What we’re reading (8/28)

• “S&P 500’s Stunning Summer Rally Points to Best August Since 1986” (CNBC). The market’s been up for five straight months—12.7 percent in April, 4.5 percent in May, 1.8 percent in June, 5.5 percent in July, and 6 percent in August to date. A big part of August’s gain is due to one stock—Apple—being up 18 percent.

• “What Is A Stock Split And How Does It Affect Your Portfolio” (Wall Street Journal). Speaking of Apple, its stock is splitting 4-for-1. That is, for every share you own of Apple before the split, you will own four after the split. Theoretically, splits (like buybacks) shouldn’t really affect value: if you had one share of a company’s stock worth $100 and now you have four shares worth $25 each, that’s still $100 in total. But there may be inefficiencies in capital markets that make that not so. If, for example, a split renders a high-priced stock like Apple more accessible to investors who previously couldn’t afford a single share, there may be reason to think that the post-split illustrative value would be $25.25 ($101 for four shares in total, or a gain of 1 percent). But as fractional share ownership proliferates you might expect even these effects to dissipate.

• “Why Does Walmart Want TikTok? Look At How Teens Shop In China” (CNN Business). “The Chinese version of TikTok, known as Douyin, is one of several apps in the country that have tapped into the rapidly growing number of Chinese shoppers who like to buy stuff on social media platforms. Users of Douyin and Tencent-owned (TCEHY) rival Kuaishou, for example, can buy goods after watching short videos about products. They tune into live streams of influencers peddling everything from makeup to furniture. Users can ask influencers about products and get responses in real time, or they can click on steep discounts that are offered only in the apps.”

• “Moderna and Pfizer’s COVID-19 Vaccine Candidates Require Ultra-Low Temperatures, Raising Questions about Storage, Distribution” (MarketWatch). Moderna’s potential vaccine requires storage temperatures of -4 degrees F, while BioNTech’s and Pfizer’s vaccines require storage temperatures of -94 F. Seems like a pretty big logistical hurdle to me.

• “Shinzo Abe To Step Down As Japan’s Prime Minister” (Financial Times). Japan’s longest-serving prime minister in history—the man who gave us “Abe-nomics”—is stepping down due to health complications.

What we’re reading (8/27)

• “Walmart Joins Microsoft’s Pursuit of TikTok” (Wall Street Journal). TikTok is asking for $30 billion for its U.S. operations. Originally, one would’ve thought MSFT had a big-time negotiating advantage over the sellers, given the Trump administration’s order requiring TikTok’s Chinese owner to divest U.S. operations. But the introduction of another well-capitalized bidder into the process changes TikTok’s relative bargaining position considerably. The clock is ticking, however.

• “Ford and Fiat Chrysler Remain Under Federal Investigation In Union Corruption Probe” (CNBC). “Ford Motor remains under federal investigation as part of a multi-year corruption probe into the United Auto Workers union, according to the lead prosecutor on the investigation. U.S. Attorney Matthew Schneider told CNBC that the automaker and the UAW’s Ford unit remain targets in the probe, which initially started with Fiat Chrysler and its union counterpart.”

• “America’s Coming Double Dip” (Project Syndicate). Yale economist Stephen Roach argues “there is a compelling case for another double dip in the aftermath of America’s devastating COVID-19 shock.”

• “Fed Prepared To Let Economy Run Hotter” (NPR). In a pretty extraordinary policy change, the Fed says it will adjust its long-term approach to fulfilling its dual inflation/employment mandate (which has historically meant targets in the range of (1) ~2 percent inflation a la the Taylor Rule and (2) “full” employment). Going forward, it seems, the Fed may not “tap the brakes” preemptively to prevent the economy from overheating. This isn’t altogether inconsistent with things we’ve heard from notable central bankers before. As former Fed Chair Bernanke famously once said, jacking up interest rates is a relatively blunt tool for popping “bubbles,” and sound supervision by the legion of regulators under the Fed’s watch of may be a better way to do it.

• “Even Corporate America Thinks The Stock Market Is Overvalued” (CNN Business). “A stunning 84% of Fortune 500 CFOs say the US stock market is overvalued, according to a survey released Thursday by Deloitte. That's up from the 55% who felt that way a quarter ago. Just 2% of finance chiefs say US stocks are undervalued.” CNN proffers this adds to the “mounting evidence” that the market is overvalued. But its not remotely clear from the article if the CFOs were asked to opine on the market as a whole or their own stock. If the latter, it’s a highly credible take, in my view—the CFOs know what the landscape looks like for their business extremely well and can readily compare that to their stock’s market price. If the former, however, I’m not sure there’s really any story here. Exxon’s CEO’s take on whether Twitter is overvalued probably has about the same “standard error” as anyone else’s.

What we’re reading (8/26)

• “I’m Billy Graham’s Granddaughter. Evangelical Support For Donald Trump Spits On His Legacy” (USA Today). According to the granddaughter of Billy Graham, American evangelicals have no business supporting Trump, and the community’s leaders have led the flock astray by going full #MAGA.

• “Palantir Files To Go Public, Lost About $580 Million Last Year” (CNBC). The data analytics company founded by Peter Thiel “has released its prospectus to debut on public markets. The company aims to trade on the New York Stock Exchange under the symbol PLTR. Rather than sell shares through an initial public offering, the company intends to debut with a direct listing, the same unconventional route taken by Slack in 2019 and Spotify in 2018.”

• “Vanguard Scales Back In Asia” (Wall Street Journal). Vanguard (the index fund company founded by Jack Bogle) is closing down operations in Hong Kong and Japan and focusing its Asia operations on Mainland China.

• “Insiders Are Now Unloading Stocks—Here’s Why You Shouldn’t See This As A Sell Signal” (MarketWatch). It turns out the “insiders” that are selling are not really insiders, just large shareholders (so large that they have to report their buying/selling to the SEC). When you strip them out of the data, true insiders—e.g., corporate executives that you might expect to have better information about their stock than you—were net buyers in the first half of August.

• “The Best Way To Play The Vaccine Races? Don’t.” (Fisher Investments). I tend to agree. “Markets are efficient and forward-looking, quickly digesting widely known information and then moving on. Given the amount of attention on vaccine candidates and clinical trials, basing investment decisions on vaccine news is the very definition of buying on widely known information. Presuming it offers any sort of an edge is to presume markets aren’t efficient at all, with a blind spot toward one of the most discussed news items on Earth. That strikes us as heat chasing and a recipe for error.”

What we’re reading (8/25)

• “4 Takeaways From The 1st Night Of The Republican National Convention” (NPR). “The first night of the Republican National Convention was a little scattershot. It seemed to be partially about counter-programming the Democratic National Convention last week, partially intended to fire up the base and partially aimed at winning back some of those 2016 Trump voters who are having second thoughts.”

• “Before Making Loans, Some Mortgage Lenders Ask, Do You Really Plan To Pay This? (Wall Street Journal). A revolutionary new tactic that beats the standard practice of “we don’t care, pay it if you want, or don’t, we’re selling your mortgage to JP Morgan for 80 cents on the dollar either way.” In all seriousness, this is a story about the unprecedented forbearance programs the government has opened up to borrowers, and lenders’ attempts to adjust to a new, less creditworthy “normal.”

• “Exxon Mobil Replaced By A Software Stock After 92 Years In The Dow Is A ‘Sign Of The Times’ (CNBC). Indeed. S&P Dow Jones just announced the largest changes to the Dow Jones in seven years. Salesforce is replacing Exxon Mobile, the longest-serving constituent company, which has been in the index in some form since 1928. I’ll be re-watching PBS’s 1992 interpretation of Daniel Yergin’s classic The Prize in memoriam.

• “Why It’s So Hard To Find Dumbbells In The US” (Vox). Of all the pandemic preparation items I tried to acquire on the internet in Feb./March (around the same time everyone else was doing the same thing), there are only two items that I ultimately couldn’t procure: (1) NIOSH-approved N95 particulate respirators, and (2) a solid set of dumbbells. The story of the broken supply chain for the former has been well-documented; until now, not so much for the latter. Alas: “‘[f]inding dumbbells that deliver within a reasonable time (less than a month) is like trying to acquire concert tickets for a pop legend without ever knowing when the tickets go on sale’.”

• “Marble Ridge Founder Won’t Have To Fight Criminal Charges, Run Hedge Fund Simultaneously” (Dealbreaker). Dealbreaker has been all over this story. “When facing the possibility of prison, some hedge fund managers draw up elaborate contingency plans for that awful potential day. Marble Ridge Capital founder Dan Kamensky, who is on record acknowledging, ‘maybe I should go to jail’ and who now may have to confront a formal evaluation of that assessment for allegedly seeking to screw over his fellow Nieman Marcus bondholders, who he represented as a member of that troubled retailer’s unsecured creditors committee, has chosen to dispense with that need.”

What we’re reading (8/24)

• “Many Companies Planned To Reopen Offices After Labor Day. With Coronavirus Still Around, They’re Rethinking That.” (Wall Street Journal). A survey of major companies employing some 2.6 million people revealed that nearly 60 percent had decided to postpone their back-to-the-office plans in light of recent upticks in covid infections and, apparently, backlash from employees.

• “‘The Big Short 2.0’: How Hedge Funds Profited Off The Pain Of Malls” (New York Times). Mall defaults in the last several months have allowed some to profit handsomely from bets against their mortgages (Carl Icahn has netted $1.3 billion on the trade so far).

• “Money Funds Waive Charges To Keep Yields From Falling Below Zero” (Wall Street Journal). “Money-management giant BlackRock Inc. is waiving costs typically borne by customers for certain money-market funds to prop up investor yields, said people familiar with the matter. Fidelity Investments, Federated Hermes Inc. and J.P. Morgan Asset Management are also ceding some fees to stave off negative yields. The moves are the latest sign of how a roughly $5 trillion piece of the financial system is bracing for new pressure as interest rates plummet. Fee waivers will hit the revenues of firms that shoulder the costs.”

• “Why TikTok Will Lose” (Dealbook). The folks at dealbook think TikTok’s lawsuit against the Trump Administrations executive orders (among which is an order for TikTok’s Chinese owner, ByteDance Ltd., to divest its U.S. assets) is “a delaying tactic, at best.”

• “Joel Greenblatt on Tesla: ‘I really can’t explain it’” (CNBC). I don’t normally take these sensational hot takes from purported experts too seriously, but when Greenblatt is up to the plate, it’s a different story. Greenblatt is the author of The Little Book That Beats The Market, which espouses a systematic, scientifically rigorous stock-selection model that you might rightfully argue was effectively a quantamental strategy before quantamental was cool.

What we’re reading (8/23)

• “Home Sales Surged 24.7% In July, With Prices Hitting An All-Time High” (CNN Business). For the second time in a row, home prices grew a double-digit percent on a month-over-month basis. Why? The article itself is all about Millennials and remote workers relocating to the burbs, but that doesn’t seem like it would explain the magnitude of the price increase, particularly in a wage-depressed, recession-like environment. The more likely culprit: historically low mortgage rates that have fallen sharply recently. There’s a lesson here for stocks: asset prices in general tend to be extremely sensitive to baseline interest rates (recall that it’s not just home prices that are up, stocks are way up too).

• “Apple Fires Back In Court, Says Epic Games CEO Asked For Special Treatment” (CNBC). This mammoth legal battle between Apple and Fortnite-maker Epic Games just gets juicier. “In its filing, Apple alleges that Epic Games asked for an individual arrangement with Apple, producing three emails from Epic CEO Tim Sweeney that bolster its claim.” From an economic perspective, most interesting is that Epic requested the ability to create its own third-party app store for iOS. Apple can claim it charges everybody the same 30 percent all it wants, but if it disallows a third-party app store, it really has no economic basis to claim that 30 percent is a market price (i.e., a competitive, non-monopolist price) in my opinion.

• “ETF Boom Fuels Gold’s Sharp Rise” (Wall Street Journal). “[W]ith the rush into gold has come an increase in volatility that many traders don’t welcome. Both metals have dropped about 6% or more from peaks hit this month and are recording bigger daily swings than normal, suggesting that gold and silver have joined U.S. tech stocks among the most crowded trades in markets—creating the risk that months of outperformance could vanish in a day or two of frenzied selling should market or economic conditions turn.”

• “TikTok Plans To File Suit Against Trump’s Order on Monday” (Bloomberg). On August 6, President Trump ordered TikTok—the wildly popular Chinese-owned video app—banned in the U.S. with 45 days, and subsequently gave it a 90-day deadline to divest U.S. operations. TikTok plans to challenge the order in court, noting that “[w]hat we encountered instead was a lack of due process as the Administration paid no attention to facts and tried to insert itself into negotiations between private businesses.”

• “Well, I Guess Anyone Can Run A SPAC” (Dealbreaker). Former Speaker of the House Paul Ryan is forming a special purpose acquisition company (“SPAC,” also known as a “blank-check company”) and is seeking to raise $300 million in an upcoming IPO.

What we’re reading (8/21)

• “New York City Is Dead Forever” (New York Post). A controversial recent article by former hedge fund manager James Altucher. Central to the apparent thesis: execs/managers are realizing their employees are actually more productive working from home, so why lease the real estate? (As we wrote about here)

• “Airbnb Picked A Terrible Time To File For An IPO” (Barron’s). Airbnb formally filed registration statements with the S.E.C., kicking off a process that will eventually lead to its long-awaited initial stock offering. But, at least on the surface, this would’t exactly seem like a great time for a travel/lodging/leisure IPO. Perhaps they’re betting trends turn around and quickly.

• “Biden Finally Has His Big Moment” (Politico). The former vice president gave a rousing speech on the final night of the Democratic National Convention. All eyes on the GOP as its convention gets underway next week.

• “Struggling Retailers Rush To File For Bankruptcy As Fears Of A Second Wave Of Coronavirus Linger” (CNBC). “Over a two-week span in early July, seven retailers, including The Paper Store, Brooks Brothers and Lucky Brand, filed for bankruptcy protection. J.Crew, Neiman Marcus and J.C. Penney and four other retailers had already filed in May. Lord & Taylor and the off-price shop Stein Mart led another wave that hit earlier this month. Some would say it has been a flood, but what’s coming could be a tsunami.” 

• “Hedge Fund Marble Ridge To Shut Down” (Wall Street Journal). A relatively large distressed debt fund is shutting down after a DOJ bankruptcy watchdog report revealed a managing partner at the firm tried to suppress an auction for a piece of Neiman Marcus’s e-commerce business, MyTheresa, during Neiman’s chapter 11 proceedings (reportedly, he wanted to buy the shares himself at a big discount).

What we’re reading (8/19)

• “Student Call For Colleges To Cut Tuition Costs As School Year Begins Online” (CNN). Watch for litigation in this area in the near future. Per NYU marketing prof. Scott Galloway: “Universities have backed themselves into a corner…[w]e have raised tuition on average 2 1/2-fold over the last 20 years. I think Covid-19 was just the straw that broke the camel's back, where families across America are saying, ‘Enough already. We're not going to pay $58,000 for Zoom classes.’”

• “A TikTok Ban Is Overdue” (New York Times). Columbia prof. Tim Wu—one of the sharpest minds on the antitrust issues that may well dominate the political-economic discourse in the U.S. in the next decade and the author of the best op-ed I’ve read all year—is back with another thought-provoking piece in the Times: “In China, the foreign equivalents of TikTok and WeChat — video and messaging apps such as YouTube and WhatsApp — have been banned for years. The country’s extensive blocking, censorship and surveillance violate just about every principle of internet openness and decency. China keeps a closed and censorial internet economy at home while its products enjoy full access to open markets abroad.”

• “How Can Wall Street Be So Healthy When Main Street Isn’t?” (Associated Press). Of the numerous recent hot takes speculating about why the stock market seems to be so out of sync with from economic reality lately, this one comes closest to the mark in my opinion. The main point as I see it (and reading between the lines a bit): the adverse economic effects of covid are concentrated in the non-publicly traded part of the corporate economy. Large-cap equities’ stocks are doing just fine because their underlying businesses really are actually doing just fine.

• “‘Semiconductors And Software Are Really The Future Of Cars,’ Analog Devices CEO Says” (CNBC). The automotive industry is continuing its long march toward an inevitable future when cars are just computers on wheels, for better or worse.

• “EU Not Just Going To Take U.K.’s, Hedge Funds’ Word On Things” (Dealbreaker). “As it turns out, without interference from the Anglo-Saxons, the Germano-Gallic impulse to regulate alternative investments can proceed unmolested—and can be imposed on those Anglo-Saxons, anyway, if they’d like to maintain any clients across the Channel.”

What we’re reading (8/18)

• “No Applause, No Crowds: Democrats Begin A Most Unusual Convention” (New York Times). The Democratic Party’s convention is off and running. Night one featured Bernie Sanders and Michelle Obama, among others.

• “Boeing Offers Second Voluntary Layoff Package to Employees” (CNBC). Boeing employees in the company’s commercial airplanes division, services division, and corporate offices are reportedly getting offered voluntary layoff packages, with pay and benefits, as the company continues suffering the covid crisis’s overall effects on air travel and demand.

• “Hedge Fund Finds Two Ways To Lose Money On Tesla” (Dealbreaker). A weird lawsuit involving some weird ties between an SF-based hedge fund and a former Tesla technician who has been publishing reams confidential Tesla documents on the web since leaving the company.

• “5G Smartphones Could Crush Your Home Wi-Fi. So Where’s The 5G?” (Wall Street Journal). 5G is coming and is going to enable “blazing fast” mobile network access speeds.

• “John Boehner Would ‘Rather Set Himself On Fire’ Than Get Involved In the 2020 Election” (The Week). “Boehner retired from Congress in 2015 and has since exuded a ‘boy, am I glad I'm not a part of this anymore’ energy in interviews, sometimes enjoying a cocktail while doing so.”

What we’re reading (8/17)

• “What’s Happening In Belarus?” (BBC). “Belarus has been shaken for days by widespread mass protests, triggered by an election which was widely thought to be rigged massively in favour of the incumbent, longtime leader Alexander Lukashenko.”

• “Uber And Lyft Could Shut Down In California This Week. It May Not Help Their Cause” (CNN). A court in California recently ordered Uber and Lyft to reclassify drivers as employees (and not benefitless “independent contractors”). In response, Uber and Lyft are threatening to shut down their services.

• “Interior Secretary Approves Oil Drilling In Alaska’s Arctic Refuge” (Wall Street Journal). The Trump administration approved an oil leasing program for the Arctic National Wildlife Refuge—an area the size of South Carolina located in northern Alaska. It’s not at all clear we need more oil now, in the midst of worldwide oil glut.

• “UNC Abrubtly Halts In-Person Classes After Coronavirus Outbreak On Campus” (CNBC). UNC is transitioning entirely to remote learning after a covid cluster broke out in the first two weeks of on-campus classes.

• “At Homeland Security, I Saw Firsthand How Dangerous Trump Is For America” (Washington Post). A spirited op-ed from Miles Taylor, who served at the Department of Homeland Security in the Trump Administration from 2017-2019, including as chief of staff. “Like many Americans, I had hoped that Donald Trump, once in office, would soberly accept the burdens of the presidency — foremost among them the duty to keep America safe. But he did not rise to the challenge. Instead, the president has governed by whim, political calculation and self-interest."

What we’re reading (8/16)

• “‘The Devastation Is Widespread.’ Iowans Continue to Struggle Following Deadly Derecho” (NPR). The great state of Iowa (and its second-largest city, Cedar Rapids—the city that birthed the name of this website—in particular) was rocked by Category 2 hurricane-force winds in a rare inland meteorological event known as a derecho last Monday. Many are still out of power and national media coverage in the interim has been exceedingly thin. Here are some ways to help.

• “The Arrest Of Jimmy Lai” (Wall Street Journal). Jimmy Lai—the Hong Kongese businessmen and billionaire pro-democracy activist—was arrested six days ago on the heels of the June 30 enactment of the Hong Kong “national security law” by China’s parliament.

• “Bill And Melinda Gates-Backed Coronavirus Vaccine Maker Soars In Wall Street Debut” (CNN). Germany’s CureVac more than tripled in its first day of trading, foreshadowing the windfall that awaits owners of covid vaccines that ultimately prove effective. Others in the running: Moderna, Novavax, BioNTech, and Pfizer.

• “The Showmanship” (Gizmodo). It’s worth appreciating the finer aesthetic points of how Epic Games went about serving its antitrust suit on Apple. “Epic Games set Apple up to piss off millions of Fortnite players and then immediately directed all that wrath at Apple, and tacked on a #FreeFortnite hashtag too. And just in case you weren’t sure what Epic’s plan was, the company timed the video with the drop of a lawsuit filed against Apple, and then released an FAQ that continued to lay the blame at Apple’s feet…I cannot recall any company—especially one the size of Epic Games—setting up a lawsuit so perfectly.”

• “‘All These Rich People Can’t Stop Themselves’: The Luxe Quarantine Lives Of Silicon Valley’s Elite” (Vanity Fair). “[Uber founder] Travis Kalanick is throwing (outdoor) parties, private-jet owners are hopping from safe zone to safe zone, and dinner party hosts are administering 15-minute COVID-19 rapid tests—all business as usual. ‘Coronavirus is a poor person’s virus,’ says one source.” Yikes.

What we’re reading (8/14)

• “Here’s How Robinhood Is Raking In Record Cash On Customer Trades — Despite Making It Free” (CNBC). Robinhood doesn’t charge customers commissions to trade (and almost no one else in the industry does anymore either as a result), but they do get paid by market makers for the right to execute customers’ trades, a practice known as “payment for order flow.” When retail trading surged this year, Robinhood started making a ton of dough.

• “Justice Goes To Yale” (Wall Street Journal). “In his letter to Yale, Assistant Attorney General Eric Dreiband puts it this way: ‘Asian American and White applicants have only one-tenth to one-fourth of the likelihood of admission as African American applicants with comparable academic credentials’…he added: ‘There is no such thing as a nice form of race discrimination.’”

• “The Times That Try Stock-Pickers’ Souls” (Albert Bridge Capital). A nice reminder to focus on “value.” But the basic “value” premise—that “value” is buying stocks trading below intrinsic value—is still incomplete. The real golden goose is identifying stocks most likely to outperform even if all stocks are currently trading at exactly their intrinsic value (conditional on the current information available and without insider trading, of course).

• “Goldman Takes New Lack Of Standards, Pride Out For A Ride” (Dealbreaker). Historically, GS has turned up its nose at consumer finance. But that’s all changed under newish CEO DJ D-Sol. The latest news is that Goldman is trying to acquire GM’s credit card business.

• “Michigan Plans To Redesign A Stretch Of Road For Self-Driving Cars” (CNN Business). When Motor City and its minders in Lansing are carving off huge chunks of highway space to retrofit for self-driving vehicles, that’s when you know it’s time to get on board.

What we’re reading (8/13)

• “Silver Vs. Gold: How The Two Metals Compare As Investments” (Wall Street Journal). Liquidity (gold more liquid), volatility (silver more volatile), diversification (gold less correlated with other asset classes because silver actually has industrial uses and therefore follows the business cycle, to an extent), storage costs (gold storage less expensive, because gold priced much higher per troy ounce).

• “Reading The Dollar Doldrums” (Project Syndicate). More from ex-IMF/ex-PIMCO/current Allianz economic chief Mohamed El-Erian. “As for the dollar’s role as a reserve currency, I am reminded of a simple principle I learned at university: it is hard to replace something with nothing. At this time, there simply is no other currency that can or will fill the dollar’s shoes. Instead, we will continue to see small pipes being built around the dollar. And, because none of these will be large enough to replace it, the eventual result will be a more fragmented international monetary system.”

• “Apple And Tesla Just Announced Stock Splits. Here’s What That Means For Your Investments” (CNN Business). Some banker out in the Valley is having an absolute field day recommending splits—which, in theory, should have little to no impact on the actual fair value of a share—to some of the world’s biggest companies that, for whatever reason, are actually paying for this asinine advice (it’s particularly surprising in a world where platforms offering fractional share purchases are increasingly ubiquitous, so you don’t need a low price/share to get retail investors biting on the stock).

• “On McDonald’s And Morality” (Dealbook). More on this McDonald’s saga, which was on our reading list a few days ago. “In its complaint, McDonald’s goes out of its way to justify its original investigation and the decision to fire Mr. Easterbrook without cause. Directors took the former C.E.O. at his word, and their investigation concluded that his conduct did not clear the ‘high bar’ set out in its definition of cause. At the time, it was best for the company to terminate him ‘with as little disruption as possible,’ it said.” SPC’s view: indeed, maybe it’s time to stop paying CEO’s—who are largely replaceable—gargantuan sums of shareholder money and then just taking their word when they run off with said sums of money that the actual facts underlying their departure are all on the up and up.

• “How To Fix The USPS Financial Crisis” (The Onion). A few fun suggestions for shoring up USPS’s finances. Our favorites: “Ask God for permission to start delivering on Sundays”; “Stop being such candy-asses about mailing hazardous reptiles”; “Consider appointing a postmaster general without millions in FedEx stock”; “Rename post offices after Confederate generals to interest Republicans in protecting them.”

What we’re reading (8/12)

• “The Definitive Guide To The All-Weather Portfolio” (Of Dollars and Data). A nice primer on Bridgewater Associate’s “all-weather” portfolio, so named to reflect the fund’s ambition to perform pretty well in a wide variety of market environments.There’s one nugget in here that is very relevant to our core investment thesis here at SPC: “Since asset prices are determined by market participants’ collective expectations about the future, the only thing that can cause a major shift in assets prices is something unexpected (i.e. a surprise).” The difference between SPC and Bwater is apparently that we actually want a portfolio heavily exposed to surprises, not one that is “indifferent” to them.

• “Hertz Selling More New Shares That It Is Renting Cars” (Dealbreaker). “Don’t worry, day traders: Even though you’re already underwater on those new shares—which went for an average of $2 apiece—we’re sure that ‘significant and rapid and currently unanticipated improvement in business conditions’ will come around and save you, once Vladimir Putin’s untested and possibly fictitious coronavirus vaccine saves the world.”

• “Uber CEO Says Its Service Will Probably Shut Down Temporarily In California If It’s Forced To Classify Drivers As Employees” (CNBC). Corporate blackmailing of the body politic, or a credible and objective run-down of the basic math for obtuse lawmakers? You be the judge. Uber CEO Dara Khosrowshahi says Uber may have to shut down for at least a bit in CA if a court doesn’t overturn a recent ruling requiring Uber to classify drivers as “employees.”

• “A Look At Robinhood Traders’ Favorite Stocks” (Axios). A lot of stocks that our model says are absolute garbage on this list (looking at you, AAL and UAL). But there’s nothing silly about young traders (Robinhood’s cornered market) trading heavily in speculative names—”risk-on” strategies are arguably exactly what traders in their 20s/30s should be doing. There’s a lot of ballgame left before retirement.

• “Morgan Stanely Boss Is Frequent Caller To SEC Chairman” (Financial Times). “When [S.E.C. chair] Jay Clayton takes calls from America’s top bankers, more often than not James Gorman of Morgan Stanley is on the line. The chairman of the Securities and Exchange Commission has had more private contacts with Mr Gorman, the Morgan Stanley chief executive, than the head of any other big Wall Street bank, according to the regulator’s public calendar.”

What we’re reading (8/11)

• “Sen. Kamala D. Harris Named As Joe Biden’s Running Mate” (Washington Post). “Biden’s announcement, made in a text and tweet, aligns him with a former presidential rival whose most electric campaign performance came when she criticized his record on school integration during a debate.”

• “S&P 500 Closes Lower For The First Time In Eight Days As Tech Shares Drop” (CNBC). All three of the major indices were down, but the Nasdaq was down a full 1.7 percent.

• “Airbnb Plans To File For IPO In August” (Wall Street Journal). Airbnb will purportedly file its registration statements with the S.E.C. this month. Morgan Stanley is apparently “lead left” on a potential initial stock offering this year, with Goldman “also playing a lead role,” whatever that means.

• “I Am The CEO Of Uber. Gig Workers Deserve Better.” (New York Times). Shots fired in the NYT opinion pages (not only at the editorial board, but also a nice jab at Khosrowshahi’s predecessor): “Many of our critics, including The New York Times editorial board, believe that Uber and our gig economy peers have failed drivers by treating them as contractors, and that we will do anything to avoid the cost of employee benefits like health insurance. Given our company’s history, I can understand why they think that. But it’s not true, and it’s not what I believe.”

• “Will Richard Branson Ever Be Richard Branson Again?” (CNN Business). Virgin Group, which is heavily concentrated in travel—airlines, trains, hotels, cruises—is reportedly getting absolutely pummeled by covid. In the words of Branson himself, “If you want to be a Millionaire, start with a billion dollars and launch a new airline.”

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.

What we’re reading (8/7)

• “For Whom The Tok Ticks” (The Atlantic). “TikTok is going to be America’s problem in America, or America’s problem in China, or both.”

• “White House Seeks Crackdown On U.S.-Listed Chinese Firms (Wall Street Journal). More on the U.S.-China story. The Trump admin. is apparently threatening to exclude certain Chinese business from the U.S. markets unless they comply with certain audit requirements.

• “Uber Ride-Sharing Revenue Plummets, Food Delivery More Than Doubles” (CNBC). Uber’s Q2 revenue fell a whopping 29 percent relative to the same period last year.

• “Trump’s Train-Wreck Interview with Jonathan Swan on HBO…” (HBO). Chomping at the proverbial bit to dig into what happened here.

• “Cities Go Extreme With Coronavius Quarantine Crackdowns: Checkpoints, Power Shuts Sleep fines” (Fox).  “[C]ities across the country are taking increasingly severe measures to force the curve of the outbreak downward—including power shutoffs, fines and more.”

What we’re reading (8/6)

• “From Class Rooms To Class Zooms: Teaching During Covid Times!” (Musings on Markets). A new post from the “Dean of Wall Street,” NYU finance prof. Aswath Damodaran, that includes links to much (all?) of his teaching materials/class videos. Also, some good commentary on what covid is doing to universities: “In 2020, COVID may have accomplished what hundreds of years of competitors and critics have not, and exposed the underbelly of the university model.”

• “More Farmers Declare Bankruptcy Despite Record Levels Of Aid” (Wall Street Journal). ~580 farmers filed for chapter 12 bankruptcy protection year ended June 30, 8 percent than a year earlier.

• “The Stock Market Will Be Flying High In A Year — For 2 Simple Reasons” (MarketWatch). A bullish perspective on U.S. equities based on (1) a plausible path to a covid vaccine and (2) unprecedented government stimulus transmitting through markets.

• “The Robinhood Craze Is Now Moving Stocks Everywhere” (Bloomberg). “Retail’s [i.e., retail investors’] tentacles are everywhere. In the U.K, tax-free savings account openings at Interactive Investor jumped 238% for investors between 25 and 34 years of age in April and May…Small-time investors in Moscow bought almost twice as many Russian shares in June than in April. In Malaysia, individual buyers are at least partially behind giant rallies in medical glove makers -- one gained more than 1,500% this year. In Japan, tiny investors boosted an obscure biotech venture with seven straight years of losses by almost 11-fold on optimism for an unproven coronavirus treatment.”

• “We Read Hundreds Of Pages Of Emails That Congress Collected From The Biggest Tech Companies In the World — Here Are The Most Revealing Things We Found” (CNBC). Congress released “a curated selection” of the ~1.3 million documents produced for discovery in its investigation into competition among the tech giants that culminated in last week’s hearing.

What we’re reading (8/5)

• “Coronavirus Has Upended Everything Airlines Know About Pricing” (Wall Street Journal). As part of our ongoing coverage of the airlines, we’d be remiss not to share The Journal’s reporting that “[a]irlines have lost the ability to extract as much money as possible from travelers. And their pricing computers may stay confused for some time to come.”

• “We Need The Export-Import Bank To Help Take On China” (The Hill). A pretty good primer from Newt Gingrich about export credit agencies, and the U.S. Ex-Im Bank in particular, and the role the latter can play as a counterweight to the substantial support the Chinese government provides to PRC-domiciled exporters.

• “Ford, Struggling In A Changing Industry, Replaces Its CEO” (New York Times). “Jim Hackett, who failed to impress Wall Street, will be replaced by James Farley, an auto industry veteran who started his career at Toyota.”

• “The Ballooning Money Supply May Be The Key To Unlocking Inflation In The U.S.” (CNBC). Quoted in the article, Morgan Stanley’s chief U.S. equity strategist Mike Wilson recently observed that “[i]t’s fair to say we have never observed money supply growth as high as it is today.” Conventional macroeconomic models hold that, in the long-term, money creation leads to a general rise in the level of prices (i.e., inflation).

• “Financial Experts Recommend Americans Set Aside Giant Mesmerizing Pearl To Rub Obsessively In Retirement” (The Onion). “Hear more about the benefits of investing in an awe-inspiring pearl to tenderly caress while whispering, ‘Yes, my sweet,’ to it every night.”

What we’re reading (8/4)

• “Kodan Loan Disclosure and Stock Surge Under SEC Investigation” (Wall Street Journal). Eastman Kodak (allegedly!) shared news about an agreement with the Trump administration to make drugs at its U.S. factories with media outlets before the announcing it publicly. Apparently, some options had been granted to executives that very day.

• “It’s Past Time The Tax Code Faced The New Home-Office Reality” (New York Post). “The American home is no longer just a place for family and leisure, but also a place of business.” Hear, hear!

• “Former Uber Self-Driving Car Exec Sentenced To 18 Months In Prison” (CNN Business). A salient tale of trade secrets theft in the Valley’s notoriously hot labor market.

• “Square Stock Is Soaring After Its Earnings Results Were Leaked A Day Early. What You Need To Know” (Barron’s). Two prongs to this story: (1) someone external to Square had accessed the company’s quarterly results early, forcing the company to release the results publicly ahead of schedule, and (2) those results included Square saying “that it had seen a July recovery in the gross amount of cash its retailer clients were moving across its payment networks.” #2 seems to bode well for the recovery. #1 seems to bode poorly for capitalism in general and society writ large.

• “The Fed Is Expected To Make A Major Commitment To Ramping Up Inflation Soon” (CNBC). As they say, don’t fight the Fed.