America’s Top CEOs are Not Optimistic About Recovery
Jun 30, 2020 | News
Who thinks the business impact from coronavirus will disappear quickly? Not America’s top CEOs. They see pandemic-related challenges lasting until the end of 2021 — and perhaps even longer. The Business Roundtable, founded in 1972, is an association based in Washington, D.C., that only has CEOs as members. Unlike the U.S. Chamber of Commerce, where membership exists at the business…
PayPal and Venmo Could Soon Embrace Crypto — Which Would be Huge for Bitcoin
Jun 29, 2020 | News
PayPal and Venmo could be adding cryptocurrency to their suite of payment options. Inside sources verified by CoinDesk, a crypto-focused news service, say a built-in wallet feature could be rolled out within three months. There is no official announcement yet — only the CoinDesk sources — but if true, this would be a huge development for Bitcoin, and other crypto…
Quarantines are Here and Lockdowns Could Follow
Jun 26, 2020 | News
In early April — which was only 12 weeks ago, but feels like a lifetime ago — we said in these pages that domestic travel bans were highly likely for the United States. We further said that, due to variations in how infections would spread, the U.S. would be sorted into “green zones” and “red zones” (or something to that…
The Global Monetary Order May Not Survive This
Jun 25, 2020 | News
The global monetary order — meaning, the existing core arrangements of finance and trade, with the U.S. dollar as the centerpiece — will be 49 years old in August. Yet this almost-49-year-old system might not make it to its 50th birthday, some 14 months from now, because the Federal Reserve is undermining the U.S. dollar, the lynchpin of that system,…
Hysteresis and the Post-Reopening Coronavirus Fatality Rate
Jun 24, 2020 | News
“Hysteresis” is a vital concept in mechanical engineering. It also applies to economics, medicine, and financial markets. Hysteresis occurs when changes to a system happen with a time lag. It can also be defined as systemic state-dependence, meaning, whatever happens next is influenced by the past. There is no hysteresis in, say, rolling a pair of dice. The outcome of…
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…
