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Friday Roaring Charts

This was the week that Nvidia passed Apple to become the second-largest stock (behind Microsoft) — and that Roaring Kitty passed the FOMC as the largest mover of markets.

Neither lasted long — Nvidia finished the week back in third place, and Roaring Kitty’s reappearance on YouTube was a sell-the-news event.

After announcing his intention to hold a livestream yesterday, Keith Gill (aka Roaring Kitty) briefly looked to be on his way to billionaire status, thanks to the soaring price of his beloved GameStop shares. 

But an hour into this afternoon’s rambling return to YouTube, with GameStop down 37% on the day, Gill shared his brokerage account balance showing a loss of $237 million on the day.

Ouch. 

Gill was entirely unfazed by the setback, however, saying he’s in GameStop for the long haul.

But that’s perhaps the problem. Unlike his audience in 2020, the 650,000 people that watched today’s livestream are in it strictly for the short haul.  

Gill effectively invented meme stocks, but he did so inadvertently — as he testified to Congress, he really was in GameStop for the fundamentals. 

Meme stocks subsequently came to be defined as those that people buy despite the fundamentals (or, in the case of memecoins, those that have no fundamentals at all).

So, when Gill made clear today that he’s in it for the fundamentals again, it struck a discordant note. 

But the demand for investments that look like lottery tickets is nonetheless higher than ever, as evidenced this week by 1) surging volumes in ultra-short-term equity options and 2) D-list celebrities making themselves relevant again with memecoins.

Perhaps there’s just too much money around and not enough exciting investments to invest it in?

Yes, the S&P 500 made another all-time high this week, but, weirdly, it’s done that with only 5% of its individual components also making new highs.

If you’ve been watching seemingly everyone else get rich in those 5% of stocks, you may feel like the only way to catch up is by swinging for the fences with short-dated options and celebrity memecoins.

Buying and holding GameStop for the fundamentals no longer seems to fit that bill.

Fortunately, things are not nearly as dire as they seemed back when buying GameStop seemed like a good idea — we’re now free to leave the house, and our 2024 paychecks are far bigger than our 2020 stimulus checks.

Let’s check the charts and see what else there is to do.

Getting jobs instead:

The US economy created another 272,000 jobs in May. Unemployment nonetheless ticked up to 4%, but that’s still a vast improvement over the 8.4% it was when Roaring Kitty first posted his GameStop thesis in 2020. 

Working for a living:

The labor force participation rate for prime-age workers was reported near an all-time high — you’d think that would mean the pool of potential day traders is near an all-time low, but 650,000 of us still had time to tune in to the livestream this afternoon, so, I don’t know, maybe not?

Working two jobs for a living:

It was noted widely on X this morning that the number of Americans working multiple jobs hit an all-time high — but as a percentage of the workforce, it’s only normalized to in line with the 2010s, which remains well below the rate in the halcyon days of the 1990s.

Working less than one job:

The rising number of people working part-time because they can’t find full-time work may be an early sign of a weakening job market — but that, too, remains near long-term lows.

The best import:

The US job market would be stagnating without the help of foreign-born workers (in blue above, vs. native-born workers in red). To invoke Hamilton the musical: Immigrants, they get the job done.

Wages are rising (really):

US wages were reported up 4.1% in May, well above the rate of inflation, which means our incomes are growing in real terms.

You may nonetheless be feeling left out:

The market capitalization of the Magnificent 7 has surged to $15 trillion and the top ten US stocks now account for 34% of the S&P 500. If you’re not fully invested in those ten, you may feel like you’re falling behind.

Overdone?

The ratio of small caps to large caps is at levels last seen in the dotcom bubble.

But we’re not buying:

Instead of welcoming the opportunity to buy cheap small caps, we’re trying to catch up fast with options. US options trading is at an all-time high, as is the percentage of those options being traded by retail investors.

Keith Gill warned on his live stream today that “you could lose everything” and I’d add that, in options, you will probably lose everything.

But, who knows? Maybe Gill is right that even GameStop is worth something.

So I won’t blame you for trying to find the next one.

Have a great weekend, fundamental readers. 

— Byron Gilliam

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The Fed Wants To Ease, Will The Everything Rally Continue?

This episode Warren Pies Founder of 3Fourteen Research joins the show to discuss the current state of markets with oil trending lower, markets continuing to rally & a pivotal FOMC next week.

Watch or listen to On the Margin on YouTube, Spotify, or Apple.

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