For those old enough to remember the last tech bubble it was given away by the rise of swags of unprofitable firms with vast valuations based upon delusional extrapolations of earnings. Hello Tech Bubble 2.0:
Good morning. Having survived the cold snap intact, FT Alphaville woke from our winter slumber this dreary Monday to find this excellent chart in our inboxes. Now, you might be aware that there’s some particularly speculative stuff going on in the US equity markets at the moment. Whether it’s the ridiculous GameStop saga, the electric vehicle-related mania, or the wider Spac-listed phenomenon, equity exuberance is everywhere. Measuring exuberance, however, is hard. Yet we think this graphic from Ross Yarrow, who is Managing Director of US Equities at Baird, does as good a job as any chart at capturing the general market madness at the moment. Gulp:
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I thought hedge fund deleveraging following the rise of bear-hunting flashmobs might do it. But bubbles have this habit of reinventing themselves. Post-virus normalisation with a little inflation is the most likely candidate to end it.
David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific’s leading geo-politics and economics portal.
He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.
