Howard Marks: “We Are In An Everything Bubble”

Dr. Jean-Paul Rodrigue published a widely circulated economic bubble chart in which he identified four distinct phases of a bubble, referred to as the (i) Stealth Phase (ii) Awareness Phase (iii) Mania Phase & (iv) Blow-Off Phase.

  • There Is No Alternative (“TINA”) 1.0 — As signs of mania / blow-off phases begin to percolate, the early movers looked to go to cash as it was “safe.” We saw personal savings at all-time highs, corporates raised cash & suspended dividends / buybacks / M&A, etc….
  • TINA 2.0- After months of negative real-yields, the mentality has started to transition to the detriments of holding cash, as the negative wealth effect has been very real, watching asset prices continue to appreciate around them, moving out the risk curve, which typically culminates in the blow-off top.

Monetary / Fiscal Stimulus

Since the COVID-19 pandemic began, there’s been $32T of fiscal and monetary stimulus, which is the largest stimulus as a percentage of global GDP that the world has ever seen. Global Central Banks have spent $834M per hour buying bonds over that time and now ~25% of all government bonds are negative yielding, with a significantly higher percentage at negative real-yields, given inflation.

Real Asset Response

We’ve seen a significant appreciation in commodities with the S&P GSCI +120% from the lows last March, and commodities such as Copper +102%, Aluminium, +82%, Corn +80%, Nickel +49%, Gold +22%, etc… We saw Lumber +300% at one point (and now it’s still +20% from March ’20 levels), while the US CPI Used Car Index is +45% YoY.

  • Composition Changes- The largest market constituents today are growing faster, more profitable, with higher margins than the largest companies of ~20–50 years ago, warranting a higher multiple all-else equal.
  • Ease of Diversification- The creation of ETF’s, and the ease of which investors can invest in 500 or 2,000 different companies with as little as $5-$10 can support higher multiples than a highly concentrated portfolio.
  • Global Nature- The percentage of ex-US sales for large US listed companies continues to increase offering enhanced geographic diversification than ~20–50 years ago.
  • Rates- As countries increase debt, they can’t afford to have real rates higher as interest would become the greatest single expenditure, resulting in a higher equity multiple all else equal.

Crypto Bubble?

Now that the “market cap” of crypto is +1358% over the past 18 months & BTC is +885%,


On Black Thursday of last year when Bitcoin sold off as much as ~50% intraday few would’ve predicted 18 months later we’d be sitting at a price of $50,000 with corporates such as Square, Tesla, and Microstrategy buying Bitcoin on their balance sheet, insurance companies like MassMutual buying $100M, wirehouse banks offering Bitcoin access to their PWM clients, or that a $1.2T infrastructure bill (crazy in its own right) would be held up as crypto lobbyists had their first taste of the Big Show, and the SEC would be showing body language that a futures-based BTC ETF might be approved (finally) in 4Q21.

  • Purchasing Power- How does this asset retain its value over time?
  • Trustworthiness- How is it perceived through time and universally as a store of value?
  • Liquidity- How quickly can the asset be monetized into a transactional currency?
  • Portability- Can you geographically move this asset if you had to for an unforeseen reason?

ETH / Other L1’s

There’s been a lot of debate regarding DeFi over the past 18 months, as the total value locked (TVL) in DeFi smart contracts now sits at $80.5B up from $925M last March. We wrote about DeFi and the evolution of existing financial market infrastructure here.


NFT’s have clearly made it mainstream (and had what most viewed as the ultimate contra-indicator) when there was an SNL skit in late March. While some early excess was removed from the market, since that time, we’ve seen some mind numbing NFT sales with Beeples $69M sale at Christie’s, the price of the “cheapest” Cryptopunk increasing 15x+ since the beginning of the year, Visa entering the mix with a $150K purchase re-rating the market overnight, one punk selling for a record $7.8M, with others listed “offered” at $5.5-$7.7M, Degen Apes selling out in 8 minutes despite servers crashing, and Justin Sun spending $500K for a pet rock.


If global central banks and governments are going to continue to print money, investors are faced with a TINA 2.0 predicament, where cash is literally burning a hole in their pockets, pushing them not just into risk assets, but further out the risk curve, exacerbating wealth inequality along the way, leading to even further risk taking.



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