Retail investors are as euphoric as in late 2021 The put call ratio and VIX Volatility Index were both low. By January 2022 all three major market indexes had peaked. The S&P lost 19% in 2022.
Investors Feel Bold Again, Wall Street Journal
Consumer sentiment in the University of Michigan survey jumped to 72.6 this month from 64.4 in June. Recall that maximum mood occurs at the end of a move either up or down. That sentiment indicator is maximum mood. Market bottoms are marked by fear and perfectly good stocks are bid down in value. The only fear at this point is the Fear of Missing Out, FOMO. This is why bets on calls (market up) are running 2.5 times bets on puts (market down).
Mania for bitcoin is back. Bitcoin miner Riot Platforms (gotta love that name) is up 458% this year. Artificial intelligence lending platform Upstart Holdings (another great name) is up 342%.
Carvana has narrowly avoided a cash crunch. It is exchanging existing bonds for new which will defer payments. And hey, why not issue $350M in new stock shares while they can? One might think deferring bond payments and interest would be a sign of weakness (it is). But Carvana shares are up 1,077% (not a typo). CVNA traded at less than $10 in May. Today it is about $55. This is a typical parabolic rise seen at market tops.
Inflation has eased but not to the FED’s 2% level. Expect another quarter point hike this next week.
Not mentioned on front pages are the potential negatives tucked away on page nine of major papers. China’s economy is cooling. One in five young Chinese are jobless. The real estate sector cools.
Ford cut the price of its EV Pickup, the Lightning, by $10,000. Ford has held the number one best seller spot with its F 150 pickup for years. Notice the best-selling car is a pickup. Ford does not want to lose that valuable source of income. There is now a 92 day supply of EVs on dealer lots. That is a long time for unsold cars. The EV mania has really existed among Washington Beltway politicians, not the public. The public seems to prefer 4 wd four door pickups with a foot print about the size of a New York City efficiency apartment.
The head of MI6, British Intelligence, sees little prospect of Russia regaining the upper hand. This will not play well in the Kremlin.
Crude oil is trading at $75.91, holding its $5 recent gain. I am still bullish on oil.
