What we’re reading (8/10)
“McDonald’s Sues To Recover Severance From Fired CEO” (Wall Street Journal). This is, in the first place, an interesting case of a company attempting to claw back comp. from a CEO that (allegedly!) lied to the board about his extra-curricular relationships with subordinates. But this is also a story about the sheer magnitude of CEO pay. The as-of-yet-to-be-clawed-back compensation amounted to ~$42 million in pay, benefits, and stock. As we detailed here, it’s not obvious that shareholders of the largest and most important U.S. stocks get what they pay for when it comes to CEO comp.
“Morgue Testing The US Economy” (Project Syndicate). According to Berkeley economics Professor J. Bradford DeLong, “[a] sound forecast for the US economy…must start by forecasting the future of the pandemic. Yet most of the charts, graphs, and tables concerning the virus and its impact are useless for forecasting purposes.”
“El-Erian Says The Biggest Threat To Stock Market Rally Is Wave Of Corporate Bankruptcies” (CNBC). Allianz chief economic advisor Mohamed El-Erian (formerly of PIMCO/the IMF) sees a hypothetical flood of corporate bankruptcies as a potential catalyst to end the mini-rally. According to El-Erian, “Bankruptcies go from short-term liquidity problems to long-term solvency problems. If you get that, then unemployment becomes more problematic, and you get capital impairment…[b]elieve me, if there’s one thing Federal Reserve money cannot help markets through, it’s capital impairment events.”
“Investors Cozy Up To Danish Stocks” (The New York Times). The Danish OMX Copenhagen 25 index is up more than 15 percent in Danish Krone, or more than 21 percent in dollar terms, blowing away the S&P 500, which is currently just barely positive YTD.
