What the absolute hell is going on with Wall Street right now? August is usually a month slowed down by bankers and traders distracted by Hamptons rentals or blissfully out of cell range on a megayacht, but this summer month has been anything but sleepy in markets. This month has so far been a bright spot during a truly terrible year for most investors trying to navigate an unreadable economy that hasn’t been this corrosive since they were born. In a lot of ways, it looks like the stupidest times of 2021, when memestocks, crypto, and anything associated with Elon Musk were all ripping higher because YOLO lol wtf why not, optimism buoyed by stimulus checks, a roaring economy, and the naïve sense that the end of the COVID-19 pandemic was just around the corner. In fact, with light trading during the dog days of summer, it’s a wonder more stocks haven’t rocketed moonward.
Take Bed Bath & Beyond, one of the original memestocks. Not a lot’s been going on with this company, all things considered. But that hasn’t stopped the day traders at the sub-Reddit r/wallstreetbets from quadrupling the value of the stock in the last few weeks. (This is practically at the high reached during the peak of the stonk frenzy in early 2021.) Gamestop, too, rose nearly 50 percent from late July to its peak this month, also just because. Memes have also been good in cryptoland, which has generally been devastated by the fallout of the TerraUSD crash and the obliteration of hedge fund Three Arrows Capital. Dogecoin — the joke cryptocurrency that Musk once joked about on Saturday Night Live — has shot up about 73 percent from its low in June. Another meme coin, Shiba Inu coin, has more than doubled.
Clearly, somebody’s getting rich out there, but even with the similarities to the speculative excesses of 2021, things aren’t the same. I spoke with Callie Cox, head U.S. strategist at eToro (and a former deskmate of mine at Bloomberg News), who told me that recent reports showing slowing inflation and strong hiring have led to an overall sense that the worst for the economy may be over. “There was a lot of pessimism and even a little bit of good news seems to throw a big spark into these markets,” Cox said. “When you’re expecting the worst, any good headline is a sigh of relief.” And it’s true that the doom and gloom from just a month ago has largely dissipated, with Goldman Sachs issuing a report that it foresees lower odds of a recession in the next year. Still, Cox said, the rush to buy, buy, buy and send stocks and crypto to the moon may be a bit premature. “We think this recovery is legit, but at the same time, it’s tough to see us rebounding back to the highs anytime soon.”
So maybe it’s just all about luck and good timing. There’s probably no better example than the Musk industrial complex and his ability to get investors all fizzed up over nothing. Last night, the world’s richest man tweeted, “I’m buying Manchester United ur welcome” and waited about five hours before he backtracked, saying it was part of a “long-running joke on Twitter.” (In April, around the time he secured a deal to buy Twitter for $44 billion, he also joked about buying Coca-Cola “to put the cocaine back in,” which he isn’t doing.) Still, the U.K. soccer club — which is publicly traded — spiked about 17 percent on the tweet, either from the trading world’s most gullible buyers or bots that haven’t been programmed to be sufficiently skeptical of Musk’s every stray thought. But one person who did appear to make money is Gurgavin Chandhoke, a Toronto trader who posted that he had bought a huge block of call options on the soccer club’s stock just five days before.
“I don’t even watch soccer,” Chandhoke told me in a Twitter DM. A few days before, a notice came across his Bloomberg terminal that a broker was selling a block of about 30,000 options betting that the soccer team’s shares would become more valuable during the next month, and he took it, he said. (He shared the screenshot of the “option alert,” which was sent out to a broad swath of investors.) “Usually there are next to no big trades in $MANU. They stood out and I took them,” he said. Since then, he’s mostly cashed out of the trade — and then apparently shorted the stock, taking advantage of the wild swings in the markets. All told, he said he made around $15,000 to $20,000 on the trade — even though he “would have made $500k + if Elon was serious lol.”