• Sat. May 25th, 2024

Gazing at new year’s ball


Dec 31, 2023 #ball, #Gazing, #years
Gazing at new year's ball

There’s a general feeling among Wall Street’s top players that 2024 is going to be a really insane year — far eclipsing 2023 in terms of crazy town. That says something, of course.

In 2023, lots of weird stuff went down: A former president, who might be our next president, was criminally indicted a bunch of times. Recently, a Senate aide was caught filming some amateur gay porn (as opposed to the real stuff) inside an upper-chamber hearing room.

Still, predicting inordinate weirdness is a fool’s game because most such extreme predictions often never materialize. If Armageddonists were right about the environment in pushing all those dopey ESG mandates, the East River would be covering Manhattan and I wouldn’t be hosting a dinner at Elio’s this week.

So in pulling out my 2024 crystal ball, I’m going to focus on stuff I think has a better-than-even chance of actually happening. In no particular order of importance, here are my not-too-extreme predictions for 2024:

Meme team maiming

Meme-stock investors will continue to get creamed. If you don’t believe me, just take a gander at the social-media hysteria surrounding something called MMTLP, a delisted preferred stock that attracted an insane amount of interest from the meme crowd in 2022.

The meme money — retail investors who seek to prop up shares of balance-sheet-challenged companies — plowed into something that was supposed to be a stake in some oil wells somewhere in West Texas. That’s not why many bought this thing, however.

Memes still think they can get rich and stick it to the man like the protagonists portrayed in that dumb meme-stock movie, “Dumb Money,” where average investors banded together and squeezed the stock of a troubled video-game company called GameStop in early 2021. They put a hedge fund that shorted (bet against) the stock out of business as shares spiked and a “squeeze” ensued.

The movie leaves out a few salient points, including the dénouement of GameStop, which is probably why it was a flop. Shares are down 78% since the squeeze, while the S&P 500 is up more than 28%. The meme-types who got greedy and held got burned — as they always do. Ditto for the memes who threw money at shares of AMC Theatres. They got creamed even more; they’re down 99% from the highs, with the stock worth just pennies on the dollar when factoring in the 10-for-1 reverse split.

The same meme types chased MMTLP in late 2022, only to be similarly hosed when the short squeeze never materialized, and now they’re on the warpath.

Many are petitioning Congress for an investigation of regulators at the Financial Industry Regulatory Authority who stepped in at the last minute and halted trading before, they contend, the real squeeze was ready to go down. FINRA’s actions were a bit murky, I must say. That said, there’s good evidence the halt  was choreographed; they just didn’t understand the intricacies of the settlement process.

The bigger point here is that if you go chasing short squeezes, you’re going to get burned because even the best traders get burned on this type of speculation, and the meme crowd hardly qualifies as being among the best traders. That means there will be many more meme-stock losses in the new year because these people don’t seem to understand that they can still make around 5% on a money market fund, and not have to worry about sticking it to the man.

Crypto crunch

A correction in crypto is coming. As I’ve been reporting with my Fox Business colleague Eleanor Terrett, the SEC is likely to approve the first “spot” Bitcoin ETF to be sold to the investing public. Having such a product priced off the daily or spot price of Bitcoin (as opposed to the futures price) is a huge step in the mainstreaming of crypto. Anyone can have access to Bitcoin through an NYSE- and Nasdaq-traded ETF instead of worrying about doing business with a Sam Bankman-Fried. This should take Bitcoin to loftier levels than it’s been trading (up more than 150% in 2023), right? My guess is the high-water market for crypto might still be reached, but at some point it will trade off when it becomes clear that aside from enthusiasts and speculators, average investors would rather keep their money in the bank than put it in the national currency of money laundering.

Getting zip from Zas

Zas won’t throw Shari a lifeline. Yes, I know Warner Bros. Discovery honcho David Zaslav (aka Zas) likes to do deals, and getting bigger is necessary these days to forestall the inevitable implosion of legacy media. But Zas has done a great job since taking the helm of the combined WBD, cutting lots of debt and fixing the balance sheet. I know he wants to play a long game: fixing what’s broken in his shop and selling to a cash-rich tech company when the regulatory environment allows. Buying Shari Redstone’s Paramount and all its debt, not to mention melting ice cubes of viewership (MTV and Comedy Central), only makes that more difficult.

OK, that’s only three predictions, but I think I’ll stop here because I have a better chance at being right than if I indulge my desire to predict something really weird (albeit plausible) — like Trump converting his jail cell into an Oval Office.

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