“I recommend investing in Argentina,” tweeted Elon Musk on Monday evening following a meeting with President Javier Milei.
Any traders who listened didn’t make the kind of quick, eye-popping gains they might have become accustomed to following the Tesla CEO’s market commentary over the years.
Shares of the Global X MSCI Argentina exchange-traded fund, the most accessible vehicle for US-based investors looking to increase exposure to the South American market, were virtually flat on Tuesday.
While volumes traded were well above average at the market open, that was the high-water mark. Activity – and prices – trended lower throughout the day. Nor were there any signs of unusual options bets that would suggest traders were looking for major upside in the wake of this thumbs-up from Musk.
ARGT is off to a strong start on Wednesday, but still: there’s no indication of any abnormally large inflows, trading volumes, or options bets on large future gains.
In short, Argentina has not been memeified nor gone to the moon.
Other somewhat unscientific but still quantitative measures suggest Musk’s market meme-ing power has waned. On the WallStreetBets subreddit, an online message board where amateur traders discuss bold wagers often involving so-called “meme stocks”, there are just 13 total mentions of “Papa Elon” and “Daddy Elon” in posts from the past year. Compare to three years ago, when there were a whopping 183 posts including one of those terms of veneration for one of the world’s richest men.
Musk’s seemingly limited impact on the markets stands in stark contrast to his power a few years ago.
In his meme-ing heyday, circa mid-2021, Bloomberg Opinion columnist Matt Levine marveled at the halo effect Musk was able to bestow upon his crypto market darlings, writing, “I am sorry to keep talking about it because it is so stupid, but there really is something unprecedented and amazing and almost magical about Elon Musk’s continuing ability and inclination to move the prices of Bitcoin and Dogecoin with his slightest whim.”
This wasn’t limited to just crypto: at that time, the glow following a bullish Elon pronouncement would be significant and last for hours, if not days. Sometimes traders bid up shares of a company that he didn’t even reference, but just had a name or ticker that sounded similar.
This speaks a phenomenon that Levine’s colleague Tracy Alloway dubbed “flows before pros” – where buying and selling activity in markets based upon a cult of personality, a compelling narrative, or the strength of a trend can overwhelm would-be fundamentals for an uncomfortably long period of time. This is particularly the case in segments of the market where it’s tough to reliably identify whether or not the extent to which fundamentals exist or matter (i.e. crypto).
Traders’ lack of enthusiasm for Musk’s market tips appears to be mirrored by their feelings towards Tesla, the stock with which he’s most commonly associated.
The one-month ratio of total puts (bearish options) to calls (bullish options) traded recently reached its highest levels since the throes of the pandemic-induced market panic. This implies relatively more interest in betting on Tesla stock declines rather than gains in the options market.
Shares of the electric vehicle maker were down 28% year-to-date heading into Wednesday’s session, versus a gain of nearly 9% for the S&P 500 Index.
Perhaps Musk has just lost his fastball – and we can trace the warning signs as far back as Dogecoin’s peak at the time of his Saturday Night Live hosting gig. Or maybe his market-moving abilities are now more narrowly confined to the world of small altcoins.
