After years of encouragement by the Federal Reserve, inflation is finally ticking up in America. Now, if you believe your dollars ought to be worth as much when you spend them as when you earn them, this is not ideal. But that's a story for a different post. One place where inflation is not rising is in retail. I've been explaining my Bezos Law theory for a few years now. In it I say that any industry Jeff Bezos enter sees prices decline. No industry has been further consumed by Bezos than retail. Amazon.com has come to dominate e-commerce, and that is having effects in the world of brick … [Read more...]
UK-EU Brexit Breakthrough
It appears negotiators have made a breakthrough in the ongoing discussions over how Brexit will unfold. Alex Barker and Mehreen Khan report for the FT: “We were able to agree this morning…on a large part of what will make up an international agreement for the ordered withdrawal of the UK,” said Mr Barnier. Under the time limited period, the UK will have to abide by all existing EU rules but will lose its say in the decision-making process. The negotiators published a colour-coded draft text of Britain’s withdrawal agreement, showing areas of agreement and dispute. The two most difficult … [Read more...]
Can Tesla Deliver on its Model 3 Promises?
Tesla is burning money fast, but the company is having trouble meeting its goals for production of Model 3 sedans. Tim Higgins and Susan Pulliam report in The Wall Street Journal that Tesla must increase its production numbers to 5,000/per week by June, or suffer severe financial consequences. They write: In April, Tesla will reveal whether it is on track to meet an ambitious second-quarter targetof producing 5,000 Model 3s a week—a goal that it already twice delayed. The Model 3 is Tesla’s mainstream electric-car offering, priced more affordably than Tesla’s luxury models, and a key part of … [Read more...]
Ready to Pay Your Bitcoin Taxes?
After raking in some profits on bitcoin (if they were lucky enough to find a greater fool) investors are now being targeted by the IRS. Apparently few bitcoin investors seem to be paying taxes on their gains. Most of them probably thought the anonymous currency wouldn't be on the radar of the IRS. Turns out however, that the IRS has forced Coinbase, one of the largest "digital-currency wallets" to give the government its customers' information. Laura Saunders reports in The Wall Street Journal: By March 16, the IRS will have data on about 13,000 Coinbase account holders who bought, … [Read more...]
Clicks-to-Bricks: Online Retailers Move into Prime Real Estate
While major brick and mortar chains like Walmart and Target are doing everything they can to boost their online sales, and Amazon.com is jumping into the world of big box retail by buying Whole Foods, smaller online retailers are stepping into a retail void that has opened up in some of the best territory on earth, Manhattan. Esther Fung reports in The Wall Street Journal that online retailers are being courted by the likes of the Feil Organization, a commercial real estate firm, and others like it that see e-commerce companies looking for ways to expand their on-the-ground operations. Fung … [Read more...]
My Take: Inflation is Here, Now What do You Do?
Originally published February 15, 2018. Surprise! When there’s too much money created by central banks, inflation is the obvious byproduct. This isn’t rocket science, although bankers have the ego to believe that it is. Pure and simple, inflation is a monetary event. Picture a car flooded by too much gasoline—it doesn’t work—and you realize the predicament investors are in thanks to the Federal Reserve. It’s why you keep your bond maturities short-term and hold on to your GNMA. Read the rest of this story by clicking here. … [Read more...]
The Ten Worst Bets
Almost thirty years ago in 1989, I advised my readers on the ten worst bets for the year. Topping the list was overpriced real estate in New England, New York, and California followed by Japanese stocks and real estate. My long-time followers may recall how real estate prices fared after that projection. Housing prices cracked in all three regions and entered a severe downturn. Anybody levered and long in residential real estate took it in the neck. According to the Case-Shiller real estate indices for Boston, New York, and L.A., the peak to trough decline in prices ranged from 15% to … [Read more...]
House Prices Jump 9% in February
Home prices rose almost 9% on a year-over-year basis in February. That’s the biggest gain in four years. U.S. house prices are now 6.3% higher than their peak in July 2006. The ratio of house prices to income is creeping toward levels hit during the height of the last real estate bubble, yet housing affordability remains significantly better. What’s the difference between today and 2006? One of the biggest differences is the level of mortgage rates. At a maximum 28% of gross monthly income (ignoring taxes and insurance) today’s median income family can afford a mortgage of $356,000. Raise … [Read more...]
Crypto Volatility Hurts
Crypto currencies are getting hammered once again in markets this week. CNBC reports: Prices of major cryptocurrencies saw a sharp downward slide Thursday, amid closer regulatory scrutiny on the space and after Google announced plans to ban advertising related to the sector. The market capitalization or value of all the world's digital coins stood at $310.4 billion early on Thursday morning, down from $372.9 billion a day before, according to Coinmarketcap.com, which tracks prices based on different exchanges. Bitcoin, the world's largest cryptocurrency by market cap, traded as low as … [Read more...]
Will 3% Bond Yields Sink the Stock Market?
If yields rise above 3%, stocks will end the year down. That is according to Jeffery Gundlach, manager of the Doubeline Total Return Bond Fund. Gundlach is of course a bond fund manager, so one should take his views on stocks with a grain of salt, but he may not be wrong. Three percent yields aren’t high by historical standards, but global central banks have kept rates so low for so long that economies may have become overly dependent on ultra-low rates. Bloomberg reports: If yields on the 10-year Treasury break above 3 percent, there’s a high chance U.S. stocks will end the year down, … [Read more...]
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