MAD Macro - Is Michael Saylor John Law?
“I Always Hated Work.” John Law
Is Michael Saylor actually John Law reincarnated? I went down a rabbit hole reading about John Law, which is very easy to do these days. My favorite rabbit hole at the moment is Perplexity. Of course, John Law was an internationally known economist. Michael Saylor, not so much. For some reason John Law had to flee his home, Scotland, for France because he killed someone in a duel. I thought that’s what was supposed to happen in a duel. Anyway, he convinced France to issue paper money and form a central bank. Then he formed the Mississippi Company which had exclusive rights to trade with the French territories in the American colonies and was supposed to be wildly profitable. John Law was what we would call an easy money guy. He thought issuing paper money and expanding the money supply was great for national economies. John Law admired the Dutch Golden Age and they had done the same thing, expanding money supply. But it also promoted financial speculation and ultimately, the Tulip Mania, which burst in 1637. John Law was the promotor of the Mississippi Company. Ultimately, John Law’s optimistic proclamations contributed to widespread overconfidence among investors. Many believed they could achieve wealth without understanding the underlying risks. The Mississippi Company in France and the South Sea Corporation in England were simultaneous double bubbles, now referred to as just the South Sea Bubble. The South Sea Corporation consolidated the British debts and was also expected to be wildly profitable, trading with the South American region. The New World was, of course, the new thing in the early 1700’s. The Mississippi bubble popped in early 1720 and the South Sea bubble just a couple of months later.
I am on bubble watch and bitcoin is on my list. One of John Law’s quotes about the Mississippi Company was, “An undertaking of great advantage, but nobody to know what it is”. Sounds familiar. Two of Michael Saylor’s best are: first, “Every day is a great day to buy bitcoin” and second, just this weekend on X, “If you are not buying bitcoin at the top, you are leaving money on the table”. I guess he was referring to his latest reported bitcoin purchase at $106,500. Michael Saylor has been issuing stock and buying bitcoin so quickly that yesterday he filed to seek shareholder approval to do a lot more of the same thing. He plans on increasing his Class A common stock from 330 million to 10.33 billion shares and his preferred stock from 5 million to 1 billion shares. His stock is trading at $340 and I assume he is bullish on his stock. His shareholders want it to go higher. So over time, hopefully for shareholders a long time, he wants to raise at least $3.7 trillion from public markets and invest all of it into bitcoin. One definition of insanity is doing the same thing over and over again and expecting a different outcome. Michael is not insane, what he is doing is working. At the moment, it looks like I am the insane one, thinking he can’t keep doing the same thing and have it continue working.
Markets are due to open a little lower after a quiet mixed day yesterday. The Santa Claus rally is the last five trading days of the year. On average the S&P gains 1.5% in the last five trading days. Three more days to go. Bitcoin is a little higher after a down day yesterday. In an interesting development, Strive Asset Management, a company co-founded by Vivek Ramaswamy and partly owned by JD Vance, has filed to list a bitcoin bond ETF. What fun, another way to gamble on bitcoin. The ETF would seek exposure to convertible securities issued by companies investing in bitcoin. What will they think of next? Bond yields keep rising, which is why equities are due lower today. The U.S.10yr yield is on the recent highs of 4.62%, close to the highs of the year at 4.70%.
I included a chart of MicroStrategy’s bitcoin buying and with Michael Saylor’s plans to sell more equity to buy more bitcoin, I guess this will continue. I updated the U.S. Dollar Index, U.S. 10yr yield, U.S. 10yr-2yr yield spread, WTI crude oil, NY copper, spot gold, bitcoin, MicroStrategy, S&P futures, NASDAQ 99 futures, DOW futures and GDX VanEck Gold Miners ETF charts below.
The dollar is lower and interest rates are higher and the yield curve is steeper.
Crude oil and copper are a little higher. Gold is a little lower. Bitcoin is higher trading close to $97,000. “Every day is a good day to buy bitcoin”.
MicroStrategy is due to open higher on the higher bitcoin prices. S&P, NASDAQ and DOW futures are all due a little lower on the higher interest rates. GDX should open a little lower on the lower gold prices.
+Returns less than one year are not annualized
The performance data quoted represents past performance. Past performance is not a guarantee of future results. Investment return and principal value of an investment will fluctuate so that an investor's shares, when redeemed, may be worth more or less than their original cost. Performance may be lower or higher than performance data quoted. Please call 800.826.2333 or visit vaneck.com for performance current to the most recent month ended.
GDX Gross Expense Ratio – 0.51%, Net Expense Ratio – 0.51%
Van Eck Associates Corporation (the "Adviser") has agreed to waive fees and/or pay Fund expenses to the extent necessary to prevent the operating expenses of the Fund (excluding acquired fund fees and expenses, interest expense, trading expenses, taxes and extraordinary expenses) from exceeding 0.53% of the Fund's average daily net assets per year until at least May 1, 2025. During such time, the expense limitation is expected to continue until the Fund's Board of Trustees acts to discontinue all or a portion of such expense limitation.
Investing involves substantial risk and high volatility, including possible loss of principal. An investor should consider the investment objective, risks, charges and expenses of a Fund carefully before investing. To obtain a prospectus and summary prospectus, which contain this and other information, call 800.826.2333 or visit vaneck.com. Please read the prospectus and summary prospectus carefully before investing.
(c) Van Eck Securities Corporation, Distributor, a wholly-owned subsidiary of Van Eck Associates Corporation
IMPORTANT DISCLOSURES AND DEFINITIONS
Unless otherwise stated, Bloomberg is the source of all data and charts.
S&P 500 futures are a type of derivative contract that provides a buyer with an investment priced based on the expectation of the S&P 500 Index’s future value. Nasdaq 100 futures are commodities futures products traded within the equity futures sector. West Texas Intermediate (WTI) oil is a benchmark used by oil markets, representing oil produced in the U.S. Brent Crude Oil is a blend of crude oil recovered from the North Sea in the early 1960s, whose price is used as a benchmark for the commodity's prices. The U.S. dollar index (USDX) is a measure of the value of the U.S. dollar relative to the value of a basket of currencies of the majority of the U.S.'s most significant trading partners. UBS Bloomberg Constant Maturity Commodity Index is a total return rules-based composite benchmark index diversified across commodity components from within specific sectors.
An investment in the VanEck Gold Miners ETF (GDX) may be subject to risks which include, but are not limited to, risks related to investments in gold and silver mining companies, special risk considerations of investing in Australian and Canadian issuers, foreign securities, emerging market issuers, foreign currency, depositary receipts, small- and medium-capitalization companies, equity securities, market, operational, index tracking, authorized participant concentration, no guarantee of active trading market, trading issues, passive management, fund shares trading, premium/discount risk and liquidity of fund shares, non-diversified and index-related concentration risks, all of which may adversely affect the Fund. Emerging market issuers and foreign securities may be subject to securities markets, political and economic, investment and repatriation restrictions, different rules and regulations, less publicly available financial information, foreign currency and exchange rates, operational and settlement, and corporate and securities laws risks. Small- and medium-capitalization companies may be subject to elevated risks.
The information herein represents the opinion of the author(s), an employee of the advisor, but not necessarily those of VanEck. The securities/ financial instruments discussed in this material may not be appropriate for all investors. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.
This material has been prepared for informational purposes only and is not an offer to buy or sell or a solicitation of any offer to buy or sell any security/financial instrument, or to participate in any trading strategy.
Certain statements contained herein may constitute projections, forecasts and other forward looking statements, which do not reflect actual results, are valid as of the date of this communication and subject to change without notice. Information provided by third party sources are believed to be reliable and have not been independently verified for accuracy or completeness and cannot be guaranteed. VanEck does not guarantee the accuracy of third party data.