Comments of the Day
27 October 2020
Video commentary for October 26th 2020
A link to today’s video commentary is posted in the Subscriber’s Area.
Some of the topics discussed include: parallels with Y2K, stocks pull back on election and pandemic angst, vaccines closer to approval, gold steady, oil weak, little movement as investors are waiting for liquidity infusions.
What Happens Next
Thanks to Iain Little for this lengthy essay by Chris MacIintosh for Capitalist Exploits. Here is a section:
Without the freedom to say what you think, you have no freedom to think. Sharing of thoughts, opinions, data and seeking out the truth of what it all means is crucial to relationships, happiness and life. Now imagine being afraid to do that.
This is so very important I can’t stress it enough. If I could, I’d do so standing on a rooftop waving my hands with spittle flying. Please understand this assault taking place across the Western world. Right now there is wealth… because it has been built, but wealth is, and always has, been in human ingenuity, what we refer to as human capital. This is what Marxists don’t understand. They see the big houses and cars… the “stuff” and think that’s wealth. It’s not. But this is what they’ll come after.
It is actually worse than that. They won’t be content simply with theft, anymore than Mao’s red guards were satisfied with destroying the jobs of intellectuals. They instead wanted to see them suffer and to bleed and die. So they beat them to death.
Governance is Everything has been a mantra at this service for decades. The most important thing is that governance is not an absolute. It’s a trend. Standards are either improving or deteriorating and that has a direct knock-on effect for risk premia in any country. The primary tools for monitoring governance are minority shareholder interests, property rights, the rule of law, independence of the judiciary and freedom of the press. Every one of these facets of governance is under threat all the time.
Range Bound Market as Margins Rebound; Earnings Driven Breakouts
Thanks to a subscriber for this report from Morgan Stanley by Michael Wilson and colleagues. Here is a section:
A link to the full report is posted in the Subscriber’s Area.
There have been some notable earnings beats announced over the last week but SAP’s very disappointing results today raised important questions about the sustainability of tech earnings. There is a clear continued divergence between the winners and losers from the pandemic but the outlook for 2021 may be see some reallocation towards a recovery.
Jack Ma’s Ant Seeks to Raise $35 Billion in Biggest-Ever IPO
This article by Lulu Yilun Chen for Bloomberg may be of interest to subscribers. Here is a section:
The company will issue no more than 1.67 billion shares in China, equivalent to 5.5% of the total outstanding before the greenshoe, according to its prospectus on the Shanghai stock exchange. It will issue the same amount for the Hong Kong offering, or about 3.3 billion shares in total.
Alibaba Group Holding Ltd., which was co-founded by Ma and currently owns about a third of Ant, has agreed to subscribe for 730 million of the Shanghai shares, which will be listed in Shanghai under the ticker “688688,” according to the prospectus. Alibaba will hold about 32% of Ant shares after the IPO.
Eoin Treacy’s view
AliPay prospered by offering a higher interest rate than banks which was earned daily. That sensation of seeing one’s balance increasing by the day, even if only by a small amount, drove massive consumer adoption. The reason it was able to circumvent strict banking regulation on how much interest can be paid was because the government was willing to look the other way by not insisting on a banking license.
Eoin’s personal portfolio – new trading position opened October 21st
Eoin Treacy’s view
One of the most commonly asked questions by subscribers is how to find details of my open traders. In an effort to make it easier I will simply repost the latest summary daily until there is a change.
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