It was a week of will they or won’t they. Both parties claimed to want another stimulus deal done before the election, but the proof is in the pudding and as of Friday, the plate is empty. Investors may be coming to the conclusion that the latest negotiations between the Democrats, led by House Speaker Nancy Pelosi, and Republican U.S. Treasury Secretary Stephen Mnuchin, and White House Chief of Staff Mark Meadows, was simply an election ploy. A way to set up the other side for failure, while making their own position look both caring and, at the same time,…
Insights & Advice
A Few Dollars More
Investors reduce risk as stimulus talks fail
Hope springs eternal, but even the most strident bulls threw in the towel this week. American politics took precedence over the country’s economic well-being once again, as both political parties refused to compromise on a stimulus deal. But it wasn’t only politics that spooked investors. Across the Atlantic, investors watched as COVID-19 outbreaks escalated across Europe. Germany, Austria, the Czech Republic, and Italy reported new records in infections, while France announced a curfew in order to stem their own skyrocketing cases. In the U.K., Londoners are now banned from mixing with other households indoors. In this country, despite denials by…
China leads global economic recovery
There is a saying on Wall Street, “first in, first out,” which aptly describes the experience of the world’s second-largest economy this year. The coronavirus was spawned in Wuhan, China late last year, but thanks to the country’s quick response, China has sprung back stronger than ever. By almost any economic measure, China has not only managed to avoid a recession this year, but will actually see its GDP grow by 1.6% in 2020. To put that growth in perspective, the world’s economy is expected to decline by 4.4% this year. The startling Chinese recovery in the face of ongoing…
One way or another, markets expect more stimulus
As the U.S. presidential elections approach, politics are becoming a bigger factor in what is moving the stock market. Some investors are already betting on the winner, and positioning their portfolios for an expected outcome. It is a risky bet to make. As of this week, many on Wall Street are positioning for what they expect will be a “Blue Wave” where both houses of Congress and the next presidency of the United States will be captured by the Democratic Party. What, you may ask, is their reasoning, aside from partisanship? Well, the number of polls that put Joe Biden…
U.S. moves to nail down strategic metals
Rare-earth minerals, with names like cerium, dysprosium and gadolinium have become ‘must have’ materials in the global race to win the technology battles of the future. The problem is that throughout the last 30 years, China has built a near monopoly in these strategic metals. Rare-earth elements (REEs), consisting of 17 different minerals, are used to make components in many high technology devices, including smart phones, digital cameras, computer hard discs, fluorescent and light-emitting-diode (LED) lights, flatscreen televisions, computer monitors, and electronic displays. China commands 35% of the world’s reserves of these minerals and produces more than 70% of all…
October is living up to its name in the stock market
Stocks gave up the ghost on Friday after a week of gains and losses. Investors should expect more of the same as they could see even greater volatility ahead. Take your pick. Was it the announcement that President Trump was diagnosed with COVID-19 that sent stocks tumbling at the end of the week? It could have been that the September employment gains were a negative surprise, indicating a potential rolling over of the economy. But if you are looking for reasons, add in the disappointment among investors that there was no new stimulus deal forthcoming from Washington. The president’s coronavirus…
Markets feel the heat
First, the good news: there is only one more week until the end of the month. The bad news, however, is that October may not treat investors any better than did September. As my swabbie friends would say, is it time to “batten down the hatches.” Let me say, I take no joy in being right. During the last few weeks of writing, the volatility I predicted has come home to roost. This kind of correction is especially painful because in these times of great uncertainty, we could have at least pointed to the stock market, and our investments accounts,…
Back to the future in America’s kitchens
Whether it is recipes, groceries, home gardens, grilling, pots and pans or online cooking classes, Americans have rediscovered the kitchen, thanks to COVID-19. Where once an occasional meal at home, or a single-serve dish for the kid’s lunch was sufficient, times have changed. Home cooking has become a bigger business. Americans are cooking more and throwing out less food, according to the Food Marketing Institute, an organization that tracks grocery shopping trends. They saw a 40% uptick in home-cooked meals, and a 27% increase in those who were planning more meals in advance in 2020. However, cooking at home, many…
Mind Your Business: Sell-and-stay
Do you want to get paid a bunch of money to sell your company but don’t want to stop working yet? A sell-and-stay strategy can help you monetize your lifelong work while allowing you to focus on the part of your job that you enjoy. A sell-and-stay strategy is a transaction that looks like a merger crossed with an outright transaction. It involves the seller getting paid upfront, instead of exercising a more conventional “earn-out,” which forces the seller to take on some payment risk. Instead of the owner walking away, she sticks around and gets paid as an employee…
Investors face a roller coaster ride
Volatility returned to the stock market this week as the level of uncertainty increased on several fronts. Unfortunately, there won’t be any definitive answers to what concerns investors for at least two months. It is September, after all, and this month is notorious for inflicting pain on investors. Historically, October is not much better, and in a presidential election year it can be worse. While the financial media will provide their thoughts on just why stocks drop or rise on any given day, it is not much use to you. The real reason for “why” will only be known after…
Bicycles sales are booming
In the age of the pandemic, some industries have thrived. Take the bicycle industry, for example; sales have more than doubled this year, and the only impediment to further growth seems to be the availability of product. Thanks to COVID-19, biking has become a global phenomenon. The real growth is centered in the metropolitan areas, where much of public transportation has been curtailed due to the infectious nature of the virus. In April alone, bicycle industry sales grew by 75% to $1 billion year-over-year, according to bike manufacturer, Huffy. Leisure bikes, those that sell for under $200, jumped 203%, while…
Markets begin the countdown to November
As the next two months unfold, investors will begin to handicap the presidential election. If history is any guide, most investors expect that volatility will rise. Is that a good bet? As we know, both the economy and the stock market, while different, have played a role in the outcome of past elections. In the last 100 years, every president that has avoided a recession during their period in office was reelected. There was only one president, who was reelected during a recession. That was Calvin Coolidge, who managed to squeak by despite a recession in his last two years…
CSAs and local farms in America make a come-back
While much of the nation’s farming industry has been decimated by the global pandemic, here in the U.S. one tiny segment of the agricultural market is booming—the CSA. The line at my local Community Supported Agriculture (CSA) pick-up station was short this week. As usual, everyone wore masks and waited in line, six feet apart. One by one, customers stuffed their carry bags full of lettuce, radishes, kale, cucumbers, tomatoes and whatever else nature’s bounty and Kate, our farmer, had planted this season. CSAs charge a seasonal, or sometimes yearly membership fee. In exchange, you receive weekly boxes, or bags…
Market’s correct imbalances
It always happens. Sometimes it takes longer than one would like, but sanity returns to the stock market when you least expect it. The only word that accurately described the stock market at the beginning of this week was “parabolic.” On Tuesday, believe or not, the total worth of just one stock, Apple, was larger than the entire value of the Russell 2000 small cap index. It was also much greater than the entire value of the U.K. stock exchange. Story stocks like Tesla were rising along with the technology-heavy NASDAQ index. Stay-at-home stocks were logging daily gains that in…
Mask mania helps small business
There was a time, when obtaining a protective mask to combat the spread of the coronavirus was almost impossible. That time has passed. Today, as more than half the country requires citizens to wear them, masks have become essential and almost a fashion statement. Back in March of this year, as COVID-19 raged across the country, first responders were desperate for all kinds of protective gear. In the Berkshires, where I sit, a cottage industry developed. Volunteers on home sewing machines were producing masks and delivering them to the local hospitals. Various small businesses around the nation were also producing…
Markets reach for the sky
Credit the Fed for this week’s bump up in the averages. Technology shares led the charge as usual, shrugging off a sinking economy, higher unemployment, and no progress on another bail out. What else is new? At the annual Jackson Hole Symposium of world central bank leaders, conducted virtually this year, Jerome Powell, the chairman of our central bank, took center stage. In his prepared remarks, Powell announced a shift in the U.S. inflation policy. Rather than using the oft-stated, long-held inflation target of 2%, the Fed will now “seek to achieve inflation that averages 2% over time.” What’s the…