Taxes up, Q/E potentially gone; world enters "new normal"

15 Mac 2021

The fed brought markets back up, so its probably pretty safe to say at this point that they are equally as capable of bringing markets back down, just like in 2018 when they started raising interest rates.

So taking this into consideration, with everything up so much, and now the addition of massive tax hikes, is there anything else that is capable of sustaining these insane valuations?


"Biden Plans Biggest Federal Tax Hike Since 1993 To Fund Infrastructure, Climate Initiatives", ZH

"Households across the US rejoiced over the weekend as they received their first stimulus checks. And as BofA's team of analysts parses exactly how millions of Americans will spend this money (will they buy washing machines and toasters? Or dump it into crypto/GME?), Bloomberg is out with a chilling report alerting Americans to the inevitable reality that President Biden is about to switch gears from spending to fundraising."

And never forget, take everything I say with a grain of salt!


Cheers

15 Mac 2021

Nota

-tech run has lasted 12 months
-catalyst for tech run appears to have ended as we transition into "new normal"
-Yields increasing; haven't been this low relative to U.S. economic growth estimates since 1966 according to ZH
-fed ending many Q/E programs, but still uncertainty about SLR forbearance..
-evidence of rotation
-most market professionals have credited the sudden and, sort of, "esoteric" move seen in the equity markets last year as the entire world was shutdown to increased liquidity created by record breaking CB balance sheet expansion, so again, with this finally coming to an end, people might view this as a signal that "the party has ended", which could explain the crash in SPAC's and more speculative tickers, even while the Dow has continued to make new all time highs

15 Mac 2021

Nota

“If you told me we would have a pandemic and that global M&A would still be flattish compared to last year, I would have been astonished.”

--Peter Orszag, chief executive of Lazard’s financial advisory business

“I think that when I look back, I don’t think I could have ever imagined any acquisitions happening this year“

--Marc Benioff, CEO of Salesforce, Financial Times, December.31st

15 Mac 2021

Nota

At one point last year, follow-on offerings were even outperforming the Nasdaq by almost 40% POST offering..

"Yet while the staggering amount of follow-on offerings is not news, the performance of companies selling their stock is nothing short of shocking, because whereas in a normal world the association dilution with new equity sales would in theory result in depressed stock prices, the reality of the past few months has been anything but. ...stocks sold in 2020 secondary offerings closed on Tuesday 39% above their offering price on average. That’s outpacing the year’s 28% gain in the Nasdaq Composite Index, a 40% outperformance."

That's INSANITY, by the way! But we all saw it..

Stocks like PEIX (ticker recently changed), GEVO, AREC, WWR; blockchain tickers, EV tickers, even marijuana tickers (SNDL) were all raising money with seemingly zero share price repercussions.

Usually when a company needs to dilute existing shareholders to continue running their operations, the shares are priced at a discount to the existing market price. This also increases the outstanding shares, which tends to scare short term traders, who see larger floats as a negative indicator for momentum, short squeeze potential, etc.