Week of October 25, 2020

Week of October 25, 2020

October 25, 2020



Stuff I read that gets stuck in my head

Why Toots has attracted the photogs and magazines, he’s not entirely sure and not particularly interested.  He seems to understand, or know intuitively, that an interest in one’s own attentions – and to value or ever come to need this sort of attention – is not a thing to have or do.  Wong, D. 2020. The Surfer’s Journal 29.5

Human Tribe & Ingenuity

People working better together and inspiring each other

Direct to consumer peanut butter company starts up during the pandemic, experiences 60x sales growth by advertising on TikTok.  Tiny Peanut Butter Company

A volcano may generate the electricity for your morning cup of coffee. Geothermal Energy

The next time you watch Netflix while on the beach, the datacenter feeding you that stream could be just under the waves.  Microsoft Underwater Data

Black Swans & Other Market Tidbits

What is on the horizon that could trip us up, or lead us up

Unemployment rate continues to trend downward, however small businesses and travel/consumer entertainment industries improve more slowly. 

In September, we began to see investors shift away from large cap growth stocks and towards large cap value stocks.  If this continues, the rotation towards value could be a long lasting market trend.

Stimulus, even if we get a deal done in the House, it is unlikely to pass the Senate prior to the election.  If Republicans keep the Senate, expect to see more resistance to passing additional stimulus.  The markets will react positively to additional cash being handed out, but we have to pay for this at some point leading to inflation and higher taxes.  We are going to more than double the $4.1 trillion in assets that were on the Fed’s balance sheet in 2019 (why include the 0.1 in that number?  Because it is $100 BILLION dollars!).

Speaking of taxes:  If Biden wins, expect a financial transaction tax (FTT) discussion.  The FTT would levy a tax on every financial transaction or trade.  Countries that have a FTT experienced a drop in trading volumes as much as 50-85%.  Sweden and Germany actually abandoned the FTT due to this drop in trading. 

COVID – 19.  Cases are picking up in the US and Europe as lockdowns have been eased.  With cold weather coming on, we expect worsening trends.  The good news is that fatalities are not rising at the same rate as infections and hospitalizations. 

Look to holiday retail sales for the state of the economy.  Normally, October-December retail is driven by holiday sales.  This year, spending has been high leading up to October due to government stimulus.  As this stimulus winds down and no new stimulus has been approved, sales could be effected and should be watched closely. 

The K-Shaped recovery.  While large corporations and the wealthy have seen a quick rebound from the March lows (the upward swing of the recovery), lower-income households have not rebounded (the downward fall of the economy).  Many of these households work in the service industries like travel and restaurants that are still lagging.

Homes at risk.  Part of the stimulus package that needs to be addressed soon, is the CDC moratorium on landlords’ ability to kick renters out of their apartments.  This expires on January1, 2021.  Over $7 billion in back-rent is currently owed.

Voting!  Over 50 million ballots have already been cast.  That is already 40% of the total votes in 2016.  We are on pace for the highest voter turnout in over 50 years. 

Cryptocurrencies.  PayPal is allowing users to buy and sell cryptocurrencies in their accounts and to pay merchants.  Look for these to become more prevalent in consumption.  Also look for some central banks to begin discussions around cryptocurrencies replacing other reserve currencies.

The tale of two (COVID) markets.  Sweden, who never fully locked-down, has kept trending higher in their stock market.  Currently trending above both its 50 and 200-day moving averages.  Spain, on the other hand, locked-down tightly.  Their stock market is trending below both the 50 and 200-day moving averages. 

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