I’ll Be Live at 8:30 Right Here
Good morning: I start with this image from Market Sentiment… The prospect of tossing the most famous book on value investing into the trash cash… and the following… statement.
I am not sure what to say - except this is exactly the “issue” that I’ve been talking about since the start of Me and the Money Printer. There are people claiming that Musk is a genius… or that SpaceX is the most innovative company of all time. Maybe those things are true… But can these people… PLEASE… for all that is holy… take five minutes to understand how the mechanics and structure of the market shifted in the last decade… and how the underlying themes I discuss are what just enabled Musk’s wealth to increase in a day by more than the lifetime net worth of the greatest investor ever… That doesn’t happen by accident. We’re not a market… we’re not a capitalism engine. We're a centrally planned bond market with equity tickets bolted on. Call it Bond Market Central Planning. Call it the Coupon Cartel… But here’s how all of this works. The Fed sets the price of money. The Treasury issues the paper. That paper gets pledged as collateral through three, four, sometimes five layers of financing simultaneously. Banks and other funds lever against it. Hedge funds margin off it. Insurance companies match liabilities to it. The whole prime brokerage system runs on it. That's the engine. Equities aren't really priced off earnings anymore. They're also now priced off leverage availability, and leverage availability is downstream of how much Treasury collateral the Fed decides to leave in the system. That's how one man's net worth jumps in a day by more than Buffett earned in 70 years. The Musk number isn't a market outcome. It's a policy output. Stop calling it capitalism. This is utterly nuts… Now… it’s Fed Day…
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