- One of our favorite gold gurus…
- … has a very unconventional take on the millennials (“Savvy!”)
- Two questions about Trump’s stimulus by executive order
- Here it comes: Utility shutoffs for pandemic violators
- Fruit logo buys startup a world of pain from Apple
- Where American expatriates go… a word from an expat in Germany… the Fed’s August plans for Jackson Hole… and more!
We interrupt what’s become a daily dirge of depression, pandemic and social disorder for a glimmer of good news.
It comes from longtime friend of The 5 Frank Holmes — chief of the U.S. Global fund family.
If you watch CNBC — and we’re not really sure why anyone would — you might have seen them give Frank airtime this morning, now that gold is suddenly hot: “It’s quite easy,” he said, “to see gold going to $4,000” over the next three years. “At zero interest rates, gold becomes a very, very attractive asset class.”
But it’s not Frank’s take on precious metals, his longtime forte, that’s got our attention this morning.
No, it’s a combination of foresight and happy accident — one that actually gives us hope for the future.
But you wouldn’t have heard about that on CNBC. You’d have heard it instead during a briefing Frank had on Friday with our executive publisher Addison Wiggin. It’s part of the exclusive interview series you get with membership in the Financial Reserve, our VIP level of service.
Out of respect for paying Reserve members, we won’t link to the whole thing. But there’s a critical highlight that merits your attention.
“As CEO of U.S. Global Investors I travel all over the world,” Frank begins.
“We have offices in Asia, Eastern Europe. In my travels, I began to notice several years ago that all of a sudden, my flight options had dropped by 30% and the price of my ticket had doubled.”
With a bit of cursory research, Frank realized there was no such thing as an airline ETF. With a whole lot more research, Frank decided to launch one of his own in 2015 — the U.S. Global Jets ETF (JETS).
Its aim — to beat its benchmark of the New York Stock Exchange global airlines index. It’s succeeded handily.
“It grew quickly to $100 million [in assets] and then went back down to $70 million,” Frank explains, “and then in March, the end of February, it halved — with this pandemic spear hitting.”
And then a funny thing happened. “This unprecedented buying started to take place.
“This fund went from $70 million to $35 million, and then a billion dollars came into it over 70 days. They say it’s unprecedented.”
It’s the Robinhoodies and their merry band of newbie retail investors.
Robinhood is the brokerage app catering to millennials that pioneered no-commission trades — a practice all the big-boy brokerages adopted last fall.
Two months ago we took note of all the locked-down people with time to spare and money to burn — and who were trying their hand at the stock market for the first time, the number of new brokerage accounts exploding.
On the one hand, we looked askance at the phenomenon — people buying shares of bankrupt companies like Hertz. On the other hand, we also said if large numbers of people believe Federal Reserve money printing will propel stocks ever higher, that becomes a self-fulfilling prophecy.
Frank’s take about this new breed of investor is much less cynical.
“I was curious, where did they learn about the airlines? It was YouTube and podcasts.
“So all these millennials are stuck at home. They are very aware of cheaper flights and hotels. They liked the ‘experiencing’ society. They couldn’t go and experience the world.
“So now they’re going to start to experience capitalism and they came in and, in fact, the numbers are mind-boggling.
“They’re very educated. They’re very savvy at digging data out of the internet,” Frank continued.
“TSA started to publish the number of passengers they screen every day. That data became public and it showed on April 14 it hit a low of 89,000. And now it’s 800,000 passengers per day. So more people are flying.
“The millennials also follow OpenTable, which publishes how many people are booking a restaurant. So they are all using the 50-day moving average. So what’s above the 50-day moving average, you go buy something like JETS or restaurants. And as soon as it falls below the 50 days you’re out.”
We’ll leave it there for today. It’s a different take on millennials in this year of 2020 than the usual fare about campus snowflakes who’ve brought their “cancel culture” from the universities into the workplace, that’s for sure.
Hey, who said we’re all doom-and-gloom around here!
All hail the blue chips as a new week of trading begins.
The on-again, off-again rotation out of tech stocks is on again — at least today. At last check, the Dow is up nearly 1% at 27,701… while the Nasdaq is nearly a half percent in the red, back below 11,000.
Gold is clawing its way back from Friday’s steep losses, the bid at $2,045 as we write.
No big economic numbers today, and few companies report earnings on Monday. So trader chatter has turned instead to the president’s stimulus-by-executive-order over the weekend — in lieu of any agreement with Congress.
You can read about the perplexing details anywhere. For our purposes here, two points to consider…
- Publicly, Democrats are saying he acted unconstitutionally. Privately, you can be sure they’re studying his actions for precedents they can seize on whenever they’re once again running the executive branch. Never let a crisis go to waste, right?
- We don’t envy anyone managing a payroll. The executive order includes a deferment of Social Security tax for employees making less than about $100,000 a year. But if Congress doesn’t ultimately sign off on this move, “employers that stop withholding now might have to withhold more later to make up the difference,” says The Wall Street Journal.
And no, the Treasury Department hasn’t issued guidance for employers yet.
As for the bigger constitutional issue, supposedly the president can do the payroll-tax deferment because there’s a presidentially declared disaster going on. But if the current president can mandate a tax cut under color of an “emergency,” what’s to stop a future president from mandating a tax increase under the same “emergency” or a different one?
Speaking of “emergency” measures, Los Angeles is moving a step closer to the pandemic dystopia we described here in June.
Effective last Friday, the city is asserting the authority to shut off water and electricity to private homes hosting large parties in violation of social-distancing orders. "While we have already closed nightclubs and bars, these large parties have become nightclubs in the hills,” carps Mayor Eric Garcetti.
“The process outlined by Garcetti doesn't give property owners the opportunity to challenge having their utility service shut off,” writes Christian Britschgi at Reason. “It instead relies only on police determining someone's guilt” before asking the Department of Water and Power to act.
“The longer shutdown orders remain in place, the more people will end up violating them by congregating in private residences. To enforce its policies, the city could end up having to shut off electricity and water to a lot of homes.”
Or as we suggested two months ago, even entire neighborhoods — the better to create elementary school-style peer pressure. Already, India routinely shuts off internet and wireless service to unruly sections of the country…
Stupid intellectual property tricks: Apple’s trademark lawyers are going after a teensy startup for having the temerity to use a fruit logo.
From the MacRumors website: “Prepear is an app that helps users discover recipes, plan meals, make lists and arrange grocery deliveries…
“The company said via a post on Instagram that Apple ‘has decided to oppose and go after our small business' trademark saying our pear logo is too close to their apple logo and supposedly hurts their brand.’"
But don’t take their word for it. Here’s Apple’s paperwork in black and white…
Oh yeah, totally confusing.
Prepear says it’s already laid off one of its five employees to pay for the lawyers. It’s hoping a petition at change.org will shame Apple into dropping the matter. To be continued…
On the subject of Americans surrendering their citizenship, a reader inquires: “So where did those people opt to go? What country was more attractive?”
The 5: For the most part, it’s the foreign country where they’re already living.
As you can see in the chart on Friday, the phenomenon took off in earnest around 2010. That’s when FATCA kicked in — the Foreign Account Tax Compliance Act — requiring Americans to tell the feds about their foreign bank and brokerage accounts.
It’s a compliance headache not only for Americans abroad but also for banks and brokerages — many of which simply refuse to do business with U.S. citizens anymore.
Some of these folks surrendering citizenship are “accidental Americans” — mostly but not exclusively Canadian, a phenomenon we chronicled a few years ago. They’re born in the United States but lived here only briefly, or they have a parent with U.S. citizenship. Many don’t even realize they’re U.S. citizens until they get a nastygram from the IRS.
“I gave up my U.S. citizenship over 17 years ago,” writes a reader who signed up for lifetime access to Jim Rickards’ suite of services, “because I could not believe that 60–70% of all Americans were dumb enough to believe the BS about Saddam Hussein having weapons of mass destruction.
“I have lived in Bavaria, Germany, for the last 40 years and when Chancellor Gerhard Schroeder said that Germany would not participate in the invasion of Iraq, I decided the time had come to sever my line.
“The deep state and fake news have been around far too long and too many Americans are not well informed or use the thing in their skull to think things through. I am definitely not saying Germany is all that much better — not with someone like Angela Merkel who wants to destroy the country and culture — however, most Germans do try to think things through and that is why the AfD (Alternative für Deutschland) has a relatively big following; there are not that many rightists or Nazis for that matter in or associated with the party although the fake news and almost all other parties try to paint them that way.”
Finally, an Idaho reader’s pandemic travelogue, by way of teeing up a question…
“Friday my wife and I took our annual trip to Yellowstone National Park. We usually go late in the fall for less tourists. We thought Wuhan flu would keep people away — not true. We leave our house at 5:30, get to the park gate in west Yellowstone at 8 a.m. Long lines already. We make our way to Old Faithful.
“We see the benches almost full. There’s a couple sitting in the middle of a bench, We ask if we could sit on one end. Only if you wear a mask was the response from the faithful Fauci follower. Sat anyway, watched and then moved on through the crowded park.
“As part of our 14-hour loop trip we come through Jackson Hole and then back to Idaho. I wanted to see Jackson Lake Lodge. There were signs saying it was closed for the season. Did I miss the Fed party there, or where are the sphincters wasting taxpayers’ dollars this year on their retreat?”
The 5: Usually the Fed’s confab there takes place closer to the end of August. Until this year, no sooner would the annual Grand Teton Music Festival clear out — anyone whose passions include both hiking and classical music should experience it once — than the joint’s invaded by the central bankers.
Yes, Lake Jackson Lodge is closed, but the gathering is still on for Aug. 27–28. A press release from the Kansas City Fed assures us “the event will continue remotely this year with international central bankers, Federal Reserve officials, academics and a small number of private-sector economists participating via an online format.”
What we’re really wondering about is the global elites’ big bash every January in Davos, Switzerland. What’s on tap for that one? Especially considering its theme for the coming year is a — gulp — “global reset.”
We might dig more into that question later this week…
The 5 Min. Forecast
P.S. This week’s Profit Wire trade recommendation is a classic. It’s a company that gets bad press everywhere it turns… but our proprietary indicator is picking up on connected insiders making bullish bets, ready to leave the media with egg on its face. And we’re going to ride those insiders’ coattails.
We’re due to issue the recommendation when the market opens tomorrow morning. Curious about the methodology behind this trade? And how much it could make for you? Then check this out right away…
Investing legend Jeremy Grantham says: “The thing about a bubble… it can keep going.” Read More
The Federal Reserve’s twice-yearly Financial Stability Report whistled past the graveyard where Archegos Capital Management will soon be interred. Read More
“While China may be the leader in the race to build central bank digital currency (CBDC),” says Jim Rickards, “the Fed has not been caught napping…” Read More
The Central Bank of Russia has been loading up on gold for years. “No one plays the gold market better,” observes Jim Rickards. Read More
If China forces Taiwan reunification, is the U.S. ready to go to war with China? Read More
The mainstream is finally recognizing that a new era of the mom and pop investor has arrived. Read More
“Financial technology (FinTech) — along with some good old-fashioned creativity — has opened an elite market to the masses,” says Zach Scheidt. Read More
“Even prior to COVID, moving to the suburbs seemed to make economic sense relative to higher city prices,” says former Wall Street banker Dr. Nomi Prins. Read More
As the number of American companies dwindles, George Gilder says: “Now [investors] have to find where the new value is really being generated.” Read More
If the mainstream insists on beating this 1999 theme to death, we’ll insist on continuing to push back against it… Read More