What we’re reading (9/9)
“Bad News, Bulls: Bank Of America Sees Stocks Flatlining Through 2022” (Fortune). “The S&P 500 has posted a mighty rally so far this year, having already more than doubled from pandemic lows last year while reporting massive earnings growth. But some more bearish strategists aren’t convinced the party can go on into 2022. Bank of America, for one, is now predicting stocks will largely flatline through next year.”
“LuLaRoe Exposed: Inside An Alleged Billion-Dollar ‘Pyramid Scheme’” (Vanity Fair). “According to a 2019 suit filed by the Washington state attorney general, [the LuLaRoe] multilevel-marketing company is…a pyramid scheme that bilked thousands of people out of millions of dollars. According to the attorney general’s office, LuLaRoe made some of their retailers believe that if they invested between $500 and $5,000 in startup costs, they could ‘rescu[e] their families during financial crisis.’ (The suit was settled in 2021.)”
“Why U.S. Housing Prices Aren’t As Crazy As You Think” (A Wealth Of Common Sense). “There are structural and market forces that are causing these price gains, even if it all feels out of hand. You have household formation among the biggest demographic (millennials), generationally low interest rates, constrained supply from a lack of homebuilding following the housing crash and a pandemic that induced people to buy. But there’s another reason the housing market isn’t as crazy as you think — housing prices in the rest of the developed world have outpaced prices in the U.S. for some time now.”
“Digital Currencies Pave Way For Deeply Negative Interest Rates” (Wall Street Journal). “The main monetary power of the digital dollar comes from the abolition of bank notes. If people can’t hoard physical money, it becomes much easier to cut interest rates far below zero; otherwise the zero rate on bank notes stuffed under the mattress looks attractive. And if interest rates can go far below zero, monetary policy is suddenly much more powerful and better suited to tackle deflation.”
“American Probe Into German Company Elicits German Probe Into German Company” (Dealbreaker). “The Bundesanstalt für Finanzdienstleistungsaufsicht sounds terrifying. Generally speaking, it’s not, unless you are a short-seller or journalist with the temerity to uncover potential wrongdoing at a German company. If you’re one of those German companies, however, it’s usually a cuddly teddy bear. Much as it would like to, however—and certainly much as Allianz CEO Oliver Bäte would like it to—BaFin simply can’t ignore the growing number of U.S. regulatory probes in the same way it ignored the growing stack of client lawsuits over the company’s collapsed Structured Alpha hedge funds. And so, with regret, and belatedly as ever, the Germans are opening a probe of their own.”
