Elon Musk takes over Twitter

Everything down today. NASDAQ broke support and the S&P 500 crossed the 20 percent down thresshold from its peak, which some people say is officially a bear market.

Maybe the news about Musk's sexual harrasment settlement helped things along in that stock, but it was holding up relatively well compared to a lot of things. It's now 48 percent off its peak, and by any normal market valuation, if so much free money hadn't been pumped into markets, it's still overvalued by a factor of 20 times. It will get down there, unless the Fed pivots. They have each of the times they tried to stop the bond purchases and raise the overnight rate since the financial crisis. The difference this time is the inflation. ... It is forcing their hand.

They have no good choices, and don't even understand what they are trying to manage, so it's difficult to predict how it plays out. From past behavior, my guess is they will tighten and try to let bonds roll of their balance sheet (it starts in a few weeks) until the credit markets break. Bond spreads are already blowing out and high-yield is dropping along with stocks. When they break the credit markets, my guess is they will reverse and end up choosing runaway inflation over the economic mess. We'll see what any of that means for people like Elon Musk who have been the recipients of huge gifts (whether they realized it or not) since the financial crisis and passed it off as genius.

 

Unfortunately, the board of directors is controlled by Musk -- it's him, his brother, and several friends like Larry Ellison, Antonio Gracias, Rupert Murdoch's kid. When you combine the large stake Musk owns in the company with institutional shares (people like Ron Baron) that are crawled up Musk's butt, that board is as good as him doing whatever he wants.