From Christopher Whalen at Institutional Risk Analyst, February 16:
In this issue of The Institutional Risk Analyst, we focus on the global tendency toward inflation even as economists insist that price increases remain too low. Everything from bank stocks to bitcoin has been lifted in nominal value by the manic actions of central banks, which make assets scarce even as these banksters with PhDs subsidize exploding public debt issuance. Thus long term bond yields are rising in response.
Do you think Tesla (NASDAQ: TSLA) or bitcoin are the only assets rising fast in this Fed-induced inflation? No. Can you have inflation and debt deflation at the same time? Yes, this QE-fueled price surge is just a pause in the general tendency toward debt deflation. The confluence of these two facts may mean growing demand for dollars and dollar assets in the near term, not less as some analysts suppose. But little of this helps American consumers in terms of jobs or real income
The flow of new IPOs in the equity markets propelled by special purpose acquisition companies or SPACs illustrates the problem. The special purpose vehicle, of course, is generating returns for the sponsors. Creating investor value is another matter. It is interesting to note that in 2020, more than $12 billion in SPACs were financed via PIPEs, or private investments in public equity.
PIPEs “are mechanisms for companies to raise capital from a select group of investors outside the market,” CNBC reports. “But as PIPEs are increasingly being deployed in conjunction with a surge in SPAC mergers, a larger group of fund managers are seeking access to this security, with limits on who and how many can invest. The heightened prevalence of this product is raising concerns about the potential lack of understanding among the broader cohort of SPAC investors about how these investments work.”....
....MUCH MORE
My oh my, I haven't thought about the self-dealing, self-aggrandizing nature of PIPES in twenty years.
Recently from Mr. Whalen:
Institutional Risk Analyst: "Don't Fight The Fed--Yet"
