08 Feb Weekly Reads: 02/04/2019
The Week’s Best Articles: Week of February 4th, 2019
Economy: Wall Street’s Safest Trade Is Entering the Danger Zone – click here
Low volatility strategies have become very popular with investors as markets for the past several years have been historically calm. Now, as volatility returns (see December returns vs. January returns) these trades are on the verge of becoming exposed.
Interest Rates: How Low Interest Rates Freeze the Economy – click here
Interest rates have been historically low now for close to a decade. While most investors have cited these low rates as one of the main reasons stock markets are up there is another side to the coin. The WSJ outlines how small business are hurt by low interest rates when larger competitors are able to borrow at far more favorable rates to fuel expansion.
Earnings: Don’t Obsess Over Earnings Season – click here
Earnings season is a four time a year cycle that investors obsess over. As the WSJ rightly points out the best thing to do is ignore the short-term results and focus on the long-term implications of guidance and management’s business decisions. These pieces of information have a much more profound long-term impact on share prices than the short-term results.
Interest Rates: Powell’s Dinner With Trump Fuels Fed Independence Fears – click here
It is no secret that President Trump has been vocal about his desires for monetary policy, lower interest rates. With the announcement that he and Fed Chair Jerome Powell will have a dinner many are worried that he is attempting to influence Fed policy. Whether this is a cynical view or one that is unfounded it goes without saying that the separation of the two entities is critical to the long-term health of the economy.
Technology: Amazon Web Services Next Targets Facebook and Google – click here
Amazon is widely cited as disrupting the nature of retail stores around the world. However, if you examine the growth of their business over the past several years it is readily evident that the real area they are targeting for disruption is large technology companies. Amazon Web Services and their other technology bets are increasingly becoming the disruption agents now that they have transformed retail.
Investing: Bill Gross Misfired at Janus, But Had the Right Idea – click here
Being an active manager is something that requires a certain amount of aggression. After leaving PIMCO bond king Bill Gross tried a late career attempt to regain the returns that made him a larger than life figure. While his bets didn’t pay off he (or any active manager) did the right thing by taking risky wagers to try and outperform.
Economy: Farm Belt Bankruptcies Are Soaring – click here
The trade war that is occurring between the U.S. and China IS having an impact on certain segments of the economy. This article by the WSJ shows how the combination of trade restrictions and low commodity prices is putting huge pressure on farmers across the country. With these exterior factors impacting their revenue many are looking at losing their farms and way of life.
Technology: Cold Weather Saps Electric Car Batteries By Up To 40% – click here
New technologies, regardless of application, are always just that new. That means that as more and more people use them manufacturers and users learn about inabilities or weaknesses that were previously unknown. In the case of electric batteries we are now learning that in extreme temperatures, specifically cold, these batteries have a hard time holding their charge diminishing the utility the cars provide. Despite the environmental negatives, internal combustion engines don’t have this issue.