It is December already… What election?

Equity markets are at all-time highs. We are some sort of broken record, but this market performance is not congruent with fundamentals around us. There is still a giant economic hole and a high level of unemployment. While interest rates have been on the rise they remain near historic lows. Central Bank intervention is still unlike anything prior to 2020. Washington has not agreed on stimulus but nevertheless sees the need. With this as a backdrop, equity investors are willing to buy companies at historically high valuations. Again, equity markets are at all-time highs. Why?



Will there ever be a month we are not left amazed.

  • Rivian reveals pricing of EV truck and SUV: link
  • SpaceX hauls another crew to space station: link
  • Tesla’s value surges, to be included in the S&P 500: link
  • Peak…?: link
  • Buoyant market, brazen move, Tesla in S&P all at once: link
  • Nikola – 60 to zero in… no more pickup truck: link
  • Tesla market capitalization greater than $500 billion: link
  • Musk second richest in the world: link  



Nearly a year ago, the United States killed Iranian General Suleimani. Tensions rose and Iran accidentally shot down a civilian aircraft, killing many innocents. Shortly thereafter, COVID swept the country and the globe. So too did it consume everyone’s attention and the Iran situation was forgotten.

Fast forward to the end of November – coinciding with the closing months of a US presidency – and there was a flurry of activity that could further stoke the flames of this long tense relationship in the Middle East. The top scientist of Iran’s nuclear program was assassinated by a remotely operated machine gun and a high ranking Iranian Guard commander was killed in an airstrike. Iran has accused Israel of the former and we know Israel was conducting the airstrikes. After these events Iran voted in parliament to overtly contravene the nuclear agreement in place since 2015. Iran demands that sanctions be lifted, or they will suspend UN nuclear inspections and enrich more uranium.

This could result in dramatic escalation. Why does this matter? Because a war is never productive and because turmoil in the oil rich middle east could be particularly disastrous for global markets if we see energy prices spike.


SP Global & IHS

Data grab in the financial markets is alive and well. In a market where passive (vs active investment management) is king, data is king of kings. Consolidation of data providers makes for fewer choices and higher fees. Passive is built around indexes and the surest way to make money in a passive investing future, where passive funds lower costs to nothing (and destroy active investing), is to own the indexes and related data and charge higher fees for licensing and data access. In the last year we saw the London Stock Exchange acquire Refinitiv, another major data provider. In November, S&P Global – the owner of various index products, a major credit rating agency, and various other important financial products – offered to acquire IHS Markit for $44 billion. IHS is a leader in energy and derivative markets. Like we said above, fewer choices make for high prices. We consumers and investors should not like this. This  market is ripe for trust busting.


Treasury Strip

As a parting gift from the Treasury Secretary, various emergency funds provided to the Federal Reserve as part of its response to the financial turmoil that resulted from the coronavirus were called back to the Treasury. This came under protest by the Fed chairman, who thinks these funds should remain in place until such later date that the economy is in the clear. Sure, the funds were not actively being used and new emergency funds could be sought if the urgent condition resurfaced, but the funds likely provided assurances to market  participants that the waters were safe. Time will tell whether pulling the funds back is detrimental to sustained market recovery.


Portugal Negative 10yr

In a first, Portugal’s 10-year bond has traded with negative yield. Portugal! And the yields of equivalent US Treasuries are positive and rising…

In case you were wondering, the total market value of negative yielding debt globally stands at around 17.17 trillion (that is a ‘T’). That is very near the all-time high of $17.47 trillion set on November 20, 2020. Yay!


Special Purpose Acquisition Corporations are the rage. They are more commonly known as blank check companies. These companies are registered with the Securities Exchange Commission and publicly traded. But with no underlying business they are nothing but a pile of cash – looking for something…anything. Quick, before we must return all this cash, or it burns a hole in our pocket.

How does the following sound? Write us a big check for an investment we’ve yet to think up over the next few years, pay us fees on said capital, we’ll take a percent of the acquired company with no money in, and forget about whether this should all be worth more or less than the check you wrote me today. Sound like something you would be interested in. Give us a call.



Institutions are trickling in. Last month we reintroduced the topic of cryptocurrencies after PayPal announced entry. This month Guggenheim’s Macro Opportunities Fund made a filing with the SEC allowing the fund to hold up to 10% of the fund’s NAV, or $530 million, in Grayscale Bitcoin Trust, an unrelated investor vehicle that “holds” bitcoin. Elsewhere, Visa announced a new card with Bitcoin rewards through partner BlockFi. These institutions and others may well “corner the market”, fueling the mother of all speculative frenzies. Maybe 2017 was a fluke top and precursor to the real Tulip Mania. That is all speculative, of course. Like last month, we continue to watch with bewilderment. Meantime, Bitcoin is back to all-time highs.



Where one can find a lesson in biotech, holy grail treatment, and efficient markets. For decades, biotech companies have sought treatment for the disease Alzheimer’s. Biogen, after previous clinical trials failed to meet study endpoints, reported new findings from its latest trial suggesting success treating Alzheimer’s. That is huge. If valid, it would mean Biogen has a leading drug treatment for a disease with few options. The stock price skyrocketed higher from around $250 to $365 in a single trading day only to fall to $225 over the next two days. A panel of scientists flagged the results as questionable. Head fake. What a ride. We wonder which part efficient markets played.

COVID-19 Vaccine

November was quite a month for COVID. Not only did new cases and deaths surge but everyone got a shot of hope as not one, but three vaccines (Pfizer, Moderna, and AstraZeneca) reported strong clinical trial results. The trick will be getting to the other side of winter when these vaccines are expected to become widely available. Even then, two of the vaccines require sub-zero temperatures which creates a complex logistical challenge for the volume and reach that will be needed.

It is easy for our collective attention to be drawn to what these vaccines could directly mean – everything back to normal. But we wonder if there is something bigger, something much more valuable than what is currently on everyone’s mind. A point that goes little noticed in these recent announcements is the breakthrough nature of these virus vaccines. They are first of their kind to use mRNA, or messenger RNA. The methods and properties may well be used to combat other viruses commonly spread or dangerous. Imagine a vaccine for the common cold – the future economy could look more productive. Reuters produced an article touching on some of this. Imagine the silver lining to this hell many have endured.