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Are Regulators Waking Up to the Threat Crypto Poses to Fiat Currency?

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After the Chinese government took a hard stand against cryptocurrency use in that country, the Biden administration is also clamping down on the use of cryptocurrencies as a tax evasion tool. The Financial Times reports: The US Treasury said cryptocurrency posed a “significant detection problem by facilitating illegal activity broadly including tax evasion”, echoing comments from the European Central Bank this week, which said that cryptocurrencies’ “potential use for illicit purposes” were a cause for concern. The US proposal is part of a Treasury report showing how Joe Biden’s White … [Read more...]

Legendary Silicon Valley Investor: ‘SPAC Fad Indicative of Later Stages of Cycle’

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Gary Silverman interviews legendary Silicon Valley investor Sand Roberston for the FT. Silverman writes of the interview: Sandy Robertson is worried about what’s happening in the markets these days, and that matters. Few people in the financial world have seen more than he has. Robertson is best known as a pioneering dealmaker in Silicon Valley, where he helped start two of the “Four Horsemen” investment banks that dominated technology underwriting in the 1990s — Robertson Stephens and Montgomery Securities. But his career dates to the 1960s, when as a Smith Barney broker covering Nebraska … [Read more...]

What Inflation? Rents Hit 14-Year High

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While the Fed can't seem to find enough inflation to quench its thirst, Americans are paying the highest rents they've paid in 14 years. Bloomberg reports: Rents for single-family homes in the U.S. climbed to the highest level since September 2006 as the pandemic pushes Americans to seek out more space. Rent jumped 4.3% in March compared with a year earlier, according an index from CoreLogic Inc., led by double-digit increases in Phoenix and Tucson, Arizona. Housing costs are surging across the U.S., adding to concerns about rising inflation as vaccination campaigns and falling Covid-19 … [Read more...]

Quantum Computing “Super Powers” Put Under Microscope

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Will quantum computing seem like reading the future? In the Financial Times, Izabella Kaminska reports that as quantum computing approaches, banks are preparing for the "super powers" the technology will give them. She writes: If you had a sports almanac from the future as did Biff Tannen, the brutish bully of the time-travelling Back to the Future movie trilogy, how might you be inclined to take advantage of the foresight buried within it? The obvious temptation would be to place sure bets in the market that make you rich. In Biff’s case, the wealth is then used to change the world into a … [Read more...]

Netflix Finally Feeling the Competition

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For years it seemed like legacy media just couldn't get it together to compete with upstart Netflix. Now, that time may be over. Anna Nicolaou reports in The Financial Times: Heavy is the head that wears The Crown. Once a scrappy upstart of the TV industry, Netflix has become the king of streaming with 208m subscribers — nearly half of the world’s total excluding China. But the latest round of quarterly results from media companies, which concluded on Thursday night with figures from Disney, has shown that the disrupter is now firmly in the role of defensive incumbent. Three of the … [Read more...]

Biden’s Plan Taxes Like Never Before

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In The Wall Street Journal, Phil Gramm and Mike Solon lay out the case against broadly applying high marginal tax rates on wealthier Americans. They make it clear that what is being proposed by the Biden administration is unlike anything that has been done before in America. Even though the nominal marginal rate will not be the highest ever, it will apply to a much broader swatch of taxpayers. They write: With deficits at levels not seen since World War II, the March $1.9 trillion stimulus only beginning to spend out, and President Biden calling for significantly higher marginal tax rates to … [Read more...]

All Shooting Stars Burn Out Eventually

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In The Wall Street Journal, Spencer Jakab cautions investors against joining "star managers," who have already had their biggest gains. He uses ARK Invest's Cathie Wood as an example. He writes: Just as unusual as ARK Invest’s marketing has been its performance, growing its assets more quickly than any active exchange-traded fund firm in history. Cathie Wood’s firm went from about $3.5 billion under management across several funds shortly before the pandemic struck to hit the $50 billion mark a year later. But that rapid growth has come back to bite her investors. Even after a major tumble … [Read more...]

The Emergency Is Over, but Fed Presses On

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Despite what is projected to be strong economic growth and massive amounts of fiscal stimulus available, the Federal Reserve, chaired by Jerome Powell, is pressing on with its emergency policies. Christian Broda and Stanley Druckenmiller write in an Op-Ed in The Wall Street Journal: With Covid uncertainty receding fast, and several quarters deep into the strongest recovery from any postwar recession, the Federal Reserve’s guidance continues to be the most accommodative on record, by a mile. Keeping emergency settings after the emergency has passed carries bigger risks for the Fed than missing … [Read more...]

MOVING THE GOODS: Pent Up Demand Drives Transport Higher

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Americans want their stuff and they want it now. Demand for goods has driven up transportation companies' profits. The improved business has driven transport stocks to new highs, as can be seen in the chart of the Young Research Moving the Goods Index below. The FT reports: The Dow Jones Transportation Average, the world’s oldest benchmark that tracks some of America’s biggest transport and logistics companies, is outperforming major indices this year, underlining the strength of the US economic rebound. The benchmark has been on a winning streak since the start of the year, rising just … [Read more...]

Was Archegos Just the Tip of a Hidden Iceberg?

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The Federal Reserve is worried that hedge funds aren't accurately measuring risk, and that the fall of Archegos Capital could be a harbinger of what's to come. Gary Silverman and James Politi report in The Financial Times: The US Federal Reserve has warned that existing measures of hedge fund leverage “may not be capturing important risks”, pointing to the collapse of Archegos Capital as an example of hidden vulnerabilities in the global financial system. The US central bank’s semi-annual report on financial stability found that some asset valuations are “elevated relative to historical … [Read more...]