What we’re reading (11/10)
“In The Race For A Covid-19 Vaccine, Pfizer Turns To A Scientist With A History Of Defying Skeptics—And Getting Results” (STAT News). Great article (from August) about Kathrin Jansen, the scientist leading the charge for Pfizer on the coronavirus vaccine front—an effort we (and markets) learned yesterday has been a massive success.
“A Dodgy Deal Helped Make Him A Billionaire. It Worked, Until Now” (Washington Post). “Over the past five years, Robert F. Smith became one of the nation’s most prominent billionaire philanthropists….[t]hroughout this munificence, though, Smith had a secret: He’d played a role in what federal prosecutors allege was the biggest tax evasion scheme in U.S. history, an effort by his longtime associate, Texas billionaire Robert Brockman, to hide $2 billion from tax authorities in an offshore scheme featuring a computer program called Evidence Eliminator and code names such as ‘Redfish’ and ‘Snapper.’”
“GM Plans To Hire 3,000 New Workers To Deepen Tech Expertise” (Wall Street Journal). “General Motors Co. plans to hire 3,000 new workers to bolster its engineering and software-development expertise, the latest auto maker to bulk up on tech talent as competition with Silicon Valley intensifies for the future automobile. GM said Monday the hiring will start now and continue through the first quarter of next year, focusing mostly on filling positions in engineering, IT and design, where the company is trying to operate more virtually in its development of vehicles.”
“Why The S&P 500’s Return Over The Next 10 Years Will Be Nothing Like The Last 10” (MarketWatch). “Kevin Lansing, a research advisor at the Federal Reserve Bank of San Francisco…developed a model that predicts where the Cyclically Adjusted Price Earnings Ratio (CAPE) will be at any given time. While this model historically has been impressively accurate, a big divergence has emerged over the past few months between the actual CAPE ratio and the model’s prediction. If the model is right, then the U.S. market is due for a sizeable drop.”
“The European Union Wants One More Tussle With Trump” (Dealbreaker). “Imagine the cost to purchase a jumbo jet and ship it across the Atlantic. Now add 15%. The European Union announced yesterday it will proceed with $4 billion of annual tariffs on Boeing aircraft and other U.S. goods, the latest retaliation in a protracted trade battle.”
What we’re reading (11/9)
“Pfizer's COVID Vaccine Candidate Shown To Be 90% Effective In Early Findings” (USA Today). “In a major boost to vaccine development, Pfizer and its collaborator BioNTech released early study results Monday indicating that their vaccine, BNT162b2, prevented more than 90% of infections with the virus that causes COVID-19. In the newly released data on the first 94 trial participants to come down with COVID-19, the vaccine was found to be more than 90% effective in preventing the disease. Half the participants received a placebo and half the vaccine, so the new data shows that more people who received the placebo than the vaccine came down with COVID-19.”
“Zoom And Other ‘Stay-At-Home’ Stocks Are Getting Crushed On The Positive Vaccine News” (CNBC). “Shares of Zoom Video fell sharply on Monday morning as names benefitting from people staying at home due to the coronavirus pandemic lost their appeal following the release of positive coronavirus vaccine data. Zoom Video traded more than 15% lower in the premarket. Fellow “stay-at-home” stocks Amazon and Netflix dropped 3.4% and 5.4%, respectively. Teladoc Health slid 6.4% and Shopify declined by 5.1%.”
“While the Pandemic Wrecked Some Businesses, Others Did Fine. Even Great.” (New York Times). “Perhaps most surprising: Some companies that had feared for their lives in the spring, among them some rental car businesses, restaurant chains and financial firms, are now doing fine — or even excelling. Wall Street analysts expect earnings to rebound to a record high next year. And, over all, 80 percent of companies in the S&P 500 stock index that have reported third-quarter earnings so far have exceeded analysts’ expectations, said Howard Silverblatt, senior index analyst for S&P Dow Jones Indices.”
“Affordable Care Act’s Fate Goes Before A Reconstituted Supreme Court on Tuesday” (MarketWatch). “Republican attorneys general in 18 states, backed by the Trump administration, are arguing that the whole law should be struck down because of a change made by the Republican-controlled Congress in 2017 that reduced the penalty for not having health insurance to zero. A court ruling invalidating the entire law would threaten coverage for more than 23 million people. It would wipe away protections for people with preexisting medical conditions, subsidized insurance premiums that make coverage affordable for millions of Americans and an expansion of the Medicaid program that is available to low-income people in most states.”
“With Pick For Treasury Secretary, Biden Will Tip Hand About His Economic Agenda” (Washington Post). “President-elect Joe Biden faces a crucial decision in the coming weeks that could dictate how he plans to run his administration and shepherd the nation’s economy: whom to nominate as treasury secretary. A leading candidate for the post is Federal Reserve governor Lael Brainard, who served as a senior Treasury Department official in the Obama administration. Brainard has broad policymaking experience, particularly during economic crises, as well as wide respect among international foreign ministries and central banks from her time as the department’s top diplomat.”
What we’re reading (11/8)
“This Election’s Winners And Losers” (Bloomberg). Interesting opinion from GMU economics prof. Tyler Cowen. Among the winners: “American Democracy.” As Cowen writes, “[m]aybe this one is premature, but so far the U.S. has held a closely contested election under pandemic conditions. Turnout was much higher than usual, and so far there hasn’t been much election-related violence. Could it be that the system really works?”
“Jeff Bezos, Bill Gates and Other Tech Luminaries React To Biden’s Victory” (CNBC). “Tech CEOs and Silicon Valley luminaries congratulated President-elect Joe Biden and Vice President-elect Kamala Harris after their victory in the U.S. presidential election Saturday. Amazon CEO Jeff Bezos celebrated Biden and Harris’ win in an Instagram post. Bezos said their victory signifies that ‘unity, empathy and decency are not characteristics of a bygone era.’ […] Microsoft founder Bill Gates, who has been a vocal critic of Trump’s coronavirus response, said he looked forward to ‘working with the new administration and leaders on both sides in Congress on getting the surging pandemic under control.’”
“Prospering In The Pandemic, Some Feel Financial Guilt And Gratitude” (Wall Street Journal). “Feelings of financial guilt have plagued many prospering in the uneven economic recovery. In some cases, those emotions along with gratitude are changing spending behavior. ‘Some of my clients have expressed feelings of survivor’s guilt, wondering why they are doing so well when others aren’t,’ said Sue Peck, a financial planner in Madison, Wis. As Friday’s jobs report showed, the labor market is healing but the recovery still has a ways to go. The unemployment rate and the 11 million people out of work are still double pre-pandemic levels.”
“The Digital Nomads Did Not Prepare For This” (New York Times). “Americans have never been especially good at vacation. Before Covid-19, they were leaving unused hundreds of millions of paid days off. They even created a work-vacation hybrid — the workation. The idea: Travel to a nice place, work during the day and then, in theory, enjoy the scenery in the off hours. In pandemic times, the digital nomads have simply made workation a permanent state. The bad news is it’s the worst of both worlds. They should be enjoying themselves in their new, beautiful surroundings. But they can’t enjoy themselves, because work beckons. The anxious self-optimization pingpongs between ‘Why aren’t I living my best life?’ and ‘Why aren’t I killing it at work?’”
“Secularization And The Tribulations Of the American Working-Class” (Brian Wheaton, Harvard). Potentially fascinating working paper by a Ph.D. candidate at Harvard. From the abstract: “[o]ver the past several decades, working-class America has been plagued by multiple adverse trends: a sharp increase in social isolation, an even sharper increase in single parenthood, a decline in male labor force participation rates, and a decline in generational economic mobility – amongst other things. Material economic factors have been unable to fully explain these phenomena, often yielding mixed results or – in some cases, such as that of single parenthood – lacking explanatory power altogether. I study the decline in religiosity and…find that religious decline has a strong adverse effect on the aforementioned variables. […] I find that, for most outcomes, the bulk of the effect is driven by religious attendance.”
What we’re reading (11/7)
Biden wins!
“Joe Biden Wins 2020 Presidential Election” (Wall Street Journal). “Joe Biden will be the next president of the United States after crossing 270 electoral votes, the Associated Press said, following a campaign in which he focused on tackling the coronavirus pandemic and pledged to unite a deeply divided nation that voted in record numbers on each side. The AP declared Mr. Biden the 46th president after saying he had won Pennsylvania four days after Election Day polls closed.”
“Biden Wins Presidency, Ending Four Tumultuous Years Under Trump” (New York Times). “Joseph Robinette Biden Jr. was elected the 46th president of the United States on Saturday, promising to restore political normalcy and a spirit of national unity to confront raging health and economic crises, and making Donald J. Trump a one-term president after four years of tumult in the White House.”
“Joe Biden Triumphs Over Trump As Voters Repudiate Divisive, Bullying President” (Washington Post). “Joseph Robinette Biden Jr. was elected the nation’s 46th president Saturday in a repudiation of President Trump powered by legions of women and minority voters who rejected his handling of the coronavirus pandemic and his divisive, bullying conduct in office.”
“Joe Biden Will Be 46th President Of The United States, AP Projects; Trump Disputes Results” (Chicago Tribune). “Democrat Joe Biden defeated President Donald Trump to become the 46th president of the United States on Saturday, positioning himself to lead a nation gripped by a historic pandemic and a confluence of economic and social turmoil. His victory came after more than three days of uncertainty as election officials sorted through a surge of mail-in votes that delayed the processing of some ballots. Biden crossed 270 Electoral College votes with a win in Pennsylvania.”
“Joe Biden Elected President, Trump First Incumbent Defeated In Nearly 30 Years” (Los Angeles Times). “Joe Biden was elected the 46th president of the United States on Saturday when Pennsylvania delivered the electoral votes he needed to claim the White House, ending a vitriolic campaign that sorely tested the nation amid a pandemic and deep partisan divisions. In a brief statement, Biden said he and running mate Kamala Harris were “honored and humbled” by their victory and renewed a call for unity.”
What we’re reading (11/6)
“Wall Street Went From Fear To FOMO In A Week Everything Rallied” (Bloomberg). “No wonder stock bulls are taking a breather in Friday trading: An everything rally has taken over Wall Street this week even as the market action defies expectations heading into the U.S. election. More than $4 trillion has been added to global equity markets since Monday, putting it on track for the third-biggest week of 2020.”
“Drop In Jobless Rate Shows Healing U.S. Labor Market” (Wall Street Journal). “The U.S. labor market continued to rebound in October, as employers added 638,000 jobs and sent unemployment down sharply amid signs the economy is healing from the pandemic-induced downturn. Jobs grew for the sixth straight month, the workforce expanded and the unemployment rate fell a percentage point to 6.9%, the Labor Department said Friday.”
“An Iowa Airport Has A Plan To Screen Passengers For The Coronavirus. It’s Being Held Up By The FAA.” (Washington Post). “The Federal Aviation Administration has for months been weighing whether to allow the nation’s more than 500 federally subsidized airports to spend their money on screening passengers for the coronavirus, an issue teed up by a plan developed by a fairly small airport in Iowa. Marty Lenss, director of Eastern Iowa Airport in Cedar Rapids, began working on the plan in the spring, when the spread of the virus and lockdown orders brought air travel to a near standstill…But months after Lenss started work, no passengers have been screened. Airport funds are tightly controlled by federal rules, so Lenss started asking the Federal Aviation Administration (FAA) in May if his plan qualified. He’s still waiting for an answer.”
“U.S. Wholesale Inventories Revised Higher In September” (Reuters). “U.S. wholesale inventories were higher than initially estimated in September as sales barely rose, government data showed on Friday. The Commerce Department said wholesale inventories gained 0.4% in September, instead of dipping 0.1% as estimated last month. Stocks at wholesalers increased 0.5% in August. The component of wholesale inventories that goes into the calculation of gross domestic product rose 0.4% in September. Inventories were down 3.9% in September from a year earlier.”
“The Average Millennial Has $27,251 In Non-Mortgage Consumer Debt—Here’s How They Compare To Other Generations” (CNBC). “Millennials are the generation with the fastest growing debt load, which isn’t surprising when you consider this cohort is increasingly having children, buying homes and continuing to pay off their student loans. According to the Experian 2020 State of Credit report, the average millennial consumer has about $27,251 in non-mortgage debt…Experian reports that the $27,251 in non-mortgage consumer debt includes any revolving credit or installment loans, including credit cards, student loans, car loans and/or personal loans.”
What we’re reading (11/5)
“Americans Were Given The Coronavirus Option To Raid Their 401(k). Most Didn’t” (Wall Street Journal). “Despite the financial toll of the coronavirus pandemic, few American households have raided their retirement accounts to make ends meet. Faced with the prospect of surging unemployment and a declining economy, Congress in March passed a law that temporarily allows Americans to use their retirement money today. But so far, there hasn’t been a rush of funds out of accounts. Fidelity Investments, the largest 401(k) provider in the country, has seen 4.6% of eligible people take some money out through Sept. 30 due to the virus.”
“Here’s Why The Stock Market Is Rallying Even Though The Election Outcome Is Still Uncertain” (CNBC). “The lack of a blue wave makes higher taxes and more regulation less likely, and that’s enough to rally stocks for now…traders are betting on a split Congress with a Republican Senate and Democratic House. Some Senate races were still uncalled Wednesday, and several key states were still counting votes and too close to call. Stocks bounced higher Wednesday, led by the Nasdaq which rose 3.9% as big tech, like Amazon and Apple surged.”
“As ‘Blue Wave’ Chances Crash, Wall Street Warms To Divided Government” (New York Times). “After weeks of buying and selling stocks on the expectation that Democrats would sweep both the White House and Congress in a ‘blue wave,’ Wall Street investors lost little time in returning to their traditional political posture: Gridlock is good. On Wednesday, bleary-eyed investors, traders, executives and analysts who had stayed up until the wee hours tracking election results predicted that Joseph R. Biden Jr. was likely to eke out a presidential victory while Republicans maintained their grip on the Senate and Democrats continued to hold the House. The resultant divided government seemed like it could be good for business: Stock and bond prices went sharply higher, with the S&P 500 closing up 2.2 percent.”
“Stocks Build On Post-Election Rally As Presidential Race Inches To A Finish” (Washington Post). “Stock indexes pointed Thursday to a third straight day of gains for Wall Street as the U.S. presidential election inched closer to conclusion. Moments after the opening bell, the Dow Jones industrial average was up nearly 400 points, or 1.5 percent, at 28,282. The S&P 500 index leaped 1.6 percent, to 3,499, and the tech-heavy Nasdaq rose nearly 1.8 percent, to 11,793, as investors flocked back to tech after recent sell-offs. The S&P and Nasdaq both notched their best post-election day performance on Wednesday.”
“Jeff Bezos Dumped $3 Billion Worth Of Amazon Stock” (CNN Business). “Jeff Bezos sold more than $3 billion worth of his Amazon stock this week, taking advantage of a 75% surge in his company's value this year. The Amazon CEO didn't explain why he sold so many shares, but he regularly sells off his stock, often using it to fund his Blue Origin space company and other ventures.”
What were reading (11/4)
“What Markets Are Telling Us As Election Results Roll In” (Wall Street Journal). “Markets often get politics wrong, but it is rare to see them price in all three of the plausible results of a presidential election—Republican, Democrat and long-drawn-out legal battle—in one night. Last night delivered exactly that as the voters once again mocked the pollsters. In one way markets did what they should: As the probabilities shifted, prices responded in the direction one would expect. Efficient markets!”
“Wall Street Got The Election Night It Feared The Most” (CNN Business). “[Tuesday night’s election results] left markets hugely exposed to bouts of volatility. US futures swung dramatically Tuesday night and early Wednesday morning. The US dollar gained 0.4% against a basket of top currencies, while heightened demand for benchmark 10-year US Treasuries, a safe haven asset, weighed on yields. Breaking it down: Wall Street bet that former Vice President Joe Biden would win the White House and that Democrats would take control of the Senate, paving the way for a generous fiscal relief package during a difficult winter. Biden still has multiple paths to victory. But results so far have not produced the decisive ‘blue wave’ many investors had been expecting.”
“Stock Futures Edge Higher After Choppy Overnight Trading Amid Wait For Election Results” (Washington Post). “Market futures edged higher early Wednesday as investors grappled with the possibility that final election results could be days away, with key states still tallying millions of votes in the tight contest between President Trump and Joe Biden…’We have seen a market rally for the past two sessions ahead of the election with the hope of ending electoral uncertainty,’ Anthony Denier, chief executive of the mobile-app based brokerage Webull, said in comments emailed to The Post. ‘A contested election is the biggest risk facing the markets amid this election cycle.’”
“Uber Jumps 12%, Lyft Rallies 17% After Californians Vote To Exempt Them From State Labor Law” (CNBC). “Shares of Uber and Lyft were up big in premarket trading after early voting projections suggest that Californians have decided both companies should be exempt from a labor law that aimed to make drivers employees instead of contractors. Shares of Uber were up more than 12% and shares of Lyft were up more than 17% before markets opened on Wednesday. Voters were deciding on California’s Proposition 22, a ballot measure that Uber and Lyft were using as a last hope in the state to continue operating as they currently do.”
“A Covid Vaccine Is The Next Tourist Attraction” (Bloomberg). An opinion piece from GMU’s Prof. Tyler Cowen. “Covid-19 has brought so many new and difficult choices into people’s lives, and now there is another one, particularly for well-to-do Americans: If a vaccine were not yet available in the U.S., would you fly to another country to get it? It is now possible to have a decent sense of which nation is winning the vaccine race, and it is not the U.S. A Chinese vaccine is being distributed now, and so far it seems to be safe and modestly effective. The data are not sufficiently clear that you ought to get one now, but it is easy to imagine that in another month or two the Chinese vaccine will be a plausible option.”
What we’re reading (11/3)
Happy election day!
“What Wall Street Will Be Watching As Votes Are Counted” (New York Times). “For months, investors have signaled that their No. 1 desire is more federal spending to keep the economy afloat in the face a pandemic that is now rapidly expanding. So when the election season culminates on Tuesday, the prospects for a stimulus bill are likely to influence how Wall Street reacts.”
“Here’s What Every Election Since 1900 Can Tell Us About The 2020 Race’s Impact On Stocks” (CNBC). “As stocks rose Monday, a positive setup to what could be a wild week for the U.S. market, one top strategist said his historical analysis suggests a notably tough setup for Republican incumbent President Donald Trump heading into Election Day. Ed Clissold, chief U.S. strategist at Ned Davis Research Group, studies elections going back to 1900 and analyzes their impact on the stock market. ‘We looked back since 1900 in years when you’ve had either a recession or a 20% drop in the market, and the incumbent party is 0 for the last 6 times when you’ve had either of those happen,’ Clissold told CNBC’s ‘ETF Edge’ on Monday. ‘Of course, this time, we’ve had both happen.’ ‘You’d have to go all the way back to Harry Truman in 1948 to find a time when a president overcame that scenario,’ he said.”
“Affective Polarization Did Not Increase During The Coronavirus Pandemic” (NBER). Interesting new study by some eminent scholars. The abstract: “We document trends in affective polarization during the coronavirus pandemic. In our main measure, affective polarization is relatively flat between July 2019 and February 2020, then falls significantly around the onset of the pandemic. Two other data sources show no evidence of an increase in polarization around the onset of the pandemic. Finally, we show in an experiment that priming respondents to think about the coronavirus pandemic significantly reduces affective polarization.”
“The Pandemic Case For The Two-Day Workweek” (The New Republic). “We’ve known for some time that residents of countries that collectively work less as a result of strong social provisions are much happier than we are. (‘Family life balance is phenomenally better than it would be back in the U.S.,’ an American transplant to Denmark, which consistently ranks as the happiest country on earth, marveled to CBS a few years ago. ‘The Danes, they leave work at five o’clock and they’re home for dinner by 5:30.’) Even just in the United States, smaller experiments to recalibrate the balance of the time workers split between work and leisure have generated measurable improvements in people’s quality of life: Throughout the pandemic, the city of Stockton, California, has continued a universal basic income program, which residents say has dramatically reduced their stress and allowed them to spend more time with their families.”
“Ant’s Record IPO In Shanghai And Hong Kong Suspended” (Wall Street Journal). “The Shanghai Stock Exchange postponed Ant Group Co.’s blockbuster initial public offering, a day after a quartet of regulatory agencies summoned Jack Ma, the company’s controlling shareholder, and top executives to a closed-door meeting. The meeting with regulators and changing regulatory environment have disqualified Ant from listing this Thursday, the bourse said in a statement on Tuesday. The recent developments are material events that haven’t been properly disclosed to investors, the exchange said.”
What we’re reading (11/2)
“Mortgage IPO Boom Faces Market Turbulence” (Wall Street Journal). “Mortgage lenders hoping to take advantage of a surprisingly prosperous year are facing a big challenge: rising market turbulence. The August market debut of Quicken Loans parent Rocket Cos. kicked off a flurry of planned public listings for mortgage companies, marking a major reversal for a group that just two years ago was under significant pressure. At least six of the 30 largest U.S. mortgage lenders have gone public this year or are seeking to, according to industry-research group Inside Mortgage Finance. Housing demand and the broader financial markets have been remarkably resilient during a recession that has put millions of Americans out of work. Mortgage rates have hit their lowest level on record during the coronavirus downturn, spurring a refinancing boom and delivering hefty profits for home lenders.”
“Two Major Mall Owners File For Bankruptcy” (CNN Business). “Two owners of a combined 130 or so malls across the US have filed for bankruptcy, signaling that the pandemic and shifting consumer habits continue to rattle the retail industry. CBL Properties (CBLPRD) and PREIT (PEI) filed for Chapter 11 on Sunday and both will continue operating while they navigate the restructuring process. The companies have previously warned they were in perilous positions because some of their largest tenants, including JC Penney, Tailored Brands and Ascena Retail Group, have filed for bankruptcy this year.”
“Wall Street Traders Are Having A Tough Time Positioning For The Election” (CNBC). “How is Wall Street positioned for the election? Even Wall Street isn’t sure. For most of October, “buy the stimulus trade” was the main idea on Wall Street. After all, polls showed odds were good for a Biden victory that would likely entail some kind of large-scale stimulus. Investors were buying small-cap stocks, infrastructure plays and alternative energy sectors like solar, wind and other clean energy ETFs. Then Covid came back with a vengeance. Suddenly, there was concern a renewed outbreak and its impact on earnings would overwhelm any benefits from stimulus. And with concerns around lower earnings, there was a new wrinkle: tech valuations.”
“The Quiet Architect Of Biden’s Plan To Rescue The Economy” (New York Times). “In recent months Joseph R. Biden Jr.’s campaign developed a virtual road show to reassure executives, investment fund managers and financiers who were nervous that the Democratic candidate’s plans to increase taxes could hurt the American economic recovery. Penny Pritzker, the billionaire former Commerce secretary under President Barack Obama, would lead off with an overview of Mr. Biden’s plans. But the worried capitalists always wanted details, and for that, Ms. Pritzker would turn over the video calls to the little-known fulcrum of the Biden campaigns economic policymaking: a 43-year-old tax and budget specialist named Ben Harris.”
“The Wealthy Rush To Shield Their Assets From Biden” (Axios). “High-net-worth Americans are busy setting up trust funds, giving large gifts to heirs and philanthropies, and even selling family businesses as they brace for the tax hikes a Biden presidency might bring. Why it matters: President Trump has jacked up the amount that people can leave tax-free to their heirs to record highs. If Biden wins, his tax shakeup would have ripple effects on how the wealthy buy and sell properties, allocate savings and investments, and give to charity…Biden says he wants to raise taxes on people who earn more than $400,000 a year — which excludes most Americans — and lower the amounts people can give tax-free to their spouses and heirs. He also wants to tax capital gains and dividends at 39.6% for people making over $1 million (which would be bad for private equity investors and others).”
What we’re reading (11/1)
“Companies Fret Over Coronavirus Despite Rebound” (Wall Street Journal). “Business for many companies rebounded faster than expected following the coronavirus-related economic shock this spring, but many corporate leaders are warning that the bounceback wasn’t uniform and may prove fleeting as infections surge again. Stronger demand buoyed companies ranging from auto makers to cereal producers during the quarter that ended in September as businesses and consumers adapted to the disruptions caused by the coronavirus. Yet executives described the path forward as tenuous, with caseloads hitting records in the U.S. and government officials in Europe and elsewhere imposing limits on some activities.”
“Boarded-Up Windows and Increased Security: Retailers Brace For The Election” (New York Times). “Nordstrom, the high-end department store chain, said it planned to board up some of its 350 stores and hire extra security for Election Day on Tuesday. Tiffany & Company, the luxury jeweler, said that ‘windows of select stores in key cities will be boarded in anticipation of potential election-related activity.’ Saks Fifth Avenue said it was ‘implementing additional security measures at certain locations in the event of civil unrest due to the current election.’ […] [t]he nation is on edge as the bitter presidential contest finally nears an end, the latest flashpoint in a bruising year that has included the pandemic and widespread protests over social justice. Anxiety has been mounting for months that the election’s outcome could lead to civil unrest, no matter who wins. In the retail industry, many companies are not simply concerned about possible mayhem — they are planning for it.”
“America’s Luxury Hotels On The Brink” (Washington Post). “Traditionally at this time of year, staff at America’s luxury hotels are beginning their work as modern-day elves, preparing lobby decorations, cocktail menus, toy giveaways and light displays as they ready themselves for a season full of holiday parties, winter weddings and New Year’s Eve festivities…[t]his year the season won’t carry the same cheer. Landmark hotels, which have long served as downtown gathering places and backdrops for the holiday season, are eerily, strangely vacant, having lost well over half their business and told most of their staff that they are not needed.”
“Wall Street Week Ahead: Big Tech Stocks May Face Post-Election Headwinds, No Matter Who Wins” (Reuters). “Some investors are betting the technology and communications stocks that drove a massive rebound in U.S. markets this year will face a tougher slog in coming months, no matter whether Republican President Donald Trump or Democratic challenger Joe Biden wins Tuesday’s election. [But] [b]etting against big technology has been a risky proposition over the last decade, as stocks like Amazon, Google and Netflix have shot higher at the expense of so-called value and cyclical stocks such as banks and energy companies.”
“Google Ad Costs, Not Its Alleged Monopoly, Irks Businesses” (U.S. News & World Report). “When asked about Google, Bryan Clayton voices a familiar lament among small business owners. ‘You keep getting squeezed further and further down the search results page,’ says Clayton, CEO of GreenPal, a company that operates an app to help homeowners find lawn care. ‘As a startup, you don’t have a million-dollar advertising budget.’ The Justice Department sued Google on Oct. 20 for anticompetitive behavior, saying the company’s dominance in online search and advertising harms rivals and consumers. Owners such as Clayton have a different beef. What’s unfair about Google, they say, is the way it gives the greatest prominence in search results to the companies that spend the most on advertising.”
October 2020 performance update
Happy Halloween, everybody! Let’s get right to it. Stoney Point had another solid month. Just as our Prime and Select picks beat the market in September, they did it again in October. By my calcs:
The Prime picks we announced on September 30 beat SPDR’s S&P 500-tracking “SPY” ETF by 3.14 percentage points in October (-0.16 percent return in the month for Prime, -3.30 percent for SPY).
The Select picks we announced on September 30 beat the SPY ETF by 0.29 percentage points in October (-3.01 percent return in the month for Select, -3.30 percent for SPY).
These are not small beats. On an annualized basis, they amount to beating the market by 42.5 percentage points for Prime and 3.3 percent for Select (based on 22 trading days in October and 252 in an average year: 0.425 = (1+0.0314)^(252/22)-1 and 0.033 = (1+0.0029)^(252/22)-1). Over 10 years, outperforming the market by these magnitudes on a monthly basis amounts to cumulative outperformance of a gargantuan 3,354.3 percent and an also-large 39.0 percent for Prime and Select, respectively (33.54 = (1+0.0314)^(10*252/22)-1 and 0.39 = (1+0.0029)^(10*252/22)-1). Being only six months into this endeavor, it’s certainly too early to quantify an expected average outperformance going forward or do any sort of forecasting; but these numbers do put the October returns in perspective.
It’s worth noting that these beats come in the face of some very turbulent market conditions as coronavirus infections surge in the U.S. and globally and as we inch closer daily to what is being billed as possibly one of, if not the, most contentious American presidential election in recent memory. Indeed, the CBOE’s “VIX” index—a forward looking measure of expected volatility derived from options prices—shot up in the last week of the month, indicating that investors anticipate choppy waters downstream for the stock market in November. At the same time, stocks in general had their worst week since March this past week.
The chart below shows the cumulative performance of Stoney Point’s picks against the SPY ETF and the hypothetical “Bogleheads” portfolio to date per my calculations. It’s not obvious from the chart, but Select seems to be coming back. Earlier this week it had returned to about parity with the SPY ETF before hitting a wall in the last two trading days of the month. Prime continues to crush the market, despite risk characteristics that suggest it should only be performing about as well as the market. Let’s hope for good things in November.
That’s all for now. You can check out the position-level October performance for our Prime and Select picks on our performance page and our picks for November here to get in on the action. Of course, if you haven’t already, follow Stoney Point on Twitter for the latest updates (@StoneyPointCap).
What we’re reading (10/31)
“Stocks Just Wrapped Up Their Worst Week Since March” (CNN Business). “It has been a messy week for the stock market. With only four days to go until Election Day, rising Covid-19 infections and uncertainty about further government stimulus to help the economy, there's plenty for investors to worry about. Stocks had their worst week since March, when the market tumbled under the first wave of coronavirus infections and lockdowns -- and one of their worst weeks of the year as a whole. All three major indexes also recorded the second straight month of losses.”
“We’re Halfway Through Earnings Season, Here’s What We’ve Learned” (Dealbreaker). “Beer sales in bars and restaurants remain under pressure, but Anheuser-Busch InBev said yesterday consumers have ‘quickly adjusted to the new reality’ of at-home imbibing…[s]treaming giant Spotify is officially in the groove, reporting a revenue jump of 14% yesterday…[c]able and entertainment conglomerate Comcast said yesterday its net profit fell 37% in Q3 with a potpourri of trends…[Royal Caribbean] came into port with negative (yes, negative) $34 million in revenue as it processed refunds, cancellations, and penalties.”
“Inside the Wild Stock Market For Politics Where Traders Bet On Our Next President” (Marker). “Right now someone, somewhere, is trying to make money off the latest news cycle. When the coronavirus pandemic began sweeping the globe, people began flipping hand sanitizer, while fashion brands pivoted to selling masks. When nationwide protests against police brutality and systemic racism erupted in the wake of George Floyd’s murder, some retailers saw an opportunity to sell merch, such as Black Lives Matter–themed wine stoppers and garden gnomes. And when President Trump tweeted on October 2 that he had tested positive for Covid-19, traders looking to earn quick cash on yet another campaign hiccup turned to PredictIt, an online prediction market where people buy and sell shares of what are essentially futures contracts for political events like elections, nominations, and presidential pardons.”
“‘Cash Is Trash,’ So Let’s Bet $425 Million On Bitcoin” (Wall Street Journal). “In volatile markets, you can use cash as offense or defense. MicroStrategy Inc., which recently had half-a-billion dollars in cash sitting around, thinks it can do both. The company could have gotten rid of its excess cash by paying a big dividend or by buying back much of its stock. Instead, MicroStrategy bet half its total assets on bitcoin. So is this a publicly traded company or is it a hedge fund?”
“The Man Who Wants To Help You Out Of Debt—At Any Cost” (The Guardian). “Dave Ramsey, America’s most influential personal finance guru, drives a pickup truck that, he says, will eat your electric car. He wears a .45 on his hip with a hollow-point in the chamber. He is an older white male, a self-described ‘capitalist pig’, and an evangelical Christian who almost always votes conservative. He hates government intervention in his life – and yours. His mortal enemy, however, is personal debt, and he has spent the last three decades on a crusade against modern usury, in the form of credit card companies (scum), payday lenders (the scum of the earth), and debt collectors (‘some good people’, but largely ‘complete scum’). Ramsey believes that as long as you have one red cent of debt – credit card debt, student loans, car payments, mortgages, medical bills – you can never be free. The day you take scissors to your credit cards is the beginning of your financial salvation.”
What we’re reading (10/30)
“Big Tech Companies Reap Gains as Covid-19 Fuels Shift In Demand (Wall Street Journal). “Tech giants including Amazon.com Inc. and Google reported strong quarterly sales and profits that showed how pandemic-era demand for their digital services and gadgets is driving them to new heights even in the midst of a debate about their market power.”
“Delta And Pilot Union Reach Preliminary Deal To Avoid Furloughs Until 2022” (CNBC). “Delta Air Lines and the union that represents its pilots have reached a preliminary cost-cutting agreement that would avoid furloughs until Jan. 1, 2022, the union said Thursday. The agreement still needs approval from Delta’s early 13,000 pilots. The agreement would reduce monthly minimum guaranteed hours by 5%. The company had planned to furlough up to 1,941 pilots. Airline employees who are furloughed generally retain rights to be recalled by the company, but given the industry’s downturn in the pandemic, it’s not clear when that could be.”
“Economy’s Big Rebound Leaves A Shortfall As Progress Slows” (New York Times). “U.S. economic output increased at the fastest pace on record last quarter as businesses began to reopen and customers returned to stores. But the economy has climbed only partway out of its pandemic-induced hole, and progress is slowing. Gross domestic product grew 7.4 percent in the third quarter, the Commerce Department said Thursday. The gain, the equivalent of 33.1 percent on an annualized basis, was by far the biggest since reliable statistics began after World War II.”
“What GDP Can And Cannot Tell You About The Post-Pandemic Economy” (The Economist). “Pity the world’s chartmakers. For years, normal economic fluctuations will be dwarfed by the extraordinary gyrations of 2020, such as the third-quarter gdp figures that are now rolling in. These data are informative—measures of output today are in part a reflection of governments’ success or failure in controlling the spread of covid-19. Yet they can easily mislead, and should be treated with care.”
“‘I’d Like To See It For Myself’ - Meet The ‘Dark Tourists’ Booking Trips To Wuhan” (Vice). “A controversial vacation trend, “dark tourism” refers to travel to sites connected with death and atrocity. This could be places like Auschwitz-Birkenau and the Chernobyl Exclusion Zone, but arguably also school trips to World War Two memorials or a visit to the Berlin Wall. Wuhan, the former epicentre of COVID-19, is the latest destination for dark tourism trips. After the city’s 76-day lockdown ended in April, residents have attempted to return to some kind of normality, with recent GDP data now suggesting that China may be the first major economy to recover from the pandemic. And as the country’s economy improves, so does Wuhan’s tourism sector, attracting visitors curious about the deadly virus’s initial focal point.”
November Prime + Select picks available now
The new Prime and Select picks for November are available starting now, based on a model run put through today (October 30). As a note, we’ll be measuring the performance on these picks from the first trading day of the month, Monday, November 2, 2020 (at the mid-spread open price) through the last trading day of the month, Monday, November 30 (at the mid-spread closing price). If you’re following the strategy perfectly, you’d want to close out your October positions by end-of-trading today, and re-balance at the start of the first trading trade of next month.
You can check out the latest picks here.
What we’re reading (10/29)
“A Biden Win Could Renew A Democratic Split On Trade” (New York Times). “As the Biden transition team begins gearing up to select the people who might staff the administration, the progressive wing of the party is pushing for appointees with deep ties to labor unions and congressional Democrats. And they are battling against appointees that they say would seek to restore a “status quo” on trade, including those with ties to corporate lobbyists, trade associations and Washington think tanks that advocate more typical trade deals.”
“Business Exit During The COVID-19 Pandemic: Non-Traditional Measures In A Historical Context” (Board of Governors of the Federal Reserve). “Given lags in official data releases, economists have studied "alternative data" measures of business exit resulting from the COVID-19 pandemic. Such measures are difficult to understand without historical context, so we review official data on business exit in recent decades. Business exit is common in the U.S., with about 7.5 percent of firms exiting annually in recent years, and is countercyclical (particularly recently). Both the high level and the cyclicality of exit are driven by very small firms. We explore a range of alternative measures and indicators of business exit, including novel measures based on payroll events and phone-tracking data, and find tentative evidence that exit has been elevated during 2020. Evidence is somewhat mixed, however, and exiting businesses do not appear to represent a large share of U.S. employment.”
“U.S. States Face Biggest Cash Crisis Since The Great Depression” (Wall Street Journal). “Nationwide, the U.S. state budget shortfall from 2020 through 2022 could amount to about $434 billion, according to data from Moody’s Analytics, the economic analysis arm of Moody’s Corp. The estimates assume no additional fiscal stimulus from Washington, further coronavirus-fueled restrictions on business and travel, and extra costs for Medicaid amid high unemployment.”
“A Spice Boom Has Left Manufacturers Scrambling, And Packaging Materials Can’t Keep Up” (Washington Post). “The most sought-after at times have been as costly as precious metals. Their allures set world exploration in motion, fueled sailing expeditions around the Cape of Good Hope, precipitated the establishment of colonies. And now, more than 4,000 years after the initial fervor, we are living through a new spice boom.”
“Hedge Fund Invests In Allegedly Defrauded Anti-Fraud Specialist” (Dealbreaker). “For years, and indeed as recently as earlier this year, venture capital firms threw money hand over first at a company called NS8. This made a certain amount of sense, insofar as NS8 was a promising player in the ever-growing field of cyber-fraud prevention. But, in one of those delightful turns of events, what they were apparently financing was a fraud in and of itself, as their decision to buy $17.5 million worth of shares from founder Adam Rogas was based on allegedly bogus financials provided to them by Rogas.”
What we’re reading (10/28)
“Social Media CEOs To Come Under Senate Scrutiny” (Wall Street Journal). “Chief executives of the largest social media companies will testify Wednesday before the Senate Commerce Committee in a hearing examining their platforms’ role in shaping political discourse. Less than a week before Election Day, members of the Republican-led panel are expected to question Facebook Inc. CEO Mark Zuckerberg, Twitter Inc. CEO Jack Dorsey, and Sundar Pichai, CEO of Google and YouTube owner Alphabet Inc., about their treatment of politically charged content, from advertising to news to candidates’ posts.”
“Nasdaq and Invesco: Mothers of Innovation” (CNBC). A couple of new tech-focused funds from Invesco and Nasdaq: “The Invesco NASDAQ-100 ETF (QQQM) is designed for easier inclusion in mutual funds and dedicated plans, and appeals to long-term, buy-and-hold investors such as people saving for retirement. Expanding beyond the Nasdaq-100 ecosystem, the Invesco NASDAQ Next Generation 100 ETF (QQQJ) looks at those companies next in line to join the Nasdaq-100, and offers exposure to mid-cap companies that will be the next generation of leading innovators. The Invesco Nasdaq-100 Mutual Fund (IVNQX) is a mutual fund to help advisors and defined contribution providers tap Nasdaq-100 innovation. And the Invesco Nasdaq-100 Unit Investment Trust (QQQG) provides advisors with a pre-determined expiration date and dividends of a unit investment trust.”
“Why Dunkin’ Is Worth Nearly $9 Billion” (DealBook). “Dunkin’ Brands is close to a $8.8 billion deal to sell itself to Inspire Brands, the restaurant operator backed by the investment firm Roark Capital. A deal could be announced as soon as today, sources say. Here’s everything you need to know about the scoop[.]”
“Crop Prices Dragged Lower As Weather Improves In Key Growers” (Bloomberg). “Prices for most major agricultural commodities fell as key weather forecasts improved and crop futures joined a broader global selloff. Wheat fell for a third day in Chicago, the longest rout in seven weeks, while corn dropped the most in more than a month. Cocoa, sugar, cotton and coffee all traded lower.”
“Billionaire Blasts ‘Gilligan’s Island’ On A Loop To Annoy Neighbor, CA Suit Says” (Sacramento Bee). “A billionaire investor is being sued by his next-door neighbor in Laguna Beach and is accused of blasting the “Gilligan’s Island” theme song at all hours of the night in a feud over a $1 million sculpture. Bill Gross, the co-founder of Pimco, and his partner, Amy Schwartz, reportedly erected a 22-foot-long sculpture with netting to protect it from damage, according to the lawsuit. Gross’ neighbors Mark Towfiq, a tech entrepreneur, and his wife, Carol Nakahara, allege that the couple didn’t get permission from the city to build the statue…[t]he lawsuit states that Towfiq called the city and complained about the structure, which was installed in 2019…[t]he city sent Gross a letter on July 28 about the sculpture and netting, saying that it lacked permits. That’s when the neighbors say the music started.”
What we’re reading (10/27)
“AMD Agrees To Buy Rival Chip Maker Xilinx For $35 Billion” (Wall Street Journal). “AMD and Xilinx on Tuesday said the companies reached an all-stock deal that would significantly expand their product range and markets and deliver a financial boost immediately on closing. The Wall Street Journal previously reported the two were close to an agreement. The U.S. semiconductor industry is going through a seismic transformation, driven both by a wave of corporate transactions and a pandemic that has supercharged demand for some chips”
“S&P CoreLogic Case-Shiller: US Home Prices Up 5.2% in August” (U.S. News & World Report). “U.S. home prices posted a robust gain in August — another sign that the American housing market remains strong despite economic fallout from the coronavirus pandemic. The S&P CoreLogic Case-Shiller 20-city home price index, released Tuesday, showed that home prices climbed 5.2% in August from a year earlier, accelerating from a 4.1% gain in July. The gain was stronger than economists had expected.”
“Robinhood Co-CEO Says Young Traders See Market Downturns As Buying Opportunities For The Long Term” (CNBC). “The young customers of Robinhood are actually smart, long-term oriented investors who recognized that the market sell-off in March was a buying opportunity, according to the zero commission pioneer’s co-founder. ‘What we’ve seen is they typically see volatility and market downturns as buying opportunities, just because they’re at the beginning of their investing journey and think they recognize that there’s many, many decades for things to, to smoothen out in front of them,’ co-founder and co-CEO Vlad Tenev told CNBC’s “Squawk Box.’”
“The Data of Long-Lived Institutions” (The Long Now Foundation). “I’ve been collecting data on all of the longest lived institutions in the world. As you look at these, there’s a few things that stick out. Notice: brewery, brewery, winery, hotel, bar, pub, right? And also notice that a lot of them are in Japan. There’s been a rough system of government there for over 2,000 years (the Royal Family) that’s held together enough to enable something like the Royal Confectioner of Japan to be one of the oldest companies in the world…[i]n the West, most of the companies that have survived for a very long time are basically service companies. It’s a lot easier to reinvent yourself as a service-oriented company than it is as a commodity company when that particular commodity goes out of use…Something else that came out of this research is the fact that the length of company’s lives is shrinking at almost one year per year. In [1950], the average company on the Fortune 500 had been around for 61 years. Now it’s 18 years. Companies’ lives are getting shorter.”
“Will Steve Cohen, A Symbol Of Wall Street Malfeasance, Own The New York Mets?” (New Yorker). “Cohen and S.A.C. Capital [his former hedge fud] were, for several years, at the center of one of the most high-profile financial-fraud investigations ever conducted, which resulted in the indictment of the company. Cohen was never charged personally, but his firm paid $1.8 billion in forfeitures and penalties, and Cohen was required to shut it down. He also was barred from managing outside investor money until January, 2018. Martoma, a former S.A.C. portfolio manager, was sentenced to nine years in prison for insider trading at S.A.C., in what was billed as one of the largest cases of its kind. In the indictment of S.A.C., the U.S. Attorney for the Southern District of New York, Preet Bharara, was sweeping in his condemnation of the company: in the course of more than a decade, the indictment alleged, numerous employees engaged in insider-trading offenses involving more than twenty publicly traded companies, which generated hundreds of millions of dollars in ill-gotten profits for the fund. Cohen micromanaged the company’s operations, and, in the years he supervised, it became ‘a veritable magnet for market cheaters.’”
November picks available soon
Reminder: we’ll be publishing our Prime and Select picks for the month of November on 10/30. As always, we’ll be measuring SPC’s performance for the month of October, as well as SPC’s cumulative performance, assuming the sale of the October picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Friday, October 30). Likewise, performance tracking for the month of November will assume the November picks are bought at the open price (at the mid-point of the opening bid and ask prices) the first trading day of the month (Monday, November 2).
Stay tuned for the new picks and the performance updates
What we’re reading (10/26)
“The World-Changing Technology of Textiles” (Wall Street Journal). “From cave-dwellers twisting plant fibers into string to scientists embedding computer chips into threads, the story of textiles is the story of human ingenuity in all its manifestations: technical, artistic, economic and cultural. The conflict between highly productive new technologies and fears of mass unemployment—’the robots are taking our jobs’—started with textiles. The Luddites, English weavers who smashed mechanical looms in the early 19th century, gave their name to technological resistance. Ironically, however, those weavers owed their own well-paid jobs to an earlier disruptive technology: spinning machines, which produced the yarn that weavers turned into cloth.”
“How The Virus Slowed The Booming Wind Energy Business” (New York Times). “The wind energy business was growing about 10 percent a year before the pandemic. But industry officials now fear that projects under construction might be postponed or canceled because of the pandemic. The industry had hoped Congress might provide aid to renewable energy, but it got little from the stimulus bills passed in the spring…‘[e]verybody is trying to figure out how everything is going to land,’ said Benoit Rigal, a vice president of engineering and construction for EDF.”
“How Bookstores Are Weathering The Pandemic” (Vox). “The pandemic arrived early for Emily Powell, owner of Powell’s Books in Portland, Oregon. The state had one of the first confirmed cases of Covid-19 in the US in February. As she watched more cases pop up across the country, ‘I felt an increasing sense of panic and crisis,’ she said. On March 15, she abruptly closed her stores in the middle of the day. She immediately shrank her staff from 500 to 60 who were ‘just helping us turn the lights off and put out-of-office messages on the website.’ Almost overnight, she shifted her business entirely to online orders.”
“Worried About Contested Election? Here’s What Went Down In Stocks During 2000 Bush-Gore Battle” (CNBC). “The last time there was a contested presidential election, the S&P 500 and technology stocks tanked. Can it happen again? Many Americans are wondering how long it will take for the winner of the presidential election to be declared. Fears about a contested election and battles over ballots that could end up in courts, as well as a president who has not said he will accept the results, could unnerve investors. That may be especially true with stocks near all-time highs in spite of so many existing headwinds, including a pandemic and massive job losses and uncertain progress on vaccines and more federal stimulus. And the top tech stocks in the S&P 500 representing as much as 20% to 25% of the index in this bull market.”
“Investors Are Pushing Into ESG For Predictable Reasons: And It Has Nothing To Do With Saving The Manatees” (Dealbreaker). “According to a recent survey by investment manager Nuveen, 53% of investors cited higher returns as the primary motivation for investing in ESG [environmental, social, and governance] funds…[w]hatever the motivation, the industry is listening. Seventeen new ESG-focused ETFs have launched so far this year, up from 10 in all of last year. ESG funds have raked in over $4.1 billion in October, on track for their best month since at least 2013…[but] [t]he Securities and Exchange Commission does not regulate how the "ESG" label is applied, and it is increasingly being used as a marketing tactic.”
What we’re reading (10/25)
“Quibi Is Hollywood’s Biggest Short-Form Failure—But Not It’s First” (Wall Street Journal). “The demise of the mobile-streaming platform Quibi a mere six months after it went live is the latest example of Hollywood’s struggles in making a business out of short-form content. Quibi may be the best-known and best-funded attempt to crack the short-form riddle, but it is far from the only one. The media industry is littered with the carcasses of short-form streaming platforms.”
“Rising Rates Seem To Signal A Recovery Is Near, But Investors Wonder Whether They Can Be Believed” (CNBC). “Bonds, it would seem, are speaking the bulls’ language. Treasury yields rolled to a four-month high last week, the 10-year note reaching 0.84%, as U.S. economic data continue to arrive generally better than expected and the markets anticipate further fiscal-support worth trillions either sooner or later, under this administration or the next…[s]till, it’s worth considering other drivers of the backup in yields and related equity reactions.”
“Influencers’ Next Frontier: Their Own Live Shopping Channels” (The Verge). “2020 has been the year of live shopping for US tech companies. Amazon launched Amazon Live for influencers in July, and Instagram and Facebook launched live shopping features in August. Google’s R&D division, Area 21, also launched Shoploop, which isn’t live but offers shoppable stories, and smaller startups continued their efforts to make live shopping not just a thing, but the future of retail. On every platform, it ends up looking like a modern twist on QVC — but with influencers instead of celebrities, and those influencers getting a cut of the sales.”
“Minimum Wage Laws During A Pandemic” (Marginal Revolution). A bit of a counterpoint to the article I posted yesterday arguing for a $15/hour minimum wage. According to Prof. Tyler Cowen at GMU: “Put in whatever exotic assumptions you wish, a basic model will spit out a lower optimal minimum wage for 2020-21, again for small business at the very least. This is the advice that leading Democratic economists should be offering to Biden.”
“Convicted User of Material Non-Public Information Pretty Pissed About Other Use Of Material Non-Public Information” (Dealbreaker). “Some years ago, The New York Times and Wall Street Journal published some fun little stories about passing some tidbits of material non-public information on the greens and fairways. These were especially fun because the beneficiaries of these tips were Phil Mickelson and a professional gambler named Billy Walters, and even more so because the alleged tipper may have been none other than Carl Icahn. These reports did not make Icahn very happy. But they arguably made Walters even more unhappy, because while Icahn was eventually cleared of wrongdoing, Walters went to trial and then jail for it, a series of events set in train by those articles, which were themselves set in train by a chatty FBI agent. And as far as Billy Walters is concerned, that means he shouldn’t be a convicted insider-trader anymore.”