What we’re reading (7/4)
After a two-day holiday hiatus, some fresh finds:
“U.S. Treasury Reaches Loan Agreements with Five Major Airlines” (Wall Street Journal). Airlines starting to tap into major “loans” from taxpayers. Uncle Sam is requiring warrants, equity, or senior debt in exchange.
“How the Black Death Made the Rich Richer” (BBC). “The sudden loss of at least a third of Europe’s population didn’t lead to an even redistribution of wealth for everyone else. Instead, people responded to the devastation by keeping money within the family. Wills became highly specific and wealthy businessmen, in particular, went to great lengths to ensure that their patrimony was no longer divided up after death, replacing the previous tendency to leave a third of all their resources to charity. Their descendants benefited from a continued concentration of capital into a smaller and smaller number of hands.”
“The Mystery of High Stock Prices” (New York Times). Steve Rattner argues the Fed’s massive intervention in capital markets in the last few months is driving the disconnect between stock prices and economic fundamentals. He points out that the S&P 500’s dividend yield is currently higher than the current yield on AAA corporate bonds.
“We’re Forecasting a Strong Long-Run Economic Recovery” (Morningstar). A bit of an alternative view to the last article. According to Morningstar, “[w]hile many investors are wondering if the market is exhibiting irrational exuberance, we think the rebound has been broadly warranted, as we forecast a strong long-run recovery in the U.S. economy.” Markets price future cash flows, so “high” forward-looking stock prices are not irreconcilable with weak current/backward-looking economic fundamentals.
“‘Black Wall Street’: The History of the Wealthy Black Community and the Massacre Perpetrated There” (CNBC). Fascinating (brief) history of Black Wall Street in Tulsa and the community there before the massacre of 1921.
