Santa Claus, HSBC Dirty Money and Airbnb IPO

One of my dear friends wanted to know what is my philosophy in life and the financial markets. My response? I never lose the opportunity to extend the continually expanding frontiers of my own ignorance.

My warnings during the last month that the S&P 500 was grossly overvalued at 3450, that oil prices were poised to collapse and that the British pound sterling was short at 1.2980 were totally vindicated by market action in the past two weeks. Now the S&P 500 index has tanked to 3281 from 3450, Brent crude oil is at $40 and the sterling has fallen to 1.2780, I feel like Santa Claus has come early this year. Jingle bells, jingle bells, jingle all the way. Oh, what fun it is to make money the easy put options way!

HSBC Dirty Money

A generation ago, the BCCI (Bank of Chapatis & Chamars International) was declared a criminal enterprise by the Bank of England and HM Treasury, wiping out millions of innocent depositors. Was BCCI guilty of money laundering for the Colombian and Panamanian dictator Noriega? Of course, si!

Yet HSBC knowingly bought and operated a Mexican bank called Grupo Bital (just wiki it). HSBC also allowed billions of Mexican coca dollars to be recycled into the global capital markets. Was HSBC closed down? No. Why not? Might is right and might is white, at least in the kingdom by the silver sea. The City never hangs its grandees just like Wall Street never jails its banksters.

Now the latest shocking news comes as HSBC shares are at a 25 year low. The Home for Scottish Bank Clerks (HSBC) should be renamed the Home for Sordid Bank Crooks (HSBC) and should I let such a corrupt and incompetent bank handle my money? Any ideas?

Airbnb IPO

The clouds are getting darker for the Airbnb IPO. When Boris Johnson has to impose a curfew on pubs in Britain due to a COVID spike, things are pretty desperate. Pubs were open even at the height of Luftwaffe's Blitz over London in 1940-41. If an Englishman's home is his castle, his spiritual sanctuary is his pub with a pint of Guinness bitter.

It is the same story in France and Spain. Airbnb pre-IPO shares have spiked from $85 to $120 after the Silver Lake deal and SEC filing for IPO in August. Sellers are demanding 20% carry from desperate buyers. The forward contracts are another potential minefield and now the wicked witch of Wall Street has gone ballistic on risk aversion. Would I take a position on the Airbnb pre-IPO at current levels? No. The greater fool theory is not consonant with my views on markets and risk. I hope the IPO succeeds, but hope is never a strategy!

Matein Khalid is the Chief Investment Officer of Asas Capital Management. He has 25 years of experience in international capital markets as an advisor to family offices and fund managers. He has worked for investment banks/hedge funds in New York, Chicago, London, and Geneva. In addition, he has been the CIO of a technology fund in San Francisco, a royal investment office in Dubai and a public insurance company listed on the DFM.