorgan Chase, Morgan Stanley Since February 14, 2020

The U.S. stock market set new records yesterday – all of them bad. The Dow Jones Industrial Average suffered its worst point loss in history, closing down 2,997 points at 20,188.52, which effectively erases all of its gains in the last three years. On January 20, 2017, when Donald Trump was sworn in as President, the Dow closed at 19,827. It’s now grown by just 1.8 percent in total over that span of time.

The Dow also had its second worst percentage loss in history yesterday, losing 12.93 percent. That loss is only exceeded by Black Monday, October 19, 1987, when the Dow lost 22.6 percent. It barely beats out October 28, 1929 when the Dow lost 12.8 percent and ushered in what would become the worst stock market crash in history. From late 1929 to 1933 the stock market would go on to lose 90 percent of its value and not reset the highs it had made in 1929 until 25 years later.

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The Road to Perdition Is Paved With Evil Intentions–A Final Reckoning, by Jim Quinn

As has become the norm with Washington bailouts, those who need it the least end up with the most. From Jim Quinn at theburningplatform.com:

In Part 1 of this article I pointed out how we have allowed ourselves to be cowed by authoritarian “experts” who have proven to be nothing but incompetent and wrong every step of the way, while the financiers have used the crisis once again to pillage the citizens as they did in 2008/2009.

The absurdity of shutting down this country based on academic death models that make economist and climatologist models look highly accurate in comparison, can be seen in the ludicrousness of the following chart. And realize we did this on purpose because of a virus that will kill .018% of the U.S. population. And most of those deaths will occur in several highly dense urban enclaves, with the rest of the country barely affected.

By shutting down the country the government has crushed virtually every business in the country and putting tens of millions out of work, with resulting crash in tax revenues at the Federal, State and Local level. At the same time, Trump and everyone in Congress have become Bernie Sanders socialists, except most of it is corporate socialism. The deficit was already on track to top $1.2 trillion, but with the $2.2 trillion stimulus package, and more to come, the deficit this year and next will approach $3 trillion.

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Helicopter Money for Wall Street, by Wolf Richter

In case you were worried that Wall Street might catch the coronavirus, fear not. An insane amount of central bank balance sheet expansion is meant to keep Wall Street feeling chipper. Time will tell if it does so. From Wolf Richter at wolfstreet.com:

Fed’s assets spike to high heaven to bail out the imploded Everything Bubble it had worked so hard to inflate over the past decade.

Total assets on the Fed’s weekly balance sheet, released this afternoon, spiked by $586 billion in one week, to $5.25 trillion. This doesn’t even include yet the bulk of the mortgage-backed securities (MBS) the Fed bought over the past two weeks because the Fed books them when its trades settle, and MBS trades take a while to settle. So they will show up later.

Over the past two weeks, total assets have ballooned by $942 billion – again not including the bulk of the MBS it bought during that time, which will be booked when they settle. Money creation at its finest:

If the Fed had sent that $942 billion it created over the past two weeks to the 130 million households in the US, each household would have received $7,250. But that didn’t happen. That was helicopter money for Wall Street.

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Monetary Looting, by Michael Krieger

The Federal Reserve is at the head of a banking cartel that has looted hundreds of billions of dollars from customers and taxpayers. From Michael Krieger at libertyblitzkrieg.com:

The United States has historically bragged about its free and transparent markets. But what the Fed is doing today is pulling a dark curtain around the financing of this so-called free and transparent market. The public has no idea which Wall Street firms have received this $3 trillion or why they can’t borrow it elsewhere. This kind of obfuscation by the Federal Reserve could actually stimulate distrust in the U.S. banking system. The Fed admitted as much in its most recent Federal Open Market Committee (FOMC) minutes, writing that participation in the Fed’s loan program “could become stigmatized.”

Wall Street on Parade: Is the Fed’s $3 Trillion in Loans to Trading Houses on Wall Street Legal?

The business model of Wall Street is fraud.
– Bernie Sanders

Financial services as currently structured is the most pernicious, predatory and corrupt industry on earth. Moreover, it’s the deliberately complex and opaque nature of the industry which then limits public debate when some problem arises and governments and central banks are called upon to take emergency measures to “save the system,” which is just a euphemism for enormous sums of corporate welfare being funneled to people and institutions who couldn’t survive otherwise.

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