Free eLetters

October 2020

The Crypto Adoption Cycle Just Got a PayPal-Powered Nitro Boost

October 23, 2020John Banks

One of the great wealth-building vehicles of the 20th century was the publicly traded retail franchise. There is a reason why retail franchise stocks, when successful, can deliver multi-thousand-percent returns over a long-term holding period. With a great franchise — like, say, a casual restaurant concept, or a new type of clothing store — the initial locations are shown to have a profitable business model that attracts customers. As new locations open up, incoming revenue goes up, which increases the

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The Department of Justice Went After Google — and the Market Shrugged

October 22, 2020John Banks

Did you hear the one about the Department of Justice (DOJ) going after Microsoft? It isn’t a joke, but the stock market seemed to laugh at the news. On Oct. 20, the DOJ announced the largest antitrust lawsuit in decades, officially declaring Google “a monopoly gatekeeper of the internet.” The last antitrust action of this size and scope was launched against Microsoft in 1998 — the same year Google was founded by two Stanford students. In many respects, today’s Google

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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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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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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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Restaurant Industry Trends are a Microcosm of Accelerated Creative Destruction

October 15, 2020John Banks

In a book written in 1942 titled Capitalism, Socialism and Democracy, the Austrian-born economist Joseph Schumpeter coined the term “creative destruction” and called it “the essential fact about capitalism.” Creative destruction “revolutionizes the economic structure from within,” Schumpeter wrote, “incessantly destroying the old one, incessantly creating a new one.” The creative destruction process is all too often painful. Entire industries can be downsized, radically restructured, or even swept away completely. Because of the global pandemic, a tsunami of creative destruction

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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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The DOJ’s “Cryptocurrency Enforcement Framework” is More Good News for Bitcoin

October 13, 2020John Banks

As a rule of thumb, regulation is good for established players. It helps the strong get stronger and the big get bigger, by making it harder to break into a space. Take data privacy rules around e-commerce and social media, for example. On the one hand, the big players in e-commerce and social media don’t like these rules. They are burdensome, expensive, and add to the cost of doing business. On the other hand, the giants think these rules are

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An $83 Billion Silicon Valley Heavyweight Buys Bitcoin — and Shows Others How to Do It

October 12, 2020John Banks

If you haven’t bought Bitcoin for the first time yet, the odds are good that you will. The question is whether you will do it sooner — and be glad that you did — or do it later and wish you had acted much earlier. Bitcoin is not just an investment opportunity, like a stock that investors can own or choose not to own. It is the future of money, and the ultimate store of value, in a world where

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In a Time of Fiscal Dominance, the Market Cares About Spending More Than Who Wins

October 9, 2020John Banks

On Aug. 10, TradeSmith Daily explained two terms every investor should know: Financial Repression and Fiscal Dominance. To briefly summarize them, financial repression is when a central bank deliberately keeps interest rates low — ideally below the rate of inflation — to inflate away the value of debt. This is a means of coping when a nation’s debt load becomes too large. Fiscal dominance, which often goes hand in hand with financial repression, is the term that describes what happens

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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 Tweet that Tanked the Stock Market

October 7, 2020John Banks

On Tuesday, Oct. 6, President Donald Trump did something mystifying. He tanked the stock market — and created a sense of panic among millions of unemployed Americans and struggling small-business owners — with a single tweet. Here is how Brian Kilmeade, the Fox News co-host of Fox and Friends, described it: “For the president to come out with a tweet like that, with the markets still open, just crashed the market and cost people a lot of money.” For markets,

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