Investors looking for alternatives to low-interest-rate bank accounts have flooded money market accounts with their cash. Harriet Clarfelt and Kate Duguid report in the Financial Times: US money market fund assets have swelled to a record high this week, as the best yields available in years and the early May collapse of First Republic Bank kept investors piling into the low-risk vehicles. Total net assets in money market funds, which invest in high-quality, short-dated debt, reached almost $5.4tn as of Wednesday, according to data from the Investment Company Institute. The figure is up … [Read more...]
About Jeremy Jones, CFA
The Mania in AI Stocks Has Arrived
Nvidia’s sales of chips used for generative AI are booming. The company delivered an impressive boost to its outlook for the next quarter. The street loves it. Shares are up 28% in pre-market trading, adding over $250 billion to the company’s market value (more than the total market value of its chief competitor AMD). If the gains hold, it would be the largest single-day increase in market capitalization for a company in history. Whether the gains are deserved or not is another question. Nvidia is the street’s preferred play in AI today, so there is a lot of hype and premium built into the … [Read more...]
The Wisdom of Sam Zell
Famed investor Sam Zell passed away last week. In Barron's, Oscar Schafer discusses Zell's life, writing: Sam Zell, the renowned real estate investor, died last week and, knowing we were close, the editors at Barron’s kindly asked if I would write a few words. People read Barron’s to learn about investing, and there are so many lessons one can learn from Sam. It is hard to know where to start. I could highlight his bold bets on out-of-favor industries or his creative knack for complex structures. I could mention his prescient sales at the top of the cycle or perhaps his repeated warnings … [Read more...]
Is an Investment Property Disaster Looming?
The Wall Street Journal's Will Parker, Konrad Putzier and Shane Shifflett explain the fate of Jay Gajavelli, and investors like him across America, who are reeling after using low-interest rates to fund their investment empires. They write: Few investors rode the pandemic-era housing boom as high as Jay Gajavelli. Fewer still have fallen as far. Before Gajavelli found his real-estate career, the 61-year-old immigrant from India was just another information-technology worker, putting in 60-hour weeks for a middling job in Dallas. Last year, Gajavelli’s company owned more than $500 million … [Read more...]
Is Japan Rising Once More?
In a long piece in the Financial Times, Leo Lewis examines Japan's current ascendance and wonders if the country is truly turning itself around, or if this is one more false alarm. He concludes: The problem with the “rising sun” thesis is that, in several cycles and across multiple decades, it has been rapidly followed by a decisive reversal as concerns around the shrinking and ageing population have resurfaced and derailed brief spurts of optimism. Rallies are always strongest in Japan when there is a pro-reform regime in government and a perception that there will be action as well as … [Read more...]
Can Western Automakers Survive in China?
As local manufacturers catch up to and overtake offerings from Western automakers in China, is it still feasible for foreign companies to compete in the Middle Kingdom? Peter Campbell reports in the Financial Times: When a market turns against you, how should businesses respond? This is the question being pondered with some urgency across the automotive boardrooms of the world. The market is China, the world’s largest auto market. It was once the breadbasket of the industry, flush with a hugely profitable pool of newly-wealthy consumers, many of whom were eager to flaunt their status with … [Read more...]
Private Debt Funds: More Risk than Meets the Eye
Private debt funds seem to be the latest too-good-to-be-true asset class on Wall Street. Private debt funds claim to offer high returns with minimal risk. One fund even shows that its investors have earned ten units of return for each unit of risk. U.S. stocks have historically offered about a half unit to three-quarters of a unit of return for each unit of risk, so this private debt fund is off the charts in terms of return to risk ratio, or is it? Unlike public investments, private assets such as private debt do not trade in public markets, resulting in smoothed prices that do not … [Read more...]
Can Auto Sales Drive the Economy?
Sales are rising at motor vehicle dealers as consumers shift spending away from home furnishings toward new automobiles. Justin Lahart reports in The Wall Street Journal: What Americans are spending their money on is changing. But they keep spending more, nonetheless. And in one crucial category, there is reason to believe growth is just getting started. The Commerce Department on Tuesday reported that retail sales rose a seasonally adjusted 0.4% in April from a month earlier after slipping 0.7% in March. That was less than the 0.8% economists polled by The Wall Street Journal had … [Read more...]
Will Millennials Find Home in the Suburbs?
Analysts are anticipating a resurgence of interest in suburban housing from Millennials looking to buy cheaper homes with more space. Alexandra Scaggs reports in the Financial Times: US urban living is still losing its shine, three full years after Covid-19 shut down city centres. But apartment rents haven’t declined — yet. While the prospect of continued city flight has sent office-property valuations into a freefall, US rents are still up, with an 8.8-per-cent rise from last year, according to the Census Bureau’s inflation data. (The median Manhattan rent rose to a new record in March, … [Read more...]
Is There Hope in Stocks?
In The Wall Street Journal, Jack Pitcher discusses the big outflows in stocks and the potential for a turnaround. He writes: Investors have a sour outlook on U.S. stocks. Contrarians say that is good news for the market. Turmoil in the banking sector has dragged fund managers’ enthusiasm for stocks to a 2023 ebb, according to Bank of America’s most recent monthly survey. The stress adds to worries including lingering inflation, higher interest rates and a slowing economy that have driven them to cut their stockholdings to their lowest levels relative to bonds since 2009. Institutions have … [Read more...]
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