TradeSmith Daily

October 2020

Markets are Increasingly Anticipating a “Biden Sweep”

October 5, 2020John Banks

When news of the president’s COVID-19 diagnosis hit, in the wee hours of Friday morning, overnight markets reacted with shock and fear. By the end of the day on Friday, though, the Dow Jones Industrial Average and S&P 500 had mostly recovered, with small caps (via the Russell 2000 index) even turning positive on the day. In Monday’s premarket session, meanwhile, the major indexes were green, if only slightly. This might seem strange, given the level of uncertainty the country

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The U.S. Government’s BitMEX Crackdown Shows Bitcoin’s Resilience

October 6, 2020John Banks

Last week saw so many head-spinning developments, it felt like the space-time continuum might implode as the speed and density of the political news cycle collapsed into a black hole. So it’s understandable a major crypto-world development got lost in the shuffle. The U.S. government came down like a ton of bricks on BitMEX, the world’s second-largest cryptocurrency derivatives exchange. The charges, both civil and criminal, were as serious as it gets. The three BitMEX founders, along with the exchange’s

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The Tech Juggernauts Face Rising Political and Regulatory Risk

October 8, 2020John Banks

The stock market has benefited handsomely from the performance of technology juggernauts. For 2020 year to date, Amazon, Apple, Facebook, and Google have helped the NYSE FANG+ index generate a better than 122% return from the March 18 lows through the Oct. 7 close. But valuation multiples don’t grow to the sky, and 2021 may not be as kind to the tech juggernauts. Regulatory risk and political risk are rising threats, and could cut into revenues and profits for the

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The Polls Aren’t Wrong. Nor Were They Wrong in 2016

October 14, 2020John Banks

In recent days, we’ve written about the “Biden Sweep” scenario, and how Wall Street has come to embrace it as a bullish expectation. The thing that Wall Street fears is a government spending cut-off that leaves the U.S. economy in a deflationary hole. If policy gridlock cuts off the anticipated flow of upcoming spending, permanent job loss and recessionary scars could take down the U.S. economy and the stock market, too. If Democrats take the levers of power in the

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A New Wave of Infection is Hitting the U.S. and Europe — and a Fiscal Wave Will Follow

October 16, 2020John Banks

It would not be correct to say the coronavirus is back — because it never actually left. We can say, however, that coronavirus caseloads are surging again on two continents. The numbers are starting to look alarming, and it isn’t even truly cold yet. (The winter months are expected to make the pandemic worse, due to reduced outdoor activities, lower humidity levels, and greater exposure to indoor circulated air.) In the United States, daily coronavirus cases topped 63,000 on Oct.

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Why the U.K. Government May Need to Crash Its Own Currency

October 19, 2020John Banks

The United Kingdom is headed for a “No Deal Brexit” break-up with the European Union. This assessment is based on harsh statements coming directly from Boris Johnson, the U.K. Prime Minister. If a “No Deal Brexit” happens, or even just an exceptionally “Hard” Brexit, the result could be a hammer blow for the British economy. That, in turn, could force the U.K. government to devalue the British pound aggressively, or even crash it, to try and steer the U.K. economy

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Central Bank Digital Currencies (CBDCs) are Having a Moment

October 21, 2020John Banks

We are now barreling headlong into the Information Age, the fourth great age of human civilization. The prior three, as we’ve explained before, were the Stone age, the Agrarian age, and the Industrial age. The Stone Age gave us tools, the Agrarian Age gave us farming techniques, and the Industrial Age gave us factories and physical machines. Now the Information Age is giving us the digitization of the physical world, the merging of the physical and the virtual. This physical-virtual

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Solar Energy is Dethroning Old King Coal

October 26, 2020John Banks

Solar power is now “the cheapest electricity in history,” according to new data from the International Energy Agency (IEA). On a cost-comparison basis, the economics of solar energy are superior to coal for new projects, and by midcentury (2025), solar could have a larger global energy footprint than coal. This is a profound turning point, because coal has been a cost-effective energy source for thousands of years. There are Greek references to coal use in metalworking that date back to

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