Joe Biden currently stands a good chance of winning the presidency. He is a lifelong centrist but could turn out to be the most ambitious Democratic president in generations.
Read more here: https://econ.st/31Ammy6 Find The Economist’s most recent coverage of the 2020 US election here: https://econ.st/3a2ptCN
We’re reposting our piece from November 2017 on the retail space in Manhattan along with a recent video Tweet we found today, which is un-fricking-believable. The video is a bit dated but our ears on the ground say it’s still pretty bad. Who is holding the mortgages on these buildings and why isn’t it making headlines or even adding one brick in the Wall of Worry?
Bleecker Street, said Faith Hope Consolo, the chairwoman of the retail group for the real estate firm Douglas Elliman, “had a real European panache. People associated it with something special, something different.” Ms. Consolo, who has negotiated several deals on the street, added: “We had visitors from all over that said, ‘We’ve got to get to Bleecker Street.’ It became a must-see, a must-go.”Early on, Ms. Consolo said, rents on the street were around $75 per square foot. By the mid-to-late 2000s, they had risen to $300. Those rates were unaffordable for many shop owners like Mr. Nusraty, who was forced out in 2008 when, he said, his lease was up and his monthly rent skyrocketed to $45,000, from $7,000. – NY Times
Retail not just being Amazoned in Manhattan, retailers are being priced out of business by exorbitant rents. Note to commercial landlords: Lower your rents! But, God forbid, that would be deflationary!
Source: Donut Shorts
One response to the neoclassical argument is that, in fact, prices are not perfectly flexible (they exhibit “stickiness”). For this reason, the economy is not self-correcting, at least not in the short run. Wages and prices may be “too high” (and, therefore, result in suppliers offering larger quantities for sale than demanders are able and willing to buy), but not come down quickly and eliminate the market surplus. This view has been widely attributed to John Maynard Keynes, and is, in fact, a key argument in what is known as “New Keynesian” economic theory. – Dollars & Sense
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During its incarnation as a fashion theme park, Bleecker Street hosted no fewer than six Marc Jacobs boutiques on a four-block stretch, including a women’s store, a men’s store and a Little Marc for high-end children’s clothing. Ralph Lauren operated three stores in this leafy, charming area, and Coach had stores at 370 and 372-374 Bleecker. Joining those brands, at various points, were Comptoir des Cotonniers (345 Bleecker Street), Brooks Brothers Black Fleece (351), MM6 by Maison Margiela (363), Juicy Couture (368), Mulberry (387) and Lulu Guinness (394).
Today, every one of those clothing and accessories shops is closed.
Mr. Sietsema, the senior critic at Eater NY, has watched with mild schadenfreude but greater alarm as his neighborhood has undergone yet another transformation from a famed retail corridor whose commercial rents and exclusivity rivaled Rodeo Drive in Beverly Hills, Calif., to a street that “looks like a Rust Belt city,” with all these empty storefronts, as a friend of Mr. Sietsema’s put it to him recently.
In the heart of the former shoppers’ paradise — the five-block stretch running from Christopher Street to Bank Street — more than a dozen retail spaces sit empty. Where textured-leather totes and cashmere scarves once beckoned to passers-by, the windows are now covered with brown construction paper, with “For Lease” signs and directives to “Please visit us at our other locations.”
– NY Times, May 31, 2017
The index for all items less food and energy rose 0.6 percent in July, its largest increase since January 1991. The index for motor vehicle insurance increased sharply in July, as it did the previous month. The indexes for shelter, communication, used cars and trucks, and medical care also increased in July, while the index for recreation declined. –BLS, August 12th
Are you surprised? The largest monthly increase since 1991 or the first back-to-back monthly prints of > = 0.6 percent prints since July 2008? Moreover, it’s only the third distinct period of such high back-to-back monthly inflation prints since November 1990.
We get it, now is not the time to worry about an uptick in inflation when the global economy is on the verge of collapsing into a black hole. There will be consequences, however.
No doubt an accelerated vaccine is great hope for and would be bullish for humanity but would it be bullish for markets? Would the Fed panic with inflation now running at an annual rate of 3.7 percent over the past two months with such an enormous amount of stimulus in the economy?
Have The Principles Of Economics Been Repealed?
Somebody from the woke crowd please tap us on the shoulder and wake us if the principles of economics have been repealed.
Money Supply Growth (M2) – Biweekly Y/Y % Growth
I skate to where the puck is going to be, not where it has been. – Wayne Gretzky
By Carol K.
I have argued for many years, and contrary to popular opinion that self-directed investors (SDI), who are not subject to the constraints of a professional portfolio manager, can outperform passive/indexed managed funds. SDIs must be willing to put in, at minimum, a significant amount of time and effort to screen, analyze, and construct a portfolio of high-quality stocks. While the macro boys at GMM are off hunting Black Swans, I am making money to keep the lights on.
Futuristic Sectors
In researching companies operating in specific niche sub-sectors we consider to be best positioned for sustainable and healthy future growth, I have concluded that an actively-managed ETF makes the most sense. It is a more efficient use of my time and, more importantly, taps the expertise of the manager to provide a higher risk-adjusted return.
Until recently, my portfolio typically held high-quality dividend growth stocks providing a significant amount of annual income. I’ve recently taken profits in several names, which I’ve owned for several years. I believe we’re facing a longer than expected recovery period from the economic damage inflicted by COVID-19, and many of the stocks I sold will suffer as a result.
Political Risk
Also, as we at GMM have posted on several occasions, a clean sweep by the Democrats, which is looking increasingly likely, will result in both an increase in individual and corporate income taxes. Furthermore, changes to capital gains taxes, and the treatment of dividend income are also a high probability. At some point, we suspect the market to begin pricing these events, which will be stock market negative. Let me stop there and leave the political speculation to others. Not my purpose here.
Future Sustainable Growth Industries
The main focus of my current portfolio analysis is on sub or micro-sectors, which focus on the economy of the future, such as genomics, artificial intelligence, robotics, 5G technologies, and the Internet of Things (IoT). These sectors are dominated mainly by higher-risk small-cap and micro-cap stocks. Some of these companies may or may not become “The Next Big Thing;” some will be taken out by more prominent names in the technology/healthcare sectors, and some will go bankrupt.
Specialization Of Labor
I must confess that analyzing these less established micro-cap stocks isn’t my strength or comparative advantage. I’ve found small and micro-cap companies much more difficult to evaluate using the metrics that have served me well in the large-cap space. Moreover, the growth trajectories of smaller cap companies in such niche sub-sectors are often far less predictable. Many of these “story stocks of the future” are relatively newer companies, have very little analyst coverage, and limited public information available.
Thus, in this particular situation, I believe an actively-managed ETF with an experienced and knowledgable portfolio manager makes more sense than picking individual names. Yes, you will likely pay a higher expense ratio for an actively managed, niche area ETF, but the additional returns with less aggravation are worth it. The table below illustrates that even many of the passive ETFs operating in niche GICS classifications sport expense ratios almost as high as the actively managed, and they merely track an index!
If you’re still not convinced, an expense ratio in the ballpark of 0.75% is still far below the fees for a typical actively managed mutual fund or a closed-end fund (CEF).
ETFs For The Future
I’ve put together the following table of some of the top-performing ETFs for the year, focused on artificial intelligence, robotics, cloud computing, genomics, fintech, and the Internet of Things (IoT) as of the August 5th market close. There are many other ETFs in this space, which I did not include a fund if their three-month average daily trading volume is below 10,000 shares. Several ETFs have performed exceptionally well this year yet are not included because they are so thinly traded, some as little 750-1,000 shares per trading day. Even if you’re a small investor looking to pick up a relatively small number of shares, I have found that the lack of liquidity and the wide bid/offer spreads in such thinly traded stocks is suboptimal.
The table illustrates the ARK Invest family of actively managed ETFs have outsized returns — especially when compared to SPY’s (S&P 500 index fund) YTD return of 3.85%. Some of these ETFs hold a significant position in Tesla (TSLA) – a few close to 10 percent of its holdings. Tesla is up over 230 percent YTD.
The ARK ETFs also meet my liquidity requirements, with the average daily shares trading in the hundreds of thousands over the past three months. I’ve initiated starter positions in ARKQ (Autonomous Technology & Robotics ETF) and ARKG (Genomic Revolution ETF) and will launch a position in ARKW (Next Generation Internet) on the next pullback.
Another exciting play with a lot of growth in its runway, which has suffered after the March COVID-crash, is the ETFMG Prime Mobile Payments ETF (IPAY). I’ve held this in my portfolio in the past, and it has performed quite well for me. The ETF has holdings in the biggest names in the payments space, such as Square, PayPal, Visa, Mastercard, Fiserv, etc.. It’s YTD performance has surprisingly lagged its historical “growth” status, even though the global COVID lockdowns have created explosive growth in online retail. It’s a fund that I am keeping on my watchlist and hope to reenter soon.
Focusing on total return is what it’s all about investing with a long term horizon. While most of my focus is on high-quality companies, which pay a reliable and steadily increasing dividend, I do not shy away from opportunities in the high growth story sectors of the economy. Investing in the trends that will drive the economy of the future can generate explosive returns, but it is not easy as it seems to pick the winners, which is why I prefer managed ETFs.
Disclaimer: I am not offering financial advice, nor am I a financial advisor. I hold no professional certifications. I do not manage money/investments professionally for third parties and only manage only my portfolio and assist family members’ with their investment portfolios. I am a member of the Global Macro Monitor (GMM) team, with my main focus on stock picking. Information provided in this post is not investment advice, and my conclusions are based on my analysis. Investors should consider performing their in-depth due diligence before buying or selling securities.
Susan Rice has narrowed a 33 point gap on August 2nd in the prediction markets to within 7 points of Senator Kamala Harris to become Joe Biden’s choice as the Democratic vice presidential nominee. See our July 19th post, Susan Rice — The Next VEEP?
Rice served as President Obama’s Ambassador to the United Nations and National Security Advisor.
Biden has already locked himself into choosing a woman running mate and he does owe the African-American community for pulling his ass out of the fire and saving his candidacy in the South Carolina primary, especially indebted to Congressman James Clyburn.
She wasn’t even on the radar a few months ago.
When choosing a candidate, the most important question is: Is she/he presidential timber? Rice, definitely fits the bill, more so, we believe, than the others on the shortlist. We like her and so does the Trump camp, who believes she is good fodder for the Obama/Hillary Deep State conspiracies — great IPA, by the way.
Biden is expected to name his pick in the next week.
Purchasing Managers’ Index (PMI)
The headline PMI is a number from 0 to 100. A PMI above 50 represents an expansion when compared with the previous month. A PMI reading under 50 represents a contraction, and a reading at 50 indicates no change. The further away from 50 the greater the level of change. – Investopedia
We had to post this after hearing a market talking head rationalizing the big stock market moves based on,
“The data is good. The U.S. PMI hasn’t been this high since November 2018.”
It’s time for a reality check and some Will Rodgers,
It isn’t what we don’t know that gives us trouble, it’s what we know that ain’t so. – Will Rodgers
By definition, the PMI is a diffusion index designed to measure the prevailing direction and robustness of the month-to-month changes in manufacturing.
July’s PMI has zero relationship to the “November 2018” PMI except for the fact both months were expanding compared to the prior month. The relative levels mean absolutely nothing.
The July PMI comes in “strong” yet factories are still operating at much lower capacity than they were in November 2018.
Upshot
Avoid the dumb-dumb pills of the talking heads, think and analyze for yourselves, folks.
We will get the same bullshit noise after Q3 GDP prints at around 20 percent. on October 29th, just five days before the election.
“the largest and strongest quarterly GDP expansion on record!”
It will be true as a stand-alone statement, in fact, double the next strongest quarterly annualized expansion of 10 percent in Q1 1958, but please keep it in context.
We preach a lot about “context” at GMM. The strong Q3 GDP print will come after,
See the article here
So, even if Q3 GDP comes in with the “greatest expansion ever” at 20 percent annualized, real output (GDP) in the U.S. will still be 6.35 percent below Q4 2019 GDP.
Why Markets Crash
It is also important to realize markets like to move on first derivatives (changes in levels) and tend to ignore levels, such as valuations until they do. One of the reasons why markets tend to crash and experience more left tail outsized events than statistics would suggest.
One last thing,
Beware of Semantic and Quantitative Fascism
The economy, as a whole, is not strong.
The gold move has been astounding but not surprising. In our book, the main driver of gold is the perception of the central bank’s commitment to maintaining the purchasing power of its fiat currency. Unless the Fed panics and begins to shut down the digital printing press, gold is moving much higher.
The chart below illustrates the measured move target to 2793.90, which simply adds the move from the Sep ’11 high to the Dec ’15 low to the Sep ’11 high.
Gold, baby.
Very cool.
I remember buying a computer for my loft apartment at the Archive in Greenwich Village just to watch the 1997 Mars rover, Sojourner, land, and cruise around the Red Planet. The brand new days of the internet and analog dial-up.
We know one of the NASA engineers who was tasked with building and now monitoring the mechanical arm that will grab rocks from Mars and bring them back on board the Perseverance, which launched last Thursday and is scheduled to land on Mars, February 18, 2021.
We also know two teenage girls with the foresight to purchase a couple acres on Mars. Talk about real estate speculators!
The high-tech Mars 2020 rover is about to launch into space (complete with its own helicopter). But how does this one-tonne beast compare to the original, pint-sized rover we sent to Mars in 1997?
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See the article here
Global Macro Monitor 