If you are a bit short on change, we’d suggest you contact DH5yaiegoZN36fDVciNyRueRGvGLRmr7L. It seems that he/she/they/it recently stumbled upon a $15 billion fortune after deciding to get in on the joke about two years ago.
The joke, of course, was a cryptocurrency called Dogecoin, which was created by two wiseacres named Jackson Palmer and Billy Markus as a parody of a viral meme involving a Shiba Inu dog. After several years in the crypto-wilderness, Dogecoin was discovered by the reigning financial genius of our day, Elon Musk, and the rest was, well, madness.
The latter took to tweeting about it, beginning with a single word ‘Doge’ back in February. The SpaceX CEO then vowed to put Dogecoin on the Moon, sharing a bizarre image captioned: “Doge Barking at the Moon.”
In another tweet, Musk claimed, “Dogecoin is the people’s crypto”, while in still another he added: “No highs, no lows, only Doge.”
When queried about why he loves doge so much he replied: “I love dogs and memes”, adding that he purchased “the future currency for Earth” Dogecoin for his nine-month-old son.
Well, you get the picture.
After all, what would you expect from someone who is worth $170 billion, but whose
company Electric Vehicle Ponzi has never made a single dime of profits aside from regulatory credits dictated by the state?
Still, given that Dogecoin has risen by 500% in the past week, Zero Hedge felt compelled to call out the farce:
There is little we can add here that David Einhorn didn’t already say yesterday, but it’s probably worth noting for those keeping track of where in the bubble we are now, that in the magical world of dogecoin – a cryptocurrency that was specifically created as a joke spoof on the crypto concept and which has been promoted aggressive by such luminaries as Elon Musk – there is now a holder residing at address “DH5yaieqoZN36fDVciNyRueRGvGLR3mr7L” who owns 36,711,935,369.11 dogecoins or whatever the plural is, and whose holdings – which started accumulating back in February 2019 – after the latest surge in dogecoin which has sent the joke crypto up 150% in the past 24 hours and 5x in the past week…… are worth just under $15 billion.
Of course, ZH’s above reference to the intrepid value investor and proprietor of Greenlight Capital, David Einhorn, was with respect to his already famous investor letter released yesterday. The latter surveyed the bubble madness now rampant throughout the entire warp and woof of the financial system and in addition to touching upon Dogecoin made mention of a penny stock called Hometown International (HWIN).
Strange things happen to all kinds of stocks. Last year, on one day in June, the stocks of about a dozen bankrupt companies roughly doubled on enormous volume. Recently, the Wall Street Journal reported a boom in penny stocks. Someone pointed us to Hometown International(HWIN), which owns a single deli in rural New Jersey.
The deli had $21,772 in sales in 2019 and only $13,976 in 2020, as it was closed due to COVID from March to September. HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing!
For want of doubt, here is what a $113 million business looks like in a world where JayPo and his mad money-printers keep talking “economy”, but are actually inflating the bejesus out of anything that can be traded.
Alas, just when you are ready to completely despair, along comes an analyst we never heard of named David Kimberley. The latter works for a publication called Freetrade, which we also never heard of, and told Express.co.uk:
“People are buying the cryptocurrency, not because they think it has any meaningful value, but because they hope others will pile in, push the price up and then they can sell off and make a quick buck.
“But when everyone is doing this, the bubble eventually has to burst and you’re going to be left short-changed if you don’t get out in time.”
But here’s the thing. How can you expect the kids to not go bat-shit crazy in the middle of a biblical mania when the so-called adults in the room have lost all contract with reality, as well. We are referring to another shareholder letter of recent instant notoriety, this one from the very head of the nation’s most profitable bank, Jamie Dimon of JPMorgan.
For our money, you could not possibly dense-pack more delusions into one sentence even if you tried for a month of Sundays.
“I have little doubt that with excess savings, new stimulus, huge deficit spending, more QE, a new potential infrastructure bill, a successful vaccine, and euphoria around the end of the pandemic, the U.S. economy will likely boom. This boom could easily run into 2023 because all the spending could extend well into 2023.”
For crying out loud. If bankers are supposed to know about anything, it’s the basic truth of double-entry bookkeeping. Does this preening corporate peacock think that all those deficits, all that spending, all that money-printing, all that free stuff temporarily lodged in checking accounts at JPMorgan et. al. has happened with no offsetting cost?
For instance, couldn’t an 8th grader tell that there is something very fishy about the chart below?
Last year total government spending in the US (including state and local government) grew by the staggering sum of $1.825 trillion. That happens to be nearly 5X the gain that occurred during the depths of the Great Recession in 2008, and towers above all else that has come before.
The question might present, therefore, as to what happens when government spending returns to a semblance of normalcy, how long will it take and how are these trillions being financed in the interim?
Beyond that, if it has generated the kind of welcome and awesome economic Boom implied by Dimon’s shareholder letter, why has it taken the politicians so long to discover the purported magic of this kind of government spending bacchanalia?
YoY Change In Total Government Spending (billions), 1980-2020
Presumably, Dimon still recalls that there are no free lunches. So why would he not be waving the red flag, as have sober bankers for decades upon decades before, about the long run costs and pain of the eruption of deficit finance that made the above spending surge possible?
For want of doubt, here’s the annual change in the public debt (market value basis) since 1980. At last year’s staggering $5.8 trillion gain, we are truly in the nosebleed section of history. That figure is actually 23X larger than the $250 billion gain back in 1982, when the outbreak of the Reagan deficits scared the wits out of not just your editor, but practically all of Capitol Hill on both sides of the aisle and absolutely the entirety of the banking fraternity on Wall Street.
Of course, back then they knew that deficits have to be financed and were under no illusions that Tall Paul Volcker was prepared to do it the easy way at the Fed’s printing press. That is to say, the Jamie Dimon equivalents of the day knew it would cause havoc in the bond pits if financed honestly out of the nation’s savings pool, and to a man (there were then no women or theys at the top of the banking fraternity) were resolutely opposed to the Reagan deficits.
YoY Change In The Gross Public Debt (billions), 1980-2020
Nowadays, of course, the Fed has cranked up its printing press to a red hot level of RPMs, which folly did temporarily delay the due bill. Then again, last year’s $3.2 trillion gain in the Fed’s balance sheet exceeded its entire accumulation during the full century between it creation in 1913 and 2013.
Needless to say, printing money at $3 trillion a gulp is a financial monstrosity that no Wall Street banker would have embraced, as did Dimon, even a few years ago.
Explosive Growth of the Fed’s Balance Sheet, 1980-2021
Among other things, worldwide central bank money printing like that shown above has generated a stampede into risk assets, especially equities on the grounds that central banks will not let prices fall materially or for any sustained period of time.
According to B of A calculations, in fact, the inflow to global stocks during the past 5 months ($569 billion) exceeds the inflows during the prior 12 years combined ($452 billion)!
Is it any wonder that money loosing machines like Tesla are being valued at 1200X its phony net income or that hole-in-the-wall deli’s in New Jersey command a market cap of $113 million?
If you want any evidence that its been the raw power of cash stampeding into the Fed’s casino that’s fueling today’s mania – big caps and small caps alike – look no farther than the Covid home arrest winner, $241 billion market cap Netflix.
In a word, finally after being handed the greatest captive audience in human history, Netflix managed to generate $1.9 billion of operating free cash flow during 2020. That came after $10.7 billion of cumulative negative free cash flow between 2012 and 2019.
Still, notwithstanding the Covid bonus point bulge in the 2020 figure, Netflix is still being valued at 125X free cash flow.
And that’s a “boom” alright. The kind that shatters everything around it when it ends.
Netflix Free Cash Flow Versus Market Cap, 2014-2021
Nor is the absurd overvaluation of the likes of Tesla and Netflix the extent of the damage. It is becoming more evident by the day that Silicon Valley has gone Woke Socialist and makes no never mind about the financial consequences because it is sitting on the world’s most phantasmagorical collection of inflated stocks.
Ever since Twitter kicked-off from its platform its very best customer by a country-mile, it has been evident that business-impairing leftist virtue-signalling is cost-free to Silicon Valley.
For instance, when the Donald got banned permanently on January 9, 2021, the company’s stock was valued at $41 billion. From time immemorial, of course, the loss of a monster customer has always taken a heavy toll on a company’s stock, but no more.
Twitter is now valued at $56 billion. No sweat!
But that’s barely the half of it. The more CEO and founder Jack Dorsey has styled himself as some present day Rasputin, the more Twitter’s stock has risen, notwithstanding its abysmal financial results.
Back in June 2015, for instance, the company’s market cap weighed in at $11.5 billion on the strength of LTM free cash flow which posted at $293 million. Accordingly, its free cash flow multiple back then was a not shabby 39X.
For the LTM period ending December 2020, its free cash flow figure posted at, well, $119 million, representing at 59% drop over the five year period. So at today’s market cap of the aforementioned $56 billion, its free cash flow multiple weighs in at an absurd 471X!
Twitter Free Cash Flow Versus Market Cap, 2015-2021
So, yes, Jack Dorsey’s $5 billion fortune has remained fully intact and has actually grown by leaps and bounds, even as he has gone full retard wokester.
But his latest gambit in that regard should be a clarion call. The Fed’s absurd money-pumping is not only creating lunatic bubbles ranging from Netflix to Gamestop, Coinbase and the $113 million New Jersey deli, but it’s also fostering political monsters like the one pictured below.
It turns out that Dorsey and his Twitter censorship brigade have permanently banned Veritas, the intrepid exposers of establishment hypocrisy and malign endeavors. Their sin in the case was exposing the truth that CNN has deliberately used blatant scare tactics to generate COVID-Hysteria.
After Veritas sent in a comely “nurse” to patrol the bar scene where New York media types hang-out and got a CNN producer to spill the beans on a (hidden) camera about how running and hyping the Chyron of Covid Deaths stimulates record viewership, you would think Twitter should ban CNN.
No, Rasputin banned James O’Keefe for exposing the truth.
With this kind of mainstream media truthless-telling, it is no wonder that we had this showdown on Capitol Hill last week between Congressman Jim Jordan and Dr. Fauci.
“You can say I’m ranting,” Jordan went on, “I am actually asking the questions that the citizens I get the privilege of representing – and my name actually goes on a ballot. I don’t think your name has ever been on a ballot.”“My name goes on a ballot,” he added. “The citizens I represent want to know when they are going to get their liberty back.
Fauci’s reply tells you all you need to know. Liberty was once protected by the US Constitution. Now thanks to the censorship and propaganda of the CNNs and Jack Dorsey’s, it but a nuisance in the way of the state’s “public health thing”.
“I don’t look at this as a liberty thing, Congressman Jordan. I look at this as a public health thing.”
Finally, we have a heads-up from out peripatetic friend, Lee Adler, who always follows the cash. If you are wondering why the 10-year UST rate has stabilized in recent days around the 1.60% yield level, then just consider the perverse mechanics of what Jamie Dimon was celebrating in the quote above.
Over the last several quarters the US Treasury has issued massive amounts of bills and notes, which have been readily digested in the bond pits because the Fed had its big Fat Thumb on the supply/demand scales and scarfed up most of the issues, which would have otherwise found a home at drastically, even catastrophically, higher yields.
However, as it does periodically, the US Treasury has temporarily paid down a considerable amount of paper as part of its balance sheet management operations. Temporarily, therefore, great gobs of cash has been released to the primary dealers to load up on new inventory, thereby momentarily taking the edge off from UST yields.
However, as Lee explains below that’s just a double shuffle. At length, the debts must be paid.
The US Treasury is again going hog wild with T-bill paydowns, announcing $62 billion over the past week alone. There’s actually a net paydown in April, after new coupon issuance. Extra slosh for the party.
And, of course, this week is the Fed’s regular monthly MBS QE purchase settlement week April 14-21. They’re pumping $93 billion into Primary Dealer accounts this week. The dealers have been up against it in managing their bond inventories, and the Fed and Treasury are, as always, doing whatever it takes to rescue them.
So all the explanations that you are seeing in the media about why Treasuries are rallying are just so much BS from the clueless mob. It’s about money plain and simple. The Fed and US Treasury are doing a great job of manipulating prices in the short run by pumping a combined $185 billion into the markets, most of it directly into the accounts of Primary Dealers in a very short period.
We were prepared for and expecting this liquidity to boost the markets this week as usual in the third week of the month, but the additional T-bill paydowns over the rest of the month are a new wrinkle that will add even more liquidity than we expected. The end of month period may not be as dry of funding as usual.
This too shall pass, and we know that the end is nigh!
Yes, it is. The lemmings are in their full-on dash to the sea mode, impelled, apparently, by the hypnotic sound of the crashing waves down below.
Reprinted with permission from David Stockman’s Contra Corner.