Coronavirus Infects Stock Market: Part LIII Blue state governors have completely dropped the ball in the name of science, killing businesses and creating new health problems like anxiety and depression. In blue Rhode Island, we have our governor patting us on the head after a “successful” Memorial Day weekend. “The good news is, overwhelmingly, people were out and about doing the right thing,” she said during her daily news briefing. Tonight’s Newport City Council meeting will hear a resolution to require all pedestrians to wear masks on certain streets at all hours of the day. Councilwoman … [Read more...]
Don’t Follow Europe into Banning Bank Dividends
At The Financial Times, Greg Baer makes the case against banning bank dividends. He writes: Leaving aside its putative benefits, a blanket dividend ban imposed outside the current regulatory framework would come with a substantial cost. It would make it difficult for investors to value banks, and thereby make them decidedly less investable. Investors might logically prefer companies whose boards of directors retain authority to maximise value for shareholders, so long as all regulatory requirements are met. This would continue a worrisome trend. The market value of US banks, relative to … [Read more...]
American Businesses Show the Way Forward Where Blue-State Politicians Fail
Coronavirus Infects Stock Market: Part LII During the coronavirus outbreak, the difference between heavy-handed local government, and private enterprises has been plain. Businesses are incentivized to protect their most important assets, their employees. Government officials are protecting their own reputations. In the early days of the virus, Leupold, an American business serving police departments and America's military elite took smart steps to protect employees. At The Federalist, Madeline Osburn reports on Leupold's response in an interview with company CEO Bruce Pettet. … [Read more...]
GMO on the Risk-Reward in Stocks and Competitive Capitalism
Jeremy Grantham’s GMO often offers useful insight. GMO’s head of asset allocation was interviewed by Barron’s recently. Below are some of the highlights. Emphasis is ours. Barron’s: You just more than halved the stock allocation in your flagship funds. What’s worrying you? Ben Inker: We were getting very nervous about how much the markets had gone up. The risk/reward trade-off for equities had really gotten a lot worse than it was in March. Value stocks at this point are trading at some of the widest spreads we have ever seen. The optimistic scenario is: We get a vaccine relatively … [Read more...]
Is Nearshoring the Future of the American Supply Chain?
Angela Velasquez reports for Sourcing Journal that the combination of coronavirus and the Trump administration's USMCA could lead to greater "nearshoring," a term describing supply-chain sourcing from nearby countries, with Mexico. She writes: Though the denim industry faces unprecedented challenges, executives from leading Mexico-based mills are planning for a brighter future. As denim mills in the country prepare to reopen on June 1, Tricia Carey, Lenzing’s director of global business development for denim, gathered players from Cone Denim, Global Denim, Kaltex and Tavex for a virtual … [Read more...]
Words of Wisdom from Matunuck Oyster Bar’s Perry Raso
The next time you visit me in Newport, R.I., be sure to check out Matunuck Oyster Bar. You’ll be glad you did. Here are some words of wisdom by owner Perry Raso. Originally posted on Your Survival Guy. … [Read more...]
Is Made in China the New Blood Diamond?
Bloomberg reports that 40% of Americans will not buy Chinese made goods and a record 60% now have a negative view of the country. It’s about time the public turned negative on China. Young Research has been pointing out the problems in China for years and advising against investment in the country. In early 2012, we explained. It is perplexing that the world has allowed a command style economy run by an unelected political party to become such an important player in the global economy. China is now the world’s second largest economy and America’s second-largest trading partner. If China … [Read more...]
“The Losses are Taking a Toll on Their Health”
Coronavirus Infects Stock Market: Part LI “You know what’s crazy,” a client told me yesterday, “is that investors spend more time buying a grill than picking a financial planner.” Friends of his are in deep financial trouble. The virus has made it even worse, and the losses are taking a toll on their health. Another client, who’s in my business, brings bond deals to market. He said every deal is oversubscribed with demand through the roof. We talked about how the retail investor has no chance to get in on these deals. When it comes to your bonds, you don’t want to be a retail buyer like … [Read more...]
Is There a Bubble in Growth Stocks?
Growth stocks are beating value stocks by the widest margin since the dotcom bubble. The top 5 S&P 500 stocks (all growth-oriented technology companies) now account for over 20% of the index—the highest weighting for the Top 5 in the S&P 500 in at least the last three decades. What’s more, for the first time in a decade, a net 20% of fund managers are expecting growth stocks to outperform value stocks. Sounds like a good time to lean into value especially those value stocks that pay and increase their dividends regularly. The Wall Street Journal's Akane Otani reports: Growth … [Read more...]
Gamblers Descend on the Stock Market
If the stock market feels more like a casino to you than a place to invest for retirement these days, the FT has some insight to offer. With all major sports on hiatus and many casinos closed, gamblers are opening stock trading accounts. Net new client accounts have soared at online brokerage firms by almost 800,000 in March and April. Some are even using stimulus money or money they would typically gamble with to bet on stocks. Gamblers who cannot bet on professional sport because fixtures have been scrapped are flocking instead to the US stock market, creating a new class of customer for … [Read more...]
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