To get an idea of how through-the-looking-glass this environment is — and just how far gone “normal” is — think about the following data point: Netflix now has a larger market cap than Exxon Mobil. It seems impossible, but it’s true. As of this writing, Netflix Inc. (NFLX) is worth $195 billion. Exxon Mobil Corp. (XOM) is worth $166 billion. Let that sink in for a minute. A company that was stuffing DVD rentals into envelopes by hand 20 years
Read now“How many divisions does the pope have?” The question (possibly apocryphal) was asked rhetorically by Joseph Stalin, the iron-fisted dictator, to emphasize the military might of the USSR. Stalin measured rivals by how many tanks and guns they had. He is long gone now, but people still think about currencies the same way. The value of a currency is backstopped by the power of the state; the more powerful the state, the more benefit the currency receives. The U.S. dollar,
Read nowWhen it comes to re-opening the economy, Americans are cautious. A new poll of 900 registered voters, conducted April 13-15 by NBC News and the Wall Street Journal, shows that 58% of respondents were more concerned about the risks of re-opening too quickly, versus the costs of re-opening too slowly. Based on this poll, it seems a majority of Americans “get it.” They recognize that COVID-19 is a serious threat, that social distancing has saved lives, and that the current
Read nowWe recently explained “How the Oil Price Could Fall Below Zero.” The piece felt a little “out there” because, at the time it was written, the possibility we were explaining — oil contracts trading below zero — had never happened before. When we explained how the oil price could go negative, we thought a looming lack of storage space might cause it to happen in a matter of months, or possibly a matter of weeks. Instead it happened the very
Read nowTo quickly recap recent commentary, we explained on April 17 why the oil price could go negative. And then, on April 23, we explained why negative pricing came so quickly. Some of you wrote in to ask, “Who was buying oil at the negative lows? Were they taking delivery?” It’s possible the big global commodity houses were buying to take delivery. Outfits like Vitol, Trafigura, and Glencore specialize in trading not just paper commodities, i.e. futures contracts and derivatives, but
Read nowOn the COVID-19 medical front, the hot new thing is antibody tests. The idea is that, if a person tests positive for antibodies, it would show they have already contracted COVID-19. That would imply (though not guarantee) they are safe from getting infected again. Antibody tests could also indicate the overall percentage of a population that has already had COVID-19. In the state of New York, for example, 21% of New York City residents may have been infected (as reported
Read nowFor so-called “Black Swan” funds, March 2020 was the best month in years. And yet, after a multi-year stretch of poor performance, a lone burst of gains underscores why bearish wagers should pair with bullish ones — that is to say, why shorts work best in a supporting role for longs. The term “Black Swan” was popularized by a best-selling book, The Black Swan, in 2007. In the book, author Nassim Nicholas Taleb described a black swan as an unexpected
Read nowWinston Churchill has been credited with saying, “Never waste a good crisis.” The idea is that, in times of turmoil, you can make big changes that otherwise would have been blocked. When the status quo dominates, it’s hard to get buy-in for radical proposals. But when chaos abounds and everything is in flux, what was once considered radical might now be considered acceptable (or appropriate to the situation at hand). “Never waste a good crisis” is thus a common rule
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