Harley was Young Research’s "Stock of the Decade" in the 1990s. The shares were first recommended as a buy in May of 1992 at a price of $3.62. During the 2000s, we advised a series of buys and sells chronicled in the chart below. The chart runs through 2007 and there was only one additional buy and sell recommendation that was essentially a wash. On the sale we explained: “The dynamics of Harley’s business have changed. HOG has transitioned from a growth company to a cyclical company reliant on a consumer that may be jobless, over-indebted, and unable to obtain financing. Demand for … [Read more...]
About Jeremy Jones, CFA
The Russian Ruble Crisis
Six years ago, oil was trading at $100 per barrel and the Russian ruble was trading at 35 to the dollar. Translating that exchange rate into oligarch terms, it would have taken about 4.5 million rubles to buy one of Mercedes’ coveted G-class SUVs. Today, oil trades at about $20 per barrel and for oligarchs with 4.5 million rubles to spend on a SUV, it's time to start looking at Chevys. … [Read more...]
U.S. Intelligence Says China is Lying About its Coronavirus Numbers
According to sources in the U.S. intelligence community, China is lying about the number of cases and deaths the country has suffered from the COVID-19 coronavirus. Bloomberg's Nick Wadhams and Jennifer Jacobs report: China has concealed the extent of the coronavirus outbreak in its country, under-reporting both total cases and deaths it’s suffered from the disease, the U.S. intelligence community concluded in a classified report to the White House, according to three U.S. officials. The officials asked not to be identified because the report is secret and declined to detail its contents. … [Read more...]
Coronavirus Case Growth Update
Below are updated coronavirus case daily growth numbers through yesterday. Growth in cases in Italy continues to slow which offers hope for the U.S. and other countries still seeing too rapid case growth. South Korea’s numbers have ticked up, but still look under control. There have also been downticks in France, Germany, the U.S., and Spain, but it may be early to judge if those are real trends or testing constraints. … [Read more...]
Coronavirus “War” Spending Could Spark Higher Inflation
At Barron's, Randall W Forsyth explains that "war" spending in the battle to fight the effects of the coronavirus could spark higher inflation. He writes: Wartime finances that balloon budget deficits and that are covered by money-printing have proved inflationary throughout history. At the same time, globalization—already in retreat in the trade wars—will be curtailed further, as supply chains are relocated to avoid crossing borders, rather than to maximize comparative advantage. That will raise the cost of internationally traded goods at a time when prices of services already are moving … [Read more...]
Gold Please
Below is a chart of the Federal Reserve’s balance sheet. The Fed has gone into money-printing overdrive. Over the last month, the central bank has conjured over $1 trillion out of thin air to buy Treasury bonds and mortgage-backed securities. The Fed is printing at a pace of up to $125 billion per day. Once the stimulus passes, the Fed will be given about $500 billion in capital that can be leveraged up to 10X to buy more assets. The source of that leverage is newly printed money. We are talking about an additional $4.5 trillion. Meanwhile, the Federal Government is likely to run a … [Read more...]
Excessive Buybacks Come Back to Bite
The buyback game may finally be coming to an end. One can hope at least. Over the last decade, many U.S. companies levered up their balance sheets to repurchase shares. Why did they do it? For starters, it drives share prices, and in turn the value of executive stock options, much higher. Why finance the buybacks with debt? Look to Mr. Powell and Mrs. Yellen and Mr. Bernanke at the Fed for keeping interest rates at ultra-low levels for an entire decade. The Fed will, of course, escape any blame for this debacle as it did the Financial Crisis, but the evidence should be clear as day for … [Read more...]
Coronavirus Stats Update: What’s the Latest?
By Jozsef Bagota @ Shutterstock.com Below are updated coronavirus stats through yesterday. The good news is, South Korea has continued to keep new case growth at a manageable level and there are signs Italy’s lockdown has slowed the growth in new cases. There is also reporting that Italy may only be testing the sickest patients which is good and bad. Bad because the growth numbers may be skewed, but good because it means the fatality rate of the virus in Italy would be much, much lower than is being reported. The other potentially good news in Italy is that recovered patients should … [Read more...]
Facebook Still an Ad Business
Facebook usage and traffic is soaring, but the company warned business may not be booming. At its core, Facebook (and Google) is still in the advertising business. If small and large businesses are drawing down credit lines and conserving cash, the ad budget is one of the first items that will be cut. Eric Savitz reports for Barron's: In the latest indication that the market for digital advertising is struggling in the face of the rapidly spreading coronavirus pandemic, Facebook disclosed in a blog post that the social network has “seen a weakening in our ads business in countries taking … [Read more...]
The Fed Announces New Corporate Debt Interventions
The Federal Reserve has announced two new interventions into the corporate debt market. The first is the Primary Market Corporate Credit Facility (PMCCF) and the second is the Secondary Market Corporate Credit Facility (SMCCF). Here's how The New York Times describes the plans' operations: The Fed’s plan to bolster the corporate bond market will work through two new programs established using the Fed’s emergency lending powers. They should help market functioning while allowing companies to stay afloat. One of them, the Primary Market Corporate Credit Facility, is open to investment-grade … [Read more...]
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