What we’re reading (9/7)
“‘We’re Certainly In A Bubble,’ Strategist Warns—But Don’t Expect It To Pop Anytime Soon” (CNBC). Stanhope Capital CIO Jonathan Bell thinks the tech rally in 2020 has involved a little “irrational exuberance.” As the article points out: “[s']hares of Amazon have shot up 78% so far this year, leading the so-called “FAANG” stocks. Shares of Apple and Netflix have skyrocketed 65% and 59%, respectively, while shares of Facebook and Alphabet have risen 38% and 19%, respectively, this year.” For what it’s worth, those numbers pale in comparison to TSLA, which was up over 400 percent between March 23 and September 2.
“Sudden Volatility In Tech Stocks Unnerves Investors” (Wall Street Journal). The Nasdaq was down 6 percent over the course of just two days last week. “‘Momentum is nice on the way up, but it’s painful on the way down,’ said Gene Goldman, chief investment officer at Cetera Investment Management. He has been lowering investments in tech while increasing positions in beaten-down value sectors that appear cheap like the financial and industrial groups.”
“European Stocks Rebound Following Wall Street Tech Sell-Off” (Yahoo! Finance). U.S. markets are closed today (9/7) for Labor Day, but European stocks are trading and apparently rebounded a bit following the sell-off at the end of last week in the U.S.
“DOJ Updates Merger Remedy Guidelines For First Time In Nearly A Decade” (Axios). In most U.S. mergers of a particular size, antitrust regulatory authorities (FTC or DOJ) get a chance to object to (and potentially litigate over) whether or not the deal will be reduce competition in a particular market. Often, acquiring entities and the antitrust authorities will agree on an antitrust “remedy” whereby the buyer will be allowed to complete the at-issue acquisition provided that they divest one or more pieces of the target company to somebody else (to preserve competition). In the latest guidelines, the DOJ makes explicit that divesting to private equity funds—long a counterparty of concern to the regulators because of their weak track record running businesses divested as a result of antitrust agreements—is OK in many circumstances.
“Russian Opposition Leader Alexei Navalny Was Brought Out Of An Induced Coma After Poisoning By A Nerve Agent, Berlin Clinic Says” (Washington Post). “Alexei Navalny, who was poisoned last month with a chemical nerve agent similar to Novichok, was brought out of an induced coma, and his condition has improved, German doctors said Monday. A statement from the Charité clinic in Berlin said he was responding to voices, but it was too early to know the long-term impact of the poisoning.”
