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Lockdown & Easing not Easy11/8/2020 Image: Annie Spratt on Unsplash
UK pumped an additional 150 billion GBP into its economy by increasing its bond buying program. The second lockdown kicked in last week as well with government data projecting 4,000 dead daily from the plague. That data's credibility has been under attack since it came out. With all of this and UK unemployment increasing to 4.8%, Downing street still has to figure out the British exit thing and its fishery issues we wrote about last summer. The unemployment rate does not include underemployed workers. What a mess. GBPUSD will open at 1.314 today.
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Bitcoin for Baseball Cards11/8/2020 Image: Aleksi Räisä on Unsplash
The famous eBay payment processor will accept bitcoin and other digital currencies as payment making commerce even faster and more global. The favorite currency of gurus who were weed experts two years ago and social media marketing experts last year processed only 60 million USD in 2018. With quantitative easing policies sadly gaining broad acceptance like beards on skinny men who don't even own a pair of steel toe boots, digital currencies will continue to exchange hands for goods and services. They can't all be union delegates like Henry Hill. Is bitcoin the new safe haven and gaining legitimacy alongside gold and silver? Decentralized digital currencies are better than government controlled digital currencies because bitcoin isn't bothered with trade, wars, trade wars, or policy, and therefore cannot be manipulated by a single actor to buy policy. We covered bitcoin's value since March on this week's podcast episode. In March when the plague hit, BTC1 was at 4700 USD and will open today at 15401.73.
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Inspired?11/1/2020 Image: Demi DeHerrera on Unsplash
Dunkin' Donuts goes private as Inspire Brands has bought the company. Iced coffee is for people who love beets. I wrote what I wrote. @ me.
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EU Unemployment Brutal11/1/2020 Image: Camille Brodard ~ Kmile Feminine Creative Designer on Unsplash
Nearly 3 million people under 25 were unemployed in EU September 2020 which is 17.1% With the lockdowns, this makes sense as the service sector, supported by young staffs, was the first to go as government magically told its citizens what jobs were essential. As the report points out, the drop in unemployment from August by 97,000 could simply mean younger workers have given up. EURUSD opens at 1.165 today.
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Keep Them Fed For Now11/1/2020 Image: Nicholas Barbaros on Unsplash
That quantitative easing is also used to pay the 80% wage subsidy to Britons who suddenly found themselves out of work when the lockdown started in March. Companies still have to pay 5% of the burden for their workers covered by the terms of the lockdown extension, who they didn't want to lose, as the government tries to hang on another month. Perhaps adults should be trusted. EURGBP opens at 0.899 today.
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Quantitative Easing Not Easy11/1/2020 Image: Jude Beck on Unsplash
By printing money and buying its own bonds, Bank of England is hoping to ride the lower cost of money and lower interest rates to make it smoother for investment and retail banks to lend with easier terms. Perhaps the answer shouldn't be built around easy. With another lockdown coming on Thursday, people will continue their streak of not standing in line for fish and chips and having conventional conversations about the weather. Maybe lockdowns aren't the answer. GBPUSD opens at 1.295 today.
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Wood Ya?10/25/2020 Image: Joel & Jasmin Førestbird on Unsplash
Mid September saw lumber prices get close to the 1,000 USD per 1,000 board feet mark perhaps directly correlated to the 1.108 million new houses started. In Denver, there was a shortage of fire treated lumber, something we had never experienced. It made for tense conversations between purchasing agents and foremen. Calling Home Depot desperate for wood is an embarrassing venture for everyone and nobody wins. Lumber is now at 515.30 USD.
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German Manufacturing Rolling (Kind Of)10/25/2020 Image: Lenny Kuhne on Unsplash
Purchasing Managers' Index reflected a fourth month of growth for Germany. It includes the manufacturing and service sectors to gauge economic activity. Manufacturing rated 58.0 while service came in at 48.9. A value of 50 represents contraction. This is encouraging because like star athletes, strong economies need to perform when it counts. We know what happened to the service sector. Now, if they could just fix the unwanted tire pressure sensor that has spouses yelling at each other over mixed readings, we'd all be better off. EURUSD opens at 1.186 today.
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Big Enough For Junk10/25/2020 Image: Joshua Rodriguez on Unsplash
The Fed's response to the plague involved the PPP. As Rolling Stone wrote in July, even giant musical acts like the Eagles had their hands out. Bands that sell out arenas and stadiums in normal non-plague conditions are huge business. Other large businesses also benefited, seemingly unfairly, from the PPP. Relationships with bankers and access to serious money is a perk to running any business with significant cash flow. These bankers know other bankers and can create financing vehicles like junk bonds and BBQ handshakes with promises to pay later. This leaves the three piece band, you know, the one that has to pay to open for a larger act, in serious trouble. Almost 25% of small businesses have closed since the plague hit according to the Bloomberg article. This gap creates the opening for giant firms to swoop in and absorb the market. AMZN has doubled since mid March. Like government regulations, big businesses have the capital to absorb these drastic changes to their industries. The little guy will continue to play his guitar but if he wants to have a live audience it will have to be after his shift in the warehouse and in front of lattes and weird green chairs.
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US Advertising Spend Down 13%10/18/2020 Amazon shelled out a cool 6.9 billion USD in 2019 to remind our wives that the company with the most annoying cardboard boxes is there for them. It won't hit those levels this year as all of US advertisement spend is expected to decline 13% excluding political ads.
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Plague and Brexit10/18/2020 In case you forgot, UK is dealing with the plague as well as Brexit and the official transition period is December 31. If UK doesn't budge and move to EU's demands, the divorce will be bitter and sudden. Sentences like that previous one are platitudes to summarize that it's a giant mess over there that involves trade, travel, and fishing rights.
UK businesses are worried about their supply chains as prices are sure to increase with trade bottlenecks from governments who can't be bothered to respond to group texts. I see your Schwartz is as big as mine.
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Oh, Johnny From The Warehouse Got In, Too10/18/2020 We talked about people taking their "stimulus" money (remember, governments don't stimulate anything) on the podcast and pouring it into their Robinhood accounts. With all that friction removed, it was easier than ever for retail traders to get in the action in the furious bull market this summer.
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Here We Go Again10/18/2020 Following a pattern of accepting a 20 USD bill from Dad before heading out Friday night, spending low risk money is still fashionable as long as others pay for it. Boston Fed President Eric Rosengren said he's expecting bankruptcies from companies that have, "gradually increased risk by taking on more leverage, which magnifies returns with good outcomes – but also magnifies losses when bad outcomes occur."
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Auto Parts Manufacturers Hurting for Labor10/11/2020 Image: Birmingham Museums Trust on Unsplash
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