What we’re reading (6/28)

• “Record Stock Sales From Money-Losing Firms Ring The Alarm Bells” (Bloomberg). “ If you think a rush by companies to sell their shares is a bad omen for the market, imagine a scenario where most of the sales come from firms that don’t make money. It’s happening now. Since the end of March, almost 100 unprofitable companies, including GameStop Corp. and AMC Entertainment Holdings Inc., have raised money through secondary offerings, twice as many as coming from profitable firms, according to data compiled by Bloomberg.”

• “The Future Of Psychedelic Medicine Might Skip The Trip” (Forbes). “Roth’s 30-person laboratory, which is perched four stories above the tree-lined campus, is powered by robots, ultra-large-scale computational chemistry and cryo-electron microscopy. His lab has discovered millions of new chemical structures of psychedelic compounds that target the serotonin 5-HT-2A receptor in the brain, just how tryptamines like magic mushrooms and LSD do. But Roth isn’t trying to find the next mind-bending molecule. ‘There are plenty out there and we don’t need anymore,’ he says. ‘The goal is to find compounds that are therapeutic and not psychedelic.’”

• “Recent Retirements Throw Wrench Into Fed’s Economic Recovery Plans” (Wall Street Journal). “Full employment has always been notoriously hard to measure, but now it has gotten harder still. Officials look at a range of indicators, including the number of jobs created and the share of the adult population either working or looking for a job. The rapid rise in retirements translates to fewer people available to work—meaning the labor market could hit the full employment threshold at lower levels of employment and a lower labor-force participation rate than before the pandemic.”

• “70% Of Millennials Are Living Paycheck To Paycheck, More Than Any Other Generation” (Business Insider). “Seventy percent of the generation said they're living paycheck to paycheck, according to a new survey by PYMNTS and LendingClub, which analyzed economic data and census-balanced surveys of over 28,000 Americans. It found that about 54% of Americans live paycheck to paycheck, but millennials had the biggest broke energy…[i]t's left even six-figure earning millennials struggling to get by. The survey found that 60% of millennials raking in over $100,000 a year said they're living paycheck to paycheck.”

• “One in Five Young Adults Is Neither Working Nor Studying In U.S.” (Bloomberg). “Almost one in five young adults in the U.S. was neither working nor studying in the first quarter…[i]n the first three months of the year, about 3.8 million Americans age 20 to 24 were not in employment, education or training, known as the NEET rate, the Center for Economic Policy and Research said in a report. That’s up by 740,000, or 24%, from a year earlier, before many lost their jobs or opted to defer college enrollment as campuses shut down at the onset of the Covid-19 pandemic.”

Lab leak and the say-so of serious people

Dr. Anthony Fauci joined Kara Swisher of the New York Times on her “Sway” podcast recently for a wide-ranging conversation about, among other things, his recently published emails, including his correspondence with Mark Zuckerberg, the long-evolving federal guidance on face masks, and the lab leak hypothesis positing that the novel coronavirus may have escaped from a lab. You can read the whole transcript here.

As everyone should know by now, Dr. Fauci is an eminent immunologist and clearly a dutiful public servant. Having spent the past year and a half helping to guide the U.S. government’s response to the coronavirus pandemic, he has been at the center of the public’s attention and surely unfairly maligned in certain corners of the political ecosphere. This blog has no current view on the U.S. government’s policy response to the pandemic, or on Dr. Fauci’s job performance during the pandemic more generally. I note that he seems like a nice guy.

The conversation with Kara Swisher was revealing, however, of just how commonplace and accepted a certain fallacious form of reasoning is in the public discourse more broadly. It goes by many names: “argument from authority,” “appealing to authority,” ipse dixit (“say-so”), etc. Because it is fallacious reasoning, it can lead you to conclusions that are not likely true; or, equally, direct you away from conclusions that are likely true. Investors, participating as we are in an activity that essentially amounts to competing to identify truths that other people get wrong, ought to care a lot about this.

Here’s a good example of the logical form I’m talking about, from the website Logically Fallacious:

According to person 1, who is an expert on the issue of Y, Y is true.

Therefore, Y is true.

In this case, Y may indeed be true. But it also may not be true. The problem is that the reasoning used to support the proposition that Y is true actually provides no basis to conclude that Y is, in fact, true. To put a finer point on it, the validity of the proposition that Y is true does not depend on who says it. This is shocking to a lot of people because we (society, the media) simply mess this up all the time. Consider, for example, how often you hear arguments like “95% of scientists agree on Y” advanced in serious fora by serious people as a valid basis to conclude that Y is true.

The problem is more obvious and intuitive when you replace Y in the example above with a simple, self-evidently false proposition about which few would disagree. For example, you can formally prove that the reasoning above is wrong by replacing Y with the proposition that 1+1=3:

According to person 1, who is an endowed professor of mathematics, 1+1=3.

Therefore, 1+1=3.

Absurd! 1+1 does not equal 3! But if the say-so of supposed experts was a valid basis for identifying true statements, we would be compelled to conclude that 1+1 does in fact equal 3. Alas, the validity of the similar true claim that 1+1 equals 2 does not depend on who says it or their credentials. It is not the person saying it that makes the statement true, but rather the principals of addition—accessible to any reasoning person—which render it true by definition.

Back to the Swisher-Fauci interview. In the interview, Dr. Fauci appealed to authority numerous times on the topic of the lab leak hypothesis and the all-over-the-map guidance on face masks during the pandemic (emphasis added in the quotations below):

• “I feel, as do the overwhelming majority of scientists who have knowledge of virology and knowledge of evolutionary biology, that the most likely explanation for this is a natural leap from an animal reservoir to a human”

• “…we all want to find out, really, what the origins were. But again, I get back to saying if you talk to the scientists with knowledge about viruses…”

• “…again, I’m not an evolutionary virologist, but those who are look at the virus, and they say it’s absolutely totally compatible with something that evolved from bat viruses because of the closeness to"…”

• “At the time that I said to Sylvia that you don’t necessarily need to wear a mask and where I even said publicly you don’t need to wear a mask, you know who agreed with me? The entire Centers for Disease Control and Prevention, the C.D.C, and the Surgeon General of the United States.”

Importantly, this isn’t to say that, on the lab leak specifically, the opposite conclusion (that it came from a lab), must be true. It’s just to say that the claim that ‘a bunch of experts think it jumped zoonotically’ isn’t good enough or dispositive enough as a purely logical matter to rule out the alternative in the way that supposedly credible authorities suggested over the past year and a half. This really shouldn’t be controversial even if all experts were saying the same thing, because expert consensus can, and often is, wrong (e.g., North Vietnamese resolve, Iraq WMDs, the electability of Donald Trump, the list goes on ad infinitum).

But it especially should not be controversial in light of the fact that other credible experts were, in fact, saying it could have come from a lab the whole time. Quite obviously, a lack of authoritative consensus obviates any argument premised on, well, consensus among authorities.

Kara Swisher pressed Dr. Fauci on this point, noting that other reputable scientists and epidemiologists like Dr. Ralph Baric and Dr. Marc Lipsitch “seem to think it’s possible it originated in a lab, or at least, they think the theory is worth checking out[.]” This was an epistemologically productive moment in the interview because it elicited from Dr. Fauci an actual argument—rather than ipse dixit—about why arguments supporting the lab leak hypothesis are less reliable than some think. To wit:

I mean, even when they’re [the Chinese government] not hiding anything, they act that way. I mean, if you look at the first SARS in 2002, they were not particularly forthcoming in what was going on. And what it was, was proven of being a natural occurrence. Yet if you look the way they acted early on, that’s the nature of the way the Chinese, when they have something that goes on in their own country, they just act in a very put-offish way. They’re not forthcoming with information. Does that mean that they’re really lying and hiding something? I don’t know.

So there you have it. Setting aside the say-so of experts, one reason we should discount the lab leak theory, per Dr. Fauci, is because one of the major arguments supporting the theory—the “what are they hiding” argument—isn’t very compelling when you consider that the Chinese government censors information in the ordinary course of affairs.

That seems like a good point and it may be true. Most importantly for this discussion, though, the validity of the point does not depend in any way on the credentials of its purveyor. It is just a plain argument, premised on basic reasoning and logic skills that all humans possess. Swisher’s Q&A revealed that what was initially proffered as a point of view well-supported by technical, definitive, expertise and specialized analysis really might not be that.

It seems plausible then, that what we’re left with here at the end of the day is a sleight-of-hand that is used regularly in public policy debates: a perfectly debatable contention, accessible to any thinking person to assess and evaluate, disguised under a veil of credentials and authority having the effect of inoculating the argument from inspection. Investors, take notice.

A bit of an aside here, but one wonders if the scientific/medical establishment could be particularly vulnerable to this type of errant reasoning. It’s a bit counterintuitive, because one would expect esteemed practitioners of science to be the most rigorous and skeptical people when it comes to popular consensus about uncertain questions. Scientific inquiry is, after all, just applied epistemology, the act of asking over and over again: “do we really know what we think we know and, if so, how?”

But it’s also possible the institutional factors that govern who is allowed into the “guild” could have the opposite effect. There are high licensing barriers, and years (decades?) of study must be done before one is permitted entry. The credentials that accompany those efforts must confer special authority (and cover from critique) to justify the efforts in the first place, separating the “in” from the “out”. Similar dynamics exist in many other places to be sure (rising publications standards for tenure at universities, rising revenue standards for becoming law firm and consulting firm partners, prohibitive zoning rules put in place by home owners on zoning boards to make new building activity in the area prohibitively expensive) — once people are in the club, they tend to make the walls higher and the moats wider for others behind them.

That’s not to say those efforts are pointless — surely they are not! Surely, people who have spent years or decades studying particularly topics are better positioned to advance strong, sound arguments on matters in their domain of expertise than are other people. But they still have to make the argument and it needs to be logically coherent. No argument is immune from examination. The smartest people in the world have always known this: if it’s too complicated for the expert to explain, there’s a chance the proverbial emperor has no clothes.

Lay folks interested in truth (or investors betting on it), should keep it in mind.

July picks available soon

We’ll be publishing our Prime and Select picks for the month of July before Thursday, July 1 (the first trading day of the month). As always, we’ll be measuring SPC’s performance for the month of June, as well as SPC’s cumulative performance, assuming the sale of the June 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., June 30). Performance tracking for the month of July will assume the June picks are bought at the open price (at the mid-point of the opening bid and ask prices) on the first trading day of the month (Thurs., July 1).

What we’re reading (6/27)

• “The Stock Market Hasn’t Been This Placid in Years” (Wall Street Journal). “The U.S. stock market is as calm as can be on the surface, while churning underneath more than it has in decades. The S&P 500 is so quiet it is almost disconcerting. The index hasn’t had a 5% correction based on closing prices since the end of October; no wonder the new day traders who started buying shares in lockdown think the market only goes up. The last time the S&P was this serene for so long was in 2017, a period of calm that ended with the volatility crash early in 2018—although back then it was even quieter for much longer.”

• “Renaissance Suffers $11 Billion Exodus With Meager Quant Returns” (Bloomberg). “Disgruntled by subpar returns, clients have now redeemed -- or asked to redeem -- more than a quarter of the capital that Renaissance manages in hedge funds with outside money, according to investor documents seen by Bloomberg. The firm now is mostly managing its own internal capital, a person with knowledge of the matter said.”

• “Interview: Marc Andreesen, VC And Tech Pioneer” (Noahpinion). “[from Marc Andreesen:] [I]t’s hard to overstate the positive shock that remote work works. Remote work isn’t perfect, there are problems, but virtually every CEO I’ve talked to over the last year marvels at how well it works. And remote work worked under the extreme duress of a pandemic, with all of the human impact of lockdowns and children unable to go to school and people being unable to see their friends and extended families. It will work even better out of COVID. Companies of all shapes, sizes, and descriptions are retooling their assumptions on geographic footprint, where jobs are located, where employees are located, how offices are configured, and if there should be offices at all. Combining these factors, it’s possible that we’ll see a huge surge in productivity growth over the next 5 years.”

• “Big miners’ capital discipline is good news for investors” (The Economist). “The big five miners [Anglo American, BHP, Glencore, Rio Tino, and Vale] consolidated their market power with a spate of huge mergers in the 2000s, just in time for China’s emergence as a voracious consumer of metals. The result was a 15-year supercycle of high prices. Miners splurged around $1trn chasing higher volumes and mega-projects. Many proved disastrous—perhaps a fifth of that investment was returned to shareholders, according to one estimate. After a round of firings, a new generation of mining bosses promised to do better. In the past few years value, not volume, became the industry’s watchword. ‘We will never lose our capital discipline,’ vows Eduardo Bartolomeo, boss of Vale.”

• “Investment Banking's Labor Crunch: A Junior Banker Shortage Is Forcing Rainmakers To Do Grunt Work And Firms Are Lowering The Bar For New Hires” (Business Insider). “Many US industries are confronting a surfeit of jobs and having difficulty filling vacancies…[a]nd while investment banking might seem a far cry from the retail industry, which has been one of the hardest hit sectors by labor shortages, financial firms have not been immune. For banks, it's not just struggling to boost the lackluster number of juniors. They're also expecting further losses, PwC partner Julia Lamm told Insider. ‘Companies are bracing for higher turnover numbers than ever before, staffing up the recruiting teams,’ and getting external recruiting agencies ‘geared up for more recruiting,’ said Lamm, who is a workforce strategy partner in the firm's financial services people and organization practice.”

What we’re reading (6/26)

• “Meet The Short Seller Who Hopes Stocks Crash And Burn” (CNN Business). “It should be no surprise to hear that the founder of an investment firm named after the Hindenburg is looking for stocks that will crash and burn. Nate Anderson, founder of Hindenburg Research, has made a name for himself in the past few years by targeting companies that he thinks are overvalued and have suspect financials. In other words: looming stock market blowups resembling the infamous German zeppelin that crashed in New Jersey in 1937.”

• “Lumber Prices Have Bottomed Out, But Are Likely To Stay Double The Historical Average For At Least The Next 5 Years, A Lumber Trader Says” (Business Insider). “‘My argument is the new normal is going to be significantly higher than the old normal while others think we're going to go back to pre-COVID price ranges,’ [Stinson] Dean [CEO and founder of Deacon Trading] said. After an intense run-up in the beginning of the year, Lumber has fallen nearly 50% from May's record high of over $1,700 per thousand board feet.”

• “Remote Work Is The New Signing Bonus” (Wall Street Journal). “Marc Cenedella, founder and chief executive of Ladders, a job-search site for roles that pay north of $100,000 a year, says greater flexibility is shaping up as a perk that companies can wield to poach talented people. ‘Remote is going to be the new signing bonus,’ he says. ‘Instead of dangling, ‘We’ll give you $10,000 if you sign for this job,’ it’ll be: ‘Instead of having to commute 35 minutes every day, go to work, and get in your car and drive 35 minutes home, you can work from your home office all the time.’”

• “The Miami Condo Collapse Is A Devastating Reminder Of America's Artificial Land Problem” (The Week). “It is not yet known for certain what caused the collapse, but one probable culprit was the fact that the building had been built on reclaimed wetland, and as a result, had been sinking into the ground for decades…[e]ven if some other factor was the proximate cause, the sinking surely made it worse — a building in such a situation can easily develop cracks in its foundation or other problems that compromise its structure. It's illustrative of a major problem in many American cities: reclaimed land. Big chunks of almost all American coastal cities are built on reclaimed land that will likely turn to soup as climate change causes ocean levels to rise.”

• “Mongooses Solve Inequality Problem” (ScienceDaily). “Mothers in banded mongoose groups all give birth on the same night, creating a ‘veil of ignorance’ over parentage in their communal crèche of pups. In the new study, led by the universities of Exeter and Roehampton, half of the pregnant mothers in wild mongoose groups were regularly given extra food, leading to increased inequality in the birth weight of pups. But after giving birth, well-fed mothers gave extra care to the smaller pups born to the unfed mothers -- rather than their own pups -- and the pup size differences quickly disappeared.”

What we’re reading (6/25)

• “Key Inflation Indicator Posts Biggest Year-Over-Year Gain In Nearly Three Decades” (CNBC). “A key inflation indicator that the Federal Reserve uses to set policy rose 3.4% in May, the fastest increase since the early 1990s, the Commerce Department reported Friday. Though the gain was the biggest since April 1992, it met the Dow Jones estimate and markets reacted little to the news. The stock market posted mostly solid gains, while government bond yields were moderately higher.”

• “Hotels’ and Restaurants’ Rebound Summer Held Back By Shortages Of Everything” (Wall Street Journal). “Summer looked like the on-ramp to a big recovery for the leisure and hospitality industry, hard hit by the pandemic and its lockdowns and propped up with billions in government aid. Instead, restaurants, theme parks, hotels and tourist attractions are finding themselves squeezed from multiple sides: rising costs, worker shortages, unpredictable supplies of some foods and, in some cases, demand so overwhelming it’s difficult to avoid leaving customers dissatisfied.”

• “Why Washington Can’t Quit Listening to Larry Summers” (New York Times). “Many people who have served in top government jobs do stick around, commenting favorably on how their former team is doing. Others, like the former Treasury secretaries Timothy F. Geithner and Steven Mnuchin, fade out of the limelight. Few remain as front and center as Mr. Summers, or as apolitical and provocative. ‘He’s driven toward trying to find out what’s true rather than to give the politically correct answers,’ said Ray Dalio, founder of Bridgewater Associates, the world’s largest hedge fund. ‘That’s caused him a lot of trouble, but I like it.’”

• “US Banks Get All-Clear On Resuming Limit-Free Share Buybacks After Passing Fed Stress Tests” (Business Insider). “Major US banks no longer have to deal with pandemic-related restrictions on stock buybacks and dividend payments after the US Fed gave them the greenlight to return to normalcy on Thursday. The central bank released results of its latest stress test showing that 23 of the largest banks could withstand more than $470 billion in losses under hypothetical doomsday scenarios, but they would still be left with twice as much capital as required by Fed rules.”

• “How Peter Thiel turned $2,000 In A Roth IRA Into $5,000,000,000” (MarketWatch). “Thiel and other entrepreneurs have used their Roth IRAs slightly differently from the manner in which the average investor would, ProPublica found. For example, Thiel bought 1.7 million shares of PayPal in 1999 for $0.001 per share, or $1,700, ProPublica reported. With this strategy, investors are able to buy a large number of shares in a startup at fractions of a penny per share. When those investments garner large gains, investors can use the proceeds from these investments still inside the Roth IRA to make other investments. Substantial gains could be derived if the company goes public and its share price skyrockets.”

What we’re reading (6/24)

• “The Green Wave Is Here…Don’t Get Left Behind” (American Consequences). “Whether or not you agree with the climate-change movement is irrelevant as an investor. The reality is the so-called “cool kids” – from Justin Trudeau, Emmanuel Macron, and Angela Merkel… to Mario Draghi and Yoshihide Suga… to Prime Minister Boris Johnson and President Biden – have designated this as their project du jour. And you want to be poised to benefit from the increased investments in the sector.”

• “Restaurants Can Solve Their Staffing Crisis, But Higher Pay Alone Isn’t The Answer” (Dallas Morning News). “Anyone who believes that higher pay or federal policy changes alone will solve the industry’s hiring issues is missing the point…[i]n 2007, I founded Edwins, a French restaurant and culinary institute in Cleveland that employs and educates formerly incarcerated people. Of those leaving Edwins, 95% walk straight into new jobs, and less than 1% ever go back to prison. (Compare that to the national recidivism rate after three years, which is higher than 50%.)…unlike our struggling friends in the industry…we’re not experiencing labor shortages.”

• “U.S. Power Reliability: Are We Kidding Ourselves?” (T&DWorld). “The average U.S. customer loses power for 214 minutes per year. That compares to 70 in the United Kingdom, 53 in France, 29 in the Netherlands, 6 in Japan, and 2 minutes per year in Singapore. These outage durations tell only part of the story. In Japan, the average customer loses power once every 20 years. In the United States, it is once every 9 months, excluding hurricanes and other strong storms.”

• “What Crypto People Get Wrong” (Tyler Cowen, Bloomberg). “The irony is that so many of the arguments made by crypto types imply especially low pecuniary rates of return on crypto. To the extent crypto is useful as collateral or for liquidity purposes, people will be more willing to hold crypto at lower pecuniary rates of return…If we eventually arrive at a world in which equities are expected to rise by say 5% to 7% a year, and Bitcoin by say 1%, then that will be a sign crypto has made it. The more general point is that while crypto has been a highly unusual asset class for its entire history, it won’t act like an unusual asset class forever.”

• “Signs That We Face An Epistemological Crisis: Book Titles, 2021” (askblog). “[W]hat does it say about contemporary culture that so many heavyweights are writing on epistemology? This seems to me an indictment of: social media, certainly; political discourse, certainly; higher education, probably; journalism, probably. This may fit with a historical pattern. The barbarians sack the city, and the carriers of the dying culture repair to their basements to write.”

What we’re reading (6/23)

• “Investment Firms Aren’t Buying All the Houses. But They Are Buying the Most Important Ones.” (Slate). “It’s not exactly accurate that investors are ‘buying every single-family house they can find,’ as some have suggested…[t]hey’re really buying up the stock of relatively inexpensive single-family homes built since the 1970s in growing metro areas. They mostly ignore bigger and more expensive houses, especially ones that are move-in ready: Wealthy boomers and the nation’s finance and tech bros nab those properties. And they’re also ignoring cities with stable or shrinking populations, like Providence and Pittsburgh.”

• “U.S. Existing-Home Prices Hit Record High in May” (Wall Street Journal). “U.S. home prices in May experienced their biggest annual increase in more than two decades, as a shortage of properties and low borrowing rates fueled demand. The median existing-home sales price in May topped $350,000 for the first time, the National Association of Realtors said Tuesday. The figure was nearly 24% higher than a year ago, the biggest year-over-year price increase NAR has recorded in data going back to 1999.”

• “WeWork's Top Tech Exec Is Leaving After Two Years Amid A Reorganization, A Leaked Memo Reveals” (Business Insider). “WeWork's top tech executive is leaving and the tech team is reorganizing, just before the coworking company starts trading publicly, Insider has learned. Ken Watson, who joined WeWork two years ago as vice president of engineering before he was promoted to chief technology officer, is leaving for ‘other opportunities,’ per a Monday internal email reviewed by Insider.”

• “Scoop: The Hill Ramps Up Sale Talks” (Axios). “The Hill, a Beltway-based print publication that receives significant national traffic to its digital website, is being more aggressively shopped by its owner Jimmy Finkelstein, sources tell Axios. It’s held recent talks with broadcasting giant Nexstar Media Group, a source tells Axios.”

• “How Tiger Global is changing Silicon Valley” (The Economist). “SoftBank is being upstaged by another brash outsider. Between January and May Tiger Global Management, a New York hedge fund that also invests in private tech firms, ploughed money into 118 startups, ten times more than it backed in the same period in 2020, according to Crunchbase, a data provider. Its portfolio now counts more than 400 firms, including several behind some of the past year’s most eye-catching IPOs, for example Coinbase, a cryptocurrency exchange, and Roblox, a video-game maker.”

What we’re reading (6/22)

• “Share Buybacks Are Back At A Record Pace” (Axios). “Why it matters: Last year, stock buyback activity fell sharply as companies were hanging onto cash amid extreme uncertainty. The about-face shows that confidence is up, along with earnings. By the numbers: S&P 500 companies have approved plans for a whopping $567 billion worth of stock buybacks since the beginning of the year through mid-June, according to a new Goldman Sachs report. This is a record for this part of the year. It’s worth noting that Apple and Alphabet accounted for $90 billion and $50 billion, respectively, of those announcements.”

• “Blackstone Bets $6 Billion on Buying and Renting Homes” (Wall Street Journal). “Blackstone Group Inc. has agreed to buy a company that buys and rents single-family homes in a $6 billion deal that’s a sign Wall Street believes the U.S. housing market is going to stay hot. The giant investment firm has reached a deal to acquire Home Partners of America Inc., according to people familiar with the matter. Home Partners owns more than 17,000 houses throughout the U.S., which it bought, rents out and offers its tenants the chance to eventually buy.”

• “Meme Stock Investors Head To Oil Patch As Shale Producer Soars” (Investor’s Business Daily). “Meme stock traders are headed to the oil patch as Torchlight Energy Resources (TRCH) comes into focus. TRCH stock soared Monday. The Plano, Texas-based exploration and production company has assets in top shale plays like the Permian Basin and Eagle Ford formation.”

• “Airlines Face A Bailout Backlash” (DealBook). “American Airlines confirmed yesterday that, amid delays trying to keep up with surging demand, it would cut nearly 1,000 flights in the first half of July…The airline’s move adds fuel to the debate about labor shortages. American said it had cut flights because of a shortage of pilots and airport workers. Critics said the airline should raise wages to attract more workers, especially since it received billions in government aid during the pandemic.”

• “Investors Really Want A Bitcoin ETF, Van Eck CEO Says After SEC Delays Approval Again” (CNBC). “Van Eck’s bitcoin ETF proposal has hit yet another bump in the road, but its CEO isn’t backing down. The Securities and Exchange Commission said in a Wednesday filing that it will delay its decision on whether to approve the VanEck Bitcoin Trust a second time, extending its review process and requesting comment from interested parties on how the rule change could impact markets. Approval may only be a matter of time given the demand for the product, Van Eck Associates CEO Jan van Eck told CNBC’s ‘ETF Edge’ on Monday.”

What we’re reading (6/21)

• “The Death Of Car Ownership: This $30 Trillion Trend Could Kill The Auto Industry” (OilPrice.Com). “The idea of recurring revenue has been around a long time, but the past three years have seen it become a huge megatrend. When you apply it to the auto industry, you could get a serious disruptor of our views of car ownership. Just like Adobe made it possible for so many more people to use its high-end software packages, so might car subscription services make it that much easier for people to drive a car--or a second (or third) vehicle.”

• “Global Markets Adapt To A Change In The Federal Reserve’s Tone” (The Economist). “[I]nvestors will ask whether the shift signalled by the Fed warranted such strong reactions. It is possible that markets overdid it. When many investors hold the same portfolio of positions, they can be forced to bail out in a hurry if markets move violently against them. This liquidation of positions can exacerbate volatility. In fact, there are reasons to think the great reflation trade has further to run: the full reopening of the American economy is still in its early stages and the end of 2022 is a long way off.”

• “An Inflation Storm Is Coming For The U.S. Housing Market” (MarketWatch). “The primary solution to address runaway inflation in housing will be to build more homes — something that’s easier said than done…[the] challenges run the gamut from the high cost of lumber to the lack of skilled workers to complete construction projects. Another factor: Zoning regulations across the country prevent the construction of more dense housing in many cities, effectively driving up home prices and rents in the process.”

• “American Airlines Canceling Hundreds Of Flights Through Mid-July In Part Due To Labor Shortages” (CNN Business). “American Airlines is canceling hundreds of flights through at least mid-July as the company strives to maintain service in the midst of massively increasing travel demand while the coronavirus pandemic continues to recede in the United States, according to a spokesperson from the airline.”

• “IRS: Ransomware Payments May Be Deductible” (Axios). “The federal government for years has recommended that companies do not pay criminals during ransomware attacks, but the feds have a consolation for those who do pay: the ransoms may be tax deductible…[t]he IRS offers no formal guidance on ransomware payments. But multiple tax experts interviewed by AP said deductions are usually allowed under law and established guidance.”

What we’re reading (6/20)

• “Tight Labor Market Returns The Upper Hand To American Workers” (Wall Street Journal). “Low-wage workers found something unexpected in the economy’s recovery from the pandemic: leverage. Ballooning job openings in fields requiring minimal education—including in restaurants, transportation, warehousing and manufacturing—combined with a shrinking labor force are giving low-wage workers perks previously reserved for white-collar employees. That often means bonuses, bigger raises and competing offers.”

• “Markets To The Fed: Your Hawkish Turn Isn’t Fooling Anyone” (Barron’s). “The Federal Open Market Committee’s latest policy communications raised more questions than answers. Perhaps the biggest one: Can the Fed ever really raise interest rates? At face value, and with a big dose of relativity, this past week’s updated summary of economic projections and commentary from Chairman Jerome Powell marks a hawkish turn…[b]ut when you take a step back, the Fed remains about as dovish as ever. When the consumer-price index is running at 5%, it’s hardly hawkish to say there is a chance price acceleration is faster and lasts longer than anticipated. It already is, and it already has.”

• “HSBC Offers Sub-1% Mortgage As Interest Rate War Intensifies” (The Guardian). “HSBC has become the latest lender to offer a mortgage deal with an interest rate of less than 1% in the latest sally of an intensifying mortgage rate war. Banks and building societies are fighting for customers in a frenzied property market, described by the Bank of England’s chief economist as ‘on fire’ as the government’s stamp duty holiday combines with big deposits saved during lockdown to ramp up demand.”

• “The Housing Market Is On Fire. The Fed Keeps Adding Gasoline” (CNN Business). “Bidding wars. All-cash offers. Homes selling for $1 million over asking. The housing boom has officially reached the ridiculous stage. Despite surging home prices that are rising at the fastest pace on record, the Federal Reserve continues to prop up the housing market by purchasing $40 billion of mortgage bonds each month. And while the Fed is finally ‘talking about talking about’ removing some of its support, some fear the US central bank is creating another housing bubble as it deliberates.”

• “Actually, The Pandemic Made Americans Richer” (Business Insider). “Today, a huge swath of Americans are better off financially than they were before the pandemic started. A Pew Research report in March found that 30% of adults said their personal finances had improved since January 2020. Another 50% said their financial situation remained just as good as before. And the sunny outlook extends to nearly everyone: men and women, old and young, and Americans of all races and education levels. Even two-thirds of those who earn less than $39,000 a year said their finances were just as good or better than before the pandemic hit.”

What we’re reading (6/19)

• “The Economic Gauges Are Going Nuts. Jerome Powell Is Taking a Longer View.” (New York Times). “To Mr. Powell’s mind, these are those lessons [from the 2010s]: American workers are capable of great things. The labor market can run hotter for longer than a lot of economists once assumed, with widely beneficial results. There are many powerful structural forces that will keep inflation in check. And for those reasons, the Fed should move cautiously in raising interest rates, rather than risk choking off a full economic recovery too soon.”

• “Why Wall Street Is In Such A Rush To Get Workers Back To The Office” (CNN Business). “Even more than other industries, Wall Street is clearly in a rush to turn the page on this extended era of virtual work. Executives, employees and those who follow the industry point to a range of factors for this…the risk is that banks could be ignoring the concerns of employees who may not be ready (or able) to get back to the office full-time. If Wall Street moves too aggressively, it could lose talent to more nimble yet equally lucrative industries like Silicon Valley.”

• “Americans Are Heading Back To Gyms As Interest In At-Home Workouts Wanes, Jefferies Says” (CNBC). “As Covid restrictions ease across the country, vaccines are jabbed into arms and fitness centers revoke mask-wearing policies, more people are heading back to the gym, new research shows. Jefferies has been tracking visits to fitness chains such as Planet Fitness and 24 Hour Fitness and monitoring online searches for gyms and digital fitness programs such as Peloton. While many Americans invested in the latter during the health crisis, aspiring to break a sweat at home, that demand appears to be fading.”

• “Why PCs Are Turning Into Giant Phones” (Wall Street Journal). “Your next laptop will be like a smartphone—only bigger, more powerful and more capable. It’s a reversal of almost a decade of trends in mobile computing, a decade that saw our phones get ever faster while our laptops and other PCs felt like they just wheezed along.”

• “Crypto-Miners Are Probably To Blame For The Graphics-Chip Shortage” (The Economist). “Since 2015 asking prices for six gpus [graphics processin gunits] tracked by Keepa have moved in lockstep with Ethereum’s value. In late 2017 the currency’s first big rally coincided with a surge in listed gpu prices. Once the crypto bubble burst, gpu costs fell back to earth.”

What we’re reading (6/18)

• “Big Oil Takes a Beating, But Its Investors Are Riding High” (New York Times). “It has been a terrible several weeks for big oil companies like Exxon Mobil, Chevron and Royal Dutch Shell…Yet it has also been a glorious stretch for investors in energy, the best-performing sector in the stock market this year. Prices of energy companies and of oil and gas have been soaring. Much of those increases can be attributed to a surge in demand as the economy recovers from the coronavirus pandemic. But the prospect of long-term energy supply constraints, as companies are forced to respond to climate change, complicates matters enormously.”

• “The Long-Term Forecast For U.S. Stock Returns” (Morningstar). “The new normal looks much like the old normal…[r]eal earnings growth during the 2000s was no higher than during the 1960s. To be sure, productivity has improved substantially over those 40 years, but those gains were already reflected in stocks’ performances. Corporate improvements come gradually. There’s no compelling reason to expect otherwise in the future. Which means that the Buffett formula would appear to remain valid. With the S&P 500 currently yielding 1.37%, the model gives an expected long-term stock return of 6.37%.”

• “As Fed Wakes Sleeping Dollar, Jolted Bears May Bolster Gains” (Reuters). “A hawkish shift from the Federal Reserve has woken up a slumbering dollar, sending the U.S. currency to its highest level in months and stoking expectations that an unwind of bearish positions could fuel more gains.”

• “Capital Gains: A Century-Old Tax Break Gets A Rush Of Attention” (Wall Street Journal). “The tax deferral on unsold assets boosts their growth and usually helps more than inflation hurts, according to tax specialists Len Burman of the Tax Policy Center and Kyle Pomerleau of the American Enterprise Institute.”

• “Investors In Technology Need To Pay Attention To Corporate Governance” (The Economist). “The recession caused by covid-19 was a hammer-blow to many parts of the global economy. But a side-effect of the pandemic was to turbocharge Silicon Valley and its various offshoots, amplifying an already unprecedented bull run. All manner of sins, from questionable accounting to imperious executive behaviour, tend to be overlooked in good times. As Warren Buffett famously noted, only when the tide goes out can you see who has been swimming naked.”

What we’re reading (6/17)

• “Red-Hot U.S. Economy Drives Global Inflation, Forcing Foreign Banks To Act” (Wall Street Journal). “The world’s central banks are hanging on how the U.S. Federal Reserve will respond to a rise in inflation, wary of being caught in the crosscurrents of an extraordinary U.S. economic expansion. Global stock markets fell on Thursday after Fed officials signaled they expect to raise interest rates by late 2023, sooner than they anticipated in March, as the U.S. economy heats up.”

• “Deep-Value ETF Report: 16 June 2021” (The Capital Spectator). “The value factor, after a long drought, is showing signs of life. Analysts continue to debate if the revival is more than short-term noise, but for the moment this corner of investing is confounding critics who claimed it was a dead strategy.”

• “Jobless Claims Show Surprise Increase To Highest Level In A Month” (CNBC). “Initial jobless claims unexpectedly rose last week despite an ongoing recovery in the U.S. employment market, the Labor Department reported Thursday. First-time filings for unemployment insurance for the week ended June 12 totaled 412,000, compared with the previous week’s 375,000. That was the highest number since May 15.”

• “To stop the ransomware pandemic, start with the basics” (The Economist). “A forthcoming study from London Business School (lbs) captures the trends by examining comments made to investors by 12,000 listed firms in 85 countries over two decades. Cyber-risk has more than quadrupled since 2002 and tripled since 2013. The pattern of activity has become more global and has affected a broader range of industries. Workers logging in from home during the pandemic have almost certainly added to the risks. The number of affected firms is at a record high.”

• “The SEC Has Delayed Its Decision To Sign Off A Bitcoin ETF A Second Time, Citing Concerns Over Potential Market Manipulation” (Business Insider). “[T]he SEC said in a filing on Wednesday it would take more time to consult with the public. It said it would seek input from the public on the potential for market manipulation of bitcoin and, by extension, the ETF. It said it would also seek comment on whether regulation of the bitcoin market had changed in the past five years.”

What we’re reading (6/16)

• “Vaccines Will Be The ‘Most Important’ Economic Policy This Year, IMF Chief Says” (CNBC). “Vaccine policy will trump all other economic polices this year as the world tries to recover from the coronavirus crisis, Kristalina Georgieva, the head of the International Monetary Fund said at CNBC’s Global Evolve Summit on Wednesday.”

• “Odds Favor The Dow Being Higher At The End Of 2021 And 125 Years Of History Supports This” (MarketWatch). “It’s because of the market’s efficiency that a buy-and-hold strategy is so hard to beat over the long term. When you deviate from that buy-and-hold approach, you’re in effect betting that you know more and have greater insight than the collective wisdom of millions of other stock market investors. It’s not out of the question that you do, but — as history has shown numerous times — it’s a low probability bet.”

• “Hard Truths About SoftBank” (The Economist). “The bull case for SoftBank is simple. It is an unabashed wager on tech-fuelled firms continuing their meteoric rise. It can thrive as long as investors are on hand to fund loss-making companies in the hope of future riches. For now, they are. But the recent IPO boom is petering out. Much of SoftBank’s record profit came with an asterisk: the share prices that helped generate it had already started falling back to Earth…[t]he next stress test for SoftBank may not be far off.”

• “Amazon Tracks Warehouse Workers’ Every Move Because Jeff Bezos Thinks People Are Inherently Lazy, Report Says” (Business Insider). “Many of Amazon's policies were designed to prevent workers from becoming lazy, a former vice president told The New York Times. David Niekerk, who helped design the company's warehouse-management system, told the publication that founder Jeff Bezos' belief that people are inherently lazy helped shape the company's policies. Bezos believed that workers' desire to perform well decreased over time and that an entrenched workforce was a ‘march to mediocrity,’ Niekerk told The Times.”

• “Poultry Prices Soar To Record Amid U.S. Chicken-Sandwich Wars” (FarmProgress). “U.S. producer prices for processed poultry jumped to an all-time high in May, climbing 2.1% in the eighth straight monthly increase, U.S. government data showed Tuesday. Gains in poultry outpaced the 0.8% increase in the broader producer price index. The surge comes after several large fast-food restaurant chains recently launched fried-chicken sandwiches in a bid to match Popeyes’ 2019 viral success.”

What we’re reading (6/15)

• “Wall Street Isn’t To Blame For The Chaotic Housing Market” (Vox). “The fundamentals of low supply of houses, low mortgage rates, and the entry of millions of millennials into the housing market armed with higher personal savings help explain most of why the housing market has careened out of control over the past year. According to the National Rental Home Council, a single-family home rental lobbying group, ‘single-family rental home companies accounted for less than 0.14 percent of homes purchased’ and just 0.09 percent of net homes if you count the fact that many single-family rental investors sold homes as well.”

• “Fed Officials Could Pencil In Earlier Rate Increase At Meeting” (Wall Street Journal). “Federal Reserve officials could signal this week that they anticipate raising interest rates sooner than previously expected following a spate of high inflation readings. In March, the last time they released quarterly economic forecasts, most officials expected to keep the Fed’s benchmark interest rate near zero through 2023 to encourage the economy’s recovery from the pandemic. Officials are set to release updated projections Wednesday after a two-day policy meeting.”

• “Lumber Prices Post Biggest–Ever Weekly Drop With Buyers Balking” (Bloomberg). “Prices in Chicago fell 18% this week, the biggest decline for most-active futures in records going back to 1986. Lumber has has now dropped almost 40% from the record high reached on May 10. Sawmills appear to be catching up with the rampant homebuilding demand in North America that fueled a months-long rally, bringing some relief to a market beset by supply shortages and price surges. Buyers are balking at still historically elevated prices and awaiting additional supplies, setting off a cascading sell-off, analysts said.”

• “What Lordstown’s Meltdown Means For SPACs” (DealBook). “Lordstown Motors’ founder and C.E.O., Steve Burns, as well its C.F.O., Julio Rodriguez, abruptly resigned yesterday. The departures came as the electric vehicle manufacturer, which went public via a SPAC last year, said a board investigation had found “issues with the accuracy” of claims about orders for its yet-to-be-released electric truck. Shares of Lordstown fell sharply. The Securities and Exchange Commission is looking into SPAC regulations, but last week said the review wasn’t due until April 2022. In the meantime, what, if anything, can be done to stop this from happening again?”

• “Business Is Booming As Regulators Relax Drone Laws” (The Economist). “Although drones, or uncrewed aerial vehicles (UAVs) as they are also known, were originally developed for military target practice and surveillance, the civilian versions that have emerged over the past decade have created a thriving new industry. Commercial UAVs, especially the hovering type, are now used for jobs ranging from inspecting power lines, buildings and crops, to aerial photography, transporting medical supplies and, in some places, delivering pizzas. The worldwide value of this business reached $22.5bn last year, according to Drone Industry Insights, a German research firm with its eye on the market. By 2025 that figure is expected to be more than $42bn.”

What we’re reading (6/14)

• “Airline Stocks Have Soared. They're Not In The Clear Yet” (CNN Business). “Air travel in the United States is back. That's great news for airline stocks, which have rallied this year on hopes that domestic trips would make a return. What's happening: The Transportation Security Administration said over the weekend that it screened more than 2 million passengers on Friday — the highest number since early March 2020. Before the pandemic, TSA screened an average of 2 million to 2.5 million travelers per day.”

• “Goldman Sachs Says Value Stocks Will Outperform In The Near Term - But Growth Stocks Will Take The Lead By End Of 2021” (Business Insider). “The rotation into value stocks spurred by the global economic recovery is mostly over, but investors should expect near-term outperformance of value names before growth stocks regain market leadership by the end of 2021, according to Goldman Sachs. ‘History, valuations, positioning, and economic deceleration indicate that most of the rotation is behind us,’ Goldman analysts led by Ben Snider said in a recent note.”

• “Bank Of America CEO Brian Moynihan Says Consumer Spending Is 20% Higher This Year Than 2019” (CNBC). “American consumers are spending more freely as the economy continues to open up, according to Bank of America CEO Brian Moynihan. Transaction volumes on customers’ credit and debit cards and over the Zelle payment network has grown by 20% so far this year compared to this point in 2019, Moynihan told CNBC’s Becky Quick Monday on CNBC’s ‘Squawk Box.’ The comparison excludes 2020, an abnormal year in many respects because the onset of the pandemic led to widespread stay-at-home orders.”

• “‘Great Resignation’ Wave Coming For Companies” (Axios). “Workers have had more than a year to reconsider work-life balance or career paths, and as the world opens back up, many of them will give their two weeks' notice and make those changes they’ve been dreaming about…[s]urveys show anywhere from 25% to upwards of 40% of workers are thinking about quitting their jobs.”

• “The Pandemic Revealed How Much We Hate Our Jobs. Now We Have A Chance To Reinvent Work” (Time). “[Millions are] reassessing their relationship to their jobs. The modern office was created after World War II, on a military model—strict hierarchies…[b]ut after years of gradual change in Silicon Valley and elsewhere, there’s a growing realization that the model is broken. Millions of people have spent the past year re-evaluating their priorities. How much time do they want to spend in an office? Where do they want to live if they can work remotely? Do they want to switch careers? For many, this has become a moment to literally redefine what is work.”

What we’re reading (6/13)

• “Shell Considering Sale Of Holdings In Largest U.S. Oil Field, Worth Up To $10 Billion” (CNBC). “Oil giant Royal Dutch Shell is reviewing its holdings in the largest oil field in the United States for a possible sale as the company looks to focus on its most profitable oil-and-gas assets and grow its low-carbon investments, according to sources familiar with the matter.”

• “In Defense Of SPACs” (DealBook). “Special purpose acquisition companies, better known as SPACs, have single-handedly revived the market for initial public offerings, taking small companies public by the dozens. So far this year, there have been roughly twice as many listings of these blank-check companies as traditional offerings. And since these cash shells — which raise money in an I.P.O. on the promise of merging with a private company within a couple of years, taking it public — often target emerging tech companies, that market has returned to its glory years.”

• “Markets Are Leaving Little Room For The Fed To Be Wrong On Inflation” (Wall Street Journal). “[I]nvestors need to consider the possibility that the Fed is wrong, too. The risk that inflation continues to overshoot is clearly much higher than usual, while the risk of undershooting is lower. Instead of leaving a larger margin of error around forecasts, bond markets are leaving little, perhaps none, with a yield of just 1.45% on the 10-year Treasury. The bond market’s best guess on long-term consumer-price inflation, the break-even rate for the five years starting in five years’ time, is down from a peak of 2.38% to just 2.23%; that implies inflation slightly below the Fed’s target on its preferred price gauge.”

• “The Fed Says Inflation Is Transitory, But These 10 Companies Have Already Said They'll Pass Along Rising Costs To Customers” (Business Insider). “Whatever side of the argument investors land on [re: whether current inflation is transitory or permanent], one thing is clear, dozens of companies are raising prices due to the increasing costs of basic commodities. From Coca-Cola to Campbell Soup, the majority of these price increases have come from consumer staples companies that are most affected by commodity costs.”

• “The Telegram Billionaire and His Dark Empire” (Der Spiegel). “Telegram isn’t just a WhatsApp with different roots. The service touts itself as a platform that is beyond the reach of states and authorities, a place where anyone can write and make whatever claim they want. This attracts conspiracy theorists, like Germany’s "Querdenker” movement, right-wing extremists, drug dealers and con artists. It doesn’t take much searching to find a "hit list” with the names of members of the German parliament on it. Counterfeiters use the app to peddle fake COVID-19 vaccination cards, dealers use it to sell all kinds of drugs. Crimes are openly and visibly planned and committed on Telegram. The app has become the equivalent of a darknet in your pocket.”

What we’re reading (6/11)

• “Slow Jobs Growth May Not Be A Bad Sign For America’s Recovery” (The Economist). “A prolonged period of elevated involuntary unemployment undoubtedly carries risks. But sub-million monthly payroll reports are not for the moment cause for much worry. America remains on track to eliminate remaining pandemic unemployment within two years. And in the meantime, the churning of workers into new, different jobs could leave the economy more productive than before, and better equipped for a post-pandemic world.”

• “How ESG Stocks Perform Depends On Who Ranks Them” (Wall Street Journal). “Money is pouring into stocks that get good grades on issues like building a diverse workforce and reducing carbon emissions. But figuring out how high- and low-rated companies perform is nearly impossible because of inconsistencies in the way they are rated. A close look at the ratings and performance of stocks ranked by the three major providers of data on environmental, social and governance criteria shows that companies can have widely different ratings. Depending on the time period and the provider, top-ranked ESG stocks either beat the market or lag behind it. Low-ranked stocks, which are generally deemed to pollute more and treat their workers less well, can outperform top-ranked ESG stocks, and the market overall.”

• “Apple Hires BMW Veteran In Latest Sign Of Electric Car Push” (CNBC). “Apple has hired Ulrich Kranz, a former senior executive at BMW who focused on electric cars, Apple confirmed to CNBC’s Phil LeBeau on Thursday. The hire is the latest sign that Apple is serious about building an electric car to compete with automakers such as Tesla. Hyundai said earlier this year it was in talks with Apple to manufacture its car before walking its comments back and confirming it was no longer in discussions.”

• “Retail Investor Base Doubles In Europe As U.S. ‘Meme’ Stock Mania Spreads - Euronext” (Reuters). “The number of retail investors in Europe has doubled since the start of last year as stay-at-home rules and high savings rates during the pandemic triggered a surge in stock investing by non-professionals, according to data from Euronext. The trend is still less prevalent in Europe than in the United States, where retail investor participation in stock markets soared last summer before hitting extreme levels in January.”

• “Behold The Highest-Paid C.E.O.s” (DealBook). “Six of the 10 largest executive pay packages of all time were awarded last year. This and other findings come from a new survey of the 200 highest paid C.E.O.s at public companies conducted for The Times by Equilar, a consulting firm. ‘Even in a gilded age for executive pay, 2020 was a blowout year,’ writes The Times’s Peter Eavis.”

What we’re reading (6/10)

• “Key Inflation Measure Rises At Fastest Pace Since 1992” (CNN Business). “Consumer prices roared higher in May, rising at their fastest pace in decades. Inflation rose 5% in the 12-months ending in May, the Bureau of Labor Statistics reported Thursday. That was a faster pace than economists had predicted and the biggest jump since August 2008.”

• “Homeowners Got $2 Trillion Richer During The First Three Months Of The Year” (CNBC). “Homeowners are getting richer and richer as prices keep soaring – and the numbers are staggering. Those with mortgages — about 62% of all properties — saw their equity jump by 20% in the first quarter from a year earlier, according to CoreLogic. This represents a collective cash gain of close to $2 trillion. Per borrower, the average gain was $33,400.”

• “Coinbase Teams Up With 401(k) Provider To Offer Crypto” (Wall Street Journal). “A small group of workers will find something new in their 401(k) plan starting in July: the option to invest in cryptocurrency. ForUsAll Inc., a 401(k) provider, announced earlier this month a deal with the institutional arm of Coinbase Global Inc., a leading cryptocurrency exchange, that will allow workers in plans it administers to invest up to 5% of their 401(k) contributions in bitcoin, ether, litecoin, and others.”

• “Are You A Work-Life Integrator Or A Segmenter? The Answer May Predict Your Risk Of WFH burnout.” (Business Insider). “Positioning the return to work as a potential cure for burnout is an idea that could gain traction — for better or for worse — at a time when many organizations face resistance from employees with little interest in commuting to an office five days a week.”

• “Keystone XL Pipeline Nixed After Biden Stands Firm On Permit” (ABC News). “The sponsor of the Keystone XL crude oil pipeline pulled the plug on the contentious project Wednesday after Canadian officials failed to persuade President Joe Biden to reverse his cancellation of its permit on the day he took office. Calgary-based TC Energy said it would work with government agencies “to ensure a safe termination of and exit" from the partially built line, which was to transport crude from the oil sand fields of western Canada to Steele City, Nebraska.”