Thursday 11 February 2021

Musk, market manipulation and the rhyme of the dotcom bubble

 2021 is so 2021.

First, we have the pandemic.

Second, we have a trumped-up Trump impeachment (he maybe more hurt by the news his twitter ban is now permanent). 

Thirdly, we have Elon Musk.

Now, like him or loathe him, Elon is a very astute man when it comes to creating hype and monetising it. Firstly he helped build paypal, now a fundamental core of internet transactions. Then a whole load of hype and tech based companies, including the very successful Space X, less successful Hyper-Loop and of course the enigma that is Tesla. 

Tesla, via a great product and just incredible amounts of hope and hype, has made Elon the richest man in the world on paper. He has many devoted fans who hang off his every tweet. And he has a strong personality, not a very nice one to judge by his ex's comments, but a strong one. 

And now this week he has pushed Tesla and his own money into Bitcoins and Doge coins. Tesla taking $1.5 billion in BTC has pushed it upwards towards $50,000 per coin. (Doge is a pure fantasy coin that has limitless amounts, pushing it is a pure hype meme in the form of a Ponzi scheme). Saying that Tesla will accept BTC payments for its products though is very smart. Once BTC gains acceptance as a currency with some use other than an electronic store of value, it become a more valuable item. 

Already, using the hype generated by his action, Tesla has made more money on paper from BTC investment than it ever has on selling its nice but very expensive cars. 

How the US financial regulators must be having nightmares, they are now duelling with the world's richest man and his army of fans, all the while trying to stop another reverse robinhood diminution of retail investors funds. 

It is so 2021, social media, dumb money released by the Lockdowns effectively, the power of hype and ponzi all wrapped up for the Regulators. So tempting to call this the late stage bubble. It certainly feels like February 2001 again. But this time, the market is so liquid due to all the Central Bank money printing, the blow-off phase may last for months yet? 


jim said...

They didn't think much to the Ocean
The waves, they were fiddlin' and small
There was no wrecks and nobody drownded
In fact, nothing to laugh at, at all.

apologies to Young Albert

But a bit like the markets, nothing really going on, oil down, energy depressed, old retail bombed, no new inventions, investors scratching around for anything.

Mr Musk looks an old time American inventor in the Edison/Nikolai/Farnsworth mould. But they were back in the days when anyone could pick up a copy of Sci Am and come up with a new gismo and make a mint. That closed down in the '80s, sure, we got the cellphone and the Iphone but what passes for 'tech' is no more than shuffling pixels around in amusing ways and that game is becoming duller and duller.

So far as amusement goes Musk is one of the few games around. His followers and competitors must feel they ride a tiger - will the leccy car really take off or go niche. At least Musk's cars can tow a horsebox, something that must bother JLR and the Chelsea Tractor makers. Everyone in that trade must be a bit twitchy about hype and keeping their ejector seats primed. Makes for a nervous market.

Thud said...

The smashing up of America via social media is both fascinating and scary. Its also fun trying to watch the fed etc trying to play catch up with tech savvy individuals like Musk, I have no idea where this is going.

andrew said...

The SP of TSLA is nuts. I said that 3 years ago. It is many times more nuts now. It may become many times more nuts in the future.

At some point someone will ask where the FCF is at which point the SP will fall.

In the meantime he is busy turning something that was just over MVP - the car was not too reliable and not that great (cheap) on the inside 3 years ago - into something pretty good.

It will be v. interesting to see if he can learn to build nice cars that are electric better than VAG/Toyota can learn to build electric cars that are nice.

On the BTC purchase, someone made a most insightful comment in alphaville.
If I read this right, Tesla has just found a very convenient way to massage profit figures in the future. Bitcoin will at some point take a dive in value (because: Bitcoin) and Tesla will recognise a loss in that quarter. At this point expect lots of talk about how Bitcoin is undervalued, and it's likely that the Bitcoin value has recovered somewhat by the time they recognise the loss. So the Tesla shills and Bitcoin Bros all agree that the loss doesn't count.
Note that this loss is going to be very much overstated on the balance sheet date, since they are marking to the "lowest price quoted...during the period"

Then, whenever the underlying business (including selling cars, alongside the core business of selling carbon credits) is loss making in future quarters, they just sell some Bitcoin and recognise a gain on the booked value. Magic!

E-K said...

He still has to realise his BTC, surely ? Which says it all about virtual coin if my suspicion is correct. It is not behaving anything like a reliable currency yet - it's not stable enough.

It's a bit like saying the UK is good for its £3tn in debt "... because it has housing stock worth £3tn and 1 pence." Trying to realise any significant amount of it causes it to become worth a lot less than £3tn and 1 pence.

It sounds like a credit con to me.

Don Cox said...

Now would be a good moment to sell any BTC that you have.

But what do I know ?

Don Cox

Elby the Beserk said...

jim said...

Mr Musk looks an old time American inventor in the Edison/Nikolai/Farnsworth mould.

Or even the Nikola Tesla mold, one might say?

Don Cox said...

I think Musk is part Tesla and part Barnum.

Meanwhile, Roll-Royce are optimistic about their Small Modular Reactors.

Don Cox

Anonymous said...

Musk pumped Dogecoin while buying BTC on the quiet. Then he announced his purchase and wateched BTC soar.

Anonymous said...

Thud: "The smashing up of America via social media is both fascinating and scary"

I couldn't agree more. America (as in 1776 America, with its attendant freedoms) is over, finished, not coming back. We are watching the collapse of an empire into an ungovernable mess, in real time.

Anonymous said...

We are watching the collapse of an empire into an ungovernable mess, in real time.

They will look back on the Trump years as one of the greatest deals in history - one that makes Musk and his attempts as small change. Reportedly, Trump only ever committed $50m of his own (borrowed) money into his 2016 election campaign and got a whole country in return to do with as he wished.

E-K said...

"We are watching the collapse of an empire into an ungovernable mess, in real time."

The consequence of the Leftist establishment filtering out Reaganism. The only figure that could cut through was a shock-jock Trump of independent means.

I can see where it's all going.

A) Loss of the USA in top slot (or ANY slot by the look of it !) They are/were our primary line of military defence.

B) The primacy of CCP led Chinese empire throughout the globe - very easy to do with a compliant intelligentsia (which we have in the West and in our universities) and a breed of dispensable, mutant elite soldiers backed up by cheap and transportable swarms of drones.

C) Anglo/European achievements in science and space exploration written out of history. It won't be us that sets foot on Mars.

D) This clever dick virtual money thing (deliberately imaged to look like a reassuring gold coin) will only go further to destabilise the West and make the Yuan/Renminbi the global currency.

I have nothing at all against the Chinese people and can but marvel at the CCP but I LOATHE the Western Left and what they have done to us. And far from being able to see what they've done they're doubling down on it all.

E-K said...

Maybe I do have one thing against Chinese people. Dogs. It's not so much that they eat them (as needs must) but that they are cruel to them before they do. Anyone who knows dogs knows how emotionally in tune they are with us and this is not an accident. It's almost an act of betrayal against the most loyal offshoot of the family.

Nessimmersion said...

To see the next trend in the US, consider this:
"Someone once observed the business of America is business. The government is the most widespread business in the country, so with a corrupt puppet as president, the future for consumers of government products or services will be evermore increasing prices for increasingly less quality. As the Sicilians say, a fish rots from the head down and by the time everybody has wet their beak in the taxpayer treasure chest, what’s left over just reflects that chain of corruption.

If you need an example of how quickly the corruption has metastasised under the new regime, consider the XO that Trump signed that mandated pharmaceutical suppliers to supply certain drugs like insulin at only the lowest price it could be bought abroad. If you were a diabetic for instance, that was literally a lifesaver if your circumstances were modest. One of the puppet’s first XOs was to rescind Trumps XO, most probably in exchange for them delaying any announcement of any COVID vaccine until Biden was installed."
Credit to Pointman

Anonymous said...

I live in the States, and everything seems to be ticking on just fine in my medium-sized city. Everyone is friendly, everything is cleaner than in GB, I feel much safer (yes, really -- no loutishness here), I pay half the tax I would in Blighty and get much better healthcare (I know that's not the case for everyone). No Antifa here, no Trump fanatics, no nothing. I did see an anarchist logo spray painted onto a speed limit sign, once. Otherwise no graffiti. Some of our neighbours love Trump, some hate him; everyone gets on fine and puts each other's bins out when on holiday, complains about the weather, etc. Yes, there are weapons everywhere: tons of people have guns and quite a few carry them (legally). But nobody talks about it or brandishes them. If I were self-disciplined enough to ignore politics, I wouldn't have noticed any difference from Obama to Trump to Biden (apart from CV).

It may be chaotic in other parts (NY/Cali, but again I only have the media to go on, and that could be nonsense), but here everything is peachy. Don't

Of course, a Russian peasant in 1917 in some Siberian province might have written something similar, but by 1919 things would feel pretty different. I'm well aware of that. But I can only talk about what I see in front of my eyes. It ain't the same as what I read in the papers.

-- EC

E-K said...
This comment has been removed by the author.
E-K said...

Nick. I would add to that list of Chinese attributes: Talented.

The Chinese are so immensely talented that when you get a 5-year-old Chinese playing a flawless piano concerto it's shrugged off by snobby Westerners almost as though "... ah - but it doesn't really count. He's Chinese."

And the difference between our own Olympics opening ceremony and Beijing's ? It wasn't that ours was any good, it was that it was rock'n'roll shabby entertainment. China showed us such endless and exquisite performances it was like trying to take in the artefacts in London's museums in one day. That you see one Farberge egg, maybe two... maybe three - then after that it's "not another f****ng Faberge egg."

If there is such a thing in the UK as unconscious racism then it's towards the Chinese. Despite having been here for centuries they remain our invisible people. Only valued for providing our takeaways though we know they give us so much more than that.

And on that. Oriental music. That's real Left side/Right side thinking !