The Stock Market’s Echo Bubble

June 08, 2023

The following commentary is an excerpt from the latest issue of my Short Seller’s Journal. The newsletter is published weekly. It reviews the weekly stock market action, economic numbers and some short ideas. Tesla is reviewed weekly. You can learn more about this newsletter here: Short Seller’s Journal

The run higher in the Nasdaq has become insane. It’s an “echo bubble” from the bubble that popped in November 2021. The Fed fueled this when it juiced its balance sheet by $400B in order to bail out uninsured depositors at the regional banks. But don’t be mistaken, Citigroup was feeding hungrily at the Fed trough as well. That $400B is now being drained. That along with the liquidity sucked out of the financial system should lead to another Nasdaq crash sometime this summer and possibly usher in the next round of QE.