Were You Invited To The ‘YOLO Feast’?

If someone invited you to a “YOLO feast” and you weren’t familiar with pop culture references or the meme stock mania, you’d probably assume you were being asked to attend a religious dinner. After nervously accepting, you’d turn to Google for help: “What do people wear to YOLO feast?”

Silly you. As it turns out, a “YOLO feast” is a multi-trillion dollar stock market “boom” characterized by triple-digit gains in shares of speculative companies and heavy buying of options contracts.

In the old days, we called that a “melt-up.” But using that superlative is a good way to accidentally prove you were born after 2018. Which makes you a fossil. You were alive when XIV was cool.

But Bloomberg’s Lu Wang and Melissa Karsh are no fossils. They’re hip to the times. Which is why they opened a Friday article by characterizing the last three weeks on Wall Street as “a YOLO feast, complete with spiraling meme stocks and surging options,” an environment which is “sow[ing] skepticism” among hedge fund managers, who the article hilariously described as “a slightly more staid group.”

Like the Reddit crowd (but very much unlike “staid” hedgies, a notoriously stodgy bunch, not known for taking insane risks in concentrated positions with the potential to vaporize unfathomable sums in a matter of days), Wang and Karsh speak “Awesome.” As it turns out, Chris Weston does too.

If you’re unfamiliar, Weston is head of research at Pepperstone Financial. According to the world’s foremost authority on Chris Weston, Chris Weston, he’s the guy you follow “if you’re after informed analysis on currencies, political risks, macro events and cutting-edge trade ideas.”

In “cutting-edge” remarks to Bloomberg, Weston deftly pivoted between standard English and Awesome. “The trend remains your friend,” he said, adding that “It becomes more of a FOMO trap into year-end.”

So, it’s a “YOLO feast” poised to morph into a “FOMO trap.”

Little wonder Methuselahs like Jeremy Grantham are having such a difficult time calling the top. Someone who still uses the word “humdinger” in public can’t possibly be expected to stay abreast of a market that demands observers be fluent in an acronym-laden dialect that might have walked out of a midnight Kanye rant.

Oppenheimer’s Alon Rosin got a piece of the action too courtesy of an anecdote about his older sister who, according to a story he told Wang and Karsh, went looking to buy Tesla last week despite having “never traded a stock.” Things like that “make you go ‘hmmmm,'” Rosin mused, before lapsing into Awesome: “FOMO is fully on here.”

Read more on the dynamics driving Tesla and how it’s impacting the broader market:

Gravity, Weaponized Gamma And A ‘Dysfunctional Mess’

Tesla Exhibiting ‘Classic Asset-Vol Positive Feedback Loop’

Central banks’ dovish pivot could conceivably lend additional support to the rally through year-end. After countenancing increasingly aggressive rate hike bets in October, policymakers finally pushed back last week.

Yes, the RBA formally abandoned yield-curve control and the Fed unveiled a schedule for tapering monthly bond-buying, but Philip Lowe effectively ruled out hikes in 2022, while Jerome Powell emphasized “patience” and again sought to de-link the taper timeline from liftoff. The BoE, meanwhile, wrong-footed markets entirely, voting to keep rates on hold, and by a wide margin.

The Nasdaq 100 has risen in every session for two straight weeks for only the second time in history (figure below).

Like big-cap tech, the S&P rose on 16 of the last 18 trading days, the most over an 18-session period in 21 years (and yes, we’re apparently just making up milestones now).

“The only thing to fear is greed itself,” BofA’s Michael Hartnett wrote, in the latest installment of the bank’s popular weekly “Flow Show” series. “Inflows galore, earnings galore, liquidity galore — little wonder the zeitgeist is ‘bubble,'” he added.

Yes, “little wonder.” But that didn’t stop the bank’s equity team from clinging to a 3,800 year-end target for the S&P until the first week of September, when Savita Subramanian finally threw in the towel.

Hartnett continued, running through a familiar list of large numbers. “$32 trillion of policy stimulus, $840 million per hour in central bank asset purchases, global stock market cap up $60 trillion in 18 months, GDP >10%, CPI>5%, house prices >20% and the lowest interest rates in 5000 years,” he wrote. “You do the math; can’t blame investors for ‘irrational exuberance’ when central bank policymakers [are] paralyzed by a framework that regards Wall Street as ‘too big to fail.'”

On September 10, 2020, Hartnett regaled clients with a Tesla anecdote of his own: “Guys I am freakin’ out right now. Tesla is down 45 points, can’t concentrate on Rocket League. Billy ask your dad what’s going on.” Hartnett was quoting a group text he said was sent to his 16-year-old son.

At the time, tech shares were in the midst of a minor correction following a late-summer melt-up. Or wait. I guess it was a “YOLO feast.”

Whatever it was, Tesla is up 200% since then, the Nasdaq 100 nearly 40%. As of Friday’s close, the S&P was around 7% higher than the most bullish year-end forecast on Wall Street.