Earnings Season, Bank of Canada and Another Default in China

27 thg 10, 2021

The markets continue to behave as if there will always be a lot of cheap money, which means that you can buy at absolutely any price: tomorrow there will be someone who will buy at even higher prices. We already wrote yesterday that for a dollar of Tesla assets in the US stock market, they are now ready to give more than $ 40. Actually, a clear illustration of this discrepancy is the growth of the company's capitalization by 120 billion on Monday for news, which will give an increase in income (if everything works out) by 4+ billion. Roughly speaking, for every dollar of additional income (not even profit), investors gave $ 30. So Tesla can be safely classified as one of the most overvalued companies on the US stock market.

Moreover, nothing lasts forever. And the era of cheap money is coming to an end. Today the Bank of Canada may roll back quantitative easing and give hints of the timing of the rate hike. And the ECB tomorrow may express even greater concern about what is happening and give its hints on future actions.

Meanwhile, another Chinese developer defaulted - Modern Land (China) Co Ltd announced that it had not paid the principal and interest on its $ 250 million bonds. By the way, who wants to earn 1000% + and sincerely believes that everything will be fine, can buy these very bonds, which are now being sold at a discount of 80%.

And the problems with logistics are not going to be resolved in any way. An estimated $ 24 billion worth of goods is located near the two largest ports in California. Apparently, the problem of supply chains from 2021 will smoothly migrate to 2022.

And finally, we recommend paying attention to Robinhood. The company issued an enchantingly disastrous report yesterday. Everything was bad, from weak revenues, which fell sharply compared to the previous quarter, to losses of more than a billion. At the same time, the number of active accounts, active users decreased, and the average revenue per user fell. In general, everything was bad, but the company's shares are still prohibitively expensive.