Postcards: Trump Wakes Media Up - Stocks Are Overvalued...

Of course. It took Truth Social (DJT) to make CNN, and the rest of the media understand that the policies they've cheered are driving Trump's stock higher. ͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­͏   ­ Forwarded this email? [Subscribe here]() for more You are a free subscriber to Postcards from the Florida Republic. To upgrade to paid and receive the daily Republic Risk Letter, [subscribe here](. --------------------------------------------------------------- [Postcards: Trump Wakes Media Up - Stocks Are Overvalued...]( Of course. It took Truth Social (DJT) to make CNN, and the rest of the media understand that the policies they've cheered are driving Trump's stock higher. [Garrett {NAME}]( Mar 26   [READ IN APP](   Market Update: Record liquidity, record markets, gold at new highs, and fiscal repression are coming. Enjoy the hedge… because things will get real starting in April if tax revenue comes in lower than expected. --------------------------------------------------------------- Dear Fellow Expat: This morning, CNN’s Matt Egan - a financial journalist I respect - a piece titled]( “Trump’s Truth Social is now a public company. Experts warn its multi-billion-dollar valuation defies logic.” Memo to CNN: No shit. Egan writes: “Wall Street is assigning Trump Media an eye-popping valuation of around $14 billion — a price tag that experts warn is untethered to reality.” In other news… water is wet.  The sky is blue.  And Florida is humid in the summer. He goes on. The social media site is losing users, doesn’t generate a profit, and has burned through cash, yet shares are up more than 200%. That’s where Egan calls in the “experts.” “This is a very unusual situation. The stock is pretty much divorced from fundamentals,” said Jay Ritter, a finance professor at the University of Florida’s Warrington College of Business, who has been studying initial public offerings (IPOs) for over 40 years. Ritter believes the stock is worth no more than $2 and argues it will eventually get there. That said, Trump owns 79 million shares and made $1 billion at the back of this rally (on paper). The story then discusses Trump’s history of bankruptcies, why investors should avoid him, and how an election loss could cause his stock to tumble. That doesn’t change the fact that it’s become a shiny new toy for hardcore traders. It doesn’t matter if it goes up or down—when you have headline-driven equity with massive swings in stock price, traders will take advantage. (This works with almost any stock, [like we do at]( Risk Letter](. I know CNN wants to beat up on Trump and talk about his history of finance…  But this is not the flex they think it is. Is Truth Social “expensive,” “overvalued,” and “divorced from fundamentals?”  Damn right it is, but this isn't a “Trump” thing, it's the truth for a huge number of public companies, particularly in Wall Street’s darling tech sector. What you say about Truth Social, you could also say about Nvidia (NVDA), Tesla (TSLA), or pretty much any of the so-called “Magnificent Seven.” There's a huge problem with valuation issues in this market… Inflated… Stocks are Expensive If you [haven’t been paying attention]( the stock market has been jolted into irrational exuberance over the last decade because of cheap money, low interest rates, and the Fed boosting its balance sheet. Increasing liquidity around the globe has pushed the MSCI to record levels. Perhaps that should be the broader story here. As I said, Trump’s stock isn’t the only one that is overvalued. WingStop (WING) - a company that sells chicken wings (and not very good ones), is trading at 155 times its earnings. Moderna (MRNA) - the damn company responsible for vaccines in the COVID world - is a $40 billion company with no profits. It’s trading at $110. It was at $18 before the pandemic. NVIDIA (NVDA) is at 80 times earnings, and its valuation is higher than the entire S&P 500 Energy Index. I have at least 100 of these companies whose valuations are untethered from reality.  Truth Social isn’t an exception.  Are we just discovering “valuations,” CNN? These journalists are [so close to discovering the real problem…]( And if you start to point out to enough people that the markets are irrational and overvalued… you might get a collective wake-up call. My advice to the writers is to [go deeper](. Bubble, Bubble Everywhere Let’s head over to [CurrentMarketValuation.com](. Here, we have the S&P 500 price-to-earnings model. This chart tracks PE ratios to the 1950s. We’re coming off the second-highest peak ever for this reading in the wake of the 2020 COVID-era rally. Where are we today? We’re above one standard deviation from the mean—in overvalued territory. Let’s move on to Warren Buffett’s Indicator next. The Buffett ratio measures the total value of the U.S. stock market relative to the current reading of the U.S. GDP.  As you can see, the stock market is very overpriced compared to current economic productivity.  No matter how you slice it, U.S. equity markets are … overvalued… “untethered,” if you will. Interest rate models are overvalued and mean reversion models are overvalued. This is the outcome of the government printing trillions of dollars in recent years. That practice allowed many to treat the markets like a casino instead of a long-term wealth generator. I guess it took the brain trust at CNN’s terrible flex on Trump to educate the population on how overvalued our equity markets are. By the way… CNN’s stock - Warner Brothers Discovery (WBD) - looks terrible. The $20.3 billion company is unprofitable… and trading for 45% of book value. A lot of debt will do that to you. Shares have been off 70% in five years. They’d love to be just back at book value. But their business is dying. WBD is a classic value trap - and they wish investors would gamble on them. And Finally My heart goes out to the City of Baltimore.  My hometown was dealt a massive infrastructure blow when a ship struck the Francis Scott Key Bridge, one of just three crossings of the Patapsco River and the only one over it. The now-collapsed bridge carries I-695, or the Baltimore Beltway. It's a “vein” that helps to connect the Baltimore area to the economic artery of Interstate 95. The wrecked bridge also blocks access to Baltimore’s massive, strategically crucial seaport. This is a critical moment in time. The Biden Administration and the Department of Transportation - cannot screw around here. If they want a win - to show that the government still works - they should get moving on this.  My concern is that they’ll spend too much time wondering what color to paint the new bridge. I’ve received a few questions about the Port and what to expect in the commodity markets. Sparrows Point and Port Covington are Baltimore's infrastructure's big, shiny objects. We’ve wanted to put industrial batteries there for years, but it’s a tough city to navigate politically. Baltimore is one of only three independent cities in America. The county has zero oversight over the city, and the state’s power center comes out of Montgomery County, on the border of D.C. I lost track of how many mayors have gone to jail in a row. This is a place where Amazon has a major distribution point - and I assume it will be affected.  But that’s just one player. Baltimore’s port is critical—and I mean critical—to the automotive industry. It’s the largest car shipment port in the country, and it’s the lifeline of what remains in that city for dock workers. An entire season of The Wire (Season 2) is dedicated to the subject. My grandfather and uncles worked on those docks for decades, and it’s tragic to see what happened to them while the city of Baltimore’s real estate market exploded in value around them. Now, I’m not even sure there will be any opportunity for those workers for months. This will likely push the cars north into Philly or down south to Norfolk. I’m not sure that they will recover from this. They do a lot of work for Toyota, General Motors, Volkswagen, and Nissan. It’s also a central shipping point for agricultural equipment.  Reuters reports that 30 ships were destined for Baltimore this week. It’ll take at least two months to clean up this mess. That means no ships in or out… food costs will rise… equipment costs will increase, and those dock workers and supporting infrastructure will have no work. On the commodity side, it’s a vast warehousing spot for the London Metals Exchange - with north of 50 tons of copper and 750 tons of nickel. That shouldn’t be affected too badly - as it’s physical storage on which exchanges trade paper. But there are two other issues.  First, Cove Point—the largest LNG facility in the region—sits upstream from the Key Bridge. About 500,000 tonnes of LNG come out of that facility a month. It shouldn’t be affected. However, the coal sector may be impacted. This is the second-busiest coal exporting facility in the U.S., which may negatively impact coal stocks, as prices could fall domestically without a working export facility.  Oddly… that might provide a positive on the inflation front. But that’s just speculation. Stay positive, Garrett {NAME} Disclaimer Nothing in this email should be considered personalized financial advice. While we may answer your general customer questions, we are not licensed under securities laws to guide your investment situation. Do not consider any communication between you and Florida Republic employees as financial advice. 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