A recent article in the weekend edition of the Wall Street Journal “News Industry, a Stark Divide Between Haves and Have-Nots” highlights the demise of the newspaper industry in the United States. Even though digital is taking over print, the speed of the death spiral is nonetheless surprising. What we lose with this trend is diversity of thought and any notion of local watchdogs committed to Superman’s Truth, Justice and The American Way. A recent example is the Ralph Northam racism accusation and how the news story and Northam literally disappeard with the cooperation of an amazingly well organized cartel controlling the news of his racist sympathies in medical school.… Read this article
In the Game Show “Who Wants To Be A Millionaire” when they were unsure of their final answer contestants had three lifelines. My favorite was Phone A Friend because the interaction was often hilarious, usually unexpected and often wrong.
Who Wants To Be A Trillionaire?
I could not stop thinking about a similar game show being played by Apple right now. With A Trillion Dollar market cap in sight earlier this year there were nonetheless a few unanswered questions about Apple’s future. The first was whether Apple would be permitted to sell its iPhone’s in China. The second was how could Apple pressure their suppliers, especially Qualcomm, to lower royalties to improve cell phone profitability.… Read this article
Business and sports understand the importance of a scorecard. But what if CEOs only got the final earnings number, or if Jordan Speith’s only input for improving his game was his 18-hole score instead of fairways hit, greens in regulation, sand saves and putts? Similarly, what if Mookie Betts only input was his final batting average or Corey Kluber only knew his year end ERA?
You Can’t Improve Something You Can’t Measure
Most sports and most businesses understand you cannot improve without measuring each aspect of performance. In business we look at a balance sheet, an income statement and a cash flow statement to give us different views of overall performance.… Read this article
I guess I am just a sucker for contrarian thinkers, but when I first read Stephanie Pomboy’s investment guidance in an article by Barron’s Leslie Norton on March 22, 2018, I was a little skeptical about her thesis. In the face of a new Fed chairman’s committed interest rate increases for 2018, Stephanie was telling her clients to buy 10 year treasury bonds as her best investment idea???
This is a single direction trade with no place to hide. The only way you get any increase in bond value is dramatically lower interest rates than anyone could foresee at that point.
Stephanie Pomboy is the founder of MacroMavens and she is a frequent contributor to Barron’s.… Read this article
When pitchers and catchers report for spring training the winter of my mind officially ends. My seasonal affective disorder of endless nights fades to a new dawn of clarity and understanding. I begin to see baseball as a metaphor for business.
There is a significant problem in baseball right now with team owners not giving really great stars like Bryce Harper and Manny Machado long-term, big money contracts. The union is calling it collusion. The owners are mum.
2014 Detroit Tigers….
The Miguel Cabrera experience still has owners twitching. In 2008 at age 25 a future Hall of Famer was paid $152 million for 8 years to play for the Detroit Tigers.… Read this article
Barron’s recently invited 10 leading financial minds to look into their crystal balls and predict how capital markets may fare in 2019. This round table is always interesting, but you have to remember panelists’ perspectives are usually tied to the industry that pays their salary. Abby Joseph Cohen is still representing Goldman Sachs.
This year a few of the panelists broke rank and gave a sobering look at the issues corporate America is facing on account of debt based tactics to goose earnings at the expense of balance sheets. Debt based prosperity is suddenly a significant concern.
By way of background, The Daily Shot also rang the same bad weather bell when it showed this surprising capitalization factoid:
It is hard to believe that 36% of small publicly traded stocks do not have earnings but this is consistent with a blog I published earlier about the noticeable rise in so called Zombie stocks (“Zombie Stocks Look Pretty Lively” and also a blog I wrote in October (“You Know It Is A Top When”) suggesting the equity market was peaking as management teams leveraged their companies to buy back their stock.… Read this article
A little-known provision of the Trump Tax Reform Act of 2017 was bipartisan support for an interesting tax incentive around investments in Opportunity Zones. This is the hottest tax dodge since tax shelters in the 1980’s, but whether it will serve its purpose of distressed community development is uncertain.
Here are a few Q&A clarifications from a recent IRS publication explaining how the tax regimen will work:
Q – What is an Opportunity Zone?
A – An Opportunity Zone is an economically-distressed community where new investments, under certain conditions, may be eligible for preferential tax treatment. Localities qualify as Opportunity Zones if they have been nominated for that designation by the state and that nomination has been certified by the Secretary of the U.S.… Read this article
The zombie motif was popularized by the horror movie “Night of the Living Dead” where zombies and vampires morphed into aggressive and deadly undead preying on humans. The zombie concept moved into finance with the advent of Zombie Banks in Japan in the “lost decade” of the 1990s. Those Zombie Banks were kept alive by accommodative central banks ,even though a majority of their assets were often non-performing.
Recently, the Zombie Bank discussion has focused on Chinese financial institutions who are insolvent because they have financed “see through” apartment complexes and also participated in shadow banking activities.
In all these cases it is accommodation from a government or central bank as part of monetary policy that keeps these undead institutions going.… Read this article
Remember when a Japanese investment group bought Pebble Beach Golf Blub September 1990? It seemed like every important asset was being gobbled up by an ascendant Japanese economy. Soon thereafter in 1992 the Japanese real estate market crashed and then, in a great imitation of a kamikaze, the Nikeii followed suit Now, more than 25 years later, the Japanese economy is just starting to shake off the chains of asset deflation.
In the rearview mirror,the miracle of Japan was really a debt financed bubble and Bank of Japan’s monetary policy of keeping bad investments alive and preserving “zombie” banks spawned 4 decades of decay.
Murky As The Yangtzee
No one knows for sure how much debt is now supporting the China miracle?… Read this article
Investors all have sure signs for market tops. Lately, the equity crowd is watching an inverted yield curve as a harbinger of recession and the inevitable market correction. Other savants point to the disconnection between the market movements of Facebook, Amazon, Apple, Netflix and Google and the rest of the stocks in all three equity markets. Private investors look at the excessive debt to capital ratios in private capital structures and the resulting spike in valuation multiples. Debt guys are spooked by a US central bank that is pulling liquidity out of the system by raising rates and shrinking the Fed’s balance sheet. Free traders bemoan the effect of tariffs on globalization and the possible return to trade cartels among regional trade allies.… Read this article