Was the SEC Right to Block the Hertz Offering?
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)…
The Virus Didn’t Leave and it Isn’t Slowing Down
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…
Was the Rebound Powered by Sports Gamblers and Stimulus Checks?
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…
Negative Bond Yields Infect the U.K.
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…
When “Don’t Fight the Fed” Becomes “Don’t Fight the Fed Chairman”
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…
A Looming Meat Shortage Demonstrates the Fragility of Supply Chains
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…
The Next Wave of Layoffs will be White Collar — and People Working From Home
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…
Unsettling News from L.A. to Sweden (and Japan to Singapore)
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…
This is Going to be a Long Fight
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…
Domestic Travel Bans are Highly Likely for the United States
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…
