(WCTW) Animal Spirit Is Back, Craziness In The Market

Hide yo kids, hide yo wife, hide yo husband, the Reddit P&L screenshots are back.

Do you smell that? What is that?

That's the smell of money.

Bling, bling, bling. That's what everyone's doing on Twitter right now.

Do you want to see my P&L? Did you buy Nvidia?

And just when you thought the chest bumping and the cheering couldn't get any louder, there's the crypto crowd. Can you believe it? We've finally broken out and Bitcoin is at $84,000! Michael Saylor is the Jesus of our era, we are finally saved.

All kidding aside, the animal spirits have returned. Following Trump's victory, Tesla shares are up an astonishing ~39%. Never mind the fact that nothing has fundamentally changed with Tesla and Chinese electric vehicle makers will continue to dominate the mass market segment (thanks to insanely cheap prices).

Perhaps there's something to be said about Elon Musk's bravery and ability to make insanely good calculated bets (betting big on Trump). Shareholders should value that highly and apply a premium to the stock. But is it worth a ~39% bump?

I don't know, but this is definitely not normal.

And then there are other segments of the market that make you just shake your head a bit.

Oil, for example, has traded lower following Trump's victory because 1) people are expecting fewer geopolitical conflicts and 2) drill baby drill. I've seen comments after comments about how oil is going to fall into the $60s because Trump will incentivize more production. We wrote about this topic numerous times last week, and we highly recommend readers to read this and this.

We don't think current oil prices will incentivize more production at all. In fact, we expect production to fall if WTI averages $65/bbl. But sentiment will be sentiment and as long as people believe that something will happen, animal spirit will take over and reality will be ignored.