Adjusting the CAPE measure
Equity valuations are high. But other options look even worse
A favoured market ratio is not much use as a short-term indicator
EVERY investor would like to find the perfect measurement tool to tell them when to get into, and out of, the stockmarket. The cyclically adjusted price-earnings ratio (CAPE), as calculated by Robert Shiller of Yale University, averages profits over ten years and is used by many as an important valuation indicator. Currently it shows that American shares have hitherto been more highly valued only in 1929 and the late 1990s, periods that were followed by big crashes.
That seems ominous. But as a paper by Dylan Grice and Gregor Obrecht of Calibrium, a Zurich-based private-investment office, makes clear, it is far from conclusive. The CAPE is not much use as a short-term indicator; it has been well above its long-term average for several years now, as it was in the late 1990s.
The main argument for the CAPE is a long-term one. If you divide all past CAPE values into quintiles, the annual returns earned over the subsequent decade by investing in equities when the CAPE was in its most-expensive quintile were more than eight percentage points below the returns earned when the CAPE was in its cheapest quintile (see chart).
However, the case is less cut-and-dried than those numbers seem. First, Messrs Grice and Obrecht point out that this approach is subject to hindsight bias. The long-term valuation range may be clear now; past investors did not know the range when they were actually buying shares. If the data are adjusted to reflect the historical data available to investors at the time, then the outperformance gap falls by more than a percentage point.
A more serious problem relates to the quantity of the data. Mr Shiller has 146 years of numbers for earnings; that breaks down into only 14 completely independent ten-year periods. It is pretty difficult to create a robust statistical case from such a paucity of numbers.
The authors calculate that, based on current valuations, the best forecast for ten-year real annual returns from American equities is 2.6%, well below the historical average. But the range of returns can only be estimated with reasonable confidence to be between -3.4% and +8.7%; something that is likely to seem too broad to be of much use to professional investors.
These criticisms are fair. So why, nevertheless, does it still seem likely that a high CAPE portends lower future returns? Future equity returns can come from only two sources—growth in profits, or the market’s placing a higher valuation on those profits. For example, a high CAPE might be justified when profits are unusually low, by the hope that earnings will recover.
However, profits are high, relative to GDP, at the moment. Perhaps this is the result of a shift in power in favour of capital, at the expense of labour; perhaps it is the result of the greater concentration of some industries, which has given certain businesses monopoly-like margins. It is possible that this shift is permanent, and that profits will not fall back as they have in previous cycles. But it seems the height of optimism to believe that profits will grow faster than GDP, ie, that the overall share of capital will rise even further.
GDP growth is itself largely driven either by an increasing number of workers or by a rise in their productivity. Since the size of the workforce is rising more slowly (and is set to fall in some countries), and recent productivity growth has been disappointing, it is hard to be more optimistic on this score. So rapid growth in either GDP or profits looks difficult to achieve.
Turning to valuation, some believe that the CAPE has trended higher in recent decades because of better accounting standards and corporate governance. Earning high returns in an era of sluggish profits growth would require valuations to rise even further, reaching dotcom-era levels. Even a partial reversion to the mean (the long-term CAPE average is 16.8 compared with about 30 today) would be very bad news. Here, too, there is a natural limit on returns.
However, the authors point out that investors are not looking at equities in isolation; they are choosing between asset classes including cash (yielding virtually nothing) and government bonds. Government-bond yields are very low in historical terms; in other words, valuations are very high. A comparison of the expected returns from equities and bonds shows equities should perform much better, even given the high level of the CAPE.
That insight chimes with the views of many fund managers. They are nervous about equity valuations but they find government bonds deeply unattractive. So they are stuck with the stockmarket as the “least dirty shirt” on offer.
ADJUSTING THE CAPE MEASURE: EQUITY VALUATIONS ARE HIGH. BUT OTHER OPTIONS LOOK EVEN WORSE / THE ECONOMIST
WHY LEADERS ARE MADE, NOT BORN / KNOWLEDGE@WHARTON
Leadership
Why Leaders Are Made, Not Born
Inspired by her own struggles, Harvard Business School historian Nancy Koehn turned to figures from the past who overcame adversity to leave a lasting mark on civilization. She learned that true leaders are those who can forge through impossible odds with intelligence, compassion and resilience. Koehn has captured the stories of five inspiring historical figures in her book, Forged In Crisis: The Power of Courageous Leadership in Turbulent Times. They include Abraham Lincoln, who presided over the United States at a pivotal time in its young history; Frederick Douglass, an abolitionist who escaped slavery to become a writer and a statesman; Dietrich Bonhoeffer, a German clergyman who became a double agent against the Nazis; Ernest Shackleton, a polar explorer who survived a shipwreck on an ice floe; and Rachel Carson, a scientist whose work sparked the modern environmental movement. Koehn recently joined the Knowledge@Wharton show on SiriusXM channel 111 to discuss her book and why true leaders are made, not born.
An edited transcript of the conversation follows.
Knowledge@Wharton: Where did the idea for this book come from?
Nancy Koehn: Ironically, the germs of the book came from finding myself in a series of completely unexpected crises, both personal and professional. My father died. Three months later, my husband walked out after 15 years of marriage. I got cancer with no risk factors. A couple of years passed, I got cancer again, befuddling all the doctors. I was beset by high waves and huge, big, strong winds.
I realized I’m a historian by training, so I grabbed for books of Abraham Lincoln’s writings. I started at the back of his life, the end of the Civil War, and I reread backwards. With each of his letters and speeches and columns he wrote for newspapers, I kept thinking to myself, “Nancy, you think you have crises; Lincoln had much more to deal with, both in terms of being president and dealing with all kinds of personal losses he and his wife had suffered.”
That was the genesis. How do we navigate through crisis? How do leaders? Because this was so clear in Lincoln’s case. How do leaders not only navigate and lead their followers through crisis, but how do they become better, stronger, more embracing of a worthy purpose with more access to their muscles of moral courage? I thought that was such a compelling question.
That was really the beginnings of the book. Then I found these other four fascinating people with their jaw-dropping, gripping stories, and I was off to the races.
Knowledge@Wharton: Lincoln’s story is well-known to most Americans, as is perhaps the story of Frederick Douglass. But the other people you selected — Ernest Shackleton, Rachel Carson and Dietrich Bonhoeffer — are not exactly household names.
Koehn: That was part of the reason to include these stories I stumbled on. I didn’t know much about Douglass, even though I’m a historian. I was trained as a European historian. I think a lot of Americans don’t know the astounding challenges he overcame as a slave who escaped to the North to get his freedom, and then as a tireless activist to abolish slavery.
Ernest Shackleton was this explorer whose boat goes through the ice off the coast of Antarctica in 1915. He’s stranded with lifeboats, some canned goods and no means of communication, and somehow he’s got to get his 27-man team home alive.
Dietrich Bonhoeffer was a German Lutheran pastor who was active in the resistance to Hitler throughout the 1930s. In the 1940s, he becomes a double agent within with the Nazi government to try and kill Hitler and overthrow the Third Reich.
Rachel Carson is this very quiet, retiring scientist and writer who literally rocks the world and almost single-handedly launches the environmental movement when she publishes Silent Spring in 1962.
I just thought these stories are amazing. They’re like the best movies we’ve ever seen. I’ve got to tell them.
Knowledge@Wharton: Bonhoeffer’s story as a double agent and a pastor is something that a Hollywood movie scriptwriter would love.
Koehn: I could not agree more. You can’t make this stuff up. Here’s a man who’s a pacifist, who’s a deeply committed Christian, who has spent years of his young adult life lecturing on Jesus’s Sermon on the Mount as the noose of Nazi evil tightens. He has family members who are working inside the government as resistors, so he knows the inside story of what the Nazi government is doing, including the beginnings of what we call today the Holocaust. He is more and more frustrated by his inability to do something, through alternative churches that he and others have helped found, to resist the Nazi government.
Eventually, he has to come to terms with this terrible moral dilemma, which is, “We may have to kill Hitler in order to stop a much greater evil. Yet we cannot escape the moral consequences of what we’re doing.” He grapples with that and ultimately decides to cross that line and do that. The story is fascinating inside and out in terms of what he experienced.
Knowledge@Wharton: Wasn’t one of his problems also the fact that Adolf Hitler and Nazis really didn’t respect the church that much to begin with?
Koehn: Not at all. They had no patience for the true teachings of Christianity, either in the Old Testament or in the New Testament, and for Judaism. They had absolutely no respect for the nobler messages of a lot of great religions. They were doing everything they could to manage and control churches toward messages that supported their power, that supported Nazi teachings. Again, here’s someone who, everywhere he turns, is stymied by an authoritarian regime bent on war and bent on making war on its own citizens, anyone they considered enemies of the state. Some of the really interesting and gripping parts of the chapter are the Gestapo trying to trap Bonhoeffer.
Knowledge@Wharton: Unfortunately, Bonhoeffer was assassinated. At that time, that was the only option that Nazis considered. If you were thought to be against their establishment, they were willing to get rid of you and not even think twice.
Koehn: Right. And Bonhoeffer was from a very well-connected family in Berlin, a storied family with a great deal of power. They were not supporters of the Nazi regime, but they were historically very important people. It speaks to their determination to literally eliminate suspected enemies that they murdered Bonhoeffer. He is killed by the German state in April 1945. Two weeks later, the place where he is murdered is liberated by Allied Forces advancing into Germany. But for a couple of weeks, this brave, serious, very courageous man would have lived.
Knowledge@Wharton: Did I read correctly that he spent some time in the United States?
Koehn: He spent a critical year in New York, teaching and lecturing and learning at the Union Theological Seminary. He was back there again in 1939. His friends in Germany had spirited him off for a year away before he was either called up for conscription, because the Nazis were making war in 1939, or he was arrested by the Gestapo. He goes to New York and realizes, “I cannot be here in good conscience. I have to go back and join my brethren in the struggle to overthrow Nazi Germany.” He gets on one of the last ships to sail for Germany from America before war breaks out, a month before World War II begins.
Knowledge@Wharton: You said there are elements of Douglass’s life that a lot of people don’t really know or understand. Take us deeper.
Kohn: Let me give you one example that still stays with me. I use it in my own life to steel my own muscles of courage. Douglass was a strong, very intelligent, very resourceful teenager who couldn’t stand being a slave. His owner sends him off to a man named Edward Covey, who is known as a slave-breaker. These were people whose job it was to intimidate slaves into more docility and more subservience through both through physical violence and emotional abuse.
Owners often sent recalcitrant black men to these people.
Douglass is with the slave-breaker and he’s scared. Covey’s been beating him. He had run away to his owner to seek some kind of redress. His owner had sent him back to Covey. He’s worried that Covey’s going to attack him, and Covey comes at him one hot summer Monday morning. Douglass decides in that moment to step into the fear and confront Covey. They have this huge physical fight. It goes on for two hours. They’re wrestling. They don’t have weapons. Covey calls other slaves to come help him, and the black man and woman he calls refuse to get involved. They watch. And for two hours, these men wrestle. In the end, it’s a draw. Neither brings the other to the ground decisively. But a draw for Frederick Douglass is a victory. Covey relents and never, ever touches Frederick Douglass again.
In his first autobiography, Narrative of a Slave, Douglass says, “You have seen how a man is made a slave. Now you see how a slave was made a man.” He recovers his self-confidence. He recovers his sense of identity. He rips through, cuts through the years of varnish of depression and loss of agency that slavery, and particularly this man, has imposed on him, and he is made, he has access to his stronger self. That is such a powerful lesson for all of us, when we face some of our worst fears and take the first small step into that fear to discover our truer, braver, stronger self. It’s an amazing story, and there are many more like it in his life’s journey.
Knowledge@Wharton: He is considered to be one of the most important African-Americans of the 19th century.
Koehn: Oh, I think he was. I think he’s one of the most important leaders in American history.
The book makes the point that these two leaders of the five, Abraham Lincoln and Frederick Douglass, ended up working for a common purpose to end slavery. They came to know each other, and they came to respect each other.
I make this point, which is not always made when we talk about Lincoln as the great emancipator, that Lincoln could never have done what he did — issue the Emancipation Proclamation, then prosecute the rest of the war as a war to end slavery and save the union — without all the work on the ground that Frederick Douglass did as a spokesperson, an activist, a man who was changing political momentum of northern whites towards slavery, working with ordinary citizens, working with politicians, working with journalists. You can’t get to the end result of the Civil War and the restoration of America to its original promise without slavery if you don’t have both Frederick Douglass and Abraham Lincoln. This man made a huge, important, positive difference.
Knowledge@Wharton: Let’s talk about Ernest Shackleton, the polar explorer who is shipwrecked on the ice. We’ve heard shipwreck stories before, but leadership is at the core of being able to overcome the worst situations.
Koehn: That’s exactly right and spot on, and that’s why it’s at the top of the book. It’s there for two reasons. One, this is such a stark example of what you just said. Against all odds, when the stakes could not be higher, you can accomplish the nearly impossible, just as he did. You read the story and keep turning the page, and you go, “It can’t keep getting worse. This can’t be this hard. He can’t be facing this roadblock.” And he keeps coming through them. He somehow keeps that resilience, that commitment to mission, that dedication. You read this and think, “Shackleton can teach us a lot about what we are capable of if we really access our core muscles of strength and courage.”
The second reason I put him at the top of the book is because most of us don’t know this story, and because it’s so gripping. It’s such a page turner.
Knowledge@Wharton: Give us more of the story of Rachel Carson.
Koehn: She’s the last person in the book and the only woman. As much as I fell in love with every one of these people, I have a very special place in my heart for her. She was born to poor parents and went to college in the 1920s, when most women didn’t go to college and most women didn’t complete college. If they did, they certainly weren’t biologists, as she was. They didn’t seek a living in science, as she did.
She quickly becomes the only breadwinner for her birth family, financially supporting and caretaking for her father, her mother, her brother, her sister, her nieces. At the same time, she’s getting a master’s in zoology at Johns Hopkins University and beginning a career that will ultimately marry this incredible poetic grace and beauty she has with language to her deep commitment to scientific rigor and truth in articles and books that make the natural world completely accessible to people, without dumbing down the science.
She pursues and marries these two gifts and nurtures them and learns all these things about herself while going home at night and putting her nieces to bed, making dinner, cleaning up and putting laundry in, like lots of women today. In the early 1950s, she writes a book called The Sea Around Us, about the majesty and importance and environmental diaspora of the ocean, in a way that every lay-reader can understand. It’s a bestseller, which gives her the freedom to leave her job at U.S. Fish and Wildlife Service, where she’s been doing all kinds of things for many years, mostly editorial content tasks and responsibilities.
She searches around for her next project and bumps into the issue of pesticides that are being used in huge, largely untested ways by farmers, big chemical companies and for household use.
The more she learns as she puts on her detective cap, the more anxious she gets, the more concerned she gets about the possible effects of this. A bit like lots of things we’ve discovered about chemicals and environmental dangers in our own lifetime.
She starts to piece together a very complicated, very serious, very high-stakes story about the dangers of these. She’s doing her homework painstakingly; it takes her years to do this. She’s double-, triple-, quadruple-checking everything. She’s very careful to not release anything before its time. But as people get wind of it, there are threats against her, threats against her family, because Dow Chemical and the U.S. Department of Agriculture, and lots of places don’t want this story out there. Yet, she’s determined. She said, “I could never look myself in the face if I kept silent on this.” She has stumbled into her life’s work. At the same time, in the middle of her research and the beginnings of her writing, she is diagnosed with aggressive, metastasizing cancer.
The second half of the chapter is the story of her race against the clock and her commitment to do this work right and to get it out there in a way that will call for citizens to action on behalf of the Earth, not in an impractical and romantic way, but in a pragmatic and morally responsible way. It’s an astounding book that still sells many copies. And it’s a page-turner because she writes so well and she makes it so easy for us to understand, and she’s so careful.
BIG TECH´S BAD DAY / THE WALL STREET JOURNAL
Big Tech’s Bad Day
The selloff in tech stocks Wednesday was less surprising than the rally in downtrodden names
By Dan Gallagher
VALUE TRAPPED
Price as multiple of forward wearnings
The rubber band snapped back.
A wave of selling hit technology stocks on Wednesday, which isn’t that surprising after their big run-up. What made the move potentially significant is the rebound in certain downtrodden stocks, which rose more than the tech giants fell.
The Nasdaq-100 Technology Sector Index, which contains the industry’s biggest names, fell by more than 3% Wednesday. That follows a gain of more than 40% this year compared with a 28% rise for the broader Nasdaq Composite. Several tech subgroups, such as chips, internet and software, were hit particularly hard.
Market watchers seemed perplexed by the sudden shift, but it was a day for doubts to creep in about frothy assets everywhere. Bitcoin, the red hot cryptocurrency that started the year worth around $1,000, cracked the psychologically significant $10,000 mark overnight and then $11,000 in early trading Wednesday before sinking to near $8,500 within hours.
Yet the day’s trading action wasn’t a classic risk-off moment, in which recently loved stocks or assets plunge and dowdy ones such as bonds or dividend-paying stocks represent a relative safe harbor. Instead, it was a swift and brutal rotation. The shares of companies that have been almost a mirror image of technology shares saw perhaps their best day of the year, even when they had nothing to do with one another.
Many of the names in question share two things in common—they had been doing as poorly as tech stocks had been doing well, and they are perceived to be vulnerable to the rise of Amazon.com. For example, home-goods retailer Bed Bath & Beyond rallied by as much as 8.5% after being down by 46% year-to-date through Tuesday, sporting goods chain Foot Locker rallied as much as 7% after having been down by 42% and drugstore chain Rite Aid was up by over 20% at one point but had been down by 77% for the year.
Amazon, by contrast, was down nearly 3% by the afternoon even as the company was unveiling the latest additions to its fast-growing AWS cloud service, as well as boasting of record sales during Cyber Monday. None of those was cause for disappointment. But Amazon’s share price had just tipped a fresh record high two days prior after having jumped 60% for the year. Its valuation of more than 190 times forward earnings proved a ripe target for skeptics.
A similar dynamic affects other big tech names. Investors have poured into megacap techs like Amazon, Facebook, Apple Inc. and Google parent Alphabet Inc. on the assumption that their massive scale will continue to accrue growth at the expense of older or more traditional competitors. That isn’t inaccurate, though the swelling valuations may also be ignoring the growing risk that scale brings—particularly in the form of lawmakers openly wondering if the sector is growing too powerful.
The risk of scrutiny remains hard to quantify but doesn’t yet seem priced in. The Nasdaq Composite is now averaging 23 times forward earnings—its highest multiple in at least 10 years. That isn’t yet a reason to flee the sector, but investors looking to lock in some profits clearly didn’t need much of a push.
SENATE CONSIDERS MAKING A TERRIBLE TAX BILL EVEN WORSE / THE NEW YORK TIMES EDITORIAL
Senate Considers Making a Terrible Tax Bill Even Worse
By THE EDITORIAL BOARD
Credit Selman Design
This is how Senate Republicans compromise these days: They could make their enormously unpopular tax bill, which lavishes benefits on corporations and wealthy families, more generous to real estate tycoons and hedge fund billionaires to win over a couple of lawmakers who say the legislation doesn’t do enough for small businesses.
Even by the collapsing standards of Congress this is astounding. The change demanded by the two unhappy senators — Ron Johnson of Wisconsin and Steve Daines of Montana — would further lower the tax bills of people like President Trump who earn most of their income through limited liability companies, partnerships and other “pass through” businesses that do not withhold taxes on the money passed along to their owners. About 70 percent of all pass-through income goes to people in the top 1 percent of Americans who receive any income whatsoever.
Under the Senate bill, business owners could claim a 17.4 percent deduction on their pass-through income before paying taxes. Mr. Johnson and Mr. Daines want a higher deduction, meaning that moguls would pay taxes on less of their earnings. It is conceivable that this could benefit some mom-and-pop businesses, but only modestly so. This is really about stuffing the pockets of people like Mr. Trump, who controls his real estate, licensing and hospitality empire through more than 500 pass-through businesses, according to his lawyers.
Forgotten in this deal-making are the millions of poor and middle-class families whose tax and health insurance premiums would rise under the Senate bill. Republican lawmakers keep talking about how middle-class families would see tax cuts of about $1,000, or about $19 dollars a week, but those cuts would last only a few years before expiring after 2025. By 2027, families making under $75,000 a year would on average pay more in taxes, according to the Joint Committee on Taxation. All told, half of all taxpayers would pay more by that year and two-thirds of people in the middle 20 percent of the income distribution would pay more, according to the Urban-Brookings Tax Policy Center. People earning $40,000 to $50,000 would collectively lose $5.3 billion by paying more in taxes and receiving less in government spending in 2027 while millionaires would gain $5.8 billion, according to the Joint Committee and the Congressional Budget Office.
The bill would also repeal the Affordable Care Act’s mandate that most Americans have health insurance or pay a penalty. As a result, up to 13 million could lose coverage, and premiums would rise 10 percent a year for the next 10 years, the C.B.O. says. Senator Susan Collins of Maine has correctly noted that any temporary tax cuts for the middle class would be more than offset by the higher cost of health insurance — a good reason for her to vote against the bill.
Because it would cut corporate taxes so deeply — to 20 percent, from 35 percent — this bill would blow a huge hole in the federal budget. Over the next 10 years, it would add more than $1.4 trillion to the federal deficit. That hole would have to be filled somehow, someday. That would probably mean even higher taxes on the middle class in the future and cuts to Medicare, Medicaid and other important government programs. Several Republican senators — Bob Corker of Tennessee, Jeff Flake of Arizona, James Lankford of Oklahoma and Jerry Moran of Kansas — have expressed concerns about the deficit. If they are genuinely troubled, they will uphold their demand that Congress not pass the buck for tax cuts to future generations and will vote no on this bill.
The majority leader, Mitch McConnell, is trying to rush the bill to a vote by the end of the week. This self-imposed deadline is intended to give lawmakers and the public as little time as possible to analyze and understand the bill. The Senate has held no hearings on this legislation, which has been cooked up behind closed doors by Republicans without Democratic input.
Senator John McCain of Arizona gave a stirring speech in July about the need for the Senate to be “deliberative” and “bipartisan” during the debate about repealing the A.C.A. The mad dash to get a tax bill passed before Christmas has been a prime example of what Mr. McCain was railing against. If he stands for the principles he spoke about so eloquently, he will vote no on this bill, just as he did on the deeply flawed health care legislation.
Republican senators have a choice. They can follow the will of their donors and vote to take money from the middle class and give it to the wealthiest people in the world. Or they can vote no, to protect the public and the financial health of the government. There’s no compromise on that.
JAPAN´S RADICAL PURSUIT OF REVIVAL / GEOPOLITICAL FUTURES
Japan’s Radical Pursuit of Revival
Summary

Japanese Prime Minister Shinzo Abe (front row, center) and his Cabinet members walk down the stairs following their first Cabinet meeting at Abe’s official residence in Tokyo on Nov. 1, 2017. KAZUHIRO NOGI/AFP/Getty Images
THE "GOLDEN AGE OF GAS" IS OVER / BARRON´S MAGAZINE
Feature
The “Golden Age of Gas” Is Over
By Jack Hough
The golden age of natural gas is ending, and coal isn’t headed for a comeback. Both will quickly cede market share in U.S. power generation to wind and solar, which will be cheaper than fossil fuels by the end of the decade, especially as technology for electricity storage improves. That’s bad news for General Electric (ticker: GE), which has plenty of exposure to gas turbines. It’s good for Honeywell (HON), Hubbell (HUBB) and Wesco (WCC), which supply equipment for distributing renewable energy and modernizing the electricity grid.
The prediction comes from J.P. Morgan’s Stephen Tusa, who shares his bearish view of GE in this week’s Barron’s magazine. Tusa recently spent two days in meetings with 14 utilities at a conference hosted by Edison Electric Institute, a trade group. Among his takeaways: Mitsubishi Heavy Industries (7011.Japan) seems to be gaining traction relative to GE in turbines. But renewables are clearly where the growth is.
Consider the outlook for Minneapolis-based Xcel Energy (XEL). In 2005, it generated 56% of its power from coal, 23% from gas and 3% from renewables. By last year, coal had dropped to 37%, gas had grown to 25% and renewables were up to 20%. That period marked the “golden age of gas’” according to Tusa. Political rhetoric aside, coal’s decline has had less to do with government regulation than with new drilling technology that has unlocked vast supplies of gas from U.S. shale. A decade from now, however, gas could be relegated to serving as a fill-in power source, like coal. Xcel, for example, plans by 2027 to generate 20% of power from coal, just 17% from gas and 47% from renewables. Many other power companies make similar predictions.
One reason is that renewable power costs have fallen 70% since 2010 and could drop another 20% to 25% by 2020, becoming competitive with fossil fuels. Another is that power companies are quickly investing in electricity storage. AES (AES), based in Arlington, Va., has a joint venture with Siemens (SIE.Germany) to take storage capacity to 30 gigawatts in five years from just three today. In other words, batteries have already spread from powering smartphones to weed whackers to, increasingly, electric cars. Homes will be next, and that’s a long-term concern for gas investors.
THE BONFIRE BURNS ON / JOHN MAULDIN´S WEEKLY NEWSLETTER
The Bonfire Burns On



• Bitcoin (which may be worthless) soared nearly 700% from $952 to ~$8000.
• The Bank of Japan and the European Central Bank bought $2 trillion of assets.
• Global debt rose above $225 trillion to more than 324% of global GDP.
• US corporations sold a record $1.75 trillion in bonds.
• European high-yield bonds traded at a yield under 2%.
• Argentina, a serial defaulter, sold 100-year bonds in an oversubscribed offer.
• Illinois, hopelessly insolvent, sold 3.75% bonds to bondholders fighting for allocations.
• Global stock market capitalization skyrocketed by $15 trillion to over $85 trillion and a record 113% of global GDP.
• The market cap of the FANGs increased by more than $1 trillion.
• S&P 500 volatility dropped to 50-year lows and Treasury volatility to 30-year lows.
• Money-losing Tesla Inc. sold 5% bonds with no covenants as it burned $4+ billion in cash and produced very few cars.
Liquidity Lost



John Mauldin
Bienvenida
Les doy cordialmente la bienvenida a este Blog informativo con artículos, análisis y comentarios de publicaciones especializadas y especialmente seleccionadas, principalmente sobre temas económicos, financieros y políticos de actualidad, que esperamos y deseamos, sean de su máximo interés, utilidad y conveniencia.
Pensamos que solo comprendiendo cabalmente el presente, es que podemos proyectarnos acertadamente hacia el futuro.
Gonzalo Raffo de Lavalle
Las convicciones son mas peligrosos enemigos de la verdad que las mentiras.
Friedrich Nietzsche
Quien conoce su ignorancia revela la mas profunda sabiduría. Quien ignora su ignorancia vive en la mas profunda ilusión.
Lao Tse
“There are decades when nothing happens and there are weeks when decades happen.”
Vladimir Ilyich Lenin
You only find out who is swimming naked when the tide goes out.
Warren Buffett
No soy alguien que sabe, sino alguien que busca.
FOZ
Only Gold is money. Everything else is debt.
J.P. Morgan
Las grandes almas tienen voluntades; las débiles tan solo deseos.
Proverbio Chino
Quien no lo ha dado todo no ha dado nada.
Helenio Herrera
History repeats itself, first as tragedy, second as farce.
Karl Marx
If you know the other and know yourself, you need not fear the result of a hundred battles.
Sun Tzu
We are travelers on a cosmic journey, stardust, swirling and dancing in the eddies and whirlpools of infinity. Life is eternal. We have stopped for a moment to encounter each other, to meet, to love, to share.This is a precious moment. It is a little parenthesis in eternity.
Paulo Coelho

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