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February 2020

This Could Be the Year Big Business Goes Remote (and stops shaking hands)

February 19, 2020TradeSmith Research Team

The coronavirus outbreak may now be “at the brink” of a global pandemic. So says Anthony Fauci, the director of the U.S.-based National Institute of Allergy and Infectious Diseases, as reported by Axios. The virus, officially dubbed COVID-19, has killed more than 2,000 people and infected more than 75,000 within China — assuming numbers from the Chinese government are trustworthy. If not, the true tally could be far worse. Outside China, there have only been five reported deaths as of

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How a Surprising Power Struggle Could Sink the British Pound

February 18, 2020TradeSmith Research Team

Bruce Kovner, a retired billionaire currency trader profiled in the book “Market Wizards,” once said he made most of his money from “stupid governments.” Kovner did not mean individual policymakers are dumb. The idea is that high-IQ people can make collectively dumb decisions as a result of political pressure and groupthink. When the bad decision is obvious, central banks and treasury departments can help make currency traders rich — or in Kovner’s case, help the rich get richer. Sometimes a

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The Coronavirus Threat to Markets Has Not Passed

February 14, 2020TradeSmith Research Team

As of Feb. 14, 2020, the stock market doesn’t appear worried about the coronavirus outbreak. This applies not just to the U.S. market — where the S&P 500, Dow Jones industrial average and Nasdaq composite touched all-time highs this week — but to markets around the world. The MSCI World ETF, which represents the global stock market and trades under the symbol URTH — like the planet Earth, get it? — touched all-time highs this week, too. Meanwhile the MSCI

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Why Great Investment Ideas are like Independent Films

February 13, 2020TradeSmith Research Team

The 92nd Academy Awards ceremony, also known as The Oscars, was held on Feb. 9, and this year something new happened. For the first time ever, the Academy Award for Best Picture went to a film not in the English language. “Parasite,” a dark comedy from Korean director Bong Joon Ho, won big, and the entire country of South Korea celebrated. But a small group of investors had even more reason to celebrate: A tiny South Korean hedge fund had

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The Most Successful “Crypto” Company in History was a CIA Front

February 12, 2020TradeSmith Research Team

In return-on-investment terms, the most successful “crypto” company in all of history — likely never to be rivaled — was called Crypto AG and was based in Switzerland. Crypto AG started out building code-making machines and encryption devices in World War II, with the U.S. military as its first client. Over the following 50-plus years, Crypto AG sold its world-class encryption technology to more than 120 countries. It even sold equipment to the Vatican. And yet, while Crypto AG reaped

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“Shippergeddon” Could Produce Big Gains Down the Road

February 11, 2020TradeSmith Research Team

Deep-value investors should take note of what’s happening in the global shipping industry. The outlook for shippers is so bad right now, you could call it “shippergeddon.” Conditions are full-on catastrophic, due to a triple-whammy of negative impacts. It isn’t time to act, but it’s time to keep an eye out. A horrible outlook for shippers now could produce significant opportunity later, when shipping stocks rise again, like Lazarus from the dead. Some of the biggest investment gains come from

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Inflation Could Come Back Suddenly and Powerfully — Here’s How

February 10, 2020TradeSmith Research Team

Ken Griffin is worried about inflation. We are, too. The market is highly complacent in its low-inflation assumptions. Many assets are priced as if inflation will stay low for years or even decades. If inflation roars back suddenly, it could wreak havoc in treasury bonds, high-yield debt, overbought “safe havens” like consumer staples and utilities, and multiple other places. It could even trigger a new global crisis. We aren’t there yet, but there is a way to get there quickly

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The Coronavirus Outbreak Looks Far More Serious Than SARS

February 7, 2020TradeSmith Research Team

As of this writing on Friday, Feb. 7,  markets are catching up to the coronavirus outbreak — but investor awareness is still far behind. The situation could be far more serious than most realize. “Dow drops 200 points,” a CNBC headline reads, “on concern coronavirus will dramatically slow China’s economy.” The odds that China’s economy will “dramatically slow” are virtually 100% now. It would take a miracle to prove otherwise. The Chinese government has effectively shut down large sections of

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The World is Drowning in Debt, and Nobody Knows What Will Happens Next

February 6, 2020TradeSmith Research Team

The world is drowning in debt, and nobody knows what will happen next. This is terrible news for fiat currencies, and excellent news for gold and Bitcoin. At a certain point, debt tends to beget more debt in a downward spiral with no way out. This generally happens for two reasons: First, because the debt load gets so heavy, relative to income, that the borrower is forced to borrow more just to stay afloat, which only makes the debt load

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Tesla’s Parabolic Stock Move is Dangerous (to Bulls and Bears Alike)

February 5, 2020TradeSmith Research Team

When a stock goes “parabolic,” the trajectory becomes so steep so fast that the chart starts to look like the right side of a parabola. A parabolic price increase also bears resemblance to a rocket ship taking off. The analogy makes sense in more ways than one. Consider how a rocket behaves: To escape the gravity of earth, a rocket must travel almost straight up with tremendous force. If it escapes gravity, the rocket leaves the atmosphere and travels to

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Why Stocks in 2020 Could “Melt Up” Like 1999

February 4, 2020TradeSmith Research Team

The dot-com boom, bubble, and bust of 20-plus years ago wasn’t just driven by tech stocks. It was also driven by monetary rocket fuel from the Federal Reserve — the world’s most powerful central bank. Technology provided a great story, which served as the engine of the boom. But engines need fuel. In 1998 and 1999, the Federal Reserve provided not just regular fuel to Wall Street, but rocket fuel in the form of interest rate cuts and liquidity injections.

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The Pros and Cons of a Digital Surveillance State

February 3, 2020TradeSmith Research Team

If you had the choice, would you live in a digital surveillance state? Stated so flatly, the instinctive answer is “no.” All-encompassing surveillance sounds awful and privacy-destroying, if not soul-destroying. And then there are Benjamin Franklin’s famous words: “Those who would give up essential liberty, to purchase a little temporary safety, deserve neither liberty nor safety.” In reality, the answer isn’t so clear-cut. There are benefits to a digital surveillance state, which is why various countries are running experiments. It’s

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