When a Bounce is Not a “V” (2020 versus 2009 and 1982)
Jul 06, 2020 | Educational
On July 2, the June 2020 U.S. jobs report was released. Nonfarm payrolls jumped by 4.8 million, the largest monthly gain in U.S. history, when a gain of only 2.9 million jobs was expected. The outsized beat of economists’ expectations was seen as bullish for stocks, at least initially. A larger than expected decline in the unemployment rate, to 11.1%,…
Opting Out of State-Directed Capitalism
Jul 02, 2020 | Educational
“Turn on, tune in, drop out” was a counterculture phrase from the 1960s. Perhaps it is time to revive it. The thing to “turn on” in 2020 is awareness of Bitcoin… So that one can “tune in” to a digital store of value… And then “drop out,” or rather opt out, of state-directed capitalism. Make no mistake, state-directed capitalism is…
The Factors Behind a Potential “Lost Decade” for Stocks
Jun 23, 2020 | Educational
Bridgewater Associates — one of the most successful hedge funds in the world by dollar volume of profits since 1975 — is warning of a potential “lost decade” for stocks. “Globalization, perhaps the largest driver of developed-world profitability over the past few decades, has already peaked,” said Bridgewater analysts in a June 16 note to clients, as reported by Bloomberg….
The Fourth Great Bubble in a 51-Year Investment Career
Jun 22, 2020 | Educational
Jeremy Grantham thinks we are witnessing the “fourth great bubble” of his investment career. This matters because of what Grantham did over the course of that career, and how long it has lasted. Grantham entered the money management business in 1969, using a “quantitative value” strategy long before Wall Street knew what that meant. Grantham himself called it “dopey value,”…
How World War III Could Begin with a Fistfight on the Outskirts of Tibet
Jun 18, 2020 | Educational
On June 15, a deadly fight broke out in a disputed border region between India and China. It was reportedly an actual, literal fight — with fists and iron rods — between dozens of Chinese and Indian soldiers. It was not the first fight of its kind, nor even the first one this year. In May 2020, another large-scale fistfight…
A New Share Offering to Raise $500 Million — From a Company Worth Zero
Jun 17, 2020 | Educational
On June 15, the 2020 Lockdown Mania reached new heights of insanity. With the milestone achieved on that day, the mania cemented its place in financial history books. And speaking of history books: If you’ve been around markets long enough, you have likely heard about wacky schemes from centuries past, designed to fleece speculators at the peak of a frenzy….
Fractional Reserve Banking, Monetary Velocity, and “Pushing on a String”
Jun 16, 2020 | Educational
A fair number of people believe the Federal Reserve has control over the U.S. money supply. They also assume, by natural extension, that the Fed is responsible for the total amount of money in circulation. Neither of those assumptions are true. It’s important to understand why, as we will shortly explain. The Chairman of the Federal Reserve, in certain ways,…
A Requiem for the 2020 Lockdown Mania
Jun 12, 2020 | Educational
The 2020 lockdown mania — our term for the ripping rally off the March lows, which went completely off the rails in the end — was the worst kind of bubble. It was born of greed and hubris, with little of value left behind. It was powered by ill-considered government stimulus, adding weight to a deficit topping $26 trillion. And…
Like It or Not, We’re All on Board the MMT Train — and the Train Has No Brakes
Jun 11, 2020 | Educational
Modern Monetary Theory, or “MMT” for short, is a hot topic — or at least it was before 2020 exploded. Prior to the pandemic, there was a lively, ongoing debate about whether MMT was a good thing or a bad thing; whether MMT makes sense, or whether it’s a bunch of nonsense; and how soon deeply indebted Western governments might…
Two Theories of How America Beat the Great Depression
Jun 05, 2020 | Educational
For more than 80 million Americans, a replay of the 1930s is not a hypothetical possibility. It is already starting to happen. According to a May poll from the Kaiser Family Foundation (KFF), 26% of Americans — more than one in four — have experienced food insecurity in the past few months. That means skipping meals, reducing meal size due…
