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Carney: Hysteria Grips Establishment over GameStop Trading

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One of the strangest things about the GameStop saga this week is how the mainstream media and prominent financiers have reacted, often with something bordering on panic.

Chris Cilliza, CNN Editor-at-large, said “Trumpism explains the GameStop stock surge.”

What’s the end game for the GameStop surgers? Like, now that they have proven the point that they can take a stock that the pros have declared moribund and revive it — at least for a moment — what do they do now? Because they don’t really believe that GameStop is suddenly the new Amazon or Apple or Google. It’s still mostly a business that derives its value from brick and mortar stores in malls. Which, again, is not exactly a big growth area in the coming years.

The point is that there is no real point beyond showing up the pros — proving to them that they aren’t as smart as they think they are and that they don’t have the ability to control everything.

Which, again, has its roots in Trumpism. The entire notion of Trump’s candidacy and presidency was to stick it to the elites. And then, well, uh, there wasn’t really a plan beyond that. The screwjob was the point.

Or maybe the “surgers” believe the company has brighter future than was reflected in its price and that its stock was too heavily shorted based on fundamentals? One thing that stands out to anyone reading the r/wallstreetbets message board on Reddit or the comments on related YouTube videos is how much energy went into analyzing the prospects of GameStop. It wasn’t just a sticking it to the man moment. And its kind of galling to insist that the price must have been right when GameStop was priced to doom but is definitely wrong now that it is priced to LOLZ, Diamond Hands, and Rocket, Rocket, Rocket.

“Mr. Gill said he wasn’t a rabble-rouser out to take on the establishment, just someone who believes investors can find value in unloved stocks,” the Wall Street Journal reported in an article about Keith Gill, one of the leaders of the GameStop bulls.

To be fair to the establishment types panicking at this little stock market insurgency, they are not entirely wrong to worry that the “surgers” are no longer taking direction from the experts. Retail investors did stage a rebellion against their Wall Street masters of the universe. This is a kind of deplorables uprising. And this will not be the last one.

But instead of adjusting to this new reality, the establishment types are trying to figure out how to stop it. On CNBC, former SEC Commissioner and board member of CIT Laura Unger, said the surge in GameStop and others creates questions “about the integrity of the market.” She then went on to liken people profiting from the trades to rioters at the U.S. Capitol.

“Everyone is scratching their heads over this. What should happen? What is the right thing we can do to control it or stop it? Not unlike what we saw on January 6th at the U.S. capitol,” Unger said.

Billionaire hedge fund manager Leon Cooperman, who has said he voted for Joe Biden based on his values, blasted GameStop traders.

“The reason the market is doing what it’s doing is, people are sitting at home, getting their checks from the government, basically trading for no commissions and no interest rates,” he said.

In fact, Gill is a certified financial analyst.  And very likely pays a higher tax rate than the hedge fund managers like Cooperman.

Massachusetts Secretary of State Bill Galvin said the Redditor campaign had “no basis in reality.” Sen. Elizabeth Warren (D-MA) is calling on the SEC to investigate the Reddiors for market manipulation.

Of course, there’s some basis in reality for the GameStop run. Real people are buying shares at staggering prices. It just that reality is turning out to be a lot different than what Galvin, Cooperman, Unger, and CNN thought it was.