What we’re reading (11/14)
“Home Prices Are Rising Everywhere In The U.S.” (Wall Street Journal). “Home prices rose in every corner of the U.S. during the third quarter, as the pandemic boosted activity in a way not seen in recent history….[t]his broad-based rally for single-family homes marked the first time since 1980 that every metro area tracked by NAR posted an annual price increase in the same quarter, NAR said. Back then, the association tracked 19 metro areas. ‘Americans are viewing their home as something more than what it was before,’ as they spend more time at home due to the pandemic, said Lawrence Yun, NAR’s chief economist. ‘Right now there is a greater interest for larger-size homes, and naturally they are more expensive.’”
“Morgan Stanley Says Housing Discrimination Has Taken A Huge Toll On The Economy” (CNBC). “In addition to its human toll, racial housing inequality is exacting an economic price that has cost nearly 800,000 jobs, $400 billion in tax revenue and prevented about five million from owning homes, according to a Morgan Stanley analysis. Disparities in home ownership are a root cause of wealth disparities across society, the Wall Street firm said in research that also looked at the rising unaffordability of rental housing and how that fits into the broader issue.”
“Disney+ Passes 73 Million Subscribers As Streaming Takes Center Stage” (New York Times). “Disney on Thursday reported an 82 percent decline in quarterly operating income, the result of steep losses at its coronavirus-devastated theme park division and the postponement of major movie releases. But Wall Street had already decided that Disney’s overall results for the quarter, the fourth in the company’s fiscal year, would be “apropos of nothing,” as Todd Juenger, an analyst at Sanford C. Bernstein, wrote in a Nov. 2 research report. Investors are confident that Disney’s theme park empire will come roaring back when a vaccine is deployed — and all they really care about, at least for the moment, is streaming, streaming, streaming.”
“This Company Conquered The Ice Cream Market. Home Delivery Is The Final Frontier” (CNN Business). “The Anglo-Dutch firm has gone on to acquire some two dozen other major ice cream brands, including Klondike and Ben & Jerry's, while pioneering its own Magnum line. It sells ice cream in 63 countries around the world and commands almost a fifth of global ice cream sales, a bigger share than its next four competitors combined, according to market research firm Euromonitor. Unilever is now the undisputed king of ice cream. But as the coronavirus pandemic rages on, and lockdowns persist, the company is taking inspiration from the delivery tricycles of its early years to conquer one final frontier: ice cream delivered to your home, on demand.”
“Many Boomers Still Own Too Much Stock: Fidelity” (Yahoo!Finance). “Fidelity released an update on its retirement trends for the third quarter, a snapshot of the activity in the company’s 30 million retirement accounts. Due to the market’s upswing over the spring and summer since the initial coronavirus crash in March, the company reported a record-number of 401(k) millionaires. But the company found a worrisome trend continuing: there are many baby boomers who own too much stock. The company said that 38% of its boomer cohort, now age 56 to 74, had more stock than recommended for their age group…[s]even percent of boomers with retirement accounts at Fidelity actually have 100% stock in their retirement account. Around a third of boomers have moved savings into “more conservative investments,” the company said.”
What we’re reading (11/13)
“ECB’s Lagarde Has ‘Hunch’ Digital Europe Will Launch In 2-4 Years” (CoinDesk). “‘We might well go in that direction,’ Lagarde said Thursday on a virtual panel with Federal Reserve Chair Jerome Powell and Bank of England Governor Andrew Bailey. ‘My hunch is that it will come.’ ECB officials have previously disclosed they are conducting research into a central bank digital currency, and Bank of Finland Governor Olli Rehn told Reuters last month he believes a digital euro is “very likely” to debut in the next decade.
“More High-Yield Muni Borrowers Are Defaulting But Investors Still Want In” (Wall Street Journal). “Covid-19 is wreaking havoc on the market for risky municipal bonds. Investors desperate for tax-exempt yield are still piling in. Fixed-income returns that come with a tax break have become so precious to affluent American households that they are willing to overlook a spike in defaults, growing reports of repayment trouble and contagion risks of communal living projects. The S&P Municipal Bond High Yield Index is now only about 1% lower than its pre-coronavirus pandemic level, despite falling 15% in March as global shutdowns roiled the market.”
“DoorDash Release Filing To Go Public, Reports $149 Million In Losses On Revenue Of $1.9 Billion Through September” (CNBC). “DoorDash, the leading food delivery app in the U.S., filed its IPO prospectus with the Securities and Exchange Commission on Friday. The company will list its shares on the New York Stock Exchange under the symbol ‘DASH.’ DoorDash reported $1.9 billion in revenue for the nine months ended September 30. That’s up from $587 million during the same period last year. As its revenue grew, DoorDash also narrowed its net loss to $149 million over the same nine month period in 2020. In 2019, DoorDash had a net loss of $533 million over the nine month period.”
“Miami Hedge Fund Manager (Allegedly) Used Investor Funds In Vey Miami Way” (Dealbreaker). “From the sound of it, Coral Cables Asset Management chief David Coggins wasn’t much of a hedge fund manager. This might have proven a surprise to his investors, what with the ‘Performance Sheets’ trumpeting’“37 months of positive monthly performance’ and a ‘perfect 2017,’ both of which are hard to reconcile with an account overdrawn to the tune of $1,180, according to the SEC. It would not have been a surprise to the accountant who Coggins allegedly asked to simply ‘put your company logo on it and sign off on it that’s it.’”
“The Oracle of Britney” (Vanity Fair). “In 2008, following a very public mental health crisis whose shaved head is burned into the psyche of many millennials and Gen Z’ers, Spears, then 26, had control of her welfare handed over to her father (depending on the state, it’s a conservatorship or a guardianship). Jamie Spears was authorized by the California Superior Court to control his daughter’s finances, health care, and aspects of her daily routine. The conservatorship was initially temporary. Twelve years later, it’s still in place.”
What we’re reading (11/12)
“Pfizer’s CEO Sold $5.6 Million In Stock The Day He Announced Promising Vaccine News” (CNN Business). Here’s a possible example of a basic idea that goes back a long time in finance: if you believe a company’s executives have better information than the market about the company’s prospects, then their trading behavior may be informative of value. In other words, when managers are selling (or companies are issuing), that could be because the stock is in fact overvalued. A counterpoint is that they could just be monetizing their stock awards to get some liquidity.
“Deposit Rates Are Taking A Pandemic Nosedive” (Wall Street Journal). “Banks are paying a pittance on deposits, but customers don’t seem to care. Some banks are slashing deposit rates. Others are keeping already-low rates at next to nothing, sometimes 0.01%. But customers keep stashing cash at banks anyway. Big banks can afford to be stingy because they already are awash in deposits. Total deposits at U.S. commercial banks have swelled to about $15.9 trillion, up from about $13.2 trillion at the start of the year, according to the Federal Reserve.”
“DoorDash, Roblox, Wish And Airbnb All Expected To Go Public Before Year’s End, Sources Say” (CNBC). “Between early and mid-December, public investors will likely get their first crack at buying stock in food delivery provider DoorDash, e-retailer Wish and kids gaming company Roblox, according to people familiar with the matter. Airbnb is also expected to file its prospectus by early next week, putting the room-sharing company in position to hold its market debut after Thanksgiving, said two of the people. Filings are expected by next week, though the timing could change based on market conditions, said the people who asked not to be named because their plans are private.”
“After A Long Ride, Harley-Davidson Is Leaving India” (New York Times). “Harley-Davidson, the proudly American company, is giving up on India because of weak sales, after more than a decade of pursuing a huge but ultimately frustrating place to do business…[t]he closure has dealt a blow to India’s ambitions to lure manufacturers, a campaign modeled on China’s success called ‘Make in India.’ It has set back Harley-Davidson’s efforts to expand its popularity overseas. And it strands a small but devoted group of Harley devotees who are wondering how they will keep their prized rides rumbling.”
“Straight Talk With Hank Paulson: Ray Dalio” (Paulson Institute). A 42-minute conversation between former U.S. Treasury Secretary Hank Paulson and Bridgewater Associates founder Ray Dalio.
What we’re reading (11/11)
“U.S. Prepares For Worst Four Months Of The Pandemic As It Stares Down The ‘Darkest’ Days Yet” (CNBC). “There’s been an ‘unprecedented spike’ in Covid-19 hospital admissions in Ohio. ICU beds in Tulsa, Oklahoma, are full. North Dakota’s hospitals don’t have enough doctors and nurses. And hospital administrators in Iowa are warning that they are approaching their limits.”
“ExxonMobil’s Failure To Go Green Could Worsen Its Financial Future” (TexasMonthly). “In 1999, Enron CEO Jeff Skilling mocked ExxonMobil, the largest U.S. oil and gas company, calling it a ‘dinosaur.’ Yet Exxon lumbered on, churning out steady profits, even after Enron collapsed in bankruptcy two years later and Skilling went to prison for fraud. But now, as the planet continues to heat up, COVID-19 has blasted into Exxon’s finances like some giant asteroid.”
“First-Time Homebuyers Hit Lowest Level Since 1987” (Yahoo!Finance). “Economists predicted that 2020 would be the year of the millennial homebuyer. But with record-high home prices, first-time homebuyers actually comprised less of the market in 2020 than they did last year. Only 31% of homes bought this year were purchased by first-time buyers, compared to 33% last year. It’s the lowest share since 1987, according to a new study by the National Association of Realtors (NAR).”
“$250 Billion Wiped Off Chinese Tech Stocks As Beijing Signals Crackdown” (CNN Business). “Fears that Beijing could tighten the screw on China's biggest tech companies have wiped hundreds of billions of dollars off their stock market value in just two days. Shares in Alibaba (BABA) and JD.com (JD) have plunged more than 10% each in Hong Kong trading since Tuesday, putting both stocks on track for their worst week ever.”
“Elon Musk’s Totally Awful, Batshit-Crazy, Completely Bonkers, Most Excellent Year” (Vanity Fair). “In 2020, the COVID-doubting, media-hating Twitterholic CEO became the third-richest man alive, SpaceX launched two astronauts into orbit, and Tesla became the most valuable car company on the planet. Inside the mind of Silicon Valley’s most vainglorious villain.”
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.”