Insights

Top News:

9/08: Labor Day respite notwithstanding, investors resumed the sell-off in stocks as analysts warned of a near-term correction (here and here).  Moreover, renewed geopolitical and trade tensions involving China (here, here) also encouraged safe-haven bids on the U.S. greenback.  Meanwhile, a no-deal Brexit came into sharper relief as the U.K. was seen as reneging on terms of its withdrawal from the E.U. 

 

9/09: Undeterred by negative headlines pertaining to a vaccine in late-stage trials, in addition to stimulus talks mired in Congressional deadlock, investors paused a 3-day selling streak in a “technical” bounce.

 

9/10: U.S. jobs recovery through the summer may be tailing off as the latest weekly jobless report failed to show improvement in both new and continuing claims.  Pessimism grew about another coronavirus relief bill after a Senate version did not clear the chamber.  On a more positive note, inflation remains a distant concern, evidenced by one gauge of prices paid by businesses in the U.S. Across the Atlantic, the ECB decided to maintain its easing stance and stimulus program, despite its projection of a negative GDP growth of 8% in 2020.

 

9/11: Still well under the Fed’s 2% target, U.S. CPI increased 1.3% annually after gaining 1.0% in July.  While the U.K. economy expanded by 6.6% in July, its economic future may be muddied by the latest salvo in the messy Brexit saga.  For now, India and China have de-escalated their border standoff.

 

Heard on the Street:

“It’s not easy to find opportunities today… I think we’ve developed a real dichotomy between the things that are obviously successful but expensive, and the things that look low-priced but are challenged in terms of business. And big money will be made by buying the latter which works in my opinion.”

— Howard Marks, co-founder of Oaktree Capital Management, remarked on CNBC on 9/09/2020

 

“Everybody loves a party … but, inevitably, after a big party there’s a hangover.  Right now, we’re in an absolute raging mania… But I would say the next three to five years are going to be very, very challenging… The merging of the Fed and the Treasury, which is effectively what’s happening during Covid, sets a precedent that we’ve never seen since the Fed got its independence.”

— Stanley Druckenmiller, CEO of the Duquesne Family Office, in a CNBC appearance on 9/09/2020

 

Longer Game:

Noting that “market indices are measures of value creation for the owners of capital, which is not the same thing as value creation in the economy more broadly,” Michael Spence, a Nobel laureate in economics, enumerated winners and losers of the pandemic economy and beyond.

 

In an investment environment littered with short-term fluctuations, Morgan Housel of Collaborative Fund argues why “save like a pessimist, invest like an optimist” should be a long-term mantra.

 

Bonus:

The advent of a brave new world where AI and automation assume greater importance in our daily lives is unmistakable.  The Guardian challenged GPT-3, OpenAI’s language generator, to write a 500-word essay on why humans shouldn’t fear AI.  The surprisingly cogent edited result may shock you!