Englund

Options markets show optimism is giving way to euphoria It is not enough for investors merely to book tomorrow’s profits today. Share prices really come unstuck from reality only after a mania takes hold. Then comes the grim doggedness of revellers who know the next morning’s hangover will be dreadful and are determined to put it off for as long as possible. Then, when it no longer is, comes the crash. SpaceX... Options are often described as insurance contracts: a simple “put” option, for instance, confers the right but not the obligation to sell a stock for a set “strike” price on an expiry date. This allows an investor to own the stock while limiting losses should prices crash—in return for paying to buy the option in the first place. Today, however, much of the options market is better understood as a casino in which punters gamble on stock prices. Volumes recorded in 2025 were nearly double those in 2020, itself a blow-out year.  And trading in ultra-short contracts, which are...

Investors are sinking vast sums into strategies whose performance hinges on enduring equity calm. A key factor in the stock plunge of early 2018 when they wiped out in epic fashion. Now they’re back in a different guise — and at a much, much bigger scale. Assets in such products have almost quadrupled in two years to a record $64 billion Their 2018 short-vol counterparts had only about $2.1 billion before they imploded. Bloomberg 10 March 2024  https://www.bloomberg.com/news/articles/2024-03-10/the-short-volatility-trade-roars-back-on-wall-street What ‘The Wolf of Wall Street,’ ‘Dumb Money’ and ‘The Big Short’ say about investor behavior https://www.marketwatch.com/story/what-the-wolf-of-wall-street-dumb-money-and-the-big-short-say-about-investor-behavior-61a3e099 Reddit launches IPO at a valuation of up to $5.5 billion Published: March 11, 2024  Reddit launches IPO at a valuation of up to $5.5 billion - MarketWatch

OpenAI is in early discussions to raise a fresh round of funding at a valuation at or above $100 billion, people with knowledge of the matter said, a deal that would cement the ChatGPT maker as one of the world’s most valuable startups. https://www.bloomberg.com/news/articles/2023-12-22/openai-in-talks-to-raise-new-funding-at-100-billion-valuation Bitcoin  The sense of doom that gripped crypto markets at the end of 2022 following a $1.5 trillion wipeout has 12 months later given way to a very different sentiment: avarice. Bitcoin stormed back with a more than 160% advance this year that added some $530 billion to its market capitalization. 23/12 Bitcoin (BTC) Rallied $530 Billion in 2023, Boosted by Gamble on Spot ETFs - Bloomberg

 Without Apple, Microsoft, Alphabet, Amazon.com, Nvidia, Tesla and Meta Platforms—the high-growth, technology-related companies that analysts have dubbed the “Magnificent Seven”—the S&P 500 would only be up 9% this year, rather than 19%.  Some 44% of stocks in the index are down this year. This not only runs counter to the principle of diversification, but it also means the most important stocks investors own are pricey. The seven stocks have posted strong profits lately, but they are still trading at an average of 32 times forward earnings, That poses a conundrum for investors, who increasingly use index funds.  WSJ 5 December 2023 https://www.wsj.com/finance/stocks/how-long-can-the-magnificent-seven-stocks-hold-the-line-0e9b5485 The Fangs have delivered spectacularly in the past couple of years.  https://englundmacro.blogspot.com/2017/11/the-fangs.html Indexfonder är en fara för aktiemarknaden och gör börsen till ”rena Solvalla”, enligt finansmannen Christer Ga...

https://www.dagensps.se/bors-finans/dustins-miljardemission-lyckad-tar-in-175-miljarder/

De två ägarfamiljerna är på väg att inkassera omkring 2 miljarder. DI 9 Oktober 2023 https://www.di.se/live/rustas-teckningsintervall-klart-motsvarar-borsvarde-kring-7-miljarder/

  Klarna ökar takten med artificiell intelligens (di.se)

Online grocery delivery business Instacart jumped as much as 43% in its trading debut  The shares were up 31% to $39.21 at 1 p.m. in New York, giving the San Francisco-based company a market value of $10.9 billion. Bloomberg 19 September 2023 https://www.bloomberg.com/news/articles/2023-09-19/instacart-soars-up-to-43-in-debut-after-660-million-ipo Some people say that Wall Street is like a casino https://englundmacro.blogspot.com/2023/09/bis-warns-short-positions-in-2-year.html  

A build-up of leveraged bets has the potential to “dislocate” trading in the $25tn US Treasuries market “The current build-up of leveraged short positions in US Treasury futures is a financial vulnerability worth monitoring because of the margin spirals it could potentially trigger,” the BIS said in the report, which focuses in particular on leverage used in the futures market to post margin. “Margin deleveraging, if disorderly, has the potential to dislocate core fixed-income markets,” it said. The BIS values short positions in Treasury futures at about $600bn. FT 18 September 2023 https://www.ft.com/content/b51edf3e-3d2b-4963-9ae7-92bc69992e24 https://www.bis.org/publ/qtrpdf/r_qt2309.htm Some people say that Wall Street is like a casino, where investors gamble with their money and hope to win big.  They compare the stock market to a game of chance, where the outcome is unpredictable and influenced by luck. They argue that Wall Street is rigged in favor of the insiders, who have a...

 Unease is rising — as are the extreme positions taken by hedge fund This week the doughty Financial Stability Board has also raised some red flags. In a new report issued before the G20 meeting  The Financial Stability Implications of Leverage in Non-Bank Financial Intermediation https://www.fsb.org/wp-content/uploads/P060923-2.pdf “presents a financial stability vulnerability because the trade is generally highly leveraged and is exposed to both changes in futures margins and changes in repo spreads”. In plain English: if US rates swing sharply, prepare for jolts. Gillian Tett FT 7 September 2023 https://www.ft.com/content/e57db62f-8784-411f-9328-b9a6d7b8a8c0 FSB warns of risks posed by hedge funds’ ‘hidden leverage’ https://englundmacro.blogspot.com/2023/09/fsb-warns-of-risks-posed-by-hedge-funds.html

Berkshire ended the year with a near record amount of cash on hand. (After Berkshire’s buying spree, the size of the company’s war chest shrank to $106.26 billion at the end of the first quarter, from $146.72 billion three months earlier.) Berkshire doesn’t try to make its investments based on what it believes the stock market will do when it opens each Monday, Mr. Buffett said. “I can’t predict what [a] stock will do…We don’t know what the economy will do,” he said. WSJ 30 April 2022 https://www.wsj.com/articles/warren-buffett-says-markets-have-become-a-gambling-parlor-11651340230 Buffett says market ‘almost totally a casino’ as it rallied in recent years Berkshire Hathaway head tells shareholders that Wall Street encouraged traders to treat shares like poker chips The billionaire and chief executive of Berkshire Hathaway, speaking in Omaha to thousands of shareholders gathered for the company’s annual meeting, added that “extraordinary” activity had been “encouraged by Wall Street be...

Negative rates do not stimulate lending for useful economic activity. They damage “good” banks by eviscerating their bread and butter business model, but help “bad” banks play the casino. BIS says negative rates – or NIRP – are chiefly intended to drive down the exchange rate. The central banks of Switzerland, Denmark, and Japan openly admitted as much. Professor Richard Werner, a bank expert at Oxford University, said the outcome is progressively ruinous for Germany’s 1,250 savings banks and cooperative lenders, which rely on deposits from savers and have intricate ties with local business. These banks account for 90pc of lending to small firms (SMEs). They provide credit for much of the Mittelstand engineering and machine tool family firms. Ambrose Evans-Pritchard Telegraph 13 October 2020 https://www.telegraph.co.uk/business/2020/10/13/negative-interest-rates-have-failed-everywhere-path-soviet-banking/

With new borrowings of $1.2 trillion by the US Treasury and $600 billion of existing bond sales by the Fed during FY 2019, you have $1.8 trillion of homeless debt slamming hard upon the scales of supply and demand. That this fiscal eruption is not even in today's Wall Street narrative and the QT is completely ignored tells you all you need to know.  Soon the casino gamblers will be shocked, blathering that another purported comet from outer space caused interest rates to soar, notwithstanding disappointing "growth". Moreover, once the bond market Armageddon gets cranking, it will way overshoot to the high side (above 4% or even 5% on the 10-year). Thereupon, carry trade speculators will be forced to dump their bonds, triggering massive mutual fund redemptions and the violent unwinding of Wall Street hatched bespoke trades. David Stockman 17 October 2018