What we’re reading (11/2)
“Mortgage IPO Boom Faces Market Turbulence” (Wall Street Journal). “Mortgage lenders hoping to take advantage of a surprisingly prosperous year are facing a big challenge: rising market turbulence. The August market debut of Quicken Loans parent Rocket Cos. kicked off a flurry of planned public listings for mortgage companies, marking a major reversal for a group that just two years ago was under significant pressure. At least six of the 30 largest U.S. mortgage lenders have gone public this year or are seeking to, according to industry-research group Inside Mortgage Finance. Housing demand and the broader financial markets have been remarkably resilient during a recession that has put millions of Americans out of work. Mortgage rates have hit their lowest level on record during the coronavirus downturn, spurring a refinancing boom and delivering hefty profits for home lenders.”
“Two Major Mall Owners File For Bankruptcy” (CNN Business). “Two owners of a combined 130 or so malls across the US have filed for bankruptcy, signaling that the pandemic and shifting consumer habits continue to rattle the retail industry. CBL Properties (CBLPRD) and PREIT (PEI) filed for Chapter 11 on Sunday and both will continue operating while they navigate the restructuring process. The companies have previously warned they were in perilous positions because some of their largest tenants, including JC Penney, Tailored Brands and Ascena Retail Group, have filed for bankruptcy this year.”
“Wall Street Traders Are Having A Tough Time Positioning For The Election” (CNBC). “How is Wall Street positioned for the election? Even Wall Street isn’t sure. For most of October, “buy the stimulus trade” was the main idea on Wall Street. After all, polls showed odds were good for a Biden victory that would likely entail some kind of large-scale stimulus. Investors were buying small-cap stocks, infrastructure plays and alternative energy sectors like solar, wind and other clean energy ETFs. Then Covid came back with a vengeance. Suddenly, there was concern a renewed outbreak and its impact on earnings would overwhelm any benefits from stimulus. And with concerns around lower earnings, there was a new wrinkle: tech valuations.”
“The Quiet Architect Of Biden’s Plan To Rescue The Economy” (New York Times). “In recent months Joseph R. Biden Jr.’s campaign developed a virtual road show to reassure executives, investment fund managers and financiers who were nervous that the Democratic candidate’s plans to increase taxes could hurt the American economic recovery. Penny Pritzker, the billionaire former Commerce secretary under President Barack Obama, would lead off with an overview of Mr. Biden’s plans. But the worried capitalists always wanted details, and for that, Ms. Pritzker would turn over the video calls to the little-known fulcrum of the Biden campaigns economic policymaking: a 43-year-old tax and budget specialist named Ben Harris.”
“The Wealthy Rush To Shield Their Assets From Biden” (Axios). “High-net-worth Americans are busy setting up trust funds, giving large gifts to heirs and philanthropies, and even selling family businesses as they brace for the tax hikes a Biden presidency might bring. Why it matters: President Trump has jacked up the amount that people can leave tax-free to their heirs to record highs. If Biden wins, his tax shakeup would have ripple effects on how the wealthy buy and sell properties, allocate savings and investments, and give to charity…Biden says he wants to raise taxes on people who earn more than $400,000 a year — which excludes most Americans — and lower the amounts people can give tax-free to their spouses and heirs. He also wants to tax capital gains and dividends at 39.6% for people making over $1 million (which would be bad for private equity investors and others).”
