United States

Another week, another 4.4 million newly unemployed people in the United States. Officially, at least. This doesn’t include the self-employed and those who work in grey markets for cash under the table. Or drug dealers. Don’t forget about the drug dealers.

One wonders why casino stocks in the United States are still at the same levels they were in 2013 when the economy was, you know, actually working. MGM for instance despite the selloff is trading where it was 7 years ago, back when it was doing business. Caesars is still valued at over $5 billion, even though $4 billion on its balance sheet is goodwill that doesn’t really exist anymore, and it has $8.5 billion in debt that can no longer be paid off. Boyd is now leveraged 130%, with goodwill yet to be impaired at 66% of market cap. Eldorado has held stable for the last two weeks like its peers, but fundamentally the futures of all these companies are in doubt.

That’s not to say that the stocks can’t climb from here in the short term. Investors are still looking for excuses to buy, for lack of understanding that economies are not wind-up toys. You can’t just start them up again after they shut down, or keep them going with bridge loans you finance out of thin air with no consequence. With the Federal Reserve shoveling another $370 billion onto the monetary base just this week, assets are going to be pumped up in the short term even if casinos have dismal business prospects and are almost certain to lose money over the next few quarters.