The WSJ reports that Turkey has moved to ban Bitcoin payments as Turks lose confidence in the lira. This is a preview of what Bitcoin enthusiasts are likely to face over coming years. Countries with the least stable currencies will move first to ban Bitcoin, but developed countries are also likely to act. The bottom line on Bitcoin is that it is a threat to fiat currencies and therefore central banks and ultimately fiscal authorities running massive deficits. Turkey will ban the use of cryptocurrencies as a form of payment following months of economic turbulence that spurred locals to swap … [Read more...]
About Jeremy Jones, CFA
How Amazon Violates Anti-Trust Rules
Dana Mattioli and Joe Flint explain Amazon's questionable behaviors in The Wall Street Journal, writing: Executives from HBO Max complained about Amazon’s behavior during the negotiations to the House Antitrust Subcommittee investigating Amazon’s business practices, said people familiar with the probe. Amazon’s Mr. Evans said that there are occasions, including its talks with HBO, when companies are interested in exploring partnerships across multiple Amazon businesses. A former longtime senior AWS executive said that in recent years AWS has discussed how to better leverage its cloud … [Read more...]
Long Live the Dividend King
Procter & Gamble is the one true dividend king and has now extended its rule by increasing dividends once again, this time by 10%. MarketWatch's Claudia Assis reports: Procter & Gamble Co. PG, -0.13% said late Tuesday its board has declared a 10% increase in the consumer products giant's quarterly dividend. The dividend of 86.98 cents a share will be payable on May 17 to shareholders of record at the close of business on April 23. Shares of Procter & Gamble rose 0.1% in the extended session after ending the regular trading day down 1.3%. … [Read more...]
Banks Prepare for Boom
Ben Eisen reports in The Wall Street Journal that banks are preparing to loosen up money they've been holding for lending into a major economic boom. He writes: The accelerating economic recovery is likely to boost bank profits. Encouraged by government efforts to pump money into the economy and signs that Americans are spending more, the largest financial institutions are expected to release some of the rainy-day money they set aside after the coronavirus pandemic hit. That will offer a jolt to their income in the first three months of the year. JPMorgan Chase JPM -1.65% & Co., … [Read more...]
Larry Summers: Stimulus “Substantially Excessive”
If even Larry Summers thinks the current stimulus being poured on America's economy is "substantially excessive," you can bet it's way more than necessary. Here are some of Summers's comments from a recent interview with FT's Martin Wolf: If you look at the economy at the beginning of this year, prevailing forecasts were that Covid would reduce wages and salaries to American households by $20bn-$30bn a month, with that figure declining over the year. So, that would be a $250bn-$300bn hole in wages and salaries over the course of the year. So, I look at this hole and then I see $900bn of … [Read more...]
Wall Street’s New Sub-Prime Borrower
Zero percent interest rates create many distortions that today’s central bankers seem to ignore. Ben Bernanke’s successful campaign to shift the blame from the Fed to Wall Street for the last financial crisis has emboldened his successors. A careful study of financial history shows that almost every mania has been enabled by a flood of liquidity. The problem as was identified over 100 years ago by Walter Bagehot is that “John Bull can stand many things, but he cannot stand two percent.” Wall Street has found a way to fill that need. As the WSJ reports here, Wall Street is now selling new … [Read more...]
Is Inflation Imminent? Prepare Now
At FT, Pascal Blanque, explains that inflation is imminent and that investors must prepare themselves for what's to come. He writes: A change in market regime often occurs with a change in the mandate of central banks. The central focus on inflation targeting that started with the arrival of Paul Volcker at the helm of the Fed in 1979 is fading. This much is clear from the new priorities recently adopted by two central banks: achieving full and inclusive employment by the Fed and reducing global warming by the Bank of England. For investors, this means the rise in bond yields might not be … [Read more...]
Trains: A Big Deal, and the Economic Future of America
The recent deal by Canadian Pacific Railroad to acquire Kansas City Southern is reigniting railroad stocks in a way not seen since Warren Buffett's Berkshire Hathaway purchased Burlington Northern Sante Fe. But as Spencer Jakab writes in The Wall Street Journal, even without a deal there are reasons to like railroads: A successful deal could bode well for other players if it unlocks further consolidation. Analyst Bascome Majors of Susquehanna Financial Group notes that more deals could follow after 2022 if the official attitude toward consolidation has improved. But even if the deal is … [Read more...]
Which Industries Are the Biggest Losers From a Biden Global Minimum Tax?
President Joe Biden and Treasury Secretary Janet Yellen are proposing a "global minimum tax" of 21%, and a major increase in the corporate tax in the United States to 28%. The tax increases are expected to "knock 9 per cent off earnings per share for companies in the S&P 500 next year," according to calculations by Goldman Sachs. Hit especially hard will be communications services and tech, aka the FAANG companies that have been driving growth in the stock market. Aziza Kasmov writes in FT: Communication services and information technology are likely to be among the biggest losers from … [Read more...]
The Biden Backlash
The problem with trying to jam through transformative economic policy with 50 votes and the Vice President is that states will resist. Gregory Meyer reports in the FT: Republican-led state capitols are considering bills that would punch holes in President Joe Biden’s green revamp of the US electricity system by promoting fossil fuels or piling costs on to renewable energy. The proposed legislation reverses a dynamic that played out over the past four years, when lawmakers in states controlled by Democrats moved to counteract Donald Trump’s climate rollbacks. One analyst described a “Biden … [Read more...]
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