Where finance and media intersect with reality


Spot Markets Live, 29/11/23 (Gamestop, Chinese IPOs, European periphery growth)


Comments in bold addressed to audience members

JR = Julian Rimmer (Resident Boomer and former EM markets pro turned writer.)

DGG = Dario Garcia Giner (Resident Zoomer and former corporate investigations pro turned meme stock watcher and in-house drone expert.)

10:30 JR: Good morning, Aloha and greetings fellow market wizards

This morning’s forum is brought to you from two locations:

The Boomer is sat in the back of his wine shop, currently infused with the smell of stale wine as I dropped a box of rosé in here yesterday

Meanwhile down there ina different continent altogether, the dark heart of Africa, our very own Marlow and geopolitical Zoomer, Dario

Good morning

10:32 DGG: Good morning!

10:32 JR: So please remind me where you are exactly

10:33 DGG: I’m in Melilla today – a Spanish enclave in the north of Morocco’s coast

A very beautiful place – was extremely wealthy during the best time to be (mid 19th century) so you know our architectural style is on point

My Visit to Spanish Morocco and the City of Melilla – Travel Shop Girl

Yesterday we ate contraband fish – the only type of fresh fish available in Melilla

10:34 JR: I think you’re in an exclave

10:34 DGG: The fish is smuggled on jetskis every evening

Because the border with Morocco is closed for goods

So only well connected restaurants can get the best fresh fish

A very strange and curious city filled with Art Deco and definitely worth a visit

My Visit to Spanish Morocco and the City of Melilla, Melilla, Spain (B)

10:35 JR: It’s the kind of thing we never saw James Bond do: deliver fish on jetskis

So much bootlegging aside, let’s look at markets

A brief miscellany

10:36 DGG: So we’ve woken up to some very interesting news from meme-stonk land

Gamestop is going up n up today

10:36 JR: Oh, no, not Gamestop again?

It’s the original meme stock

10:37 DGG: For a meme stock movement always more focused on hype than fundamentals (whatever the more serious posters claim) today’s movements are shrouded in mystery

Very much so – it’s the OG Julian

The only tangible news surrounding this share price shift is the expectations that Gamestop’s Q3 2024 earnings MIGHT indicate the company has turned around a profitable quarter

A remarkable turnaround for a once beleaguered vendor

10:37 JR: It’s made money? whatever will they think of next?

10:38 DGG: That’s a rarity nowadays

“While there isn’t a specific catalyst related to business fundamentals for this short-term reversal, the most plausible reason is the stock’s extended stay in oversold territory since September. The 14-day Money Flow Index (MFI) has been trading below 20 for the first time since July 2019, signaling an overselling condition. Additionally, the Relative Strength Index (RSI) has been hovering very close to oversold territory since mid-October.”

10:38 JR: Esp among meme stocks

10:38 DGG: A Bloomberg piece reflected the wild change in movement

“Options in GameStop Corp. are seeing wild volume as traders bet that the stock will rally 50% in little over a week.

A Dec. 8 $20 call option changed hands 17,500 times by midday in New York. The vast majority of the positions were newly opened and traded in small blocks throughout the morning — a sign that appetite could be coming from individual retail traders.”

10:38 JR: Was there a catalyst for this latest outbreak of insanity?

10:39 DGG: This is the most curious bit Julian. For a meme stock community always focused on wild speculation, hopes and dreams, and intrigue, it seems like nobody’s more surprised at the recent sharp increase than the Gamestop meme stockers themselves

10:39 JR: Yes, because last time wasn’t the driver that were lots of institutional shorts, but now?…

10:40 DGG: The conspiratorial narrative goes that the shorts are still very much active but concealed due to the shenanigans of Ken Griffith’s Citadel – and are having trouble covering them because of the GME crowd’s effort to directly register their shares so they can’t be loaned out

Something that will laed to the Mother Of All Short Squeezes – the MOASS – which is essentially a theory that GME is the biggest hedge against the performance of the American economy

Now – I don’t think this is why the stonk is a ‘meme stock’

I’ve always claimed that meme stonks arent about fundamentals and strategy (like WSB or Superstonk – the subreddits involved – claim) or that it’s about really dumb retail money (like the mainstream)

10:41 JR: Fool me once, shame on you. fool me twice, shame on me? I know George Dubya struggled with that adage

10:42 DGG: Meme stocks are fundamentally political plays driven by a narrative which pits the rogue, impoverished retail trader against rich hedgies

This is what determines whether a meme stock is a true ‘meme stonk’ – like GME or BBBY rather than a simple pump n dump


We will watch this space!

10:42 JR: The rogue impoverished retail trader…. i’m not convinced by that trope

10:43 DGG: Shall we move on to bigger things Julian?

10:43 JR: Yes, interesting times as we approach the end of Nov as we finish a startlingly strong month, confounding many

XAU now over $2040, XBT $38k and UST10YR @ 4.5% just three of the more surprising moves we’ve seen

DXY now down to 102, lighting a fire under EM

A month go, DXY touched 107 but as punters continually bring forward the expected date of the first rat cut

The dollar index slides

This is pretty much a fucntion of rate differentials, though

So once mkts start discounting rate cuts from all the other central banks later in the year, I would expect DXY weakness to be arrested

Bill Ackman is the latest high profile hedgie to call for a rate cut from the fed in 1Q24

Yesterday, gold, oil and bitcoin all very strong but while I like gold (central baks buying) and I like bitcoin (cheaper funding, better r etail sentiment) I’m still not a fan of crude here

I’d be wary of chasing oil given the desperation of oil producing countries generally to open the spigots and sell everything they can

VIX still hovering below 13 is the most crucial indicator of becalmed sentiment

10:48 DGG: The only thing I know about VIX is from that scene in the Big Short

10:48 JR: I saw the film but don’t remember that scene. Was Margot Robbie involved in it?

10:48 DGG: Fortunately for me, who’s rewatched the movie like 20 times, yes Margot Robbie features in at least one scene.

10:49 JR: But was she in the volatility scene? She’s certainly caused some metaphysical volatility in her time

10:49 DGG: So, apparently it was the results of the 7 year bond auction which caused the curious VIX spike for half a second before coming back down

10:49 JR: That looks like a fat finger to me

10:50 DGG: What’s that?

10:50 JR: Someone keying something in inadvertently

Happens a lot

And in fact caused the eventual bankruptcy or failure of knight securities about 10 yrs ago

10:50 DGG: That’s kinda hilarious

10:51 JR: Some dramatic moves last night in Chinese ADRs

The world’s largest food delivery business,

Meituan MPNGY US

10:51 DGG: Crazy – I’d never heard of ’em

10:52 JR: ADRs fall 11% last night after it  warned that demand is slowing and promotional spend is on the rise

As Chinese diners venture back out post the pandemic and order in less.

(ordering more hairy crabs and chicken feet, no doubt)

Similar post-Covid patterns to those observed elsewhere and inline with recent consumer data demonstrating punters value the experiential since lockdown. Food delivery is a rubbish business model.

10:53 DGG: The idea that food delivery is essentially being funded by pension funds and other generational wealth to deliver goods to Gen Z’ers strikes me as the one positive wealth transfer happening in this generation

I like!

10:54 JR: Food delivery is a play on human sloth

Just like bitcoin is a play on human gullibility

10:54 DGG: offended gen Z noises

10:55 JR: But while both commodities are limitless, i’m just not sure you can ever charge enough to make money delivering a hamburger

Another sizeable ADR mover yesterday was PDD, the Chinese retailer

Whose online app, Temu, competes favourably against the like of Shein and Amazon with incredibly cheap offers.

10:55 DGG: Is this like Alibaba?

10:56 JR: Again, I did some home-based research by asking my daughter what she thought of Temu

And she was exhausted by my questioning yesterday on Shein so today she only offered a one-word judgment on Temu from her student bed at 10am


10:57 DGG: That works!

10:57 JR:

10:57 DGG: Speaking of China, the Asia Times has reported that Zhongzhi’s collapse – the shadow bank – could be even bigger than Evergrande

The news comes as beijing’s police announced the launch of a criminal probe into its wealth management unit – which reported a net liability of 260bn yuan ($36.5bn) last week

10:58 JR: Big numbers

10:58 DGG: Several individuals were arrested, including a person believed to be the nephew of the firms’ late founder – accused of being involved in illegal fundraising activities and other crimes

“The company said it’s not easy to liquidate its assets, most of which are bonds and equities that are now undervalued. It seems to be telling the public that its net liability may actually be more than 260 billion yuan.”

10:58 JR: (contraband hairy crabs?)

10:59 DGG: All of this comes after news emerged this August that the National Financial Regulatory Administration of China – its financial regulator – set up a taskforce to examine Zhongzhi after an unnamed former employee claimed at least 350bn yuan of Zhongrong’s wealth products (a Zhongzhi subsidiary) had stopped payouts

10:59 JR: I think you definitely want to call the regulator about that

10:59 DGG: And speaking of failing audits

The Pentagon has now failed its sixth independent audit in a row for the sixth consecutive year

The Pentagon failed an independent audit of its accounting systems for the sixth consecutive year, a Pentagon official said Wednesday.

“The audit consists of 29 sub-audits of the department’s services. All must pass for the overall audit to receive approval.

To conduct the audit, 1,600 auditors conducted 700 site visits and assessed $3.8 trillion in assets and $4 trillion in liabilities, the Pentagon said.”

10:59 JR: Do we know why?

They spend too much on Viagra?

11:00 DGG:

Old systems for tracking funds, a slow bureaucracy, and the sheer size of the U.S. Defense apparatus have kept audits from passing since they began in late 2017.

11:00 JR:

News Image

More than a million prescriptions are paid for every year, and many go to retired personnel.

11:00 DGG: But it’s not all bad news for the Defence Department’s CFO, who told reporters “things are showing progress”

(After the sixth consecutive failure)

And that “we need to be doing better at this and moving faster”

(After the sixth failure for the sixth year in a row)

Speaking of failing attempts

Britain’s CMA has announced a tentative deal by Adobe to purchase cloud-based product design platform Figma for $20bn would “eliminate competition in the software markets for product design, image editing and illustration”

The CMA has provisionally found that the merger could harm competition in design software markets, effectively blocking the deal until its concerns are addressed.

11:02 JR: Who owns Figma?

11:02 DGG: Apparently a bunch of shares are owned by its co-founder Dylan Field, but I’ll have to dig deeper
11:02 JR: That’s a chunk of change

As we approach the final month of the year it seems like investors are trying to compensate for a difficult 2023 with a final feeding frenzy into YE

A JPM Morgan survey of treasury clients shows speculative investors are the longest they’ve ever been

78% were long relative to benchmark,

This compares to 56% just a fortnight back

Equity investors also demonstrating irrational financial exuberance (especially when considering the reason yields are falling is because many think a recession possible)

But BAML recorded inflows of $2.6bn into equities last week and there are still billions tied up in money-mkt funds that will most probably be released into stockmkts sooner or later

So, Dario, commodities are rallying on a weak $ rather than growth expectations and did you see copper jumped yesterday?

11:06 DGG: Yes I saw

11:07 JR: Panama’s supreme court voted against 1st Quantum Minerals’  new copper project, the Cobre Panama mine in Donosa.

First quantum have a 20 year contract with the govt and an option on a 20-year extension.

Or they thought they did

The mine has been unable to operate for a week as the boats blocked the port bringing supplies.

This is 1% of global output

Panama runs a fiscal deficit of 5%.

And this will increase that fiscal deficit by 10%

Do you think this decision is political or environmental, DArio?

12:09 DGG: The country’s President has followed the supreme court’s unanimous ruling to announce they will shut the copper mine – which accounted for about half of Quantum Minerals annual production – and is widely expected to go to international arbitration

A combination of several factors – I think the President has decidedly sided with the protesters because

A) Long running crisis in Panama – especially the brutally stark inequalities that always seem to get worse

b) The lack of rainfall is forcing the operation of the Panma Canal to slow down – as we saw last week, it relies on sweetwater – and this is ascribed to the mining projects int he country by the protesters and environmentalists

c) That there are Panamanian general elections in May

11:10 JR: Surprise, surprise

11:10 DGG: Expect something to change after that

But this doesn’t round off the bad news for copper

Workers in the Las Bambas mines in Peru, which produce around 2% of global copper supply, have begun an indefinite strike over a profit-sharing dispute

Izzy lol

Worse comes to worse I can jump the fence. Much easier to jump into Morocco than into Melilla

11:12 JR: We actually highlighted a report by I think MS recently which was moderately bullish on copper but with supply tightening, i think the picture looks better and better even if copper stocks themselves arent particularly cheap

Just to point out at this juncture, in light of DArio’s illegal piscine activities, that T he Blind Spot does not encourage criminality in any shape or form

11:13 DGG: (I do, if it involves piscine activities)

11:13 JR: On that note, Izzy cycled over yesterday to Kew, like on of Orwell’s nuns cycling through the mist

And given her electric bike looked unstoppable I doubt she halted at any red lights on the way back

Yet more criminality from the blind spot team

Speaking of criminals…

Elon Musk

11:14 DGG: Goddamn it Julian, not again

11:14 JR: TSLA

First shipments of the cybertruck on Thursday apparently

Who do you think is the logical buyer for this ‘vehicle’?

@marksnow -100%

11:15 DGG: I think anyone who enjoys zombie movies, packs an AR-15 at home, or who has a shelter filled with a variety of tincans for an apocalypse they will frankly not survive

Honestly – I would buy it

It strikes me as the iPad of cars. Everyone makes fun of it until it becomes the new standards

11:16 JR: I think the average buyer of the cybertruck is someone who shouldn’t be trusted with metal cutlery let alone a firearm

11:16 DGG: (thats the fun!)

11:16 JR: Just some random speculation here, Dario, a question pointedly for a Zoomer… do you think Elon Musk …


I stopped myself

He was born in South Africa

So cant run for president

But that would be the logical conclusion to his career and in fact, he can probably afford to lobby t o have the constitution amended in his favour

11:17 DGG: What’s an adequate comparison to a Roman historical figure for Elon

Clearly he’s a Caesarian

11:17 DGG: Populist

A flair with the pen but awkward irl

Augustus? Or maybe I’m giving him too much credit

11:18 JR: Another remarkable shift in popularity


11:18 DGG: I vehemently oppose that acronym

11:18 JR:  The so-called PIGS are suddenly market darlings at the expense of established credits like France and Germany.

Look at the changes in spreads on peripheral bonds highlighted by Multipolar market.

11:18 DGG: Why is that?

11:19 JR: And while you’re at it, look at the growth forecasts for 2024

11:20 DGG: (I don’t think there’s any universe in which Trump doesn’t cinch the Rep nomination. Haley as VP. You heard it here first)

11:21 JR: So I think Germany and France have real difficulties growing, especially Germany as its manufacturing model depended on cheap energy from Russia whereas the so-called PIGS took their medicine a while back, reformed some things, made some cuts and are able to grow faster from a smaller base

11:21 DGG: I guess also the PIGS have nice tourist money coming in which the core doesn’t have that much of

11:21 JR: I should have mentioned the return of tourism after pandemic

11:21 DGG: And speaking of Spain – the FT reported that Spanish inflation fell further than expected to 3.2%, since lower tourism and fuel prices pushed inflation lower than expected

Core inflation in Spain has now gone from 5.2% to 4.5%, our lowest level since April 2022.


Even if our economies are supposedly growing – a worrying article on Euronews claimed 38% of Europeans no longer eat three meals a day due to their precarious financial situation

The figures being particularly high in greece and moldova

Or maybe they’re just fans of intermittent fasting?

11:22 JR: I ‘d be interested to know the obesity stats in these countries

And also if portion sizes are exactly the same as they were a generation ago

11:23 DGG: Speaking of being overweight, I found a very good chart from Bloomberg on the overperformance of the magnificent 7 versus the rest of the S&P493

Another nifty chart from Bloomberg suggested the S&P7 stocks are as overvalued as ‘nifty fifty’ and tech in 2000

11:25 JR: This is something we have discussed of late and I still think as we head into a low growth year in the US, investors will pay a premium for growth and also the bigger the companies, the less susceptible they are to higher rates because their debt has longer duration

11:25 DGG: Mark – M&S is the only place where the beef sold is of excellent quality and bang for buck. I almost barfed at a Waitrose burger a few weeks ago – and it still cost a pretty penny

11:26 JR: Just one more item


US home prices rose 4% in the last yr. even though bond yields/ mortgage rates are rising it appears no homeowner wants to ever sell at a lower price

(because that’s not how property ownership works, right?)

So as a consquence, there is very little by way of supply

Marksnow – did you see Milei is converting to Judaism?

11:29 DGG: Oh my God

11:29 JR: He’s definitely going to cut spending now

11:29 DGG: On that incredible note

11:29 JR: Nunc tempus taciendi

11:30 DGG: הֱיה שלום

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