Wrap

Fairly risk neutral today. AirBnB IPO’d with a pop of 100%. The bubble stocks are bubbling. Yield curves are bending down, slightly. Currencies have no clear direction. The yen was up, the euro down. The ECB is continuing QE, but the market had already discounted the move. Boris Johnson is saying that we’re heading for a “No Deal” outcome from the Brexit talks, the pound is down about 0.7% vs the USD. More against the Euro. Coal stocks are being aggressively bid up.

Recent trends

I was too lazy to write anything very structured today, but I thought I’d make a few notes of what seems to be defining the Zeitgeist at the moment.

Asian currencies getting some interest. Increasing clamour for repeal of Section 230 which protects Facebook from libel (defining it as a platform, not a publisher). We are possibly in a liquidity trap, or in some way in a domain where classical ideas about the relationships between interest rates, investment and saving have broken down. Bitcoin is getting a lot more attention as a ‘real’ asset. (I am starting to reconsider my view that it is only one amongst 8000 crypto currencies so should not have a distinguished position: PayPal is starting to allow ordinary users to hold it in their accounts. I gravely overestimated the ability of the average person to install a cryptocurrency wallet on their PC and not lose their private keys.) Tesla has simply powered through all normal valuation barriers. I is as detached from any rational valuation metrics as bitcoin is, but more so. It is dangerously near the point when it can simply buy out all the competition, so it might even be worth it! Paul Samuelson pointed out that the economy is not the stockmarket, but the two have never been as divergent as in 2020. 2021 should see a recovery in the economy, but by the same logic, it could see a collapse in the stockmarket.

Many measures to counter the impact of Covid have had a regressive impact on the economy. Low wage service sector workers have been forced to be exposed to the virus, while professional staff have saved hours of commuting and been given new PCs by their employers. Monetary policy has put a rocket under asset prices.