In Deflationary Environments, Central Banks Make the Price of Gold Go Up
2 days ago | EducationalInvesting StrategiesNews
After we explained why deflation is coming, some of you wrote in to ask: “What happens to gold if we get deflation?” The short answer is that, in deflationary environments, the value of gold tends to go up, possibly by a lot. We have empirical evidence of this from the 1930s, a decade where gold mining stocks saw stratospheric gains….
Was the Rebound Powered by Sports Gamblers and Stimulus Checks?
1 week ago | 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.
2 weeks ago | 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”
2 weeks ago | EducationalNews
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
1 month ago | 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
1 month ago | 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)
1 month ago | 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
2 months ago | 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
2 months ago | 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…
China’s Coronavirus Stats Can’t Be Trusted
2 months ago | News
The coronavirus data coming out of China is manipulated, and possibly outright false. We know this, in part, because a Chinese health official has admitted as much. There have also been questions and red flags around China’s data reporting from very early on. This matters because China’s coronavirus statistics — the number of cases, the number of fatalities, and the…
