Market Commentary: Manifest Absurdity

 

Greensill

Today’s FT reported on Lex Greensill’s testimony to Parliament’s “Treasury Committee” as follows:

He insisted that his company’s lending was supported by real assets, although he admitted that up to 20 per cent of the group’s lending last year was based on “future receivables”.

If you’re like me, you probably had to stifle a guffaw on the conflation of “future receivables” with “real assets”.

But if you think a bit more, perhaps in the current environment it’s not so far fetched.

Even sober financial analysts and commentators, including some at the FT, have identified crypto currencies as a new “investable asset class”.

In terms of “real assets” are future receivables any less real than Bitcoin, Dogecoin, or their like? 

I think not.

If that isn’t a sign of irrational exuberance, I’m not sure if there is any sign.

Fairness impels me--note the choice of that verb—to mention that today Jemima Kelly did opine in those very same salmon-colored pages that crypto currencies were a “joke” and shouldn’t be taken “seriously”.

Ark Innovation – Springs a Leak

The FT reported that Ark had lost one-third of its value since its February “high”.

I’d make the same comment I did regarding Tesla’s loss of value.

More accurately, the price is down by one-third.

Value is intrinsic. Price is a market phenomenon.

Also a shout out to Lex, for noting that:

Data from Morningstar illustrate the pitfalls. More than two-thirds of thematic funds outperformed the broad MSCI ACWI index in the year to end March. But go back five years and that drops to below a third. One-fifth of thematic funds did not even survive. Over a decade, just 4 per cent outperformed. As themes go, this one does not inspire much confidence.

Middle Eastern Democracy – Kurdistan Style

Today’s FT “Long Read”--as its actual length discloses it is apparently designed for those with ADD--discussed authoritarianism in Kurdistan.

Not only was I was surprised and deeply shocked to learn that Jeffersonian democracy was not flourishing in Kurdistan. 

But also that corruption was rampant indeed.

Who would ever have thought?

As pointed out in the article, much of the silence on these two topics has to do with geopolitical “considerations”.

So much for making the world safe for democracy or fighting corruption.

At least I suppose one can take comfort that no one has proposed Kuridstan for NATO membership. 

 At least not yet!