Another two weeks and the major global stock markets are still looking as frothy as ever. The spike in new retail investment accounts, the super bullishness around new capital raisings (e.g. SPACs, Ark's 'innovation' ETFs, big promise (and big losses) future technology companies, etc), surging stocks pumped by retail trading hordes (e.g. GameStop by WallStreetBets?)... the list goes on. Everyday I read something that makes me think 'I don't get this' and 'that's nuts'. Interestingly recent market reactions to bullish news have been sluggish and mixed - global markets actually fell after Biden's $1.9trillion stimulus announcement on Jan 14. Although it spiked upwards again at the time of his inauguration, it finished weakly on Friday. A sign of adrenaline fatigue? An improving virus situation may drive the market up some more but the biggest bull lever: liquidity, is already priced in. Is this the final stage of this market rocket?
I think BTC prices is another data point to monitor in gauging investor/horde sentiment. From the hyper-activity at the start of the year, BTC price in the recent weeks have been weak despite Biden/Yellen's massive money printing promises. Some of that is crypto-asset specific. Although the FinCen regulations on disclosures have been delayed, at Yellen's confirmation hearing she said she believes many cryptocurrencies are used for illicit financing and she would favor curtailing their use to stop money laundering. And why not? It's a legitimate concern and additionally why would she want to risk large wealth outflows into non productive and non US assets at this point in time? BTC and crypto bulls may have a rude awakening that nothing is decentralised, nothing is lawless/free - everyone is subject to the rules of the land and those rules are self-preserving.
My hedge position continues to rise and I continue trimming stock positions. I'm below target on a few names but I want to be cautious and patient in my buying. The Valaris chapter 11 refinancing is coming along nicely and I'll focus on special situations like these to keep my portfolio occupied whilst I wait for the next note of this song.
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