What we’re reading (4/5)

• “The US Recovery Is Speeding Up But The Global Economy Isn’t Out Of Danger” (CNN Business). “The economic recovery in the United States and China is gaining steam, triggering a wave of upgraded forecasts and optimistic commentary. Meanwhile, economists watching other parts of the world are getting worried.”

• “Stocks Were The Only Major Asset Class That Gained In The First Quarter, But Bank Of America Says ‘Anemic’ Returns May Be On The Horizon” (Business Insider). “According to the firm's Sell Side Indicator, a contrarian gauge of Wall Street sentiment, optimism over the past twelve months has risen three times the typical rate following bear markets since 1985. Bank of America's sentiment indicator is now at a 10-year high and the closest it's been to a contrarian ‘sell’ signal since May 2007.”

• “Risky Borrowers Are Falling Behind On Car Payments” (Wall Street Journal). “A greater share of people with low credit scores has been falling behind on their car payments in recent months, a sign of stress among consumers whose finances have been hit hard by the pandemic. Some 10.9% of subprime borrowers with outstanding auto loans or leases were more than 60 days past due in February, up from 10.7% in January and 8.7% a year prior, according to credit-reporting firm TransUnion.”

• “GameStop Plans $1 Billion Stock Sale, Shares Slide” (Reuters). “[GameStop] said it would sell up to 3.5 million shares and use the proceeds to speed up the shift in its business model to e-commerce in an overhaul being led by top shareholder and board member Ryan Cohen.”

• “He Built A $10 Billion Investment Firm. It Fell Apart In Days.” (New York Times). “[Bill Hwang] borrowed billions of dollars from Wall Street banks to build enormous positions in a few American and Chinese stocks. By mid-March, Mr. Hwang was the financial force behind $20 billion in shares of ViacomCBS, effectively making him the media company’s single largest institutional shareholder. But few knew about his total exposure, since the shares were mostly held through complex financial instruments, called derivatives, created by the banks.”

What we’re reading (4/4)

• “Individual Investors Retreat From Markets After Show-Stopping Start To 2021” (Wall Street Journal). “Individual investors kicked off 2021 at a sprinter’s pace. Now, they are finally showing signs of fatigue. Trading activity among nonprofessional investors has slowed in recent weeks after a blockbuster start to the year, with the group plowing less money into everything from U.S. stocks to bullish call options.”

• “What’s Behind The Boom In Iconic Boomer Musicians Selling Their Songs” (CNBC). “A wave of boomer rock icons are selling out of their song catalogs. The moves, the latest of which was made by Paul Simon last week, point to a straightforward truth about the intersection of art and money: Music has always been a business, and one where creative genius deserved to be rewarded with riches. And it is a business that right now is seeing major changes caused by streaming, and further disruptions caused by the pandemic.”

• “A Cryptocurrency Entrepreneur Just Bought The World’s Largest Painting, By Artist Sacha Jafri, For A Whopping $62 Million” (Artnet News). “Last fall, Sacha Jafri set a Guinness World Record for the world’s largest painting, titled The Journey of Humanity. Now, he’s sold it at auction for an equally large price: $62 million. The figure makes him the fourth-most expensive living artist—behind Jeff Koons, David Hockney, and digital artist Beeple.”

• “Technology After The Pandemic” (DealBook). “Many companies made changes to survive the pandemic. For tech companies, the changes were also about seizing opportunities to thrive as life abruptly moved online. Few companies have juggled these risks and rewards in as many industries, across as many countries, as Prosus, an Amsterdam-based conglomerate that in 2019 was spun out of Naspers, the South African tech and media giant.”

• “Hertz Selects Chapter 11 Exit Plan Backed By Centerbridge, Warburg, Dundon” (Reuters). “Hertz Global Holdings Inc said on Saturday it has selected an enhanced proposal from Centerbridge Partners, Warburg Pincus, and Dundon Capital Partners to provide the equity capital required to fund the car rental company’s exit from Chapter 11. The proposed deal, which is subject to approval by the U.S. bankruptcy court for the district of Delaware, is supported by holders of over 85% of the company’s unsecured notes, Hertz said in a statement.”

March 2021 performance update

Hi folks, here with a a performance update for March. First, the key numbers for the month:

• Prime picks: +2.53%

• Select picks: +4.15%

• SPY S&P 500-Tracking ETF: 2.79%

• Bogleheads (80% VTI + 20% BND): 1.14%

As usual, cumulative performance since since we started last May is shown in the chart below.

A few takeaways for March from my perspective:

• Select appears to be coming back, substantially outperforming SPY in the month and beating it by more than 100 basis points for the second consecutive month. Over the long run, I’m expecting Select to outperform the market, but underperform Prime, and this is a step in that direction. I use the same foundational model to choose the Select picks as the Prime picks, but deliberately choose stocks for Select that don’t look quite as good as Prime (but still good relative to the modal stock). Another way of saying that is that, per unit of return the Select picks earn, they tend to exhibit a little more volatility relative to the Prime picks (or, equivalently, per unit of risk, they tend to yield a little less).

• The composition of the Select portfolio was more heavily weighted toward tech last month compared to Prime (8 of 10 picks for Select; 4 of 10 for Prime). That disproportionality is interesting in light of Select’s outperformance, especially in as far as it runs counter to the popular finance media narrative that rising long-term Treasury rates should have the opposite effect on tech stocks, given their relatively longer cash flow durations and higher sensitivity to interest rate shocks.

• Relatedly, one way that rising interest rates likely affected the numbers above in a way they actually would be expected to shows up in the performance of the Bogleheads portfolio. That portfolio has a 20% exposure to the bond-tracking ETF BND. Bogleheads was in positive territory in March because of its 80% equity weight on VTI, but the BND piece of the portfolio was down 1.26% as rising rates hurt bond values.

That’s all for now!

Stoney Point Total Cumulative Performance

What we’re reading (4/3)

• “Travel Is Coming Back. That’s Great News For Airport Stores” (CNN Business). “Airline travel in the United States recently reached its highest level since the pandemic began, although it's still around half of what it was pre-pandemic, according to the Transportation Security Administration.”

• “We (Might) Work” (Scott Galloway). “The new WeWork is a stronger company than the 2017 model. It’s still not worth $50 billion, but it might be worth $9B (or more)…[i]magine: a commercial real estate play, with properties around the world, configured as flexible office space, rentable by the hour, the day, or the month, with great community spaces, aspirational design, and strong tech. In sum, We might Work.”

• “The Housing Market Is Crazier Than It’s Been Since 2006” (Wall Street Journal). “The past year has been the hottest for sales activity in 14 years. Home values are rising in practically every corner of the U.S., and median sale prices in dozens of metro areas have posted double-digit percentage increases from a year ago, according to Zillow Group Inc. In Boise, Idaho, the median sale price rose almost 25% in January from a year earlier, while in Stamford, Conn., it rose 19%.”

• “Here’s Where The Jobs Are — In One Chart” (CNBC). “The Labor Department reported Friday that total nonfarm payroll employment rose by 916,000 last month, the best monthly print since August. The unemployment rate continued its steady decline to 6%.”

• “I Avoided Fake Meat For Years. That Was A Big Mistake” (Wired). “If anyone needs a reminder, beef is bad for the world. You can either stick a seed in the ground, grow some food, and eat it, or grow some food and feed large quantities of it to a cow, every day for about two years, the animal farting and burping methane until you chop it up and eat it. Multiply that by the beef cravings of a few billion people and that math gets real bad, real quick.”

What we’re reading (3/31)

• “Biden Set To Unveil $2 Trillion Infrastructure Plan” (Wall Street Journal). “Mr. Biden will unveil the proposal during a Wednesday afternoon speech in Pittsburgh, where he kicked off his presidential campaign. He is expected to make the case that the investments are necessary to help the U.S. compete with China and tackle climate change.”

• “Goldman Sachs Is Close To Offering Bitcoin And Other Digital Assets To Its Wealth Management Clients” (CNBC). “The bank aims to begin offering investments in the emerging asset class in the second quarter, according to Mary Rich, who was recently named global head of digital assets for Goldman’s private wealth management division.”

• “No Longer A ‘Lost’ Generation: Millennials Born In The 1980s Are Finally Getting Richer” (Business Insider). “Older millennials are finally getting richer. Over the past three years, they've gained serious ground in building wealth, according to a new report by the Federal Reserve Bank of St. Louis that studied data from the Survey of Consumer Finances. As of 2019, those born in the 1980s have median wealth levels 11% below where they should be if the Great Recession hadn't occured [sic].”

• “Wells Fargo Plans To Bring Workers Back To Office In September” (Reuters). “Wells Fargo & Co said on Tuesday it plans to start bringing workers back to its offices after Labor Day due to the increasing availability of vaccines. The bank hopes that operations will begin to return to normalcy after Sept. 6, according to a memo circulated to the staff.”

• “Corporations Are Working With Social Media Influencers To Cancel-Proof Their Racial Justice Initiatives” (Washington Post). “Companies like Procter & Gamble, Sephora and Snap are seeking help to stay ahead of cultural moments and avoid embarrassing gaffes[.]”

April Prime + Select picks available now

The new Prime and Select picks for April are available starting now, based on a model run put through today (March 30). As a note, we’ll be measuring the performance on these picks from the first trading day of the month, Thursday, March 1, 2021 (at the mid-spread open price) through the last trading day of the month, Friday, April 30 (at the mid-spread closing price).

You can check out the latest picks here.

What we’re reading (3/30)

• “One of World’s Greatest Hidden Fortunes Is Wiped Out in Days” (Bloomberg). “From his perch high above Midtown Manhattan, just across from Carnegie Hall, Bill Hwang was quietly building one of the world’s greatest fortunes. Even on Wall Street, few ever noticed him -- until suddenly, everyone did. Hwang and his private investment firm, Archegos Capital Management, are now at the center of one of the biggest margin calls of all time -- a multibillion-dollar fiasco involving secretive market bets that were dangerously leveraged and unwound in a blink.”

• “JPMorgan, Salesforce Join Growing List Of Firms Dumping Office Space” (Wall Street Journal). “Large companies typically sign office leases for a decade or longer, giving them few options for reducing their footprint beyond trying to sublease floors to other tenants. At the end of 2020, 137 million square feet of office space was available for sublease across the U.S., according to CBRE Group Inc. That is up 40% from a year earlier and the highest figure since 2003.”

• “Millennium Management Has Been Quietly Hoovering Up London Quant Talent” (efinancial careers). “It's not only banks who are all about building out their systematic trading teams in 2021. Hedge fund Millennium Management has been surreptitiously adding quant trading staff from both banks and rival hedge funds in London too.”

• “Options Traders Bet On A Big Move Higher When Lululemon Reports Earnings” (CNBC). “Lululemon is off to an uncharacteristically rough start to the year, along with many of 2020′s other high flyers. The stock, which has soared more than 250% over the last three years, is down more than 8% just since the beginning of 2021, significantly underperforming all three major indexes. Despite the recent losses, options traders are betting Tuesday’s earnings report will hold the key to a quick rebound when results cross the wire after the bell.”

• “The Suez Canal Has Reopened, But Experts Say You'll Still Have To Wait 9 Months For That Couch To Be Delivered” (Business Insider). “The Suez Canal blockage may be cleared, but experts warn the impact will be seen on the supply chain for months to come. The hulking cargo ship, the Ever Given, was unmoored from the Suez Canal on Monday, nearly a week after it became stuck, allowing a massive backlog of vessels to begin their transits through the vital passageway.”

What we’re reading (3/29)

• “Banks Warn Of ‘Significant Losses’ As They Exit Positions With Large U.S. Hedge Fund” (CNBC). “Credit Suisse and Nomura warned Monday of “significant” hits to first-quarter results, after they began exiting positions with a large U.S. hedge fund that defaulted on margin calls last week. While neither Credit Suisse nor Nomura named the fund, it’s been widely reported that Archegos Capital Management is the firm connected to the fire sale.”

• “Coronavirus Was Supposed To Drive Bankruptcies Higher. The Opposite Happened.” (Wall Street Journal). “The number of people seeking bankruptcy fell sharply during the pandemic as government aid propped up income and staved off housing and student-loan obligations. Bankruptcy filings by consumers under chapter 7 were down 22% last year compared with 2019, while individual filings under chapter 13 fell 46%[.]”

• “Larry Summers Warned About Inflation. Fed Officials Push Back.” (New York Times). “Federal Reserve officials pushed back on Thursday against concerns raised by two prominent economists — Lawrence H. Summers, the former Treasury secretary, and Olivier J. Blanchard, a former chief economist at the International Monetary Fund — that big government spending could overheat the economy and send inflation rocketing higher.”

• “Ever Given Ship Freed In The Suez Canal, Authority Confirms” (CNN Business). “The Ever Given container ship has been dislodged and is now floating, after blocking the Suez Canal for almost a week, authorities said Monday. Tug boats had spent several hours on Monday working to free the bow of the massive vessel after dislodging the stern earlier in the day.”

• “Congressional Stock Report: Diet Coke-Loving Debbie Dingell Buys The Competition, Environmentalist Lois Frankel Eyes Oil, And Dan Crenshaw Gets His Move On” (Business Insider). “Members of Congress routinely trade stocks, buying and selling the shares of companies that often have significant business before the federal government — and sometimes spend lots of money to lobby lawmakers.  Insider dug through congressional financial disclosure records that federal lawmakers filed in recent days. Here are the latest highlights from what we've found.”

What we’re reading (3/27)

• “Betsy Cohen Has Launched Nine SPACs And Is Still Going” (Wall Street Journal). “Celebrity influencers like Serena Williams, Ciara and Chamath Palihapitiya have jumped on the blank-check-company boom. One of the biggest stars in this white-hot corner of Wall Street is a 79-year-old financier who doesn’t tweet or court the Reddit daytrading crowd. What Betsy Cohen does do is deals—lots of them.”

• “Wall Street’s Sleepless Nights” (DealBook). “Starting jobs at investment banks are notorious for long hours and a lot of pressure. But junior bankers say the pandemic, booming markets and other factors are making their grueling jobs even more intense. Some are near, or past, breaking point.”

• “‘It's Crazy. There Is No Inventory.’ Housing industry veteran marvels at real estate boom” (CNN Business). “For wannabe buyers, the shortage of homes on the market, combined with a surge of competition from other purchasers is setting off bidding wars, all-cash offers and no end of sticker shock. But this one-two punch of very low supply and roaring demand is suiting homebuilders just fine.”

• “NASA Wants Companies To Develop And Build New Space Stations, With Up To $400 Million Up For Grabs” (CNBC). “The National Aeronautics and Space Administration last year marked two decades of astronauts continuously onboard the International Space Station. But, as the floating research laboratory ages, the space agency is turning to private companies to build and deploy new free flying habitats in low Earth orbit.”

• “When Hedge Fund Billionaire Thomas Sandell Paid $105 Million To Settle A Tax Fraud Case, An Anonymous Tipster Made $22 Million. Here's An Inside Look At The Crazy World Of Whistleblower Lawsuits” (Business Insider). “A whistleblower is someone who shares credible information about financial fraud, criminal activity, unsafe working conditions, or other improper conduct with a government agency. If the information leads to a settlement, whistleblowers earn a percentage of the financial penalties paid by wrongdoers. While the process can take years, tipsters stand to earn millions of dollars for their valuable information.”

April picks available soon

We’ll be publishing our Prime and Select picks for the month of April on or before 3/31. As always, we’ll be measuring SPC’s performance for the month of March, as well as SPC’s cumulative performance, assuming the sale of the March picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Wed., March 31). Likewise, performance tracking for the month of April will assume the April 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 (Thurs., April 1).

What we’re reading (3/26)

• “WeWork Agrees to SPAC Deal That Would Take Startup Public” (Wall Street Journal). “WeWork has agreed to merge with a special-purpose acquisition company in a deal that would take the shared-office provider public nearly two years after its high-profile failure to launch a traditional IPO.”

• “Suez Canal Blockage Is Delaying An Estimated $400 Million An Hour In Goods” (CNBC). “The stranded mega-container vessel, Ever Given in the Suez Canal, is holding up an estimated $400 million an hour in trade, based on the approximate value of goods that are moved through the Suez every day, according to shipping data and news company Lloyd’s List.”

• “Global Shipping Was In Chaos Even Before The Suez Blockage. Shortages And Higher Prices Loom” (CNN Business). “But even before the Ever Given ran aground in the Suez Canal earlier this week, global supply chains were being stretched to the limits, making it much more expensive to move goods around the world and causing shortages of everything from exercise bikes to cheese at a time of unprecedented demand.”

• “Interest Rates, Earning Growth and Equity Value: Investment Implications” (Musings on Markets). “The first quarter of 2021 has been, for the most part, a good time for equity markets, but there have been surprises. The first has been the steep rise in treasury rates in the last twelve weeks, as investors reassess expected economic growth over the rest of the year and worry about inflation. The second has been a shift within equity markets, a "rotation" in Wall Street terms, as the winners from last year underperformed the losers in the first quarter, raising questions about whether this shift is a long term one or just a short term adjustment.”

• “Comic Gold: The Easterner Goes West In Three Early American Comics” (Public Domain Review). “The California Gold Rush transformed the landscape and population of the United States. It also introduced a new figure into American life and the American imagination — the effete Eastern urbanite who travels to the Wild West in quest of his fortune. Alex Andriesse examines how this figure fares in three mid-nineteenth-century comic books.”

What we’re reading (3/25)

• “Cargo Ship Blocking Suez Canal Could Take Weeks To Move” (CNBC). “The massive container ship that ran aground in the Suez Canal, halting traffic in one of the world’s busiest waterways, is still stuck as tug boats continued to try to dislodge the ship on Thursday. A team of expert salvors from Smit Salvage have been called in to assist with the operation.”

• “Powell Says Now Is Not The Time To Focus On Reducing Federal Debt” (Wall Street Journal). “Federal Reserve Chairman Jerome Powell said that the federal government can manage its debt at current levels but that fiscal-policy makers should seek to slow its growth once the economy is stronger.”

• “Who Are The Biggest Tax Cheats? The 1% — And Here’s How They Get Away With It” (Los Angeles Times). “It’s widely assumed that the biggest tax scofflaws are those with the most money. A new study by a team of IRS analysts and academic economists, however, tells us that things are much worse than anyone suspected.”

• “Facebook, Twitter And Google CEOs Testify Before Congress On Misinformation” (CNN Business). “Congress is set to grill the chief executives of Facebook, Google and Twitter about misinformation and online extremism on Thursday, in the executives' first appearance before lawmakers since the Jan. 6 Capitol riots and the rollout of the coronavirus vaccine.”

• “U.S. Regulator Opens Inquiry Into Wall Street's Blank Check IPO Frenzy - Sources (Reuters). “The U.S. securities regulator has opened an inquiry into Wall Street’s blank check acquisition frenzy and is seeking information on how underwriters are managing the risks involved, said four people with direct knowledge of the matter.”

What we’re reading (3/24)

• “The Years of Work Behind Washington’s Best-Liked Man” (New York Times). “Mr. Powell and his team swiftly moved to put out fires on Wall Street and Main Street last spring. The efforts were imperfect, but the retirement savings of millions as well as the budgets of states and cities were saved from destruction.”

• “Massive Cargo ship That Blocked Egypt’s Suez Canal Is Reportedly On The Move” (CNBC). “A cargo container ship that’s among the largest in the world turned sideways and blocked all traffic in Egypt’s Suez Canal, officials said Wednesday. The ship is now on the move, indicating a resumption of traffic in the waterway, a shipping source and witness told Reuters.”

• “Elon Musk Announces On Twitter That You Can Now Buy A Tesla With Bitcoin” (Business Insider). “Tesla has begun accepting Bitcoin as a form of payment, Elon Musk announced on Twitter Wednesday…[a]dditionally, ‘bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency,’ Musk said.”

• “Will This Boom Go Bust?” (DealBook). “The bull market is now a year old, with the S&P 500 up nearly 75 percent from its low point at this time last year…[t]he factors that have stoked the rally also raise questions about whether it can last.”

• “Where Are Those Shoes You Ordered? Check The Ocean Floor” (Wired). “Since the end of November, this is some of what has sunk to the bottom of the Pacific Ocean: vacuum cleaners; Kate Spade accessories; at least $150,000 of frozen shrimp; and three shipping containers full of children’s clothes.”

What we’re reading (3/23)

• “Credit Cards Slash $99 Billion From Spending Limits During Pandemic” (American Banker). “The notices went out to one cardholder after another, sparking complaints. Big banks were trimming credit limits by hundreds or thousands of dollars as the COVID-19 pandemic spread. None were saying how far it would go.”

• “Homes Are Selling At Record Speed As Buyers Scramble To Find Properties” (CNN Business). “Finding a home to buy remains a challenge for house hunters right now. Inventory of homes for sale remained at a record low 1.03 million homes in February, the same as January, and dropped a record 30% from a year ago, according to the National Association of Realtors.”

• “Tech Stocks Led The Market Rally. Now They’re Falling Behind.” (Wall Street Journal). “Recently…[the] rally has stalled, sending the tech-heavy Nasdaq Composite briefly into a correction—a 10% decline from a recent high. Since the index’s recent record on Feb. 12, growth and tech stocks have largely struggled. In contrast, other sectors have surged, including energy and financials.”

• “Pension Funds Have To Buy Bonds To Rebalance Portfolios, And That Might Be Good For Stocks” (CNBC). “Pension funds and other major investors should be big buyers of bonds during the next week or so, as they rebalance their holdings to make up for the bond market’s first quarter sell-off. That could send bond yields lower, at least temporarily.”

• “Miami Wants To Be The Hub For Bitcoin” (New York Times). “Mayor Francis Suarez of Miami is selling his city as the world’s cryptocurrency capital. “We want to be on the next wave of innovation,” he told DealBook. To make that happen, Mr. Suarez said he was ‘refashioning’ the city’s ‘fun in the sun’ image. Thanks in part to the mayor’s marketing efforts, tech and finance titans have flocked to Miami during the pandemic.”

What we’re reading (3/22)

• “U.S. Economy Is ‘On The Brink’ Of A Complete Recovery, Says Richmond Fed’s Barkin” (CNBC). “The U.S. economy is recovering from the Covid-19 recession, but some economic “scarring” may take a long time to heal, said Richmond Federal Reserve Bank President Thomas Barkin. Economic scarring refers to damage left behind by crises that will suppress growth prospects over the medium or long term.”

• “One Measure Of Debt-Market Distress Is Down 90% Since March Amid Fed Assistance And Easy Money” (Business Insider). “The US distress ratio - the proportion of speculative-grade (rated "BB+" or lower) issues with option-adjusted composite spreads of more than 1,000 basis points relative to U.S. Treasuries - continued to trend down in February 2021, hitting 4.0% after peaking at 35.2% just 11 months earlier, according to a report from S&P Global.”

• “Bond Rout Hits Safest Company Debt” (Wall Street Journal). “Bonds from highly rated companies have lost more than 5.4% this year, counting price changes and interest payments, through March 18. That is their second-worst start in data going back to 1996, the worst being last year’s pandemic-fueled selling, according to Bloomberg Barclays data. That compares with a 0.2% return for high-yield bonds and a 1.7% gain in corporate loans to highly indebted borrowers.”

• “States Are Out Of Excuses About Remote Work And Taxation” (Real Clear Markets). “As a result of the pandemic, many Americans switched to remote work for long periods of time in 2020. Many employees that normally cross state lines to an office (as is common in large multi-state metro areas) but instead worked from home last year may find that the state in which their office is located still expects them to pay taxes as if nothing had changed. This also opens up the possibility of double taxation, as both the resident’s home state and their prior work location’s state could allege that the work was done in that state.”

• “Turkey's Lira Plunges After Erdogan Fires Central Bank Head” (CNN Business). “Turkey could be on the cusp of another currency crisis after President Recep Tayyip Erdogan abruptly fired the head of the country's central bank, putting the lira on track for its worst single day decline against the US dollar in nearly three years.”

What we’re reading (3/21)

• “Easy Money? Gen Z Invests Online To Beat Coronavirus Woes” (Reuters). “From South Korea to the United States, a growing number of teens and young adults born after 1996 - dubbed Generation Z - are turning to online investment platforms that offer the chance to make a living with a swipe, but often pose unforeseen risks.”

• “As Blackstone Barrels Toward Trillion-Dollar Asset Goal, Growth Is In, Value Out” (Wall Street Journal). “Blackstone Group Inc. became an investing powerhouse by making successful bets on undervalued companies. For the next leg of its expansion, the firm is focused on companies with big growth prospects, even if it has to pay up for them.”

• “Cathie Wood's Ark Invest Expects Tesla To Soar To $3,000 Per Share By 2025 On Robotaxi Service” (Business Insider). “Cathie Wood's Ark Invest is out with a new eye-popping price target for Tesla, and investors are taking notice due to the accuracy of its previous price predictions on the electric vehicle manufacturer. Ark now expects Tesla to hit $3,000 per share by 2025, representing a potential upside of 359% from Friday's close and a market valuation of about $3 trillion. That's a sizable increase from its previous 2024 price target of $1,400.”

• “Saudi Aramco Profit Slumps 44% After Covid-Battered Year, But Maintains Dividend” (CNBC). “Oil giant Saudi Aramco reported a 44% slump in full-year 2020 results, but maintained its $75 billion dollar dividend payout, with CEO Amin Nasser describing the last twelve months as one of the most “challenging years” in recent history…Aramco said revenues were impacted by lower crude oil prices and volumes sold, and weakened refining and chemicals margins.”

• “‘MillionaireMike’, a SpaceX Engineer, Tried to Buy and Sell Inside Information on the Dark Web. He’s Now Facing Jail Time.” (Institutional Investor). “The so-called dark web is well-known as a marketplace for illicit activities such as drug dealing and arms sales. Add insider trading to the list. The Securities and Exchange Commission detailed the dark web’s use as a marketplace for insider trading tips in a complaint filed Thursday in an Indianapolis federal court against James Roland Jones, a SpaceX engineer it accused of accessing ‘an insider trading forum on the dark web in search of material non-public information (‘MNPI’) on which to trade securities.’” 

What we’re reading (3/20)

• “Larry Summers Versus The Stimulus” (The New Yorker). “The Biden rescue package will pour out enough sand to fill a hole, and then keep pouring. In Summers’s view, this is economically risky, because it means that the Federal Reserve will probably eventually need to manage inflation, a recipe for a bumpy future. “My reading is that there are roughly zero historical examples where we got inflation to the point where the Fed got nervous and had to tighten and the whole thing happened smoothly,” Summers told me last week.”

• “A Return To Wall Street’s Low-Rent District” (New York Times). “Of all the trading manias in recent months — Bitcoin, SPACs, meme stocks, nonfungible tokens — the latest has a long history of fraud and scandal. That’s right, penny stocks are booming, according to The Times’s Matt Phillips, who visited the ‘low-rent district of Wall Street.’ There were 1.9 trillion transactions last month on the over-the-counter markets, where such stocks trade, according to the industry regulator Finra. That’s up more than 2,000 percent from a year earlier, driven in large part by the surge in retail trading[.]”

• “5 Big Signs That Travel Is Roaring Back” (CNN Business). “Vacation deprivation is about to be replaced by a travel boom, according to Expedia CEO Peter Kern. He told CNN's Julia Chatterley earlier this week that people are beginning to think about their future travel ‘very quickly.’ Reservations on the travel website for some parts of the United States this summer are ‘all booked up’ and he expects Europe will soon follow as the number of vaccinations grow.”

• “Elon Musk Says Tesla Won’t Share Data From Its Cars With China or U.S.” (Wall Street Journal). “Speaking via video link Saturday to the government-backed China Development Forum in Beijing, Mr. Musk said that no U.S. or Chinese company would risk gathering sensitive or private data and then sharing it with their home government.”

• “Taiwan Official Urges People To Stop Changing Their Name To ‘Salmon’” (The Guardian). “A Taiwanese official has pleaded with people to stop changing their name to “salmon” after dozens made the unusual move to take advantage of a restaurant promotion. In a phenomenon that has been labelled ‘salmon chaos’ by local media, about 150 mostly young people visited government offices in recent days to officially change their name. The cause of this sudden enthusiasm was a chain of sushi restaurants. Under the two-day promotion, which ended on Thursday, any customer whose ID card contained ‘gui yu’ – the Chinese characters for salmon – would be entitled to an all-you-can-eat sushi meal along with five friends.”

What we’re reading (3/19)

• “Morgan Stanley Says Rising 10-Year Treasury Yields Is Reasonable As Confidence In U.S. Economy Grows” (CNBC). “Morgan Stanley said the rise in 10-year Treasury yields is reasonable and a reflection of the growing confidence in the U.S economic outlook, according to Jim Caron, global fixed-income portfolio manager at the investment bank.”

• “The New Stimulus Act Offers Big Benefits for Families” (Wall Street Journal). “The coronavirus-relief legislation signed by President Biden earlier this month contains unprecedented benefits for families with children and other dependents—especially for some who plan carefully. The new benefits, which apply for 2021, are largest for low-income families, but they extend well into the middle class, with many eligible for more than $10,000 in tax-free income for this year. Higher earners can also benefit from some changes, such as expanded tax breaks for child-care costs.”

• “Paris Goes Into Lockdown As COVID-19 Variant Rampages” (Reuters). “France imposed a month-long lockdown on Paris and parts of the north after a faltering vaccine rollout and spread of highly contagious coronavirus variants forced President Emmanuel Macron to shift course. Since late January, when he defied the calls of scientists and some in his government to lock the country down, Macron has said he would do whatever it took to keep the euro zone's second largest economy as open as possible.”

• “Goldman’s First-Year Bankers Beg to Work Only 80-Hour Weeks in Stinging Deck” (Bloomberg). “Hundred-Hour weeks on the job. Declining physical and mental health. The heightened chance of fleeing the bank in very short order. Those are among the laments of 13 first-year analysts in Goldman Sachs Group Inc.’s investment-banking group who surveyed themselves, according to a presentation making the rounds on social media.”

• “Coinbase Trades Investor Roadshow For A Reddit Q&A” (Coinbase). “Coinbase is opting for a question-and-answer session on online forum Reddit lasting through Friday evening and a series of explainer videos ahead of its public debut, in lieu of a more traditional roadshow or live-streamed presentations for investors…[m]uch about Coinbase's public listing is already unusual—it'll be the Nasdaq's first major direct listing, and it will be the first U.S. cryptocurrency company to become publicly-traded. It's also a nod to the cryptocurrency industry's roots in online forums and where many of its biggest enthusiasts still convene.”

What we’re reading (3/18)

• “Bank Of New York Mellon Invests In Crypto Startup” (Wall Street Journal). “The startup, Fireblocks, builds tools for the secure storage and transfer of bitcoin and other cryptocurrencies. BNY Mellon plans to use Fireblocks’s technology to underpin a new business that the bank unveiled last month, in which it plans to serve as a custodian for digital assets on behalf of institutional investors.”

• “Google To Spend $7 Billion In Data Centers And Office Space In 2021” (CNBC). “Google says it plans to spend more than $7 billion on real estate across the U.S. in 2021 as it resumes spending in the wake of the Covid-19 pandemic. The company said the money will go toward expanding offices and data centers across 19 states, creating what it says will amount to at least 10,000 full-time jobs. $1 billion will go specifically toward California.”

• “Jobless Claims Are Still Higher Than During The Great Recession A Year After The Pandemic Started” (CNN Business). “Last week, 770,000 Americans filed initial claims for unemployment benefits on a seasonally adjusted basis, the Department of Labor reported Thursday. It was an increase from the prior week and 70,000 claims more than economists had expected. It was also nearly 3 times as many claims as in the same week last year, just before the pandemic layoffs made benefit claims skyrocket.”

• “Back To The 60s” (The Grumpy Economist). “In the 1960s, macroeconomists thought that recessions were just ‘shortfalls’ of ‘aggregate demand.’ The point of policy was to fill the valleys with aggregate demand, as indicated by the dashed line of the top graph. In the conventional reading, they tried it in the 1970s, and got inflation…How can an economy run ‘too hot?’ Well, if your boss asked you to work 7 days a week 12 hours a day with no vacations to finish a special project, you could. But you would not want to do that forever. The economy as a whole can similarly push above what is long-run sustainable for a little while.”

• “‘Big Short’” Investor Michael Burry Says He’ll Stop Tweeting After SEC Regulators Paid Him A Visit” (Business Insider). “Michael Burry's incendiary tweets have piqued the interest of federal regulators, the investor revealed this week. ‘Tweeting and getting in the news lately apparently has caused the SEC to pay us a visit,’ the Scion Asset Management boss said in a now-deleted tweet. ‘Lovely,’ he continued, adding the hashtag ‘#nomoretweets.’”

What we’re reading (3/17)

Happy St. Patty’s Day!

• “Investing In Bonds Has ‘Become Stupid,’ Ray Dalio Says. Here’s What He Recommends Instead” (MarketWatch). “The founder of Bridgewater Associates, the world’s largest hedge-fund firm, decried the ‘ridiculously low yields’ of bonds in a LinkedIn blog post Monday, while urging a diversified portfolio…Dalio has never been a fan of holding cash either — and he still isn’t.”

• “P/E Ratios And The Case Of The Dueling Denominators” (Fisher Investments). “[I]f a ratio holds steady while the numerator rises, then the denominator must also be rising. That is the case now: Even as earnings were falling last year, analysts looked to the future, to lockdowns ending and normal(ish) economic activity returning, and penciled in a strong recovery. Stock prices rose alongside expectations, in a sign investors were looking to that same future.”

• “Learning Apps Have Boomed in the Pandemic. Now Comes the Real Test.” (New York Times). “After a tough year of toggling between remote and in-person schooling, many students, teachers and their families feel burned out from pandemic learning. But companies that market digital learning tools to schools are enjoying a coronavirus windfall. Venture and equity financing for education technology start-ups has more than doubled, surging to $12.58 billion worldwide last year from $4.81 billion in 2019[.]”

• “Commodities Boom Hits Home” (Wall Street Journal). “Prices are surging for the raw materials used to build American homes. Lumber, one of the biggest costs in home-building after land and labor, has never been more expensive and is more than twice the typical price for this time of year. Crude oil, a starting point for paint, drain pipe, roof shingles and flooring, has shot up more than 80% since October. Copper, which carries water and electricity throughout houses, costs about a third more than it did in the autumn.”

• “U.S. Housing Starts Fall Sharply In February” (CNBC). “Housing starts dropped 10.3% to a seasonally adjusted annual rate of 1.421 million units last month, the Commerce Department said on Wednesday. Economists polled by Reuters had forecast starts would drop to a rate of 1.560 million units in February.”