The markets keep getting further and further from reality

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How does one measure a "good" financial bubble versus a "bad" financial bubble?
One way of doing that is to look at individual components, like this one.

In 2021, 16 companies either have or are expected to go public with a valuation of over $1 billion despite having zero revenues. That's more than double the number in 1999, three more than in 2001, and two more than in the year 2000, during the height of the dot-com bubble.

The rise in public companies with zero revenues of late is an illustration of a boom in special purpose acquisition companies, or SPACs.

Over 90% of zero revenue companies that plan to go public with over a $1 billion valuation in 2021 thus far intend on using a SPAC to do so.

A SPAC is a "blank check firm" that exists solely to list on a public stock exchange, raise money, and then find a merger partner to take public.

In 2019, 59 SPACs went public. In 2020, 250 SPACs went public. In just January and February of 2021, 170 SPACs went public.
A-Rod and Colin Kapernick have taken part in SPACs in 2021, to name just a few celebs.

“I mean, Shaq has a SPAC. What could go wrong?”
- one economist

Remember that some of these stock offerings are for companies that have ZERO revenue.
We aren't talking about zero profits, like Tesla, but zero revenue.
It enough to make one question the claim that unregulated capitalism is efficient.

Then there's the fact that people can't buy stocks fast enough.
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Last week, they poured $36 billion into funds focused on U.S. equities, the biggest inflow in more than two decades, according to data compiled by EPFR, a unit of Informa Financial Intelligence.

Hedge funds are trimming bearish bets while raising their bullish wagers. Their net leverage, a measure of industry risk appetite that takes into account long versus short positions, climbed to a record this month, according to data compiled by Goldman Sachs Group Inc.’s prime brokerage unit.
The cost of missing out is looming large on investors’ minds with equities having added a stunning $12 trillion to values since March. Valuations rivaling the dot-com era proved no hurdle to risk appetite...

“This isn’t a ‘normal’ market, but as long as it continues to press higher and higher, I think we’re almost forced to own stocks.”

Bears are almost nowhere to be found, with short sales dwindling to fresh lows amid January’s retail-driven short squeeze. In fact, according to a survey by the National Association of Active Investment Managers, the most-bearish group that typically has a net-short position was 80% long in stocks earlier this month before turning neutral.

There once was a time when the smart money bet against the crowd. That time appears to have passed. Now the market is ruled by fear, fear of missing out.

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The bubble goes far beyond just stocks. Bitcoin at $50,000 is a good example.

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And then there's the historic, unprecedented bubble in bonds, as reflected in global negative interest rates.

Germany’s biggest lenders, Deutsche Bank AG and Commerzbank AG , have told new customers since last year to pay a 0.5% annual rate to keep large sums of money with them. The banks say they can no longer absorb the negative interest rates the European Central Bank charges them. The more customer deposits banks have, the more they have to park with the central bank.

That is creating an unusual incentive, where banks that usually want deposits as an inexpensive form of financing, are essentially telling customers to go away. Banks are even providing new online tools to help customers take their deposits elsewhere.

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snoopydawg's picture

and these guys have unlimited credit to play as dangerously as they want because they probably do and we are just pawns that serve them refreshments and they don’t even notice us. I don’t know if it’s separate from this stuff, but banks and hedge funds have received $38 trillion since 2009. Congress is going to talk to them about it again this month. With Porter gone it’s just kabuki from now on. At least she put on a good show. Think Maxine Waters is gonna do anything now? How long has she been in congress anyhow? Nuther race sellout. Anyone serious about reparations for blacks knows the best way is to create social equality in their neighborhoods and to clean up toxic areas where they live. Why hasn’t anyone in the black caucus try to do that! Yes it’s rhetorical but what else.

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18 users have voted.

The donor class doesn’t want it, and Americans elect the bribed. So suck it up.

Humans must not submit to policing by machine.

@snoopydawg
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usefewersyllables's picture

@gjohnsit

is *deafening*, isn't it?

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7 users have voted.

Twice bitten, permanently shy.

@usefewersyllables
There are lots of other reasons too. I would say free trade agreements are a close second.
And corruption is right up there as well.
But central banks bailing out wealthy speculators time and time again is the leading cause of wealthy inequality.

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9 users have voted.

@gjohnsit @gjohnsit

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3 users have voted.

I've seen lots of changes. What doesn't change is people. Same old hairless apes.

snoopydawg's picture

@gjohnsit

That sure stands out doesn't it. Kinda slaps you up the head and says yeah you were seeing things as they were... thanks for including that.

Too many GOP voters believe the hype that businesses should get tax breaks, subsidies because they create jobs and they should be able to pay people whatever they want. Not when it costs the guv lots of money to keep people alive just because they won't pay living wages. They are paying for companies to get those big breaks, but don't see the harm. Can we wake them up?

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5 users have voted.

The donor class doesn’t want it, and Americans elect the bribed. So suck it up.

Humans must not submit to policing by machine.

@snoopydawg
Heh. How do you think that conversation will go?

Congress: Well, sir we've made sure banks and hedge funds have received $38 trillion since 2009, and we feel we deserve a raise.

Banks and hedge funds: You've barely met expectations. Go back and get to work!

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13 users have voted.
usefewersyllables's picture

Good bubble: I make trillions of dollars.
Bad bubble: The government gives me trillions of dollars.

Win-win!

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3 users have voted.

Twice bitten, permanently shy.