Bubbles are growing, Musk is richer than Gates

25 Nov 2020

The start of the week was again marked by a sharp jump in the level of greed in the financial markets. Just take a look at the CNN Fear and Greed Index to be convinced (the index is in “extreme greed” zone). Naturally, this provoked a massive exodus from safe-haven assets (gold alone lost over $ 75 per ounce in a couple of days). Well, if it has disappeared somewhere, it must arrive somewhere.

The markets do not even try to be selective, to give preference to relatively undervalued assets. On the contrary, the most overvalued and overbought assets are bought. Bitcoin approached 20K, Tesla - 550 (as a result, Musk overtook Bill Gates and became the second richest man in the world). And nobody worries that even less than a year ago, they did not give 4K for the same Bitcoin, and $ 75 for Tesla (price adjusted for the August split).

In general, there is nothing criminal about the rise in asset prices. But what has changed in the world of cryptocurrencies? Were they allowed everywhere, and became full-fledged and commonly recognized payment instruments? Or maybe Bitcoin was introduced as a payment instrument in Google or Facebook? Maybe Testa has increased production tenfold and become a world leader in car production?

The answers are too obvious to be voiced. But the saddest thing is that no one asks these questions. People buy assets simply on the basis of the principle: growth was yesterday and it will be today and it does not matter why it happens, the main thing is: it happens.

The outcome of this approach is obvious. It has been clear since the 17th century, when the Dutch were no less active in buying tulip onions than Bitcoin is now. But nowadays very few people study history.

In the US, meanwhile, Trump, though reluctant, admits defeat and prepares to leave the White House. Biden continues to form his team. The appointment of former Fed chief Jannette Yellen as Treasury Secretary seems like a good idea.

Today a large set of statistics from the US will be published. The fact is that tomorrow in the States the official holiday (Thanksgiving Day). So, the data is published for two days at once. It includes revised figures for the US GDP, as well as data on durable goods orders and jobless claims, personal income and new home sales.