Last Bear Standing

‘Behind every great fortune is a crime,’ wrote Balzac. On January 29, 2018, YouTube watchers were seeing one.

Down the highway rolled a sleek 18-wheeler,a heavy truck that promised not to destroy the planet. It was the creation of Trevor Milton and his hot-shot company, Nikola.

Trouble was, the video was a fake. The motive force was gravity, not Nikola’s advanced technology. The truck wasn’t running on its own power; it had none. It was just coasting down the hill.

For a while, the stock boomed. It rose to over $2,000 a share in June, 2020. Milton was a billionaire. But it now trades around $1.

A lot happened between $2,000 and $1. Among them, Trevor Milton got a four-year prison sentence.

MarketRealist.com:

A video purportedly showing a zero-emission truck in motion turned out to be fake and a court later found the ex-founder and chairman of Nikola Corporation guilty of defrauding investors by misleading them about the company’s technological capabilities to artificially inflate its stock price. Milton was convicted of one count of securities fraud and two counts of wire fraud. The judge sentenced him to four years in prison along with a fine of $1 million.

According to Wall Street lore, a bull market will continue “until the last bear gives up.”

In 2023, famous bear short-seller Jim Chanos gave up. The Financial Times reported:

One of Wall Street’s best-known bears, Jim Chanos, has told his backers he is closing his main short-focused hedge funds after more than three decades. Chanos is best-known for his bet against Enron, the energy trader that collapsed in 2001… In a letter to investors seen by the Financial Times, Chanos wrote: “It is no secret that the long/short equity business model has come under pressure and interest in fundamental stock pickers has waned.”

Waned?!

Investors not interested in fundamental research?

Why bother with real research when you can get 25% (the S&P gain, 2024) for not doing it? Nvidia rose 171% last year, while the S&P 500 itself was up 25%. Fundamental research would have steered you away from both. In terms of value, neither looked like a good deal.

And this week, Hindenburg Research — which had revealed the fraud at Nikola — has thrown in the towel too. Reuters:

Hindenburg Research’s founder said he would disband the firm whose reports sparked heavy selling by investors and investigations by authorities, wiping billions from the market values of companies including India’s Adani Group and U.S.-based Nikola.

In a normal stock market, some companies do well; their stocks go up. Some don’t do so well; their stocks go down. Researchers try to figure out — in advance — which are which. Good research pays off.

But a normal stock market is fairly stable. As one company earns more, it takes sales from another company, which earns less. As one company cuts costs, it cuts income to other companies. Overall, the stock market doesn’t rise, or fall, very much. Because total purchasing power rises slowly, with GDP… at only around 3% per year. A stock market surge of 25% is unnatural, implausible… and suspect.

But a stock market juiced by the Fed… by hype… by hope… and tech ‘aspirations’… is a whole different thing. Real investors disappear; in come the clowns and gamblers.

How else to explain Fartcoin? The cryptocurrency made its debut in October. By December it had a value of $1.2 billion,which is a lot of pay for something of no known utility. But it was a perfect meme investment,created anonymously and said to have something to do with Elon Musk’s interest in the sounds of flatulence.

No use trying to do research on that one. There is nothing to research — no earnings, no profits, no business, no assets, no balance sheet, no audited financial reports, no CEO or parking lot attendant… no hush money… no lobbying expenses… no hanky panky in the office, no executive travel… no company logo. No nothing. Even gravity seems to be missing.

Maybe Hindenburg was the ‘last bear.’ Maybe not. But when Ursa Ultima finally gives up, we predict, the need for sharp pencils, green eye-shades, sober judgement and a gimlet glance will soon come back into fashion.

More to come…

Regards,

Bill Bonner, Bonner Private Research

~~ Bill Bonner, Bonner Private Research

‘Behind every great fortune is a crime,’ wrote Balzac. On January 29, 2018, YouTube watchers were seeing one.

Down the highway rolled a sleek 18-wheeler,a heavy truck that promised not to destroy the planet. It was the creation of Trevor Milton and his hot-shot company, Nikola.

Trouble was, the video was a fake. The motive force was gravity, not Nikola’s advanced technology. The truck wasn’t running on its own power; it had none. It was just coasting down the hill.

For a while, the stock boomed. It rose to over $2,000 a share in June, 2020. Milton was a billionaire. But it now trades around $1.

A lot happened between $2,000 and $1. Among them, Trevor Milton got a four-year prison sentence.

MarketRealist.com:

A video purportedly showing a zero-emission truck in motion turned out to be fake and a court later found the ex-founder and chairman of Nikola Corporation guilty of defrauding investors by misleading them about the company’s technological capabilities to artificially inflate its stock price. Milton was convicted of one count of securities fraud and two counts of wire fraud. The judge sentenced him to four years in prison along with a fine of $1 million.

According to Wall Street lore, a bull market will continue “until the last bear gives up.”

In 2023, famous bear short-seller Jim Chanos gave up. The Financial Times reported:

One of Wall Street’s best-known bears, Jim Chanos, has told his backers he is closing his main short-focused hedge funds after more than three decades. Chanos is best-known for his bet against Enron, the energy trader that collapsed in 2001… In a letter to investors seen by the Financial Times, Chanos wrote: “It is no secret that the long/short equity business model has come under pressure and interest in fundamental stock pickers has waned.”

Waned?!

Investors not interested in fundamental research?

And this week, Hindenburg Research — which had revealed the fraud at Nikola — has thrown in the towel too. Reuters:

Hindenburg Research’s founder said he would disband the firm whose reports sparked heavy selling by investors and investigations by authorities, wiping billions from the market values of companies including India’s Adani Group and U.S.-based Nikola.

But a stock market juiced by the Fed… by hype… by hope… and tech ‘aspirations’… is a whole different thing. Real investors disappear; in come the clowns and gamblers.

More to come…

Regards,

Bill Bonner, Bonner Private Research

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.

Here we sit — investors, analysts, retirees, accountants, even a few masochistic economists — gathered beneath the leafless monetary tree, rehearsing our lines as we wait for Jerome Powell to step onstage and tell us what the future means.

Spoiler: he can’t. But that does not stop us from waiting.

Tomorrow, he is expected to deliver the December rate cut. Polymarket odds sit at 96% for a dainty 25-point cut.

Trump, Navarro and Lutnick pine for 50 points.

And somewhere in the wings smiles Kevin Hassett — at 74% odds this morning, the presumed Powell successor — watching the last few snowflakes fall before his cue arrives.

With U.S. stocks trading at about 24 times forward earnings, plans for capital growth have to go off without a hitch. Given the billions of dollars in commitments by AI companies, financing to the hilt on debt, the most realistic outcome is a hitch.

On a valuation basis, global markets will likely show better returns than U.S. stocks in 2026.

America leads the world in innovation. A U.S. tech stock will naturally fetch a higher price than, say, a German brewery. But value matters, too.

As copper flowed into the United States, LME inventories thinned and backwardation steepened. Higher U.S. pricing, tariff protection, and lower political risk made American warehouses the most attractive destination for metal. Each new shipment strengthened the spread.

The arbitrage, once triggered, became self-reinforcing. Traders were not participating in theory; they were responding to the physical incentives in front of them.

The United States had quietly become the marginal buyer of the world’s most important industrial metal. China, long the gravitational center of global copper demand, found itself on the outside.