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Was the SEC Right to Block the Hertz Offering?

By: Justice Clark Litle

Jun 19, 2020 | News

On June 15, Hertz announced plans to raise $500 million in a new share offering. This was controversial because Hertz is in Chapter 11 bankruptcy, the creditors have dibs on the assets, and the new shares have statistical near-certainty of being worth zero. We wrote about this fiasco on June 17. That same day, the Securities and Exchange Commission (SEC)…

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The Virus Didn’t Leave and it Isn’t Slowing Down

By: Justice Clark Litle

Jun 08, 2020 | News

“The COVID-19 recession is over,” said Mark Zandi, the Moody’s Analytics chief economist, last week. But then he added a qualifier: “Barring… a major second wave, or real, serious policy errors.” In other words, if the world avoids events quite likely to happen — with a probability significantly greater than 50% — the COVID-19 recession is over. This is head-scratching…

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Was the Rebound Powered by Sports Gamblers and Stimulus Checks?

By: Justice Clark Litle

May 26, 2020 | News

The strength of the stock market rebound has been a mystery. (To give you a sneak preview, today we’ll explore a narrative that solves the mystery.) It’s not just that stocks — not all stocks, but a favored group — are showing a kind of bizarre optimism, relative to a catastrophic collapse in the real economy, the ongoing challenges of…

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Negative Bond Yields Infect the U.K.

By: Justice Clark Litle

May 21, 2020 | News

The U.K. government achieved a dubious milestone on Wednesday, May 20. It sold its first ever batch of negative-yield bonds. In 2016 — when Brexit took markets by surprise — a one-month U.K. treasury bill went negative. But May 20 was Britain’s first time for a conventional longer-term bond. The offering was for 3.8 billion pounds worth of three-year gilts…

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When “Don’t Fight the Fed” Becomes “Don’t Fight the Fed Chairman”

By: Justice Clark Litle

May 19, 2020 | News

Jerome Powell, the Chairman of the Federal Reserve, said extraordinary things in a May 13 speech. And to make sure his points were heard, Powell reiterated them on a May 17 60 Minutes interview. The “extraordinary” part came from the context. Under normal circumstances, a central bank never gives policy advice to the government. Nor does a central bank chief…

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A Looming Meat Shortage Demonstrates the Fragility of Supply Chains

By: Justice Clark Litle

Apr 29, 2020 | News

Supply chains are a marvel of modern commerce. The links of a supply chain can span tens of thousands of miles, traversing whole continents and crisscrossing the globe. Supply chains are also fragile and vulnerable to disruption. Under adverse circumstances, a supply chain can easily get backlogged or broken. The lack of a part from a single factory, or the…

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The Next Wave of Layoffs will be White Collar — and People Working From Home

By: Justice Clark Litle

Apr 27, 2020 | News

On March 31 we said “The Odds of a V-Shaped Recovery are Zero.” The analysis still holds — and the case has only grown stronger. On March 31 we pointed out that the retail, restaurant, and travel industries account for 73.4 million jobs by self-reported estimates, accounting for nearly half of all U.S. jobs. In terms of layoffs, those three…

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Unsettling News from L.A. to Sweden (and Japan to Singapore)

By: Justice Clark Litle

Apr 22, 2020 | News

It’s possible that more than 400,000 people in Los Angeles county (population 10.1 million) have already contracted COVID-19. The estimate comes from a new study conducted jointly by the University of Southern California (USC) and the LA Department of Public Health. The study conducted antibody testing on 863 people, with results pointing to a 4.1% infection rate. The data matches…

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This is Going to be a Long Fight

By: Justice Clark Litle

Apr 07, 2020 | News

A global pandemic is about as serious as it gets, and this is going to be a long fight. Even if an “apex” comes in April, we’re only at the beginning of this thing. It’s important to be clear on this. If you look at a situation realistically, without downplaying it or sugarcoating it, you can steel yourself for the…

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Domestic Travel Bans are Highly Likely for the United States

By: Justice Clark Litle

Apr 06, 2020 | News

The hockey legend Wayne Gretzky summed up his approach in one sentence: “Skate to where the puck is going, not to where it has been.” The quote has probably been used — and abused — by tens of thousands of corporate executives. But the quote is popular because it captures an important idea. To be competitive and prepared, you have…

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