Owning gold is like owning some insurance in your investment portfolio. When times are uncertain, its price may go up while others are going down. It has always made a great deal of sense to own gold, but now more than ever its price is rising. Joe Wallace explains why gold's price is soaring in The Wall Street Journal: The main reason is this year’s precipitous drop in yields on U.S. Treasurys to levels below the expected pace of inflation. Unlike bonds or bank deposits, gold doesn’t pay any income. As a result, owning gold means missing out on yields from other assets when interest … [Read more...]
Is the Stock Market Too Big to Fail?
There is some truth in that headline. The central bankers' focus on the performance of financial markets and specifically the stock market has turned one of America’s greatest strengths into a liability. Last time the Fed bought Treasury securities to prop up the market. This downturn, they waded into corporate bonds. Is there any doubt that during the next big down cycle, the Fed’s emergency lending powers will be used to buy stock prices directly? What a sad state of affairs. Bloomberg has more on one analyst's take on the stock market's emerging too big to fail status. Lu Wang … [Read more...]
How COVID Will Change Buildings
The Wall Street Journal's Katy McLaughlin explains how COVID-19 changed the way a developer is building his projects. She writes: Someday, years from now, a resident will wake up in their luxury condominium at developer Gregg Covin’s The Cedars Lodge & Spa in Hendersonville, N.C. They’ll make breakfast on the island in their big kitchen and sit on their heated balcony. They’ll walk out of their private entrance and use an elevator that serves only three other units. They’ll work out in a series of small exercise rooms and gather with friends at a restaurant in a glass … [Read more...]
Americans Spark Lumber Shortage in Escape from the City
You have read about the lumber shortages facing America as economic activity heats up. Americans escaping the city have initiated a housing boom that is creating lumber shortages. The Wall Street Journal reports on one woodworker here in Newport, RI that ordered four times the lumber he normally would, and still didn't have enough. The Journal explains: When woodworker Michael Hendershot stocked up with lumber in March ahead of building season, he feared the coronavirus pandemic would disrupt the supply of wood more than demand for fences, decks and cabinets. He multiplied his usual order by … [Read more...]
Working Remotely Is Here to Stay
At The Wall Street Journal, Robert Sutton tells employees and employers, working from home is here to stay. He writes: It was mid-June, three months after the Covid-19 crisis had forced the top executives in a fast-growing tech startup to leave their offices and work from home. Executives had believed this “work from home thing” would last a few weeks, one of the company’s vice presidents told me, so they treated it like a brief emergency that required all hands on deck, all the time. It was only when the vice president sent an email at midnight and got detailed comments from two … [Read more...]
Here’s a Head Scratcher on Apple
Apple announced results last night that came in better than Wall Street was anticipating. Instead of reporting a drop of about 10% in quarterly net income on a year-over-year basis, Apple reported 10% growth. Results were driven by higher than expected sales of Macs and iPads. Shouldn’t be a big surprise with so many people working from home. But extrapolating those trends out for more than a quarter or two would be a mistake. A mistake that Wall Street analysts were of course more than willing to make. Taking a short-term trend and extrapolating forever into the future is apparently part … [Read more...]
Retail Investor Mania Appears “Bigger—and Broader” Today than Dotcom Era
You have heard the hype. Everyone is trading stocks at home. What could go wrong? Reporters at The Wall Street Journal write that today's retail investor mania, pumped up by popular trading platforms like Robinhood Markets and E*Trade, appear "even bigger—and broader—this time" than during the dotcom era. For those of you old enough to remember the dotcom bubble burst, that's not a good comparison. They continue: Trades this year by individual investors more than doubled the usual level of retail activity, said Joseph Mecane, head of execution services at market maker Citadel … [Read more...]
Escaping the City Becoming a Bit More Expensive
You may want to escape the city, you're not alone. Many Americans are watching the riots and COVID-19 transmission rates in cities and making the decision to leave that life behind them. The "urban exodus" has begun driving up real estate prices in the suburbs and rural areas surrounding America's metropolises. Tom Olson outlines the effects in a piece at Think Realty, writing: If you are looking for a new place to live these days, the odds are good you have at least considered taking the “country mouse” route and buying a home in a rural area. The odds are also pretty good that a year … [Read more...]
Time to Privatize the Postal Service?
The United States Postal Service just reached an agreement to borrow $10 billion from the U.S. Treasury. The USPS is on an unsustainable track. Declines in first-class and marketing mail volumes are pointed to as the cause. Higher e-commerce deliveries that are more expensive to process are also cited as a culprit. The real problem here is there is no incentive to innovate or drive productivity and efficiency. Privatization via a concession with requirements for delivery set by the federal government looks like a sensible way forward. The Wall Street Journal's Paul Keirnan and Paul … [Read more...]
The Fed Can Fix It
We’ve officially jumped the shark with respect to monetary policy. Joe Biden wants to amend the Federal Reserve Act to push Powell & Co., to use monetary and regulatory policies to fight for racial economic equality. The Fed, as originally envisioned had one goal, and that goal was to be the lender of last resort in a panic. Today’s Fed is viewed as the white-knight for every financial, economic, health, and apparently social problem in America. Recession? The Fed can fix it. Did you borrow too much? The Fed can fix it. Pandemic? The Fed can fix it. Racism? Let’s see … [Read more...]
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