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November 2020

The Chinese Government Killed the World’s Largest IPO

November 10, 2020John Banks

Last week, the U.S. presidential election consumed the world’s attention. This week, the potential for a game-changing COVID-19 vaccine dominated headlines and market action. But something else shocking happened last week, an event so surprising — and in some ways so ominous — it would have dominated headlines if not for the stiff competition. The Chinese government killed the world’s largest-ever initial public offering (IPO) at the last minute. On Oct. 28, we explained the details of the largest IPO

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Pfizer Announces a More Than 90% Effective Vaccine Result, and Markets Rejoice to the Skies

November 9, 2020John Banks

Pfizer, the pharma giant, and its research partner, BioNTech, changed the outlook for 2021 — and for the whole world — with a huge announcement this morning (Monday, Nov. 9). Pfizer and BioNTech shared Phase 3 trial results of a COVID-19 blocking vaccine that was effective in more than 90% of patients. The data results are early, and not yet final, but were verified by an independent external committee, and looked promising enough to share. You can read the press

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Bitcoin is a Schelling Point

November 6, 2020John Banks

On Oct. 30, we noted that Bitcoin is outperforming gold. Less than a week later, as the U.S. election week comes to a close, Bitcoin is up another 14% (above $15,500 as of this writing). The latest run higher seems driven by a sudden burst of extreme U.S. dollar weakness — a bullish thing for risk assets in general, and Bitcoin especially. It could also be related to a Department of Justice (DOJ) seizure of 70,000 Bitcoins generated by drug

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The Three Types of Uncertainty (Aleatoric, Epistemic, and Knightian)

November 5, 2020John Banks

“The political polling profession is done,” Republican pollster Frank Luntz told Axios on Nov. 4. “It is devastating for my industry.” The frustration with polling was further echoed by a New York Times opinion piece titled, “Can We Finally Agree to Ignore Election Forecasts?” The Atlantic also piled on with a piece titled, “The Polling Catastrophe.” Our hunch is that no, we can’t ignore election forecasts, and the polling industry will stick around. The polling industry will keep revising its

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The Markets Process Jaw-Dropping Uncertainty as Election Odds Plummet and Soar

November 4, 2020John Banks

If you’ve ever wondered what mind-bending, jaw-dropping uncertainty looks like, this it. The snapshot below, taken at 8:00 a.m. Eastern on Nov. 4, shows a vertigo-inducing swing in betting market odds for who will win the 2020 presidential election.  As of election night on Nov. 3, President Trump had roared ahead in the betting odds, thanks to a strong showing in Florida, Ohio, and other key states. But then, in the early morning on Nov. 4, former vice president Joe

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How Green Regulation Could Help Save the Oil and Gas Industry

November 3, 2020John Banks

What’s good for investors is sometimes terrible for the U.S. economy, and what’s good for the economy is sometimes terrible for investors. You know that old saying, “What’s good for General Motors is good for America”? Sometimes, that saying is completely backwards. What is bad for an industry can be wonderful for America on the whole — and vice versa. The all-time champion of this phenomenon is the oil and gas industry in the aftermath of the shale revolution. The

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The Crucial Differences Between Monetary Policy and Fiscal Policy

November 2, 2020John Banks

October 2020 was an ugly month for the U.S. stock market. The Dow, S&P 500, and Nasdaq Composite all declined more than 2%, registering their second down month in a row. Some will attribute this market weakness to pre-election jitters. In our view, it is more a reflection of post-election jitters — that is to say, what happens in the months after the election, rather than what happens with the election itself. For the stock market, the immediately relevant question

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October 2020

A Surprising Reason (Among Others) Why Bitcoin is Outperforming Gold

October 30, 2020John Banks

If you own gold, you are likely satisfied with the yellow metal’s annual performance thus far. As of Oct. 29, the gold price was up more than 25% year-to-date, as determined by Comex gold futures. GLD, the popular gold ETF, was up a tad less at just under 23%. Bitcoin, however, has blown past gold like it was standing still. By the same Oct. 29 reference point, Bitcoin (as priced in U.S. dollars) was up nearly 84% year-to-date — more

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A High-Profile Hedge Fund Manager Warns an “Enormous” Tech- Stocks Bubble Has Popped

October 29, 2020John Banks

A high-profile hedge fund manager is warning that an “enormous” bubble in technology stocks has popped. He believes the top was registered on Sept. 2, 2020, that investor sentiment has shifted from “greed” to “complacency,” and that bear-market pain for technology stocks is ahead. Is he right? Possibly, yes. The reasons he cites for calling a tech-stocks top will be familiar to TradeSmith Daily readers, as we have touched on some of them over the past few months. Among those

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The Largest Initial Public Offering (IPO) of All Time, for a Digital Payments Leviathan, is On Deck

October 28, 2020John Banks

Ant Group Co. — the owner of digital payments leviathan Ant Financial, a digital payments firm with 730 million active monthly users in China — is set to complete the largest initial public offering (IPO) of all time by Nov. 5, raising an incredible $34 billion via dual share offerings in Shanghai and Hong Kong. The rise of Ant Financial says a lot about the changing state of the world, the tech-driven chill in an increasingly frigid U.S.-China relationship, and

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Why Central Bank Digital Currencies Will Arrive Faster Than You Think

October 27, 2020John Banks

Central Bank Digital Currencies (CBDCs) are likely to arrive faster than you think. This is partly because they will not be true cryptocurrencies. CBDCs will be centralized, whereas true cryptocurrencies are decentralized. This makes a big difference. The decentralized aspect of a cryptocurrency is what makes it distributed and trustless – meaning there is no requirement to trust a third party in facilitating an exchange. . Because it is decentralized — not governed from a central server or a single

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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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