What we’re reading (5/10)
“Prices Are Rising Everywhere You Look” (CNN Business). Just as Larry Summers predicted. “This doesn't just matter for Americans guarding their pocketbooks. Price increases are also being closely scrutinized by investors and economists, who are desperate to know: Is this a passing phenomenon as the country emerges from a once-in-a-lifetime economic shock, or a more sustained trend that evokes the 1970s?”
“SpaceX Accepts Dogecoin As Payment To Launch ‘DOGE-1 Mission To The Moon’ Next Year” (CNBC). “Elon Musk’s SpaceX will launch the “DOGE-1 Mission to the Moon” in the first quarter of 2022, with the company accepting the meme-inspired cryptocurrency as full payment for the lunar payload.”
“The Breakout Cities on the Forefront of America’s Economic Recovery” (Wall Street Journal). “The pandemic is accelerating growth in midsize cities, positioning them to lead the charge in the nation’s economic rebound. Even before Covid-19, these rising stars—such as Greenville, Des Moines, Iowa, and Provo, Utah—had been quietly building out vibrant economies in the shadow of bigger metropolises. During the pandemic, they have drawn workers and businesses with large and affordable homes, ample access to outdoor space and less congestion.”
“Do Restrictions On H-1B Visas Create American Jobs?” (DealBook). “The chances of getting an H-1B visa have never been lower. In a randomized lottery each year, U.S. Citizenship and Immigration Services chooses 85,000 applicants to receive the visa, a cap that has remained unchanged since 2004. This year, the lottery pool contained about 308,000 applicants, meaning only one in four applicants was selected.”
“How A Homeless Man Lost Federal Aid By Trying To Move Into A New Apartment And Start Contributing Rent” (Business Insider). “On February 3, Derrick Henderson, 49, was going through his mail when he saw a rent bill addressed to him, saying he owed $2,368. On April 1, the bill increased to $5,788.26. Henderson was surprised, not because he didn't know his rent was due, but because he thought somebody else was helping him pay for it: the government. He was counting on a federal housing voucher to keep him from being homeless again, and he told Insider he was worried he'll soon be homeless in the future.”
What we’re reading (5/8)
“What Happens To Stocks And Cryptocurrencies When The Fed Stops Raining Money?” (Wall Street Journal). “Easy monetary policy has regularly fueled financial booms, and it is exceptionally easy now. The Fed has kept interest rates near zero for the past year and signaled rates won’t change for at least two more years. It is buying hundreds of billions of dollars of bonds. As a result, the 10-year Treasury bond yield is well below inflation—that is, real yields are deeply negative —for only the second time in 40 years.”
“U.S. Pipeline Operator That Transports 45% Of East Coast Fuel Shuts Entire Network After Cyberattack” (CNBC). “Top U.S. fuel pipeline operator Colonial Pipeline has shut its entire network after a cyber attack, the company said in a statement on Friday. Colonial’s network supplies fuel from U.S refiners on the Gulf Coast to the populous eastern and southern United States. The company transports 2.5 million barrels per day of gasoline, diesel, jet fuel and other refined products through 5,500 miles (8,850 km) of pipelines.”
“Logjam!” (Slate). “[T]he culprit [for the lumber shortage] is the decade of instability and low prices that followed the Great Recession, when America stopped building homes, leaving the lumber trade out to dry. The stunted recovery stripped the industry’s crucial middlemen—the mills themselves—to the bone. Building a new deck is expensive now because mills can’t ramp up to meet the demand surge—or won’t, nervous they’ll get caught with millions in underused machinery when prices crash back to earth.”
“The ‘Hybrid Office’ Could Be Great. It Could Also Be Hell.” (New York Times). “[R]esearchers at the University of Chicago estimate the share of work done remotely will level off at about 20 percent after the pandemic restrictions end. That’s about half as much remote work as is happening right now, but still four times the prepandemic share.”
“Analysis: Fund Managers See Value, Cyclical Stocks Running Further Despite Slow U.S. Jobs Recovery” (Reuters). “[F]und managers say that they are continuing to rotate into value and cyclical stocks - whose fortunes are closely tied to economic conditions - in anticipation that the economic recovery will be longer and more gradual than originally anticipated.”
What we’re reading (5/7)
“Warren Buffett ‘Broke’ Nasdaq: System Is Unable To Record High Berkshire Hathaway Share Price” (Entrepreneur). “Berkshire Hathaway shares, an investment group led by Warren Buffett , have reached such a high price that Nasdaq computers are unable to record their price. The entity stopped transmitting the quote from Tuesday and today there is no information about them on its official website.”
“From Dutch Tulips To Internet Stocks, How to Spot A Financial Bubble” (Wall Street Journal). “History shows that investment crazes are often associated with financial innovation, new instruments created by Wall Street middlemen, surrounded by mystery and fueled by expectations of big future profits. Sometimes they go very badly.”
“Fed Concerned About The Risks That Accompany Soaring Markets” (Washington Post). “A soaring stock market and fanfare around “meme-stocks” are drawing the attention of the Federal Reserve, as the economic recovery casts some shadows on a party that could eventually wind to an end. Rising asset prices, plus riskier investor appetites, were noted in the Fed’s latest Financial Stability Report, with fears that a significant drop-off in asset prices could ripple through the broader financial system.”
“Nobel Prize-Winning Economist Paul Krugman Details The Indicators He's Watching For The First Signs Of An Inflation Shock” (Business Insider). “Krugman said he's watching a handful of indicators to determine whether inflation poses a significant risk to the recovery. Core inflation isn't enough, since various bottlenecks could elude the benchmark, he said. Instead, the inflation-metric dashboard maintained by the Federal Reserve Bank of Atlanta gives a more holistic view of nationwide price growth. Sticky inflation indices, which track a subset of goods and services that change price somewhat rarely, are also worth monitoring, he said.”
“Nearly 1 In 3 New Stores Opening In The US Is A Dollar General” (CNN Business). “These openings are a continuation of dollar stores' rapid growth even before the pandemic. Economists and retail analysts say dollar stores are expanding in part because of growing wealth inequality in the United States and the hollowing out of the middle class. The share of American adults who live in middle-income households decreased from 61% in 1971 to 51% in 2019, according to Pew Research Center.”
What we’re reading (5/6)
“The Vaccine Liberation Movement Gets A New Ally” (DealBook). “The Biden administration reversed course yesterday and came out in favor of suspending patent protections for Covid-19 vaccines. The move pits policymakers against drug companies, as infections in India, South America and elsewhere spiral, highlighting the urgency of more widespread vaccination.”
“Patents Are Not The Problem!” (Marginal Revolution). “Patents are not the problem. All of the vaccine manufacturers are trying to increase supply as quickly as possible. Billions of doses are being produced–more than ever before in the history of the world. Licenses are widely available…[p]lastic bags are a bigger bottleneck than patents…[t]he US trade representative’s announcement is virtue signaling to the anti-market left and will do little to nothing to increase supply. What can we do to increase supply? Sorry, there is no quick and cheap solution. We must spend.”
“Millions Are Unemployed. Why Can’t Companies Find Workers?” (Wall Street Journal). “Hiring has been robust recently, despite the labor shortfall. U.S. employers added 916,000 jobs in March, according to the Labor Department, and economists project that the April jobs report, due out Friday, will show employers added 1 million more. Still, the shortage threatens to restrain what is otherwise shaping up to be a robust post-pandemic economic recovery.”
“U.S. Productivity Rebounds In First Quarter” (Reuters). “U.S. worker productivity rebounded in the first quarter, depressing labor costs growth, but the data has been severely distorted by the COVID-19 pandemic to provide a clear trend. The Labor Department said on Thursday that nonfarm productivity, which measures hourly output per worker, increased at a 5.4% annualized rate last quarter. Data for the fourth quarter was revised higher to show productivity falling at a 3.8% rate instead of the previously reported 4.2% pace.”
“Twitter Makes All Of Its Money From Ads. It’s Trying To Change That.” (Vox). “Twitter has been a free service for its users ever since it launched in 2006. Now it’s getting more serious about getting you to pay up, via an optional subscription service it’s building.”
What we’re reading (5/5)
“Yellen Says Rates Might Need To Rise As Economy Recovers” (New York Times). “The comments, broadcast online on Tuesday at The Atlantic’s Future Economy Summit, come amid heightened concern from some economists and businesses that the United States is in for a period of higher inflation as stimulus money flows through the economy and consumers begin spending again.”
“Weekly Mortgage Demand Stalls As Rates Rise And Fierce Competition Hurts Home Sales” (CNBC). “It was a mixed bag for mortgage demand last week, as higher rates did nothing for refinances and homebuyers faced more steep competition for a pitiful few homes for sale. Total mortgage application volume fell 0.9% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.”
“Michigan Wants To Close Oil Pipeline Under The Great Lakes. Canada Says No.” (Wall Street Journal). “Canada is fighting to stop U.S. officials from closing a vital cross-border oil and gas pipeline as a deadline to shut it looms. The dispute erupted in November, when Michigan Gov. Gretchen Whitmer announced she was revoking a permit that allows Enbridge Inc.’s Line 5 pipeline to run along the bottom of the Straits of Mackinac, between Lake Michigan and Lake Huron. She gave the company until May 12 to shut the pipeline.”
“Krispy Kreme files IPO Paperwork” (CNN Business). “The doughnut company said on Tuesday that it has confidentially filed paperwork related to a public offering of its stock with the Securities and Exchange Commission. The number of shares that will be offered and their price range has not been determined, the company said, adding that the IPO is expected to happen after the SEC completes its review.”
“Corporations Aren't ‘Woke,’ They Just Know Their Customers. Watch And Learn, Republicans.” (USA Today). “[D]on’t be tricked into thinking that America’s corporate giants are becoming something fundamentally different from what they’ve always been. But what you can see them as, in addition to profit pursuers, are bellwethers — highly useful signalers of where the culture is headed and how reality-based organizations are positioning themselves for success.”
What we’re reading (5/4)
“Fate Of Metal Magnate’s Empire Looms Over Blue-Collar Towns” (Wall Street Journal). “James Sanderson one day hopes to name a horse in the Kentucky Derby after British metals magnate Sanjeev Gupta, who he believes will save the steel industry in Georgetown, S.C. For now, Mr. Gupta is fighting to save his empire. The entrepreneur’s GFG Alliance group of companies says it is seeking to refinance billions of dollars worth of debt after Greensill Capital, its main lender, filed for insolvency in March.”
“Emails Between Steve Jobs And Other Apple Execs Reveal Conflict With Facebook Has Spanned More Than A Decade” (CNBC). “Last August, Facebook said Apple’s App Store rules were hampering it from releasing its Facebook Gaming app for iPhones in the way it wanted to…[n]ow, emails between three former Apple executives, including Steve Jobs, from 2011 show that a similar conflict between Apple and Facebook was likely part of the reason for a delay for the release of a Facebook app for iPads over a decade ago.”
“Goldman Sachs Plans To Get US Staff Back In The Office By Mid-June, According To A Report” (Business Insider). “Goldman Sachs is planning to get US employees back to the office by mid-June, Bloomberg reported Tuesday, citing people with knowledge of the matter. The bank has not yet informed staff of the plan, according to the report. Goldman Sachs declined Insider's request for comment.”
“How The Pandemic Led To A Rental Car Crisis Just As Americans Are Ready To Bust Loose” (Washington Post). “Major rental car operators last year sold off more than 770,000 cars as the pandemic crushed demand and kept Americans home…[f]or customers, smaller fleets mean higher prices and longer waits. But for the rental companies, shedding car leases and cutting billions of dollars in planned purchases was the key to survival. Now that the economy is growing faster than anticipated and people want to travel, the companies are struggling to find enough cars.”
“Verizon Offloads Yahoo And AOL In $5 Billion Deal” (CNN Business). “Verizon is exiting the media business, announcing Monday that it's selling the unit for $5 billion to private equity firm Apollo Global Management. The sale includes AOL and Yahoo, which Verizon bought for a combined $9 billion in recent years. Verizon will retain a 10% stake in the spin off and the Verizon Media Group name will be changed to just Yahoo.”
What we’re reading (5/3)
“Berkshire Chooses Greg Abel As Warren Buffett’s Successor In CEO Role” (Wall Street Journal). “Berkshire Hathaway Inc.’s famous Chief Executive Warren Buffett, the billionaire who has led the conglomerate for more than 50 years, is to be succeeded as CEO by vice chairman Greg Abel, putting to rest one of the biggest succession questions in corporate America.”
“Expensive Lumber Costs Have Added $36,000 To The Average Price Of A New Home, Report Finds” (Business Insider). “The housing market took off last summer, as the pandemic enabled many to work from home indefinitely, and with mortgage rates so low, many people rushed to buy new homes. But the pandemic shut down lumber production, and it hasn't kept pace with building since.”
“Fed’s Barkin Sees Higher Inflation This Year, But Then A Reversal In 2022” (CNBC). “‘I think we will see price pressure this year. You’ve got a very strong demand situation, and you’ve got constraints in supply,’ the central bank official said during a ‘Closing Bell’ interview. ‘When those things happen, you’re definitely going to see price pressure.’ However, Barkin added that he expects those pressures to subside as economic dynamics change through the year and the economy returns to a more normal state.”
“Nasdaq Wants New Diversity Rules, But Diversifying Boards Does Not Mean Better Performance” (USA Today). “Nasdaq cannot cite any high-quality study showing that board diversity boosts returns, because there appears to be none. In fact, there are many serious academic papers reporting the opposite result: diversifying boards can harm financial performance. Troublingly, Nasdaq disregards this evidence.”
“Sticking With Remote Work? Businesses Are Betting On It” (Reuters). “U.S. businesses have been spending more on technology than on bricks and mortar for more than a decade now, but the trend has accelerated during the pandemic, one more sign that working from home is here to stay.”
April 2021 performance update
Hi folks, here with a performance update for April. First, the key monthly numbers:
Prime: +2.34%
Select: +1.30%
SPY: +4.74%
Bogleheads (80% VTI, 20% BND): +3.62%
As the numbers make clear, Prime and Select were both up, which is always good, but they also underperformed both the market and the alternative, lower-risk “Bogleheads” benchmark (a sub-optimal monthly result, but also a rare one based on the longer history of our performance results so far). The numbers do obscure a bit the fact that things were looking pretty good until the last trading day of the month. In fact, Select was beating all three of the other portfolios above for almost the entire month and continuing its trend of catching back up to the market until Twitter reported quarterly earnings on Thursday, missing the mark on user growth. TWTR plummeted on the news, and ended up down ~15 percent for the monthly, which you can see in the gray line on the chart below.
In any case, with April now in the books, it’s worth noting that we’ve officially completed one full year of issuing picks and tracking performance here at Stoney Point. Needless to say, stocks had an exceptional run in the last 12 months. While I don’t expect Prime to deliver a 60%+ return in the next 12 months (and certainly don’t expect the market to deliver 50%, given the long-term historical yearly average of around 7 percent), our first year’s performance is a great track record to carry ahead. In the next year, I’m hopeful for a similar level of monthly alpha generation in the Prime portfolio, and for Select to converge to or even surpass SPY on a cumulative basis. All the while, I expect significant behind-the-scenes developments at Stoney Point as an enterprise.
Most of all, thanks for your readership and support!
Stoney Point Total Performance History
What we’re reading (5/1)
“How Apple Does M&A: Small And Quiet, With No Bankers” (CNBC). “While big tech rivals routinely strike multi-billion dollar deals, Apple has followed a different strategy. It’s refined the ‘acquihire,’ or strategic purchase of a small company primarily for its staff.”
“E.U. Accuses Apple Of Antitrust Violations Over App Store Rules After Spotify Complaint” (Washington Post). “Apple is facing antitrust charges in Europe for allegedly abusing its ‘dominant position’ to choke competition from music streaming rivals in its App Store, regulators announced Friday.”
“The Global Chip Shortage Is Going From Bad To Worse. Here's Why You Should Care” (CNN Business). “In the market for a new car, smartphone or washing machine this year? A global shortage of computer chips could mean you have to wait a while and pay more. A growing number of manufacturers around the world are having trouble securing supplies of semiconductors, delaying the production and delivery of goods and threatening to push up the prices paid by consumers.”
“Buffett Fights With Investors, With His Reputation At Risk” (DealBook). “Investors are pressing Berkshire to disclose more about climate change and work-force diversity. Shareholders, including the Calpers public pension fund, argue that Buffett’s conglomerate isn’t doing enough to disclose its portfolio companies’ progress in addressing those issues. Buffett opposed these initiatives ahead of the meeting, arguing that they cut against Berkshire’s philosophy of letting its subsidiaries operate largely independently. ‘I don’t believe in imposing my political opinions on the activities of our businesses,” he said at Berkshire’s 2018 annual meeting.’”
“America's Wealthiest Added $195 Billion To Their Fortunes In Biden's First 100 days” (Business Insider). “Over the last 13 months, as the pandemic has taken its economic toll, American billionaires have added $1.62 trillion to their collective net worths, according to a report from the left-leaning Institute for Policy Studies (IPS) and Americans for Tax Fairness (ATF). That report also found that the number of American billionaires has grown from 66 in 1990 to 719 today.”
May Prime + Select picks available now
The new Prime and Select picks for May are available starting now, based on a model run put through today (April 30). As a note, we’ll be measuring the performance on these picks from the first trading day of the month, Monday, May 3, 2021 (at the mid-spread open price) through the last trading day of the month, Friday, May 28, 2021 (at the mid-spread closing price).
You can check out the latest picks here, and stay tuned for performance result for April.
*Edited 5/27: the last trading day of the month was corrected from Monday, May 31, 2021 to be Friday, May 28, 2021. Monday, May 31 is Memorial Day and U.S. stock markets are not open.
What we’re reading (4/29)
“U.S. Economy Grew At 6.4 Percent Annual Rate In First Quarter As Consumer Spending Drives Robust Recovery” (NBC News). “The reopening economy surged in President Joe Biden's first 100 days, with U.S. gross domestic product hitting 6.4 percent, the best quarterly reading since 2003. U.S gross domestic product, or GDP, a measure of the total amount of goods and services produced, hit 6.4 percent in the first quarter of 2021, according to advance estimates released Thursday from the Commerce Department.”
“Stocks Are Off to Best Start to a Presidential Term Since Great Depression” (Wall Street Journal). “The S&P 500 has risen 10% since Mr. Biden’s Jan. 20 inauguration. The index is on course for its strongest performance since the start of Mr. Roosevelt’s first term in 1933, when it surged 80% after a spectacular crash in the Great Depression, according to a Dow Jones Market Data analysis. By comparison, the S&P 500 rose 5.3% in the first 100 days of President Donald Trump’s term in early 2017 and on average has gained 3.2% over that period in presidential terms since Herbert Hoover’s in 1929.”
“Jobless Claims Hit New Pandemic Low For Third Straight Week As Labor Market Picks Up” (Washington Post). “Weekly jobless claims fell to a pandemic low for the third consecutive week, the Labor Department reported Thursday, with 553,000 Americans filing for initial unemployment benefits in the week that ended April 24. This marks a 13,000 decrease compared to last week, putting the insured unemployment rate around 2.6 percent, the Labor Department said.”
“Apple Just Had A Massive Quarter Thanks To The 5G iPhone” (CNN Business). “Apple's steady stream of hardware upgrades and new services launched throughout the pandemic has held the company in good stead going into 2021. The company on Wednesday reported revenues of $89.6 billion and a profit of $23.6 billion for the three months ending March 27, blowing past analyst forecasts. The company also authorized a $90 billion share buyback, it said. Apple shares surged more than 3% after-hours following the report.”
“Millennials Are Getting Screwed Again By Their 2nd Housing Crisis In 12 years” (Business Insider). “A recent bank note from Jefferies said the US was short 2.5 million homes, while Freddie Mac put that estimate higher at a shortage of 3.8 million. There are 40% fewer homes on the market than last year, a Black Knight report found. It's bad news for many aspiring homebuyers — but especially for millennials. It's just the latest chapter in a long line of bad economic luck.”
What we’re reading (4/28)
“Venture Firms Bask In a Surge of Blockbuster Profits” (Wall Street Journal). “The venture sector has long been defined by big wins on disruptive tech companies, balanced by far more numerous losing bets. But in recent months, an unusually large number of venture investments have logged multibillion-dollar profits, setting many firms up for their greatest returns since the dot-com boom of the late 1990s.”
“Samsung Family Announces Plans To Pay Off More Than $10 Billion Of Inheritance Tax” (CNBC). “The family of Samsung Electronics’ late chairman announced Wednesday they will be paying off a massive inheritance tax bill of more 12 trillion Korean won (about $10.78 billion). The inheritance tax payment is one of the largest in the history of South Korea and globally — ‘equivalent to three to four times the Korean government’s total estate tax revenue last year,’ Lee Kun-hee’s family said in a statement.”
“Small Business Demand Lifts UPS Q1 Profit, Revenue Up 27%” (ABC News). “UPS is one of the few companies that benefited from the pandemic as demand for delivery rose as more people stayed home and shopped online. But even with more people getting vaccinated and heading out, the company said it expects delivery demand to continue this year as more businesses open up and need to ship goods. Plus, consumers have more money in their pocket to spend from government stimulus checks. UPS said daily volume jumped more than 14% in the first three months of the year from the same period a year ago.”
“Hedge Fund Manager Spent Legitimate Earnings On Race Cars, Allegedly Needed To Commit Fraud To Buy A Place To Keep Them” (Dealbreaker). “[B]efore his indictment for allegedly lying to investors about how he was investing their money and how those investments were doing, among other things, Franzone told The Wall Street Journal just how he used his disposal income: the 1965 Daytona 500-winning ride, Toyota’s first-ever NASCAR-winning entrant, etc.”
“Record-Breaking Digital Artist Beeple Says The NFT Craze Is Just Like The Dotcom Bubble Of The Late 1990s” (Business Insider). “Record-breaking digital artist Beeple, who sold a piece of digital art for a record-breaking $69 million, thinks the non-fungible token (NFT) market will evolve in the same way the internet did during the dotcom bubble of the late 1990s.”
What we’re reading (4/27)
“Tesla Makes Money (Including From Selling Cars)” (DealBook). “The electric carmaker posted record quarterly earnings yesterday, beating Wall Street forecasts. But a closer look shows that its core business — you know, making vehicles — wasn’t the only story, and that might be why the company’s stock fell in aftermarket trading.”
“Joe Biden To Issue Executive Order Implementing $15-An-Hour Minimum Wage For Federal Contractors” (Business Insider). “The order would increase the hourly minimum wage for workers on federal contracts no later than March 30, 2022, almost a year from now. Officials in the Biden administration estimate the measure will benefit hundreds of thousands of government contractors and argue it will not raise the financial burden on taxpayers.”
“Toyota Snaps Up Lyft's Self-Driving Cars Unit For $550 Million” (CNN Business). “Toyota is hitting the gas to achieve its self-driving goals by buying Lyft's autonomous vehicle business for over half a billion dollars. The two players announced the $550 million acquisition on Tuesday, saying that it would allow them to create a ‘dream team’ of about 1,200 researchers and engineers around the world.”
“Crocs Shares Soar As Shoe Maker Raises 2021 Sales Outlook, Sees Growth Of 40% To 50%” (CNBC). “Crocs shares shot up more than 8% Tuesday after the shoe maker increased its revenue outlook for the full year and reported record first-quarter sales. CEO Andrew Rees said demand for the Crocs brand is “stronger than ever” across the world. Some have called Crocs the “it” shoe of the pandemic, as the clog became a closet staple for consumers seeking comfort at home.”
“Lakeside Idaho City Is America’s Hottest Housing Market In New WSJ/Realtor.com Index” (Wall Street Journal). “Buyers from other Western states are moving to northern Idaho in droves, seeking a more rural and less expensive place to live, said Kristen Johnson, a real-estate agent at Century 21 Beutler & Associates in Coeur d’Alene. Workers able to work remotely are also choosing to relocate, she said.”
May picks available soon
We’ll be publishing our Prime and Select picks for the month of May on or before 4/30. As always, we’ll be measuring SPC’s performance for the month of April, as well as SPC’s cumulative performance, assuming the sale of the April picks at the closing price (at the mid-point of the closing bid and ask prices) on the last trading day of the month (Fri., April 30). Likewise, performance tracking for the month of May will assume the May 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 (Mon., May 3)
What we’re reading (4/26)
“Summer Skies Will Be Close to Normal—But What About Air Fares?” (Wall Street Journal). “…[I]nvestors have reasons to be hopeful: All major airlines suggested last week that ticket prices on summer bookings are getting close to pre-pandemic trends.”
“Apple Will Spend $1 Billion To Open 3,000-Employee Campus In North Carolina” (CNBC). “Apple announced plans Monday to open a new campus in the Raleigh, North Carolina, area. Apple will spend over $1 billion on the campus, and it will employ 3,000 people working on technology including software engineering and machine learning.”
“The Last Roaring Twenties Ended In Disaster. Should Investors Be Worried?” (CNN Business). “There has been a lot of talk about how the combination of massive economic stimulus and vaccines for Covid-19 could bring about a lengthy financial boom — just as there was during the 1920s after the end of the influenza pandemic. But if you follow this analogy to its conclusion, there could be a major cause for concern. After all, the 1920s ended with the Black Tuesday stock market crash in October 1929 — right at the onset of the Great Depression.”
“Copper Prices Hit Their Highest Since 2011 As The Global Economic Recovery Spurs A Rally In Metals” (Business Insider). “Copper prices are surging as supply constraints combined with a surge in demand represent a perfect storm for the soft metal. Copper prices per ton soared to just under $10,000 on Monday, representing its highest level since 2011. Amid the height of the COVID-19 pandemic in March 2020, copper prices per ton traded at less than $5,000.”
“Why These C.E.O.s Got Paid So Much In The Pandemic” (DealBook). “Chief executives of big companies in the U.S. now make, on average, 320 times as much as the typical worker. In 1989, that ratio was 61 to 1. In years when the profits are flowing and unemployment is low, such disparities are often explained away. But in this pandemic year, corporate P.R. teams are bending over backward to justify their bosses’ big paydays.”
What we’re reading (4/24)
“U.S. Manufacturing, New Homes Sales Underscore Booming Economy” (Reuters). “U.S. factory activity powered ahead in early April, though manufacturers increasingly struggled to source raw materials and other inputs as a reopening economy leads to a boom in domestic demand, which could slow momentum in the months ahead.”
“History Offers Only Rough Guide To The Coming Economic Boom” (Wall Street Journal). “The U.S. economy is poised to grow at its fastest pace in decades, carried along by a wave of pent-up demand built during the pandemic and the trillions of dollars of support the government has provided over the past year. But what that boom will look like—how long it will last, what it might do for employment, how much inflation it might generate—isn’t clear.”
“A New Lawsuit Could Weigh In On Who’s The Real Inventor Of Bitcoin—Why Its Creation Is Still Shrouded In Mystery” (CNBC). “A copyright lawsuit brought by Craig Wright — the man who has claimed to be Satoshi Nakamoto, the pseudonym used by the creator of bitcoin — could finally put to bed the years-long mystery over who actually invented the multibillion-dollar cryptocurrency.”
“Imagining Berkshire Hathaway After Buffett: Who Will Be CEO, What Else Will Change — And What Won’t” (MarketWatch). “The passage of time guarantees that Berkshire Hathaway will one day be without the man synonymous with creating one of the world’s most valuable and admired businesses…[t]he most important role to fill will be CEO, one of three jobs now held by Buffett (he is also chairman and chief investment officer). While the actual name remains a secret, the background and skillset of Greg Abel suggests the board will choose him.”
“Billionaire Investor Reveals The Secret To His Success: Shrooms” (Daily Beast). “German investor Christian Angermayer—a 42-year-old billionaire who bears a not-negligible resemblance to Jared Leto in Blade Runner 2049—has made a fortune betting on a host of sci-fi-sounding finance fads. Among them: space travel, crypto, psychedelics, movies, weed, SPACs, and ‘life extension.’ […] in a recent profile, Angermayer cited a single experience as having paved the way for his billions: doing hallucinogenic mushrooms.”
What we’re reading (4/23)
“Stock Market Investors Must Keep An Eye On The Corporate Cash Mountain” (Wall Street Journal). “Major corporations are sitting on a mountain of cash: a decadelong buildup was given another sharp lift by precautionary measures taken during the pandemic. Those balances are worth monitoring, because they have important implications for investment returns in the future.”
“Congress Likely To Cap Joe Biden's Capital Gains Tax Hike At Around 28%, Goldman Sachs Says” (Business Insider). “Congress is likely to settle on a much more modest increase in capital gains tax than President Joe Biden would like, according to analysts at Goldman Sachs, with the eventual figure likely to land at around 28%.”
“Supreme Court Limits The FTC’s Authority To Return Money To Consumers Duped By Deceptive Business Practices” (CNBC). “In a unanimous opinion delivered by Justice Stephen Breyer, the court said that Section 13(b) of the FTC Act does not authorize the agency to seek monetary relief for violations of the law, as it has commonly been used. The court noted that 13(b) doesn’t explicitly authorize the agency to obtain such a remedy, but instead allows the FTC to seek “a permanent injunction” pending administrative proceedings.”
“Chinese Leaders Boast About China’s Rising Power. The Real Story Is Different.” (Washington Post). “[T]he reality in China often is more than meets the eye. Xi’s regime appears triumphant after controlling the pandemic within China, pulling off an economic recovery and scoring a ‘complete victory’ of eliminating absolute poverty despite the crisis. This confidence, however, is moderated by words of caution and deep insecurity that we did not see expressed earlier in Xi’s reign.”
“How the Super League Fell Apart” (New York Times). “For 48 hours, soccer stood on the brink. Fans took to the streets. Players broke into open revolt. Chaos stalked the game’s corridors of power, unleashing a shock wave that resonated around the world, from Manchester to Manila, Barcelona to Beijing, and Liverpool to Los Angeles.”
What we’re reading (4/22)
“American And Southwest Report Stronger Bookings, Ramp Up Schedules” (CNBC). “American Airlines posted its fifth consecutive quarterly loss on Thursday, while Southwest Airlines swung to a profit, boosted by federal payroll aid. Both carriers have noted an improvement in travel bookings and plan to increase flying during the peak spring and summer months as more people are vaccinated against Covid-19 and tourist attractions reopen.”
“Just Because You Can Work From Home Doesn’t Mean You’ll Be Allowed To” (Vox). “[A]s the return to the office picks up, the extent to which American office workers are allowed to continue working from home — which the vast majority of them have done during the pandemic — stands to affect everything from their satisfaction at work to where they are able to live.”
“Yes, Working From Home Makes You More Productive, Study Finds” (The Edge Markets). “The great work-from-home experiment occasioned by the pandemic has divided opinion in the corporate suite and sparked endless debates about whether employees work as effectively from the kitchen table as they do from the office. A new study finds that, in fact, remote work does indeed make us more productive… ‘[o]ur data on employer plans and the relative productivity of WFH imply a 5% productivity boost in the post-pandemic economy due to re-optimized working arrangements[.]’”
“The Curious Case Of First Union Capital” (Institutional Investor). “An investigation into First Union Capital reveals that its founder is not being truthful, if he even exists; that it appears not to be registered with the financial regulatory agencies in any country in which it claims to do business; that hundreds of thousands of traders have not used its online trading program over the past four years, as it claims; and that its assertion of the almost perfect predictive powers of its trading program is certainly bogus.”
“The Gray Market: How A Brazen Hack Of That $69 Million Beeple Revealed The True Vulnerability Of The NFT Market (And Other Insights)” (artnet news). “In the opening days of April, an artist operating under the pseudonym Monsieur Personne (“Mr. Nobody”) tried to short-circuit the NFT hype machine by unleashing “sleepminting,” a process that complicates, if not corrodes, one of the value propositions underlying non-fungible tokens. His actions raise thorny questions about everything from coding, to copyright law, to consumer harm. Most importantly, though, they indicate that the market for crypto-collectibles may be scaling up faster than the technological foundation can support.”
What we’re reading (4/21)
“Silicon Valley’s Deal Machine Is Cranking: ‘I’ve Never Seen It This Frenzied’” (Wall Street Journal). “Investors are offering startups five times—or more—the amount of money they are asking, and deals that used to take months now sometimes close in days, according to venture capitalists, deal makers and founders. Startups are raising cash every few months rather than every couple of years, and valuations are soaring with each new check, these people say.”
“Robinhood's ‘Costless’ Trading Can Be Very Expensive” (Real Clear Markets). “Essentially, Robinhood’s business model is in conflict with its customers. Robinhood has a regulatory duty of “best execution” of its customer trades at the best buy and sell prices available. In actuality, the SEC found Robinhood ran its customers’ trades to get the best payment for itself by directing order flow. Robinhood did this to such an extent its customers paid $34 million more than if they’d paid commissions to competitors because of inferior price execution – a fact the SEC determined Robinhood knew, at the time, but made misrepresentations to its customers nonetheless.”
“Weekly Mortgage Demand Jumps 8.6% After Interest Rates Fall To A Two-Month Low” (CNBC). “A sharp drop in mortgage interest rates sent homeowners and potential homebuyers to their mortgage lenders. Total mortgage application volume surged 8.6% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. That is the first overall increase in weekly applications since the end of February.”
“Wall St Fears Netflix Fatigue As Subscriber Growth Slumps” (Reuters). “Wall Street cast doubt on Wednesday on Netflix Inc's ability to bounce back strongly from a first-quarter slowdown in subscriber growth that pointed to fatigue among viewers after a year of COVID-19-driven binge streaming. Several analysts said the streaming giant would need fresh and interesting new content along with a creative approach to pricing going forward as it faces a slew of improving competitors.”
“Shockingly, Guy Behind $100 Million South Jersey Deli Has A Shady Past” (Dealbreaker). “So you’ve probably heard of the deli across the river from Philadelphia International Airport that sells about $18,000 a year worth of sandwiches and the like (except when it doesn’t) and which is nonetheless worth about $100 million. This, of course, raises a number of questions, although the main one seems to be, ‘What the hell are you talking about? How can that be?’ Another question that seems worth asking is, ‘Why the hell does a South Jersey deli with a gravel parking lot alongside a freight rail line sharing a building with something called the ‘New Jerseys Got Talent School Of Performing Arts’ have 7.8 million publicly-traded shares, a Nevada incorporation, a Hong Kong-based chairman, and shadowy shareholders in that city and Macau in the first place?”
What we’re reading (4/20)
“Oil Prices Went Negative A Year Ago. Now The Glut Is Gone” (CNN Business). “Panic gripped the energy market last spring as a frightening realization dawned on oil traders: The world was rapidly running out of space to store excess crude…[f]lash forward 12 months and US oil prices stand at $63 a barrel — exactly $100 above that record low [-$37/barrel] from last April.”
“Alaska's GameStop Stake Soared Over 700% Last Quarter - And Its Tesla Bet Has Gone From $0 To $85 Million In 18 Months” (Business Insider). “There have been several surprising beneficiaries of the GameStop short squeeze in January, including the Mormon Church. The state of Alaska has also emerged as an unlikely winner. The state's revenue department has owned a stake in the video-games retailer since at least 2017, and held about 43,000 shares worth $802,000 at the end of December last year, regulatory filings show.”
“Venmo Users Can Now Buy And Sell Bitcoin And Other Cryptocurrencies” (CNBC). “Starting Tuesday, Venmo will show users a new feature that lets them invest in four different cryptocurrencies — bitcoin, ether, litecoin and bitcoin cash — with a minimum spending requirement of $1. They can also share their crypto purchases with friends through Venmo’s social feed.”
“Behind The Mysterious Demise Of A $1.7 Billion Mutual Fund” (Wall Street Journal). “The Infinity Q Diversified Alpha Fund disclosed in filings with the Securities and Exchange Commission valuations of investments that in at least three instances were incorrect or inconsistent with market conditions, said traders and academics. One valuation was mathematically impossible, said a former Morgan Stanley managing director who reviewed the disclosures.”
“Wall Street Analysts Battle Weight Loss, High Blood Pressure And Mental Health Issues From Long Hours” (NBC News). “The online forum Wall Street Oasis, the networking group for students and junior staffers in the banking industry that conducted the survey, found junior bankers work on average at least 80 hours a week. After a year of working these hours, often in isolation, the survey found 40 percent of the first-year bankers, 32 percent of second-year bankers and 46 percent of third-year bankers sought or considered mental health counseling. Analysts in their early 20s interviewed for this article also reported they suffered extreme weight changes and developed health conditions like high blood pressure.”