World’s Most Speculative Mania?

The western media – especially any mainstream U.S. news source – has made it a habit to blame the world’s problems on Russia and China.   The U.S. economy is aces – when the U.S. stock market drops it’s China’s fault.

Bloomberg published a report yesterday which presented China’s commodities futures market as the world’s most speculative mania:

What started as a logical bet — that China’s economic stimulus and industrial reforms would lead to shortages of construction materials — quickly morphed into a full-blown commodities frenzy with little bearing on reality.  Bloomberg News

But let’s put China’s commodities trading frenzy in the context of the stock that I estimate is the biggest corporate Ponzi scheme in U.S. history:

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AMZN trades at a trailing GAAP p/e of 562x.  I use the term “GAAP” here quite loosely because there’s GAAP and then there’s Jeff Bezos GAAP.  It trades at 23x book value, 30x tangible book value and 40x EBITDA.    Bezos claims that AMZN threw off  a couple billion in “free cash flow” for Q1.  Yet, if this is a provable fact, how come AMZN’s cash balance declined $3.4 billion from the the end of Q4 2015 to the end of Q1 2016?   Someone is not telling the truth…

It did not hit me until this morning (this was well before the Zerohedge article reporting a similar concept later in the day) that the reason the SEC and Congress do not open an investigation into Amazon’s accounting is because Jeff Bezos owns the Washington Post. That’s a very powerful weapon to dangle in front of a Washington, DC politician or bureaucrat.

AMZN stock hit an all-time high today because some chode from a Wall Street bucket shop issued a “buy” with a price target of $1,000.  The analyst did not have any specific fundamental reasons for why the stock was worth $1,000/share.  But then again, I’ve never seen anyone besides this blog and a few others attempt to hold these Wall Street hand-puppets to any reasonable degree of accountability.

The Bloomberg article references the the Dutch Tulip bulb mania of the 1600’s and the internet bubble of the late 1990’s in the U.S. when referencing the frenzied activity in the Chinese futures markets.   How convenient for Bloomberg to overlook that the fact that the greatest investor fraud of all-time is domiciled right here in America.

Yes, I suppose just like Bloomberg’s assertion that Chinese commodities futures “started off as a logical bet,” at time in its infancy as an online book reseller Amazon’s stock was a logical bet.   But fueled by Fed money-printing, regulator-enabled fraudulent accounting and extreme investor greed, Amazon stock is the embodiment of a financial system that is completely corrupted to the core.

11 thoughts on “World’s Most Speculative Mania?

  1. “…that the reason the SEC and Congress do not open an investigation into Amazon’s accounting is because Jeff Bezos owns the Washington Post.”

    Makes sense to me. Also I guess the SEC, Congress, Treasury, Justice Department, and lapdog media HAVE to allow some “performance leaders” in the NASDAQ, DOW, and probably S & P, to conduct business recklessly, immorally, and even illegally to pull up the broad index they are in?? Just a guess on my part.

  2. Dave the corporate & political predation on the productive capacity of the west using the price distortion of unrealistic wage deflation(cheap labour) is a matter of historical fact, wether India (the new corporate wage slave state darling, du jour) China , Malaysia or other. Have to agree on Amazon though and your point is prescient, I dont know one person whom owns any of these “tablets” the given reason for the “surprise” jump in earnings…If one company is an example of the desperation in the mist of corporate bullshit…it has to be Amazon

  3. The Washington Post is the CIA’s Pravda. If Bezos “owns” the Washington Post, then the CIA really owns him.

  4. Great story from Casey Research this am. A couple key messages:

    “The biggest 1,500 nonfinancial companies in the U.S. increased their net debt by $409 billion in the year to the end of March, according to Société Générale, using almost all—$388 billion—to buy their own shares, net of newly issued stock. Companies have become far and away the biggest customer for their own shares.”

    “Companies say adjusted earnings give a more complete picture of their business. But it’s becoming obvious that companies are using non-GAAP earnings to hide weaknesses.”

    And this November 2015 article discussing the impact of share buy backs.

    http://viableopposition.blogspot.ca/2015/11/how-corporate-america-dilutes-its.html?m=1

    It seems that corporate executives are well aware of the fact that the low growth economy provides little incentive to invest for future returns. In my opinion, corporate executives see more benefit in looting their companies now for personal gain rather than investing in the future for the benefit of shareholders. Share buy backs reward executives whose compensation is tied to share appreciation. Selling their stock and executing stock options in a rising market makes sense NOW when the vision for the future is void of any optimism.

    “Many critics feel that share buybacks are an artificial and short ¬term way to make it appear that companies have boosted their profits. What it is really telling us is that companies simply aren’t interested in investing their profits or cash on hand in either capital or in purchasing other companies. When the same company that is repurchasing stock is also issuing stock, it tells us that its corner office floor dwellers are being well cared for. Share buybacks ¬ a cruel mirage for investors.”

  5. I agree with your assessment of Amazon but just think if you shorted it 10 years ago how much you would be under water. “The market can stay illogical for longer than you can stay liquid” (grin)

    1. Timing is everything to be sure. Some shorted the housing market ahead of the real estate bubble popping (The Big Short) and did very well. So, some do get the timing right. And many of those who warned of the housing market collapse are again warning of a bubble about to burst. Will it be bonds, real estate, equities, student debt, frackers, banks or all of the above this time?

      Or will it be as the MSM would have us believe? That everything is rain bows, unicorns and lollipops for as far as the eye can see. I don’t recall the MSM warning of a real estate bubble in 2007. Ben Bernanke did not see a bubble in the real estate market. Did he not see it, or was it in his interest not to reveal it? I tend to think the latter.

      I’m guessing that Ms Yellen and President Obama know about the current bubbles, and also know when truth is likely to be revealed. We can expect them to deny reality (as Bernanke did) until the day the bubbles start bursting. I also bet some insiders will be warned ahead of time, the rest of us will get no official warning and wonder what happened.

    2. You are right. Shorting maniacal srocks is fraught with danger. I think these stocks feed off of short squeezes as much as cooked up,non GAAP earnings numbers. It is better to look for weaker, not so popular stocks to short. I myself got burnt with shorting TSLA recently.

  6. I am sure , they will try to blame somebody else at the end.
    We should be very afraid of that , because by doing it they will fool a lot of people again and many of them will fight for them.
    We need French Revolution again !!

  7. Dave … your fighting a “establishment” stock in Amazon … Bezo’s is an “establishment boy”, IE: Time magazine cover …….. so, even though Amazon may be a creative large scale hybrid retail stock selling machine, IMO; you’d be better of focusing your short research into easier targets; like energy or retail companies with soaring CDS’s that are aprox. 60 days away from filing bankruptcy … my 2 cents.

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