It’s getting hard to watch what is going on in the gambling capital markets. Fundamentally, we are in an environment of widespread economic devastation from lockdowns, riddled with mines like a possible contested US election and an imminent hard break in the existing European political order and a highly likely ensuing European banking crisis in that event. And yet thanks to stratospheric levels of liquidity flooding the entire financial system, mergers and leveraged buyouts and extreme valuations just keep coming and accelerating, creating a feedback loop of ridiculous optimism that is sucking retail investors in while market-making banks continue to pull out of the game. The latest market maker to pull out is Citigroup, which will no longer be providing market-making services in retail options. We’ll get back to market-making in a minute.

The latest would-be victim of this massive and dangerous consolidation trend is William Hill, which has until now been spared getting sucked in to this dizzying leveraged buyout game and has managed to maintain itself as a relatively focused, tight company with relatively orderly finances. That may now be coming to an end thanks to a huge $3.73 billion bid from the undisputed king of untimely embarrassing mergers, Caesars.

Part of me is just wide-eyed, can’t believe what I’m seeing, but the other part isn’t surprised at all. This is what happens when there’s too much loose money floating around that needs something to fall on. Caesars, already up past its eyeballs in triple net lease liabilities from all its commercial real estate collapsing in value, is putting in an offer at a 23% premium to buy William Hill specifically now, while the United Kingdom is stuck in lockdown and a hard break from the European Union looks imminent and massive capital exodus from London is already underway. JPMorgan, the biggest and healthiest G-SIB bank in the world, is already moving $230 billion out of Europe’s financial capital, and it won’t be the last. What do the people at Caesars think is going to happen to William Hill as a result of a massive capital drain out of London?

If you’ve been following my periodic coverage of William Hill the past few years, I turned cautiously positive on the stock at around 250 pence in September 2017 as an income play for dividend reinvestment that would automatically buy the dips. I called it an outright long term buy and hold at 160 in April 2019, and urged buying more in February 2020 at 180. Now trading at 280, it is a clear and unequivocal sell. Either the deal goes through and the giant it gets melted into will fall over whenever the global liquidity flood finally stops, or the deal does not go through and the premium just tacked on to the shares gets reduced or erased. I see no sustainable upside from here. Buying shares at this point is nothing more than a speculation that the current liquidity bubble will continue expanding. Maybe it will, but that is not sound investing in my opinion.