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December 14, 2018, Vol. 36, No. 24

For the next 10 years

In which we take a stab at the future course of interest rates. It’s a speculation of course, but we do know one thing for sure about futurity. Starting Friday, Grant’s will be making its offices at the Woolworth Building, where we started 35 years ago.

After the boom

It’s been a storied boom, 27 years young on Sept. 30, but we see in the Lucky Country the symptoms of post-boom deflation syndrome. Mortgaged houses and blue-sky equities.

‘Really, just IOUs’

If the free-and-easy portion of the credit cycle is behind us, better days – at least, for the intrepid, value-seeking readers of Grant’s – may be at hand.

Year-end review

An annotated list of our 2018 investment ideas, bonds and stocks, currencies and metals, longs and shorts, profitable and otherwise.

Governmental leaf blowers

As leaf blowers disperse leaves but do not destroy them, so financial regulators shift risk but do not remove it.

Tropical-storm warning

Anything can happen in Brazil, and new political complications do not narrow the range of possible outcomes.

Bring in the unicorns

Or has the IPO window already closed?

November 30, 2018, Vol. 36, No. 23

Neither stocks, nor bonds, nor things

News that, in the year through mid-November, 90% of the dollar-denominated asset classes monitored by Deutsche Bank delivered a loss, the worst such showing since the start of the 20th century, leaves Wall Street with certitudes to discard, expectations to reset, portfolios to rebuild.

Meeting of the minds

The New York Times and Donald Trump have at last found common ground.

Massive oil spill

Just why the price of West Texas intermediate has taken a 29% header is a mystery. But as clear as day are the bargains on offer among energy-sector equities.

Don't bank on it

If there were a corporate epitome of today’s frenzied finance, a certain leveraged, unicorn-sustaining, fashion-forward conglomerate would be the one.

Words to live by

“The public is well advised to be on high alert,” advises an Asian monetary authority. Excellent advice for speculators in the world’s most overvalued real estate market.

November 16, 2018, Vol. 36, No. 22

It ain’t necessarily so

It’s supposedly settled science that stocks deliver superior investment returns over any reasonable long-term holding period: superior to cash, of course, but also to bonds. Now comes a retired marketing professor to blow it to smithereens.

Children of QE

What sustains these profitless wonders? The still low cost of capital, of course. And a sense of entitlement.

Dept. of SNAFU

When acronyms adhere to the policies and procedures of other acronyms.

Returns to adversity

Last month’s reduction in the quarterly payout to one lonely penny was symbolic of a new seeming certainty, namely, that Thomas Alva Edison’s corporate brainchild is sick unto death. We write to sing the praises of one particular high-yielding security.

Art house picture

But the evening may be more notable for what didn’t happen.

Used and abused

The point of ultra-low interest rates is to yank consumer demand into the present from the future. For those industries whose demand has thus been accelerated, we expect falling sales and lower residual values. Knock-on effects for a known Grant’s pick-not-to-click are likewise in the cards.

Mex officio

“Ironic it is that markets are surprised.”

Central bank games

And the Swiss are the conservative ones.

November 2, 2018, Vol. 36, No. 21

What corrections correct

Markets are efficient, all right, but nobody’s perfect and errors cyclically crop up. Corrections set things right. We write to identify the errors that opened the October trap door.

Built by interest rates

The San Francisco app developers didn’t build this ride-sharing behemoth by themselves.

Wag the dog

At $34 billion in cash, (corporate nuptials are slated for late next year), it would be the largest-ever cash-only M&A transaction in high tech. It would likewise constitute a milestone in the credit cycle and in the long-term decline of a known Grant’s pick-not-to-click.

New ZIRP code

Weak as the market may be today, strength is on the agenda over the next five to 10 years, if indeed demographics are destiny.

Hold the bubbly

The meteoric rise and crash appears to be linked to a kind of digital credit creation.

October 19, 2018, Vol. 36, No. 20

What do you mean, reverting?

Concerning one cosmological proposition or another, Sir Martin Rees, Astronomer Royal, said he thought it was true. And he added that while he wouldn’t bet his life on it, he would bet his dog’s. So it is with Grant’s and the notion that interest rates have stopped falling and started rising.

For rising rates

No matter how much you invest in zero percent yields, zero is what you earn. For the many who need income, a survey of the opportunities on offer at today’s new and improved yields.

Trophies for all

“If you’re managing money and your job is to find strong companies and short weak ones,” observed Jason Trennert, leadoff speaker at the Fall 2018 Grant’s Conference, “it is awfully hard when everyone gets a trophy.”

Modern media leviathan

“The most levered nonfinancial company in the history of the world is also about as levered as Thailand or Portugal, if it were a country.”

Arise, prudent man

“There is no such thing as objective value. That is, all value is subjective to the person doing the valuing – and specifically insofar as he acts toward a desired end.”

Central bonkers

Seated with your editor onstage at the Plaza, the great wealth compounder Stanley Druckenmiller hurled thunderbolts at the conduct of monetary policy. “Where are the bankruptcies?”

Starbucks also mentioned

“Our approach usually is, if we don’t think management is good, we change the management.”

'Making stuff up'

“In the salad days of the 1980s and 1990s, a penny-per-share earnings beat could jiggle a share price. Now you need nickels or dimes, or more. And how does a company exceed expectations by such a wide margin?”

Sell the yuan

“There is no nuance involved in cutting credit growth in half, particularly in a system that is used to very rapid credit growth in previous years.”

Father of QE

The improbable, tragi-comic life of a certain Scottish “policymaker cum business projector, stock promoter and activist central banker holds a lesson for our own day.”

Relationship counseling

The standard 60/40 stock/bond portfolio-allocation protocol is more than a rule of thumb, our speaker informed the Grant’s audience, and “the relationship is in a period of transition.”

Times table

The money multiplier is inching up, but growth in the money supply is sputtering. What, exactly, is going on?

October 5, 2018, Vol. 36, No. 19

Tennis without a net

Inflation remains the order of the day, and the rate of inflation, by the standards of 800 years of monetary history, remains elevated.

Red river

Not at the 112-month mark of every economic expansion is the Treasury staring at a $1 trillion deficit.

Insurance runs

It’s nice to know that the forces of supply and demand, and the movement of interest rates, exert their (almost) intuitive effects on a field of business that sometimes compensates in opportunity for what it lacks in glitter.

Can’t take it with you

This Pittsburgh senior citizen is the exemplar of heavy borrowing against non-GAAP earnings for empire-building and share repurchases. A story for the many who buy long as much as for the few who sell short.

‘A great tragedy’

As Brazilians head to the polls, the question is not, “Which of the two is more bullish?” but rather, “Who’s the less bearish?”

The worse the better

Junk is the new gold.

September 21, 2018, Vol. 36, No. 18

Jay Powell, prisoner of history

No free agent is the chairman of the Fed, no matter what the prior chair contends. The consequences of past policies will tie his hands, and the monetary consumer will exercise his sovereignty.

She doesn’t work here

Carmen M. Reinhart, the Minos A. Zombanakis Professor of the International Financial System at the Harvard Kennedy School, is not, after all, a member of the staff of Grant’s.

Buy British

Brexit and the growth in digital commerce have thrown a spanner into the works of the UK retail industry. But a former force to be reckoned with is on the way back.

Tricks of the trade

What should a creditor expect in this time of debased accounting standards, eviscerated covenant protection and miniature interest rates? “Less” is the answer.

Golden primer

This is a sermon for the choir, and there is nothing impartial about it, or us. Suppressed interest rates and the radical methods of modern central banking are storing up trouble for the future. The readers of Grant’s need a hedge.

No more magic

Next time, the Fed will be debarred from this kind of abracadabra.

September 7, 2018, Vol. 36, No. 17

Progress skips a beat

You wonder how the same race of men who conquered smallpox and abolished the slave trade and spread democracy and invented the Internet could persist in the financial errors that periodically send the world into a tailspin. We have the answer.

Deal of the art

It’s good to be rich – everyone says so – but not necessarily good to cater to the rich. Watch out for splashy newspaper stories.

Pigs in blankets

On Wall Street, success begets failure. Take a good idea, emulate it and embellish it, drive it into the ground like a tomato stake. Voilà: It’s a bad idea. How a great idea of the last recession is poised to menace the next one.

America guzzles liquidity

The United States remains no less connected to the rest of the world because the president puts America first.

August 10, 2018, Vol. 36, No. 16

The trouble with economics

“I wasn’t impressed by the math, but I was stunned by the lack of data.”

Buck privates

A critical survey of the $3 trillion industry that will supposedly save the bacon of the country’s underfunded pension plans and income-starved endowments. We all live inside the private-equity force field.

His mother fired him

Michael J. Harkins, 1953-2018, ran an old-fashioned money-management business with the old-fashioned virtues of tax efficiency and low portfolio turnover. In a more just world, he would have drawn a Grant’s salary.

Here’s the plan, Elon

A little free advice on how to structure the post-MBO Tesla that would carry a debt load 10.9 times projected 2019 EBITDA. If Musk can pull this off, sell credit—his and everyone else’s.

‘Records’ tumble

You know it was bad when management, never diffident, could find only four opportunities to drop the word “record” into the press release. The really bearish case on a Grant’s pick not to click.

Better at a discount

On offer, a quintuplet of funds with better yields than the municipal bonds featured in the previous issue, with the proviso that a seemingly deep discount can always deepen.

Emergent trouble

In faraway places, the knee bone remains connected to the thigh bone.

July 27, 2018, Vol. 36, No. 15

‘Factors’ of the forest

Value, volatility, momentum, size and quality are foremost among the hundreds of “factors” that determine investment performance, say the quants. Following in the erroneous footsteps of the late Robert Lovett.

Search for survivors

The fat lady keeps her counsel, but it’s not too soon to speculate on the close of this prodigious cycle of lending and borrowing. We reaffirm our bullishness on a Grant’s income favorite and present an assortment of retail-oriented offspring.

Proof of concept

On July 19, the editor of Grant’s addressed the Sprott Natural Resource Symposium in Vancouver. The bullish case for armor against the consequences of adulterated interest rates.

Yields less low

The critique of the must-have income asset of the year continues. That demolition work complete, we suggest income-producing alternatives.

Mind the gap

Is it not, in fact, so very obvious that America is the only investment game in town.

July 13, 2018, Vol. 36, No. 14

Humphrey-Hawkins originalist

Where’s the good faith in premeditated inflation?

Back together again

Looking for a few good yields, this publication has settled on one. The close of a kind of journalistic trial separation.

Tomorrow’s debt hearings

The federal inquest into the credit smashup of, let us say, 2019 will not overlook leveraged loans. Testimony will uncover the facts that were as plain as day in 2018.

No more pretending

Some $2 trillion of assets and liabilities will appear as if from nowhere on the balance sheets of American companies come the first quarter of 2019. For asset-light businesses, “Shangri-La doesn’t go on forever.”

James Carville redux

“The trouble with elections, of course, is that somebody wins them.”

June 29, 2018, Vol. 36, No. 13

Credit where credit is due

Time Warner, Inc. was put on this earth not to produce Game of Thrones but to punctuate the cycles of investment enthusiasm. Having rang down the curtain on the dot-com bubble, the former Ma Bell marks the characteristic excess of the post-crisis era.

Crypto’s doppelganger

In the California gold rush, the pick-and-shovel vendors famously out-earned the starry-eyed Forty-Niners. So it may prove in the crypto field today. A good, hard look at the leading pick-and-shovel merchant of the bitcoin-mining mania.

Good dog

Inanimate objects, never having lived, can hardly die, though gold investments are making a stab at that morbid impossibility.

Arrow points down

Promising their investors more, the debt hounders pay more. And they keep paying more—and borrowing more—to present a respectable financial face to the world. Not a formula for success.

Big Bertha goes boom

Rescuing the debt-bloated Chinese economy may prove more difficult this time around.

June 15, 2018, Vol. 36, No. 12

The man in the argyle socks

Over the sweep of decades, the 10-year Treasury has delivered a 2.3% real yield. Apply that average to the 2.8% CPI for May. Anyone for a 5% government bond handle?

Fountain of youth

Optically, a certain corporate centenarian is a technology business. Substantively, it is more and more becoming a financial business. Welcome to the ultra-low interest rate business longevity center.

Still radioactive

A survey of alternative opportunities in the market that is (if possible) even more marginalized than gold.

Thunder Down Under

Liars’ loans, robo-signing, interest-only mortgages—10 years later, the Lucky Country relives the American experience. This time a different ending?

Postcard from Toronto

Another outpost of the British Commonwealth is showing what a bear market in residential real estate might look like.

Made in America

Not in 44 years have respondents to the earnings component of the National Federation of Independent Business survey been more bullish. A certain coterie of Silicon Valley insiders begs to differ.

June 1, 2018, Vol. 36, No. 11

Down and out and radioactive

A reaffirmation of the bullish case for a heavy element with an even heavier price. “Sometimes you have a bad decade.”

Rocket ship yields

Query: Has Mr. Market lost his mind, or has he found it?

All in the family

Soaring revenues paired with plunging cash flows is a hallmark of the San Francisco high-tech elite – and, curiously enough, of a certain East Coast construction business.

Corrected valuation

At the current share price, Alliance Resource Partners, L.P., after it merges with its general partner Alliance Holdings G.P., L.P., is valued at around 4 times – not 6.6 times – trailing EBITDA.

Cheaper, not cheap

We write to update the thesis, not (principally) to remind our noble subscribers why they pay good money to read Grant’s.

Where yen go to die

Japanese savers will soon have a “high-yield” domestic option.

May 18, 2018, Vol. 36, No. 10

A prospectus for the United States of America

In its power to tax, borrow, spend, expropriate and wage war, the government of the United States must be the world’s greatest temporal power. Still, you wonder what this almighty institution would have to say for itself if it were brought into the sunshine of the Securities Act of 1933. The Grant’s model Treasury bond prospectus—the sixth in a series that dates from 1985—realizes this enticing impossibility.

Not the color green

The reasons to avoid coal are too obvious to belabor. The reasons to invest in it (for any with a tolerance for pariahs) are equally obvious but maybe less familiar.

Bancos do basis points

Short-dated, speculative-grade and U.S. dollar-denominated. A trio of income opportunities in the Great Green Country.

May 4, 2018, Vol. 36, No. 09

I Can’t Believe They’re Covenants

The central banks are against you. The managements are against you. And the lawyers are against you. Good luck to you, corporate-creditor victims!

Mexican yield exports

“Income on which to build a safe and carefree retirement”—not, admittedly, the first thing you associate with the country due south of the rising Trump wall.

Concerning the 3-1/4s of ‘26

A threefold status update: on the bonds, on their issuer and on the risks attached to the burgeoning triple-B portion of the investment-grade corporate bond market. Opportunity beckons after the fall.

After-tax edge

Equities are volatile, junk bonds are rich and cash is, still – even with the up-creep in the London interbank offered rate – blah. Where to turn for income?

Don’t blame Keynes

The federal finances are none too solid in prosperity. What cascade of red ink might the next recession deliver?

April 20, 2018, Vol. 36, No. 08

This magic moment

Whether the transformation in monetary worldview from Martin’s generation to our own is a good thing or a bad thing is for the bondholders to judge.

For the newbies

“The bull market in everything” – stocks, bonds, Picassos, bitcoin, real estate – is over. Actually, not every bull market is kaput, contended David Rosenberg, leadoff speaker at the April 10 Grant’s Conference.

‘A special thing’

“A discount that you can actually do something about, that is objective and that, while you sit there is not dead money.”

Here’s the beef

“Big” and “asset-light” are the reigning ideas in the restaurant franchise business. “I’m here to tell you this Shangri-La doesn’t go on forever.”

No munis, please

Howard Marks reflected on the asset class which he wouldn’t go near—hasn’t touched, in fact, in 40 years.

Overreaction syndrome

When a company’s stock falls out of bed while the same company’s debt remains securely under the covers, someone is going to make money.

Hedging Mr. President

“Two assets: Both go up, and yet they are strongly negatively correlated day-to-day. Nirvana.”

So out, it’s in

This biggest risk in holding gold bullion? “Career risk,” came the answer. They’ll fire you for taking leave of your senses.

‘Somalia on purpose’

The blockchain is, “a crappy technology and a useless technology,” our speaker matter-of-factly informed the Grant’s audience.

Only the best

“The biggest mistake is actually the trades you didn’t do and the reasons for why you didn’t do those trades,” said the hedge-fund titan John Burbank.

Tax Bungle

In which Grant’s erred: U.S. investors may not, in fact, receive capital-gains tax treatment on bonds purchased at a discount to face value and held to maturity.

Who Say’s Law?

The Fed’s program of balance-sheet reduction brings to mind the punchline of the old trader’s joke: “Sell to whom?”

April 6, 2018, Vol. 36, No. 07

Make way for Darwin

The index is not a company you want to buy.

Box Checker, Inc.

A grand tour of the housing market and mortgage finance now that the bubble-era round trip in home prices is over and done. Also, the thriving mortgage vendor that’s poised to thrive less.

Odd fact out

South of the border, yields don’t comport with the news.

Doormats of Wall Street

The loneliest corporate stakeholders need a raise.

Pattern recognition

Managerial insult compounds interest-rate injury.

Let the ECB pay you

Profiting from the negative.

March 23, 2018, Vol. 36, No. 06

The nine lives of the modern leveraged company

The zombies didn’t just climb up out of the graves by themselves.

Slightly below par

No tax experts are we, but 20% is better than 37%.

Down Mexico way

Spread compression has lately been the story in fixed-income investing, in EM debt and junk bonds alike. Now comes decompression.

Gnomes roll the dice

The Swiss prepare to vote up or down on a proposition to abolish double-entry bookkeeping in the accounts of the central bank. Turning chocolate into kale?

Hedge your bets

The strategy of the “three arrows” is at risk. What next for one of the strongest monetary brands not on the blockchain?

March 9, 2018, Vol. 36, No. 05

Xi Jinping’s poisoned chalice

We hoist an amber light not only for the countries and markets in obvious and financially close proximity to the “biggest and strangest thing in the world,” but also to just about anyone, anywhere who has money at risk.

Silicon Valley’s zombies

Not all zombie firms are created equal.

Fair-haired orphans

The United States is poised to overtake Saudi Arabia in energy production this year, though you wouldn’t know it by the slump in the prices of a trio of known Grant’s picks to click.

Where you sit

The one-eyed bond is king in Mario Draghi’s land of the blind.

While you wait

Something beyond the grudging yield on Warren Buffet’s Treasury bills to compensate the patient investor?

Down in Toronto

Sooner or later, the inevitable comes to pass.

February 23, 2018, Vol. 36, No. 04

This is the way the world ended

Radical monetary innovations got a fair trial in France exactly 300 years ago. In the resulting spectacular boom and bust, a cautionary story for our time.

Clunkers, Inc.

You might not suppose there’s much to quarrel with in the results of this titan of second-hand transportation and known Grant’s pick not to click. Still and all, maturities are lengthening, rates are rising and prices are softening.

Pass the ketchup

Left with little more to cut, what next for the brilliant Brazilians?

Bears watching

Ordinarily, the Ten Commandments do not impinge on the legal interpretation of bond indentures, especially in very large transactions.

Let’s assume

The bull stock market is a fact, the coming bear bond market a hypothesis. Imagination is no substitute for a margin of safety.

Gross and grosser

Imagine if IBM accounted for its pension liabilities the same way as the Treasury does. No, don’t imagine. It’s too frightening.

February 9, 2018, Vol. 36, No. 03

The bond crop never fails

The government will borrow more in relation to GDP next fiscal year than it has borrowed in any fiscal year since 1945. A reason or two why Dick Cheney may yet stand corrected.

Cognitive dissonance alert

With valuations at record highs and high-yield credit spreads at decade lows, it’s the heyday of private equity. One question: Where are the limited partners’ yachts?

Bond light

Mispriced, profuse and – from the point of view of refinancing risk – vulnerable is the debt of a certain Goliath. Wherein brew masters meet leverage artists.

Bay Street blues

Visiting Yanks have shaken their heads before, but don’t Canadian house prices look a little high? Yours to ponder, Bank of Canada.

What happened

The whys and wherefores of the stock-market volatility storm in fewer than 700 words.

January 26, 2018, Vol. 36, No. 02

A cloud no bigger than a man's hand

At risk is the government's credit and the prices of the government's securities. What's the opposite of Fort Knox?

Inflate your income

The cyclical stars are seemingly aligned, except for the dim star of inflation. Now comes a survey of the opportunities in – bonds.

'More study needed'

Not even the irreplaceable heretic of the Bank for International Settlements can help but dither. It's the time for action.

Washing(ton) machines

Grant's lifts its fatwa on a known pick-not-to-click for reasons related not to where the company makes its headquarters but to the capital of rent-seeking.

Like no business

No mystery about the common equity of this particular enterprise. It goes up. The mystery concerns the bonds. Why does anyone buy them?

Breaking the mold

Whatever could go wrong as we approach the ninth anniversary of the stock-market bottom?

Still more overvalued

The Big Mac (adjusted index)

January 12, 2018, Vol. 36, No. 01

Crypto-monetary easing drive

Could the boom in alt-currencies disrupt the policy-making monopoly of the fiat central banks? What the consensual suspension of the law against private-sector counterfeiting has wrought.

His highest praise

Contagious, our bullishness is so far not. We write to freshen an equity story and to highlight a pair of fetching bonds.

Motoring City

In which we close out a deep value investment. Here’s to you, “the most exciting city in America.”

Checking out

Old-time travel agents are gone. Middlemen are going. Now taste and technology are closing in a supposed untouchable franchise.

Out of gas

Never mind sex, data breaches or intellectual-property jiggery-pokery. The trouble with Uber is that it has lost money, it is losing money and it will lose money.

Divine currency call

Yes, a certain large, picturesque troubled country deserves a break, but not with your money. Sell the stocks, sell the bonds, sell the currency.

Amber lights among the green

Not all signs are on-message, and more than a few are concerning.

December 15, 2017, Vol. 35, No. 24

Case of the 0% junk-bond handle

Devoted to the observation of interest rates, this publication thought it had seen it all. It had not.

Income deficit

Animal spirits, we have. Employment, ditto. But interest income? Where the conservative saver turn for yield in a time of rising money-market rates.

Unhacked, unforked, unloved

If your best forecasts are the ones you are almost too ashamed to utter, this one is a guaranteed winner.

Epitome of the cycle

Every financial epoch has its avatar. For this epoch, we nominate a certain mammoth, leveraged, complex and speculative business a half world away. “The smartest guy in the room.”

Anyone for last year’s forecast?

What happens next year when President Xi has no one to impress?

December 1, 2017, Vol. 35, No. 23

Odds-on favorites finish last

Variations on the themes of "Goldilocks" and "rational exuberance" are the favored story lines for 2018. How might these cheerful narratives be confounded? Let us count the ways, starting with interest rates. What won't happen is what most people expect to happen (if that's clear).

Trigger points

The Third World branch of the everything bull market of 2017 hangs on the words of the volatile Recep Tayyip Erdogan.

Bees to honey

The siren song of sensibly free money in the euro-denominated bond market tickles corporate eardrums all the way across the Atlantic.

Balance of power

Mr. Market smiles on leveraged food makers, scowls at their customers, the grocers. Could the opinionated gentleman have it backwards?

November 17, 2017, Vol. 35, No. 22

Interest rates for the long run

The oldest central bank is out with the longest continuous series of sovereign bond yields. Eight centuries of data prove that the times in which we live are more than interesting. Financially speaking, they are unique.

Changes in key interest rates

Changes in key interest rates since the early July 2016 lows.

About that dividend

The halving of General Electric Co.'s once-sacred dividend surprised few longtime Grant's readers. Paying out more than you operationally take in is more than a GE problem – more, in fact, than an American problem.

Back at you, Vietnam

America, like Vietnam, is "doing very, very well."

About this dividend

Financial leverage, bespoke accounting, a problematic dividend and more: the REIT in the Grant's crosshairs is as contemporary as taking a knee.

Founder's regret

Bitcoin, down by 29% and then up by 23% in a flash, is not so much a store of value as a source of excitement. "I find it so easy to lose money in situations I understand so much better."

Upholster your portfolio

All about a growing class of bonds that features high coupons and early call dates. How a "yield-to-worst" of minus 45 basis points turned into an annualized return of 8.8%.

The mirror image of 15%

A cyclical bookend to the once-shunned, long-dated Treasurys of 1981. Regardless of what central bankers say, interest rates are what they do, and rates are going up.

November 3, 2017, Vol. 35, No. 21

The Fed's selling. You're buying.

Who will step in to absorb the supply that looms with the Fed's pending pivot from helping the market to hindering it? Look no further than "Agg"-tracking bond mutual funds. Falling rates, lengthening durations, deepening complacency: "These are very strange days, indeed."

Not the FANGs

In this flyaway stock market, some sectors, still, are positively reviled. Unusual is a group in which the average price is down 90% from the peak and in which the average discount to replacement value is pushing 60%. Of babies and bath water.

Dog of the Dow

A 20-year compendium of a journalistic crusade against the most storied name in corporate America.

Attention, creditors!

Beware of the Toys 'R' Us effect.

Pay Me, Plc.

Debt begets debt, which begets defaults. Defaults beget debt collectors, which begets the debt (and the equity) of the debt collectors themselves. Behold the story of humanity in markets.

Making America grow again

No law says that fat years must follow the lean ones. Consider, still, the myriad green shoots.

How GE came to grief: a 20-year Grant's compendium

Grant's and GE go back a long way together.

October 20, 2017, Vol. 35, No. 20

Attack of the killer BBBs

Tomorrow’s fallen angels come thick and fast in the corporate bond market. Not quite junk, barely investment grade, is the flavor of the cycle. Creditors may be senior claimants in the capital structure, but they don’t stand at the head of the queue for corporate emoluments. Marking the wise words of Graham and Dodd.

Bridgewater correction

In which we set the record straight.

Sun shines

With respect to the shares of business-development companies—dividend-paying, non-bank providers of credit to leveraged corporations—Mr. Market seems to smell a rat. A shining light on a happy outlier in this time of disenchantment.

Sickness in health

"It's very interesting," James Chanos told the Grant's assembled... (GRANT'S CONFERENCE HIGHLIGHT)

Risk slumbers

"Volatility does not equal risk," Frank Brosens reminded the Grant's audience... (GRANT'S CONFERENCE HIGHLIGHT)

Mr. Free Speech

"The Fight Is Real and the Cause Is Mighty" was what Marc Cohodes called his talk... (GRANT'S CONFERENCE HIGHLIGHT)

Call it 'unmanaged'

Let's be done with the false dichotomy between "short-termist vs. long-termist," Paul Singer urged the Grant's audience. (GRANT'S CONFERENCE HIGHLIGHT)

Euphoria soon

Your editor, in conversation with Alan Greenspan. (GRANT'S CONFERENCE HIGHLIGHT)

'Japan is different'

"It took us 224 years to get to $10 trillion in debt," said Keith Anderson, referring to the gross public debt of the United States... (GRANT'S CONFERENCE HIGHLIGHT)

'I'll tell you when'

First, Ed Hyman ticked off the immediate risks... (GRANT'S CONFERENCE HIGHLIGHT)

Fees flop

The long-serving chairman of Protégé Partners, LLC, Jeffrey Tarrant has spent his career identifying tomorrow's investment stars... (GRANT'S CONFERENCE HIGHLIGHT)

'Capacity to suffer'

Paula Volent, introduced the topic of debt into the panel discussion on endowment investing at the Grant's Fall Conference... (GRANT'S CONFERENCE HIGHLIGHT)

'Very, very different'

Jeremy Grantham debates Jim Grant. (GRANT'S CONFERENCE HIGHLIGHT)

FOMO alert!

The rapid rise in all things crypto – bitcoin is up by 31% in the first 17 days of October – is spreading that most powerful human emotion.

October 6, 2017, Vol. 35, No. 19

The face on the Wall Street milk carton

At major market inflection points, someone is revealed to have zigged when he should have zagged. Who might that someone be when today's credit-enhanced, central-bank infused, interest-rate-inflated updraft in asset prices runs its course?

See here, Mr. Buffett

Other bears can speak for themselves. As for us, we are not short the Declaration of Independence, the collected works of Mark Twain or blueberry pie. Our stock in trade is financial eyesores.

Preferred income

Now that the Fed's massive iceberg of a balance sheet is starting to melt, the search for yield becomes even more interesting. A kind word for a particular kind of options-laden preferred.

Past, present and future

Though world business activity is on the hop, the world's central banks create new credit as if they spied a recession. An American inflection point?

September 22, 2017, Vol. 35, No. 18

Meet the Carrefour S.A. senior unsecured 1-3/4s of 2022

The central banks of the West, rattling their interest rates, are hinting at a big change. Whither bond prices?

Bonds 'R' Us

Financial repression doesn't make us smarter.

Barrel roll

Dubious governance, environmental depredation, a stretched valuation and a vulnerable dividend – it's the very stock not to own, and the very dividend yield on which not to depend, on the eve of a recession.

'It's chaos'

Now that the running of the bears is over or ending, Mr. F. can resume the laborious business of running a leveraged retailer in the digital age.

Down the drain

Wild day-to-day gyrations aren't supposed to happen in respectable markets. Bitcoin – aspirationally a respectable world currency – is an exception.

September 8, 2017, Vol. 35, No. 17

Yanking the tablecloth slowly

The ocular evidence is still to come, but official predictions are in. Though quantitative easing was bullish, quantitative tightening will not be bearish.

Crypto 36,000

Craft currencies, fiat money, craft beer and gold bullion – argument holds no power against the locomotive force of a speculative mania.

For the contrary

The utility component of the S&P 500 is up, the energy component of the S&P is down. For your consideration: cheap and marginalized plays on a reversal of fortune.

Alpine money machine

Since July 19, shares of the Swiss National Bank have jumped by 57% in U.S. dollar terms. A clue as to what put them in orbit.

August 11, 2017, Vol. 35, No. 16

Concerning Mark Zuckerberg

Like Alexander the Great, the Facebook CEO has only one world to conquer. Then, again, unlike Alexander's world, Zuckerberg's market is both expandable and contractible. A meaningful community of the rich and liquid?

While algos slept

When low-vol turned high-vol for a certain sleepy dividend payer. Avalanche warning for the S&P 500.

'Dry powder'

What the staff of CalSTRS can learn from a free web download.

In your mind

Money of the mind is the fastest-growing monetary aggregate on Earth.

Hamptons confidential

Does Gary Cohn want to hibernate for two months at a time?

'A masterly manipulation'

"And still the applications are pouring in!"

Credit Creation • Cause & Effect

July 28, 2017, Vol. 35, No. 15

Seven singularities

An unzestful, low-volume and low-volatility affair, the post-crisis bull market seems to belong on a psychiatrist’s couch. We herein catalogue its singularities with a view to answering the always pertinent question: What to do with money besides enjoy it?


Grant’s keeps wondering, What does money have to do with it?

À la Modi

These pages remain bullish on the nation whose prime minister is – as they say in Mumbai – ever “Modi-fying” and modernizing.

Everyone loves Europe

When the investors pile into one side of a trade, markets tend to list to the other side.

Sprott Asset Management USA, Inc. - July 2017

In his July “Strategy Report,” Trey Reik, senior portfolio manager at Sprott Asset Management USA, considers questions from the gold guy’s point of view. His essay—a first-class exploration of the monetary aspects of the crypto-boom...

July 14, 2017, Vol. 35, No. 14

Fifty years in Wall Street

Markets are about the future, and the future is about change. Let’s see what the light of a half-century’s worth of birthday candles can shed on the past, the present and – if possible – the future.

Auction ear

Just how far is Detroit willing to go to support used-vehicle prices?

Viscous black yields

The honor of calling the bottom in oil we leave to others. Herewith a trio of picks which can thrive with or without a new bull market in crude.

A box unticked

It almost goes without saying that risk pops out of the place where you aren’t looking. What is the eastern azure hiding now?

Prelude to tumult

Low volatility is self-perpetuating---until one day when it isn’t.

June 30, 2017, Vol. 35, No. 13

Fearlessly facing the new abnormal

There's no going back to 2007, the chair might as well have announced.

Rates über alles

It's an interest-rate-centric world, even without real interest rates.

'A dangerous situation'

In the absence of price discovery, "we really don't know the price of credit," says the CEO of Deutsche Bank. Suggestions, Mario Draghi?

Reaching for customers

A certain subprime-lender-cum-retailer is front and center in this exploration of the mores of late-cycle American credit. How many checks can a mother write?

Food fight joined

Yes, we do know many other tickers besides this somewhat familiar one, though few whose share price is so evidently out of sync with the fast-breaking news.

Happy birthday, un-boom

Friday marks the eighth anniversary of the end of the Great Recession – and the start of a non-great expansion. Then, again, it's boomed in its way.

New rate on the block

Now all that remains is the work of transitioning $150 trillion or so financial contracts.

June 16, 2017, Vol. 35, No. 12

The apostasy of Jeremy Grantham

The oracle of mean reversion, anatomist of bubbles and prophet of climate change has changed his mind. Should we change ours, too?

'Further research' required

The whys and wherefores of radical monetary intervention as explained by a central banker to an audience consisting (evidently) of school children. Something lost in translation, we hope?

At donuts drawn

"False allegations," "misinformation" and a rocket fired by a Toronto law firm. It seems that someone spoke without permission to a certain financial analyst.

Two hips joined

With news of another positive print in GDP growth, the long-running Australian economic expansion sets a new world record for the greatest streak of unchecked prosperity in modern times. How a lucky country shackled itself to an unlucky one.

Heavy lifting in store

In the past three months, foreign central banks have resumed their purchase of Treasurys. Another impediment to a higher Fed funds rate and a steeper Treasury yield curve.

June 2, 2017, Vol. 35, No. 11

Rumblings from the great white north

What are the chances of Warren Buffett being wrong?

Ever higher

Proverbial--like "Bank of United States" or "Hindenburg"--will become the name of a certain encumbered Far Eastern property developer.

The Fed taketh away

President Trump's "double whammy."

Crisis without value

A shipwreck ought to be valued like a shipwreck.

To forgive is divine

How to square a strong jobs market and improving credit scores with a rise in bad debt?

The new J Capital report

A report from J Capital Research...

May 19, 2017, Vol. 35, No. 10

'I own tulips at 40 cents a bulb'

Bitcoin is on fire, other digital currencies are likewise making new highs and ICOs--initial coin offerings--are supplanting, in some small degree, the dearth of equity IPOs. Still, the question lingers: What's the wampum good for?

Bank sells dresses

Shrinkage is the corporate theme. In store count, share count and revenue count, less is the new more. In the absence of growth, apply more debt.

'No More Champagne'

There are innumerable books on how to manage your money. Here might be the best book on how to mismanage it.

Chinese Wallpaper

In China, too, April is the cruelest month.

Loaded for bear

Take every known principle of long-term investment success, negate those precepts and multiply the negative times leverage. Welcome to the world of the ultra-funds.

The story changed

A land of opportunity--for value investors, that is--loses its allure.

Monetary confidence meter

A short survey of the world's listed central banks. How many can you name?

May 5, 2017, Vol. 35, No. 09

Portfolio insurance of the 21st Century

As the economist famously said, stability breeds instability. Today's peace and quiet is inducing a kind of mass unconscious time migration back to 1987. We write to expose the newer strategies that mimic the portfolio insurance of yesteryear.

Spoiler alert

A massively oversubscribed, covenant-spare, yield-sparse, single-B-rated eurobond deal raises the question: Are you pleased with yourself now, Mario Draghi?

In the Bezos bullseye

The price revolution rages in the office and on the factory floor as well as in the home. Competition hots up, profit margins flatten while Mr. Market---Mr. Market, are you paying attention?

Blue-sky catastrophe

Serenity in the weather eerily mirrors serenity in the VIX. Your invitation to lever up in certain insurance-related securities? Beware of the man who insists, "Yes!"

Not for widows and orphans

There's one bank, at least, that can make money just by printing the stuff.

April 21, 2017, Vol. 35, No. 08

Sacred cows in the road

In trying to perfect the driverless car, Silicon Valley has invented an exciting new children’s game: “Throw the ball and watch the car stop.” No easy workaround for the problem of “deferential paralysis.” Hey, Uber: You’ll be paying the drivers for years to come.

Anyway, it’s bullish

America’s largest bank needs a copy editor.

Bots buy beans

Once upon a time, investors used machines. Nowadays, machines use investors. Herewith a speculation on the consequences of auto-investing, along with a revisit to a known Grant’s pick-not-to-click.

Happy Tax Day

Again, how many rate rises are on tap this year?

Long Shots, Inc.

Framed by a presidential musing, some deep out-of-the-money options on a change in the monetary climate. “I do like a low interest-rate policy, I must be honest with you.”

What could go wrong?

The Fed will start shrinking its balance sheet in 2017. Risk of collateral damage to toppy bond and stock markets? Put it out of your mind, counsel the mandarins.

April 7, 2017, Vol. 35, No. 07

Not much to look at

Symbol is substance at the Federal Reserve. Poring through its new financials, an analyst may wonder, "Is it broke?"

Cleanest dirty shirts

Small, illiquid and hairy are the opportunities that remain in junk bonds after an eight-year visitation of the yield-munching locusts.

Tightness on tap

What SpaceKnow can't see from the high heavens is the continued disruption of a certain short-term funding market. Why the volcano smokes.

Call a tow

Too many used cars spell slower sales of new cars. February brings traffic jams in dealer lots to rival the congestion last seen in 2009.

Financier Chris Christie

An opportunity to reflect on what makes the municipal market so confoundedly phlegmatic.

Derivatives become the underlying

The constant bid from passive investors delivered a remarkable calm in the just-ended quarter. Stormy weather to follow.

March 24, 2017, Vol. 35, No. 06

Price war for Warren Buffett

“There are just way too many assets chasing the sales,” says a man as wise—in this particular instance—as the Sage of Omaha himself. Ultra-low interest rates, high price/earnings ratios and credit markets fitted out with red carpets share the blame. No profits? No problem.

Excess lingers long

“The hedge fund isn’t an asset class. It is a compensation scheme.” It became an over-compensation scheme. Tracing the rise and ongoing pratfall of the modern-day hedge fund.

‘Yes, but’ they said

Bullishness dominated, though they did not quite monopolize, the day’s proceedings. A vision of 20 years on the investment equivalent of an exercise bicycle.

$1 billion a day

“Indexing doesn’t need any help. It is growing at an astonishing rate and, for someone who never intended to build a colossus, a kind of frightening rate.”

Rejoice, mediocrities!

Where in life can a sub-par performer achieve average results with a light tap on a computer key? Investment indexation, attested a preeminent active investor, is “incredible.”

The Age of Trump

The text of your editor’s early-morning remarks: “The Age of Trump will go down as the Age of the Consequences of Radical Monetary Policy.”

Whence D. Trump?

A long and a short for a Trump Market where “what has worked so well in investing will fade or stop working.”

Four letters unspoken

The word “gold” went unmentioned at the Plaza, except in the context of an unassailable rule for living: “Never stand in line to buy an asset.”

Last to first

Yes, buying low and selling high is hard to do, but there are ways. “Trailing three-year performance is very predictive.”

The great escape

To close the era of extraordinary monetary policy, the Federal Reserve must open its mind. “There is no wealth effect, only a wealth illusion.”

Narendra Reagan

A pair of stocks in a country poised on the brink of capitalist emergence.

Mentioned at the Plaza

Other investment ideas presented by our speakers at the Spring 2017 Grant’s conference.

Where’s that boom?

While the S&P 500 is near an all-time high, the much-vaunted wealth effect does not seem to be working its magic.

Undoing Extraordinary Monetary Policy

Remarks of Peter R. Fisher Tuck School of Business at Dartmouth *** Grant’s Interest Rate Observer Spring 2017 Conference New York, New York *** March 15, 2017

March 10, 2017, Vol. 35, No. 05

Scraping up inflation

American consumer prices registered a year-over-year rise of 3.6% in February, according to the Web-scraping inflation detectives of the Billion Prices Project. More inflation is what the central bankers say they want. Cue the Disney cartoon classic, "The Sorcerer's Apprentice."

Risk-parity screenshot

Never--at least not since the time of the Napoleonic Wars--has the bond market served up anything like the gains that risk-parity portfolios have earned these recent decades. Is it so farfetched that something new and different awaits us all?

You only get par

Take a plunging VIX and a resurgent S&P. Add tight credit spreads, rock-bottom sovereign yields and a world-wide income famine. Voila: today's not so high-yield bond market. The worst of all fixed-income worlds.

Laddered oil play

Everyone is bullish on oil, though not so bullish as to lift the valuations of drillers whose survival depends on a $60 crude price. Nigeria on the cheap, the Arctic for a pittance. Widows and orphans, please avert your eyes.

Many happy returns

Whom to thank for the magnificent returns in the post-2009 stock market? We furnish a mailing address.

On the other hand, FOMC

A higher funds rate is all but in the books. What the central bankers may regret.

February 24, 2017, Vol. 35, No. 04

All about the headquarters

A pair of big, profitless, stockholder-defying American companies are building shiny new glass corporate offices with a common theme of sunshine. What the "fake moon landing guys" are demanding from Steve Mnuchin.

Disabled vehicles

For long-range worry, imagine a Detroit that produces not 17 million new vehicles a year but three or four million (who needs a car in the Age of Autonomy?). For a timelier set of concerns, observe today's falling used-car prices, decaying credit metrics and at-risk auto lease market.

White flag at Fortress

Last week, the first private alternative asset manager to go public became the first public alternative asset manager to declare its intention to go private--at less than one-half the 2007 IPO price. Could the business model use a tweak?

How long's 'secular'?

Only 43% of money managers believe in a future of persistently low growth and chronically droopy prices, just half as many as the year before. What ever happened to long-term investing?

So long for now

A favorite Grant's income play has progressed from reasonably cheap to fully valued. While there are better examples of excess in the beautiful Trump stock market, "fully valued" is the amber light of investment.

Making better facts

The Trump administration is casting a creative eye on more than the trade data. Not so easily amendable is the flattening trend in bank lending and Federal Reserve credit.

February 10, 2017, Vol. 35, No. 03

Bankers' White House koffee klatch

In the 91st month of a business expansion comes a push to liberate the banks to lend and their customers to borrow. A speculation on the consequences of the possible liberation of $2 trillion. "Larry did a great job for me. He managed a lot of my money."

Spin cycle

Ingenious humans can produce better products at lower prices. They can likewise transform low GAAP earnings into high non-GAAP earnings. Such intellects make their home at a certain iconic American manufacturer. But whither free cash flow?

When tongues lashed

Nowadays, Democrats and Republicans seem to hurl insults rather than arguments. Then, again, the delicate ears of the 21st-century partisans were never exposed to the blistering rhetoric of William Darrah Kelley (R., Pa.).

Mine disaster

We return to a low-cost, option-laden play on the mismanagement of the world's monetary system. So much potential, yet – in the moment – such disappointment. A speculation on lemonade.

Bid wanted, eh?

Credit constriction in China ripples far and even, even to the northern fringe of NAFTA-land.

January 27, 2017, Vol. 35, No. 02

‘DJT’ on the New York Stock Exchange

President Trump resembles a heavily shorted common stock. The analysts despise the ticker and the company it stands for, yet the shares go up and up. Rallying, too, are the battered shares of sea-going shippers, the administration’s anti-trade agenda notwithstanding. A theory of unscripted events.

Onward and upward

When you see colleague Evan Lorenz at the March 15 Grant’s Conference, kindly address him by his new title: Deputy Editor.

REIT numero uno

“Investors Bolt Mexico as Peso Enters Free Fall,” a Wall Street Journal headline of Jan. 11, is our journalistic call to arms, a 55.9% too-cheap peso our value observation. On a certain developing opportunity behind the projected Trumpian wall.

Not Joseph Schumpeter

Should a disrupting enterprise be more efficient than its targeted disruptees? Spotlight on the consequences of uber-cheap capital.

Changing places

In which we journalistically cover one short-sale candidate, propose another in its place. Since when did the technology industry become cycle-free?

Rah, rah, debt!

Now that the economic expansion is passing the 91-month pole, the president of the Federal Reserve Bank of New York urges Mr. and Mrs. America to borrow more money against the collateral of their home equity. Live and don’t learn.

January 13, 2017, Vol. 35, No. 01

2017 in money -- a sneak preview

A vision of the next tumultuous 12 months in 140 characters or less. For Janet Yellen and Jared Kushner there’s good news, bad news—and good news all over again.

Sell a non sequitur

The asset-allocation votes are in for 2017, and the results are confounding. You can defend one big idea or the other big idea, but hardly both at once. What coal owes to Chinese speculators.

Horrible to bad

In investing, timing is said to be everything. In value investing in far-away places, solvency—in fact—is everything. Kind words for a pariah.

Luther the disrupter

Cometh the man (or the woman), cometh the hour. No worldwide web required.

Mushroom cloud parts

Returning to the scene of an error in judgment, we are bullish all over again. Why a lift is in store for the Earth’s heaviest naturally occurring element.

Smiling Contest

Rages a new bull market in equanimity.

Credit Creation • Cause & Effect

December 23, 2016, Vol. 34, No. 24

Reasonable Nutjob Caucus

To the anarchist Pierre-Joseph Proudhon, a certain French legislature was a "box of matches." We judge that a Trump fiscal appointment meaningfully boosts the chances of political conflagration in the new administration.

Wrong number

A certain vendor of an indispensable 21st century communications service loses money, piles on leverage and underinvests in its capital stock. Still, its bond prices rally and its share price levitates. Yield-grubbing in a bull market.

Can make it anywhere

"Sell New York," we said, and someone did. That someone is hereby stricken from the list of Grant's short-sale candidates.

Out of the kitchen

Beleaguered by eight years of weaponized regulation, the dining-out industry sees a new day dawning. What am I to bid for a like-new, high-end commercial stainless steel 2-bay steam table with drain and storage shelf?

China being China

Unsurprisingly, Mr. Market complicates the cadres' attempts to control the money market. Looking ahead to an eventful Chinese New Year.

December 9, 2016, Vol. 34, No. 23

Central bank of many time zones

"America First" is Donald Trump's moto, but it could just as easily be Janet Yellen's. How foreign events will color American monetary policy in ways that the Fed chair, the president-elect and even Mr. Market may not yet anticipate.

Discombobulation trade

Tax-rate uncertainty and the November spike in interest rates have combined to turn the municipal-bond market upside-down. From tumult comes opportunity.

Past Performance, Inc.

Good news you shout from the rooftops, bad news you mumble in a footnote. The most successful Canadian company you've never heard of isn't one for shouting.

The short of it

Sixty-three short-sale candidates have featured in the pages of Grant's over the past three years. We write to render an accounting.

Don't say they didn't warn you

From Italy's revitalized 5-Star Movement, a modest proposal for a "parallel" currency. Now, wither the euro?

November 25, 2016, Vol. 34, No. 22

It’s G. William Miller time

Spring training for the Trump administration feels like exhibition baseball under the Florida sun. Pending the start of real competition, optimism is irrefutable. Anything seems possible. A speculation on the next four years in monetary policy.

Redheaded stepchild REIT

Put aside the adage, “Buy the best building on the worst block.” We here propose the purchase of OK buildings on a terrible block. Anyway, who needs analyst coverage, an annual report, a dividend or a 10-Q?

Dept. of foresight

Markets make opinions.

Contain your enthusiasm

Years of ultra-low interest rates have facilitated the cartelization of a certain branch of American industry. Rarely have its profits been so high. And rarely has it been so overvalued. An eagle eye on the soaring dollar.

Move over, mandarins

Herewith the text of your editor’s speech to the 34th Annual Cato Monetary Conference in Washington, D.C., complete with a few things that he thought of later.

This is your government: Stick ‘em up.

This is your money—or was. The state would like it now.

November 11, 2016, Vol. 34, No. 21

Tinker to Evers to Chance – to us

The 20th-century Chicago Cubs required fewer than 90 minutes to put away the Detroit Tigers in the fifth and final game of the 1908 World Series. A funny thing is human progress, in money no less than in baseball.

Opportunity droops

The leader in one of the world’s most battered industries prepares to lead a consolidation drive. Buying low is laudable. Buying very low is scary.

Muni fun facts

Seven years into an economic expansion, the credit quality of the U.S. states is getting worse, not better. Who’s worried? Not the yield-starved Japanese bond buyer.

Banking on Turmoil

Imagine a capitalist island set down in a communist sea. Recall the American real-estate bubble of the mid-2000s. Observe the mighty Swiss franc. Thus imagining, recalling and observing, you understand the vulnerability of a certain top-tier bank.

Driving while leveraged

People aren’t waiting for Janet Yellen to lift the Federal funds rate on Dec. 14. They’ve been lifting various yields for months. Day of reckoning for auto credit?

October 28, 2016, Vol. 34, No. 20

The arc of the narrative

There’s always a narrative. Better to get in on the ground floor of the great stories that, at first blush, seem preposterous.

No yield for you

If you are looking for someone to thank, Mr. or Ms. Yield-Starved Cash Hoarder, you may thank the U.S. government. Are there, then, no money-like income oases?

Kicking the can

Hundreds of companies used to compete to sell canning jars to American families. For the giant corporate descendants of those glass-jar makers, it’s not so clear that the 21st-century business model is any more lucrative than the legacy one.

Disabled no more

Vanishingly rare is the profitable, market-leading, stockholder-attuned, reasonably large, reasonably cheap business that would stand to gain by a rise in interest rates. This party to the mysteries of actuarial science and insurance accounting would seem to tick every box.

Keep selling it

What we did not anticipate was the warmth of the credit market’s hospitality towards a known Grant’s pick not to click.

Counting up the pretexts

There’s not much doubt that the Fed will raise rates on Dec. 14. The greater question is what it will do the next time it has to cut.

Credit Creation • Cause & Effect

October 14, 2016, Vol. 34, No. 19

'You get what you pay for'

Federally-mandated overhaul of the retirement-themed investment business promises a big boost to passive investing, which was doing fine without the government's imprimatur. Robotic disruption plus federal coercion makes a force to be reckoned with.

On the ETF divide

A golden age of active investment management awaits only one signal, disastrous event. Is there an exchange-traded fund for which ExxonMobil is not ideally suited?

Battle of the bonds

In the great debate over interest rates at the fall 2016 Grant's conference, the scholarly bull and the newly fledged bear butted heads over more than the future of bond yields.
**Ed. note: John H. Cochrane's, essay, “Inflation and Debt”, as mentioned in the issue. Click here to view.

They said it

What to do with money? A grand survey of the wit and wisdom dispensed by the Grant's speakers at The Pierre Hotel last week. "Almost everything that is particularly attractive is a little bit unusual."

Dysfunctional CDO

Deutsche's bond sale registered an increased cost of borrowing for the big sick puppy. Unclear is whether investors are taking a dimmer view of Deutsche or a closer look at its fine print.

September 30, 2016, Vol. 34, No. 18

Case of the strange coincidence

A 35-year bond bear market ended 35 years ago. Since when was history so symmetrical?

House of fads

Activist monetary policy has laid low active investment management. Index funds and ETFs have supplanted the fine art of security analysis. A bearish speculation on the central banks’ own Wall Street doppelganger.

Wealth effect redo

Raise up asset prices, the central bankers proposed. The rich, becoming richer, would spend. It was an elegant theory.

One-stock ETF

What single liquid security is the best proxy for China’s frenzied finance? A certain deal-doing conglomerate may fill the bill.

Clio for the Fed

The editor of Grant’s prepared a few remarks to deliver on Sept. 28 on the occasion of his presentation with the Money Marketeers’ Distinguished Achievement Award.

Not banking on Europe

Spotty profitability, sclerotic technology, an immense book of derivatives and scary leverage: The ripples are spreading far and wide.

September 16, 2016, Vol. 34, No. 17

Into the new abnormal

Abnormal presidential candidates, abnormal interest rates and abnormal monetary thinking are calculated to deliver abnormal results. "I hear the choppers hovering. They're hovering overhead."

Musk, Edison, Tesla

If you ever wondered where Elon Musk came from--what peculiar alignment of stars produced this protean creator, spender, borrower, innovator, printer of red ink, spinner of yarns and blower of deadlines--only look to the great Thomas Alva Edison, or, perhaps, to Edison's brilliant enemy and Musk's corporate namesake, Nikola Tesla.

From hunger

Low-vol is a cult for this age of low growth and zero-percent money-market interest rates. A bearish appraisal of one of the beneficiaries of a love affair with boredom.

Worst is yet to come

The story remains the same for a Grant's candidate for the title of most likely not to succeed. Picking apart the one-offs and monitoring the credit troubles of a bank-in-all-but-name.

Why bankers fret

Some borrowers stretch to meet looming interest payments. Can interest rates ever be low enough?

August 24, 2016, Vol. 34, No. SB

2016 Summer Vacation Issue

This summertime e-anthology of Grant’s articles, both old and new, is for you. Please pass it along, with our compliments, to any and all prospective members of the greater Grant’s family.

Trudges, the nation’s business

"Speculate" is the operative word. Economic cycles, interest rates and the dollar are the topics at hand. A skeptical eye on the world's "most crowded trade."

Sell Donald Trump

Crash or no crash, the personal stock of Donald J. Trump, the New York real-estate celebrity, was up. Up is Trump's favorite direction....

Driving the automo-bezzle

The automakers are selling more and more cars, or so they say. An inquiry into the meaning of the word "sell."

Paper tigers

A new high in the prestige of modern central banks was recorded two Fridays ago when Britain waylaid the gold market. Without warning, Her Majesty’s government announced the sale of more than half of the U.K. gold reserve, formerly called “treasure.”

Sell Big Food

Americans may be buying the stocks. They are not – as they have done in the past – buying the products. The trouble is that crowds are

Monetary regime change

On August 30, at the annual monetary jamboree of the Kansas City Federal Reserve Bank in Jackson Hole, Wyo., Alan Greenspan washed his hands of responsibility for the bubble he said he could not have pricked even if he had noticed it floating above his desk on a string.

August 12, 2016, Vol. 34, No. 16

Send no money

Inventive minds resist the urge to capitulate at the alpine peaks and stygian depths of speculative markets. Rather, they adapt, sometimes with a twinkle in their eye. A no-risk, index-beating scheme for this sub-zero time.

Hostile banking

No staycation for Mr. Market this year. Adventure in foreign parts is rather to his taste. Kind words for a pair of pariahs.

'Pervasive and persistent'

When people say “structural,” don’t they really mean "familiar"?

Dorian gray

A former Grant’s pick to click was always a speculation. It is now a very cheap and very risky speculation.

Pants on fire

Quick, which nation is the world’s top gold producer? China, you say? Maybe not.

Bump in the road

Digital break-ins. The price that we pay in a time of monetary insanity.

At the intersection of cars and banks

E-Z money was the spark plug of the post-crisis auto recovery. Beware, now, a creeping tightness.

July 29, 2016, Vol. 34, No. 15

Dispatches from the mania

Bond bulls or bears, we are living in historic times. Savor the zaniness.

Ultimate hedge

The tribulations of the active spirits, especially hedge funds, is the subject at hand – that and a revisit to a 21st century monetary hedge.

Corporate mystery meat

The strategy of selling complex solutions rather than individual products is the new, new thing in flavors and ingredients. Safety, or rather, perceived safety, is what investors seem to crave.

Speculating for income

For U.S. dollar-denominated yields in excess of 3%, one must settle for the types of securities once known as a businessman’s risk.

They asked for it

Short-term interest rates didn’t wait for the Federal Open Market Committee. Back to you, federal overseers.

July 15, 2016, Vol. 34, No. 14

Remember the Shell Union Oil 2 1/2s of 1971

Long-trending cycles are the standard in bonds. The once-in-5,000-year interest-rate event is non-cyclical and nonstandard. Today’s negative bond yields are that non-cyclical singularity.

European scavenger hunt

Under the spell of Mario Draghi, the once rugged terrain of European credit is today a flat, bleak tableland. Preserving capital, sanity

Borrow to rent

The cacophony of jackhammers, brick saws and excavators outside our window (and yours, too, we’ll bet) bodes well for the construction capital-goods business. A certain company’s debt bodes ill.

Orchids from Ecuador

Provoking the market gods by attempting to bring the outdoors inside. Kale Caesar salads for the pampered staff.

Subject to revision

In today’s climate of radical monetary policy, what’s worse, imperfect data or imperfect advice? The Japanese try both.

July 1, 2016, Vol. 34, No. 13

Monetary rule by the cargo cult

What with Brexit, the soft May durable goods report, collapsing bank stocks, the surging dollar exchange rate, the looming American presidential election, etc., the question is not so much when the Fed will raise its little funds rate as when it may cut it. Now unfolding is a speculation on the developing crisis in the Ph.D. standard of discretionary monetary management.

A selective panic

There was never a discriminating panic, but the post-Brexit markets outdid themselves. Are the algos quite sure about buying the sub-1%-yielding 10-year notes of the country with the bulging current-account deficit?

Inside Story

Strange to relate, the collapse of the share prices of Valeant Pharmaceuticals International and Endo International has drawn no line under the era of debt-funded

Thanks, Dodd-Frank

You don’t need a financial crisis to jack up repurchase rates nowadays. Congress has seen to that job all by itself. In the record books: The highest overnight general treasury repo rate since October 2008.

Renminbi on the march

As Britain leaves the European Union, Chinese investors are fleeing the renminbi. The curious case of resurgent growth in Chinese M1.

June 17, 2016, Vol. 34, No. 12

Kitten up a tree

Sky-high asset prices make an odd accompaniment to softening business activity. Now what, First Chief Yellen?

Waiter, the check

People have to eat, and investors want to invest. The trouble, in 2016, is that the urge to eat and the propensity to invest have fallen out of phase.

We are Metro

Washington’s subway system has been 50 years in the unmaking. Problems do not become less problematic simply on account of their being familiar, the editor of Grant’s reminded the Washington, D.C. Chartered Financial Analysts.

Just enough hair

Widows, orphans and college students may avert their eyes. Now in progress

Can’t say goodbye

A correction of a correction. Now, please, go away.

Foreign and domestic

America is a massive net debtor to the world. Then, again – a mitigating fact – Americans are good investors.

June 3, 2016, Vol. 34, No. 11

Up with the accidental metal

A speculation for this year of populist revolt.

REIT from hell

A good management is no match for a bad business, goes the adage. Belatedly, we take those wise words to heart.

Popular Pariahs

Never mind "global macro." Global micro's the ticket. Pick a good company in a bad country with a worse government.

Lending clubbed

"Saving up" for a purchase is a phrase that connotes consumer behavior in the pioneer days of Little House on the Prairie. In impatient millennial America, we borrow to buy.

Get out of town

How to square the decline in the assets of the People's Bank of China with the evident boom times in China's commercial banking sector? Read on.

May 20, 2016, Vol. 34, No. 10

For monetary diversity

Diversity, especially in the matter of ideas, is at the top of the Grant's election-year monetary reform agenda.

Transmission mechanism

A cyclical stock that dances to the beat of a cyclical industry (as well as to the cha-cha-cha of the Federal Open Market Committee). Now unfolding is a speculation about a profit-driven investment decline.

Yield from hunger

A dividend aristocrat of the North with an unsustainable payout.

Just type 'CNRR001'

That the world's second-largest economy is an accident waiting to happen is a longstanding tenet of these pages. What's new is the mounting evidence that the accidental occurrence is drawing closer.

We hardly knew ye

On Friday the 13th of May, Royal Bank of Scotland Group Plc. announced its intention to redeem the three issues of preferred stock that featured in the April 8 issue of Grant's.

One and done

A fall in profits and activity comes despite an explosion in bank lending to businesses – time to reconsider that rate hike, Chair Yellen?

May 6, 2016, Vol. 34, No. 09

Paging George Champion

Before desk-top computers—before consultants—a worldwise banker laid in reserves against loan losses in the certain knowledge that credit experience is cyclical. What the great man could teach the Financial Accounting Standards Board.

Inherent safety?

Risk is where you don’t look for it.

Sell New York

Not the city, but the ticker. Where’s the value, Larry Silverstein?

Made (up) in Japan

You can run from credit risk, but you can’t hide it. A kind word for bankruptcy reform, no matter how belated.

Bubble No. 3

Growth in household net worth had handily outstripped growth in after-tax income. You may thank the Fed, Donald Trump.

Under the headline

The share price would be lower if the analysts were more curious. Attention, Wall Street: There’s a balance sheet, too.

Buncombe glut

Did the president of the European Central Bank say “savings” when – with a little more attention to analytical detail – he should have said “credit”?

April 22, 2016, Vol. 34, No. 08

The road to confetti

April 15 comes and goes but the federal debt stays and grows. The secrets of its life force are the topics at hand – that and how the upsurge in financial leverage, both public and private, may bear on the value of the dollar and on the course of monetary affairs.

No, not Treasurys

"Normalization is a good thing. Rates going up is a good thing. It's not a bad thing because we have a strong economy." The speaker is the chairman and CEO of JPMorgan Chase & Co., and the setting is the spring 2016 Grant's conference.

Credit the yield

Now under way is a reprise and a report: a reprise of a couple of familiar yield-bearing Grant's favorites and a report on the state of small-business credit.

For the repressed

For the people at the receiving end of zero percent interest rates and quantitative easing, "inflation is not that dead."

Insider to outsider

"There are probably more dangerous words in the English language than 'data dependence,' but I don't think any said with this frequency…."

Advice at a price

If it's financial advice you want, you could ask a Nobel Prize-winning economist. Alternatively, you could invest in a company that markets highbrow robo-advice.

A political animal

"China doesn't devalue. The US doesn't tighten. Détente."

Solvency not liquidity

"Budgets have been out of whack and unbalanced for 10 years straight and they have been balanced with borrowing." A game of debtor-creditor drama "is unfortunately coming to an end."

Bullish on Oil

Standing before the Grant's crowd, a bear on oil before the deluge, declares that the bottom is in.

Not enough gold

With progress in mining technology at a standstill, "the problem that the industry faces is really daunting when you look at the demand curve."

Short and a long

It was the short that caught the Grant's audience's fancy. "It is a poor steward of capital and a poor investor of capital. Its operating metrics are implausible and not a few of its assets dubious."

Next for Japan

"In the face of all-time high profits, there is record-high cash-hoarding. One must infer that Japanese corporations don't trust the future, or at least not the Japanese future."

South of the border

The stars are profitably aligned for U.S. investors in Latin America. "Local currencies are cheap, multiples are reasonable and corporate earnings have troughed."

For a monetary encore

Expectations run high for this pioneer in radical policy to do more – but what more can it do?

April 8, 2016, Vol. 34, No. 07

Driving the automo-bezzle

The automakers are selling more and more cars, or so they say. An inquiry into the meaning of the word "sell."

Least to beast

All bad things come to end, even for the former Worst Bank in the Entire World.

Dialing for dollars

At the end of a lease, what's left? Less than a certain capital-goods giant might be bargaining for.

Tax day uplift

A salute to the great Vivien Kellems.

Wide open spaces

A known Grant's pick not to click is living out the theory of interest rate-induced market distortions. Landlords, beware.

For 17 basis points

What, cash is trash? Re-evaluating the money-market value proposition.

Coulda' seen it coming

Financial calamities are obvious – in hindsight. Federal Reserve Bank of New York, please copy.

March 25, 2016, Vol. 34, No. 06

Inflation cheering section

The very people you’d suppose would oppose the monetary equivalent of breaking and entering are the ones who are cheering it on.

Sell Big Food

Americans may be buying the stocks. They are not – as they have done in the past – buying the products. The trouble is that crowds are

Taps for credit

While Draghi’s latest trick may be notched up as another resounding success, one wonders if Mario should be quite so eager to please the markets.

Investment value—“on”

Occupying a kind of parallel, Benjamin Graham universe, this bright light has figured out a way to buy assets during a bear market rather than having to sell them. A bullish reappraisal.

Business is hard

Our old flame became a bankrupt. Its road into Chapter 11 and its prospective road out again are the topics under discussion. Financial leverage, economic cycles, commodity prices, human foible and bad luck are the featured sub-topics.

Credit risk: “On”

Just how far has the sentiment swung? Speculative-grade debt is on fire.

March 11, 2016, Vol. 34, No. 05

A debt bell tinkles

A certain deep-subprime auto-loan securitization has run into trouble just four months after it came into the world. Casting about for someone or something to blame, we blame “liquidity.”

Borrow to plow

What looks like a tax-and commodity-price-induced bubble in tractors, combines, harvesters etc. is visibly deflating – visibly, so far, except to the stock market. The latest from Machinery Pete.

Chinese exceptionalism

On the topic of shareholder rights, America is an exceptional country. So is China.

For the un-meek

If something can’t go on forever, it won’t. Now under way is a bullish speculation on a bearish set of circumstances. Anticipating the joyous relief imparted by the lifting of bankruptcy fears.

Trade closed

The market having performed its revaluation, we lift our fatwa.

Not quite parity

Risk parity was the subject of a great debate that was scheduled to be held the day after Grant’s went to press. Herewith the text of your editor’s opening remarks.

Valeant's fine print

Reading the lines—and between the lines—of you-know-who’s debt covenants.

19 yuge basis points

It used to be said that 5% would pull money from the moon. One small fraction of 1% is pulling billions from banks. Monetary conditions have tightened, but not in the old familiar way.

February 26, 2016, Vol. 34, No. 04

Gyro Gearloose redux .

The arc of monetary evolution is the subject at hand. A question for the dollar-holding subscribers of Grant’s: What’s really in your wallet?

Buildings are tortoises

Real estate will not be hurried. Contracted rents, like skyscrapers, tend to stay put. Now in progress is an analysis of the relationship among stationary buildings, mobile financial markets and reluctant lenders.

The Brexit contagion

Betting on the contagious nature of an event that hasn’t happened is what might be called a time-waster. Not so in the case of Britain’s mooted exit from the European Union.

Power of negativity

If bad debt can destroy a good currency, only imagine what bad debt can do to a bad currency. China and its wobbly renminbi are the subjects at hand.

Call in the safes

Does America need another monetary pick-me-up? The question is debatable. Still, the Fed is quietly dusting off its QE toolbox.

February 12, 2016, Vol. 34, No. 03

Next from the monetary kitchen

Negative nominal interest rates, helicopter money and the "cashless society" – like a play on tryout in New Haven, the ideas of the next phase of radical monetary control are getting a public airing before their Broadway debut.

Big sick puppy

Fears of Deutsche Bank AG's missing an interest payment on a contingent convertible security sent the bank's common-stock price skidding. Are Deutsche's problems idiosyncratic or systemic?

Canadian sunrise

For many a disappointed Canadian retail investor, "preferred" is more a term of derision than of description. We write to suggest that their loss is the contrarian's gain.

New default cycle

Fear, always a value accelerant, is back in the air and on the palms. Putting the "high" back into high yield.

Toward zero or less

Mortgage real-estate investment trusts are the topic, interest rates are the sub-topic and income – precious income – is the point of it all.

Outflows to themselves

China's cadres command that the People's Republic will grow by 6.5% in 2016. Say it were true. How much financing would that require and where would the money come from?

January 29, 2016, Vol. 34, No. 02

Mr. Market, the merciless

There is no such thing as a separate and distinct “U.S. economy.” There is rather the single dollarized and financialized and over-leveraged worldwide economy. Like it or not, we are all in this together—the Chinese communists, the European socialists, the Japanese statists and we the people.

Oil & Son

Parent and offshoot have something to offer, each in its own way. “The cure for low prices is low prices.”

Left hanging

The final sentence of the final article in the previous issue of Grant’s stopped just short of the period. Here it is, from beginning to end: “Let us not forget that Cowperthwaite was the architect of prosperity.”

Hope over evidence

In a bear market, two and two make three, at the most. To judge by the fancy, hope-inflated multiple of a certain U.S.-based multinational, this must be a bull market, still.

Hey, Canada, seriously?

Vancouver is taking radical – though, to American eyes, hardly unprecedented – steps to perk up flagging condominium sales. Check back next year for data on virtual defaults.

Trouble times leverage

Cause and effect, leverage and volatility, babies and bath water are the topics under discussion; junk bonds and leveraged loans (and the structures that house them) are the featured asset classes.

What’s in a name?

As a purveyor of e-cigarettes, Vapor Corp. has achieved the epiphany of joining share price with corporate name.

Virtual-reality interest rates

As Grant’s goes to press, the scholars of the FOMC were deep in cogitation. Some expect Chair Yellen to emulate Mario Draghi and implement negative interest rates. Would it be so implausible?

January 15, 2016, Vol. 34, No. 01

Jobs 1 and 2 for the new year

Top two items for the 2016 agenda: Free Lee Bo, the abducted Hong Kong bookseller! Unleash the constructive forces of arbitrage!

Black as coal

Nothing is better calculated to restore the profitability of a fallen industry than to cut off its access to credit. A bullish word for a desperately out-of-favor business.

2020 foresight

To judge by the long-range projections contained in the Jan. 11 press release disclosing the merger of Shire plc and Baxalta, Inc., the document was drafted by clairvoyants.

Neither fish nor fowl

A certain kind of hybrid security answers the needs of leveraged issuers and yield-starved investors alike. It offers incremental returns relative to senior bonds in the same capital structure. There must be something wrong with it.

That 1980s show

Falling grain prices, a rising dollar exchange rate, the softening market in farmland – anyone feel nostalgic yet? Paging Bob Dylan.

Hong Kong Speech

On Jan. 8, the editor of Grant’s addressed the BofAML Chief Investment Officers Conference in Hong Kong. A salute to the former British colony’s late financial secretary.

Hear Messrs. Train and Junk Bond

Dr. Copper has spoken. Heed, now, the macroeconomic soundings in rail traffic and corporate debt. Your move, Chair Yellen.

December 23, 2015, Vol. 33, No. WB

Happy And Merry 2015

To the readers, and potential readers, of Grant’s: This anthology of recent articles, our annual Christmastide e-issue, is for you. Please pass it along, with our compliments, to any and all prospective members of the greater Grant’s family. We resume publication with the issue dated Jan. 15 (don’t miss it!).

December 11, 2015, Vol. 33, No. 24

Interest rates by the clock

Ultra-low rates push and they pull. They push business failure out into the future. They pull consumption forward into the present. Here with a grand tour of the credit horizon. In the background: auto sales and corporate M&A. In the foreground: a booming regional bank and a credit-dependent time-share vendor.

What he said

The word is "customers," not "competitors." Grant's corrects a blunder.

'They' already tightened

ZIRP and QE have warped the economic timbers. On a bad day, you can even hear them creak. Have the brainiacs forgotten that the money market is a delicate institution?

Anticipating Mr. Friedman

In an earlier epoch of history, a man so driven as the chief curator of Restoration Hardware might have led a revolution. As it is, he seeks to revolutionize the high end of furniture and décor trades. Awaiting Dec. 10.

Handicapping a devaluation

If it were any economy but the world's largest, you'd expect that a devaluation would be in the offing. The People's Republic wouldn't dare to cheapen the very currency that the IMF has just welcomed into the SDR. Or would it?

November 27, 2015, Vol. 33, No. 23

Trudges, the nation's business

"Speculate" is the operative word. Economic cycles, interest rates and the dollar are the topics at hand. A skeptical eye on the world's "most crowded trade."

Money-good, but . . .

Neither sterling nor speculative, probably OK but maybe not, a certain kind of investment-grade security is the flavor of the cycle. What goes wrong with the most popular credit ideas? Something, usually.

Banking on energy

You can't blame this Grant's-assembled collection of energy lenders for the macro- and microeconomic scrapes in which they find themselves. But you could sell them.

Guilt by association

"Small, illiquid, complex" to which we now append another attribute: unprofitable, at least so far.

But can they?

Wanting to lift the funds rate is one thing, actually doing it is another. Good luck to you, Dr. Potter.

November 13, 2015, Vol. 33, No. 22

Too close to the sun

The super-rich continue to accumulate high-end residences far from their principal toothbrush. They are the smart money—are they also the wise money? A short review of the bumps in the road of a certain great city's real-estate market. Too few moguls for the burgeoning supply of mogul-appropriate housing.

Over here, Carl Icahn!

The bullish analysis of a little-regarded REIT has so far yielded bearish results. Why a sky-high dividend yield and a record-setting discount to evident NAV leave the market cold. Calling all activists.

Monetary optics report

A new federal highway bill needs financing. Where will the money come from? Contemplating the risk of a capital call on very high-yielding Federal Reserve stock.

Stand-pat primer

Bearing in mind that Janet Yellen reportedly arrives at the airport "hours before" her flight is scheduled to depart, we serve up the facts that might lead a risk-averse central banker to surprise people.

October 30, 2015, Vol. 33, No. 21

Saul Steinberg's second coming

In the 1960s came Leasco and the big conglomerate boom. Now comes Valeant and the bigger platform-company boom. Starved for income, 21st century investors reach not only for yield but also for heroes: "our thirst to believe in others."

Your 4,000 bagger

The case for a currency that governments don't print and miners don't excavate. "The potential to do for money what the Internet did for information."

Stan on stage

"I believe that diversification is the most destructive, over-rated concept in our business." The speaker is Stanley Druckenmiller, investor and speculator par excellence, and the setting is the fall 2015 Grant's Conference.

Don't stop reading

"There are no accidents in SEC filings. Everything there (or not there) is for a reason."

E&P equity gusher

It wouldn't be so bad in the E&P business if oil and gas prices were not so low, or if accounting conventions were not so elastic or if maintenance capital expenditure requirements were not so high. "The business is not economic."


How an innocent component of the Periodic Table was converted into a kind of neo-subprime mortgage-backed security.

Just keep compounding

Compound interest is a wondrous force, all may agree. Pick the right stocks and mistakes just don't matter.

Comes Mauricio Macri

The money-burning days of Cristina Fernández de Kirchner are ending. How bullish the aftermath?

To own or not to own?

What does it mean to own something? J. Michael Pearson weighs this urgent metaphysical question.

October 16, 2015, Vol. 33, No. 20

Bull market in liabilities

The Teamster Central States Pension Plan is petitioning the Treasury Department for permission to reduce the distributions it makes to 200,000 beneficiaries. Ben S. Bernanke, Ph.D., please copy.

Thank you, Ruth Hlavacek

The Grant’s grammarian rides into the sunset after 28 literate years of service. How we shall miss her!

Exit, Michael Novogratz

A corporate problem child and the man who managed it take their leave. Good news for the business he helped to found.

Acres of hope

Asset-rich and management-poor, a certain real estate-development company is ending its years in the wilderness. Next order of business: Sunlight on net asset value.

Constructive developments

A lightly leveraged closed-end fund, managed by prudent and independent-minded people, is priced at a deep discount to book value and offers a high yield. What’s not to like?

Postscript to value

The emergence of a new fact improves the risk-reward proposition attached to a pair of leveraged income vehicles.

Go big or go home

“Stimulus” is not so stimulating when it takes the form of debt slathered on an already-overleveraged economy.

October 2, 2015, Vol. 33, No. 19

Towers of deflation

It’s evidently not impossible to forget that real estate is a cyclical business. The localized booms in office construction suggest that many would rather not remember.

Predatory borrower

Care for a nice, fat 5% yield, Mr. and Mrs. America? The people who ought to read the fine print probably won’t.

Frontiers of junk

If a market can become overvalued—and can remain so (as this one has) for the better part of nine months—it can surely become undervalued.

Way of all paper

An ancient perpetual Dutch security continues to pay interest, though no longer in gold (you get euros) and no longer at the originally stipulated rate (you get half of that). A “teaching moment” in money and credit?

Flashing beer sign

The Fed hasn’t tightened. The market has. Maybe the mandarins have missed their opportunity.

September 18, 2015, Vol. 33, No. 18

Age of magical thinking

In monetary affairs, orthodox ideas have become marginalized and radical ideas have gone mainstream. From the eminent Financial Times, a proposal to drop helicopter money to the masses. You wonder what the London tabloids are suggesting.

Calling Mr. Bear

Never mind backing that luxury automobile into the garage. For the very rich, a turntable will do the trick. What will the market gods think?

Unaccountably cheaper

Any stock that derives its value from a portfolio of assets has taken a pratfall. One particular asset-sensitive stock has been splattered—for no good reason, we say.

Closed-end days

In closed-end funds, a novelty: investor-led initiatives to close persistent discounts to net asset value.

Yield to term

In a picked over, credit swollen, ZIRP strafed bond market, a certain kind of mutual fund is making the best of things.

Inside the People’s Bank of China

Is even one central bank actually tightening credit? Only the world’s biggest.

September 4, 2015, Vol. 33, No. 17

They follow the leader

Having failed at finance, the Reds of Beijing are staging a gaudy military parade. Look out below for the renminbi/dollar exchange rate.

Almighty ringgit?

Everyone knows that the dollar is appreciating. Everyone similarly knows that emerging-market currencies are depreciating. Could everyone be thinking the wrong thoughts?

Hock that painting

A shot across the bow for investors and connoisseurs alike.

10% off sale

Closed-end funds usually trade at a discount to net asset value. They rarely trade at the discounts now quoted.

They already tightened

The Fed's back office pushes repo rates higher. Whom to blame for contracting net interest margins on your mortgage REIT.

August 19, 2015, Vol. 33, No. SB

2015 Summer Break Issue

This anthology of recent articles, our summertime e-issue, is for you. Please pass it along, with our compliments, to any and all prospective members of the greater Grant’s family.

Not such a lock

Save us from the security experts. What, exactly, do they do?

The balance sheet that ate Switzerland

Like a celebrity in flight from the paparazzi, the Swiss Confederation demands protection from its pesky admirers. To beat back the unwanted appreciation of the Swissie, the central bank is—once again—vowing to move heaven and earth. How to profit from it?

Final last gasp

Expectant but not bullish on everyman's safe haven.

Revenge of the reciprocal

Finance is nothing if not symmetrical. There are assets, and there are liabilities. There is demand, and there is supply. For every policy yin, there is a policy yang. The unscripted consequences of post-2007 monetary intervention is the subject at hand.

Operation Barn Door

Incapable of predicting financial crises, our central bankers are doing their utmost to prevent them. Should you rest easier on that account? You should not.

International complacency contest

Time to cast your financial ballot – an investment in monetary and financial disorder.

Posterity will smile

Which mistakes—financial ones, that is—will our children’s children identify as our most gratuitous? Wisdom from Edinburgh’s Library of Mistakes

August 7, 2015, Vol. 33, No. 16

Fault lines in credit

The fateful words of a Chicago alderman mark the turn in the credit cycle.

Dueling indices

Wage costs rise by the least in 30 years? Not so fast.

Global verbiage glut

Opportunities in places you may not care to visit.

Try this at home

Ultra-low mortgage rates deliver a quicker accession of home equity.

July 24, 2015, Vol. 33, No. 15

International complacency contest

Time to cast your financial ballot – an investment in monetary and financial disorder.

Toss away the key

Constant readers will recognize the government’s allegations against a certain identity-theft promotion.

On the rebound

A long-tailed branch of the insurance market returns to the black.

Holy guacamole!

It’s hard to argue with a 20-year improving market. We do.

New diagnosis

Quick, painless and cheap. What is Mr. Market pretending not to notice?

Not for the money

Concerning tightening cycles past and prospective – what’s the big hurry?

July 10, 2015, Vol. 33, No. 14

More candidates, please

A public-spirited plea for a better class of political talent. The gamesmanship of a “balanced” budget.

12% goes begging

A dream come true for the income-starved American saver, though one’s lunch never comes entirely free.

Small, illiquid, complex

An income vehicle for our time.

Dare you, Ms. Yellen

If the supposed imminent rise in the federal funds rate should come to pass, what then?

Two percentage points to go

Capitalism without the price mechanism: a non-starter in Shanghai, too.

June 26, 2015, Vol. 33, No. 13

What’s in your wallet?

What investment asset, though it yields nothing and costs nothing to produce, is gaining in worldwide popularity? A leading, London-based Fidelity bond manager has the answer.

Check, please, waiter

People have to eat, but they don’t have to go out to eat. Investors have to invest, but they don’t have to buy restaurant stocks.

Underachiever update

Even in this levitating bull market, investors give wide berth to a pair of Grant’s-favored ideas.

Posterity will smile

Which mistakes—financial ones, that is—will our children’s children identify as our most gratuitous? Wisdom from Edinburgh’s Library of Mistakes.

Thanks all around

On June 23, the editor of Grant’s received the Gerald Loeb Lifetime Achievement Award. Universal praise for the brevity of his acceptance speech.

Happy birthday, prosperity of a certain kind

How to account for the smashing rebound of household net worth since the 2007-09? A theory from the author of “The Legend of Sleepy Hollow.”

June 12, 2015, Vol. 33, No. 12

Transported by Mr. Dow

An ancient theory of stock market timing resurfaces. Rising interest rates, deteriorating breadth and a frenetic M&A cycle. What would William Peter Hamilton say?

Under analyzed

What does it take for a once excellent brand to become merely good? A change in the fashion weather, or maybe an article in a college newspaper. Next up: the "dad bod."

Monetary must read

George Gilder's brilliant new monograph, "The 21st Century Case for Gold: A New Information Theory of Money," recasts the idea of money. The author makes you think--he insists on it.

Pessimism to burn

When Norway's' sovereign wealth fund prepared to divest its coal holdings last week, it joined a growing fatwa against the world's least beloved fossil. One miner deserves a reprieve.

Hayek for download

A lecture, not to be forgotten--your editor, the 2015 Hayek Prize and "The Forgotten Depression."

Not what you think

The seasonally adjusted GDP data are subject to revision. Corporate earnings are "pro forma." Quantitatively-eased currencies proliferate. What ever happened to reality?

May 29, 2015, Vol. 33, No. 11

Wire-pullers of the twenty-first century

Markets are just as efficient as the people who operate in them. They are just as cool, calm and calculating as the humans who will buy high and will sell low. Still, they are devilishly hard to beat. Credit, restaurant chains and platform companies are among the topics under discussion.

Yesteryear’s great idea

Like New York City taxi medallions, bonds started appreciating at around the time of the birth of Beyoncé. So consistently have they performed that serious people have come to judge them, bonds and medallions alike, as intrinsically safe. Not the best idea on which to build a leveraged portfolio.

Keynesian beach book

“Universal Man: The Seven Lives of John Maynard Keynes,” a new biography by Richard Davenport-Hines, is not just a book for the admirers of a certain errant economist. It is a book for the lovers of superb writing, fine portraiture and novelistic story-telling

Lots of return

With April housing starts leaping by 20.2% and April existing-home sales declining by 3.3%, the American residential real estate market last week was alternatively reported to be thriving and dwindling. We herein proceed to clear up the confusion. Bullish on terra firma—at a price.

Get your free money!

“Buy the rumor, sell the news,” is standard operating procedure in most markets. “Buy the rumor,” suffices in such a credit-juiced market as this one.

May 15, 2015, Vol. 33, No. 10

On the systematic mispricing of debt

Fidelity & Guaranty Life is the firm that “helps middle-income Americans prepare for retirement,” or so claim its copywriters. If so, the life insurer’s investment department, with its RadioShack trifecta, itself needs help. Certainly, it’s getting none from the world’s central banks—or from the post-1981 interest-rate zeitgeist.

Attention, Larry Fink

Is contemporary art one of the “greatest stores of wealth?” Not if the life, celebrity and obscurity of the 19th century French painter Jean-Louis-Ernest Meissonier is any guide.

The only game

If a company seems to be cheap in the sixth year of a bull market, it probably isn’t a legitimate company, and it probably isn’t cheap. An exception to prove the rule is the subject at hand.

America the unhedged

Native-born citizens of the United States are famously mono-lingual. Likewise, they are mono-monetary—dollars are what they cling to, whether or not the home currency is appreciating against the alien alternatives. How to diversify out of green money?

Balance-sheet story

Constant readers may remember the company herein featured. Some will regret having ever heard the name. As central banks have gained prestige, our subject has lost market cap. What it has not lost is its speculative appeal.

Pick your own data

“Monetary Policy It’s Data Dependent” is the legend on the t-shirt that the president of the San Francisco Fed waved to the TV cameras Monday morning when Steve Liesman asked him, So when will the Fed raise interest rates? We deconstruct the central banker’s non-answer.

May 1, 2015, Vol. 33, No. 09

Revenge of the reciprocal

Finance is nothing if not symmetrical. There are assets, and there are liabilities. There is demand, and there is supply. For every policy yin, there is a policy yang. The unscripted consequences of post-2007 monetary intervention is the subject at hand.

Listed bear-baiting

Coming soon: the first ETF dedicated to taunting the bears. SQZZ is the symbol. Is it wrong to suspect that people create new ETFs just for the pleasure of unfurling a clever ticker?

Mother Earth retraces

Average Iowa farmland prices tumbled by 8.9% last year, the first and only meaningful decline since 1986. The nearly three decade-long bull market in tillable American real estate is over, as the city-dwelling editors of Grant’s weigh the evidence. Grain prices, land prices, weather, inflation and deflation are the topics under discussion.

Elevator going down

Let it be said, writes Evan Lorenz, that China has the best airports, the fastest trains and the comeliest empty residential towers in the world. I can say this with some authority after spending last week in the People’s Republic.

Welcome back, Sumner Slichter

On Tuesday, as the FOMC sat down to weigh a decision to raise the funds rate for very nearly the first time in modern memory, the New York Times produced a story to showcase the argument for a much higher inflation target. Paging Prof. Slichter, 1950s-era father of the “new inflation.”

April 17, 2015, Vol. 33, No. 08

Mumbai calling Valéry Giscard d’Estaing

A monetary experiment half a world away from the Federal Reserve’s interest rate laboratories is set to begin next month in India. Looming over all, an ancient question: What is money?

Radical negative one

David Einhorn, long-short equity investor par excellence, led off the Grant’s Spring Conference with a long idea and a short-sale candidate. He prefaced his stock picks with a grand tour of interest rates, such as they are.

Up with India

"India is one of the biggest structural changes taking place in the world today," Jon Thorn, manager of the India Capital Fund, told the Grant's audience, "and, unlike, say, Greece, it's a very positive one."

Drill they must

"I've run through a lot of industries as they've involuntarily entered my domain," bankruptcy lawyer James Sprayregen, explained to the Grant's faithful. Next up, he said: the E&P segment of the energy business.

Leaders have to lead

David Abrams, a top-flight Boston investor whose nearly invisible public profile led The Wall Street Journal to speculate that he might be a unicorn, sat on stage at the Plaza Hotel fielding questions.

Liquidity to the max

125 pages of charts and graphs complemented lunch at the Grant's event. Stretching from the dawn of financial time to the present, the pictures, compiled by Bank of America Merrill Lynch strategist Michael Hartnett, amounted to a kind of museum of astounding facts

Something to shock

Bill Gross observed that the Fed, by remitting the interest in earns on government securities, in effect absolves the Treasury of its obligation to pay. You might even think of it as a species of default, said the king of bonds.

Value times three

Cash constitutes 62.8% of his portfolio, Mitch Cantor, portfolio manager of Mountain Lake Investment Management, told the Grant's audience. After which he pitched a trio of value-laden, improbable-sounding equities.

The Bigger Short

Paul Singer, founder of Elliott Management Corp. and among the earliest proponents of the 2006-08 trade that Michael Lewis popularized in "The Big Short," took the Plaza stage to propose an even bigger short.

The great debate

Passive investing is no fad, contended John C. Bogle, in an opening salvo of the debate over the merits of indexation. The editor of Grant's spoke to the virtues of research, analysis and imagination.

Not so safe

J.P. Morgan Chase has hired 8,000 people just to comply with the onslaught of post-crisis regulation. At some higher level of regulatory intensity, the Fed may just achieve its mandate for full employment. Its mandate for financial stability? That’s another story.

April 3, 2015, Vol. 33, No. 07

Janet Yellen, say hello to Bill Martin

Moving to free-market interest rates from the governmentally administered kind is the issue of the hour—and of the day, month and year, in the opinion of this interest-rate observing journal. Happily, the trick has been done before.

Use as directed

On July 15, 2014, on the ceremonial stage of her second Humphrey-Hawkins testimony, Janet Yellen singled out biotech (and social media) stocks for their "substantially stretched" valuations. Since that ex cathedra pronouncement, the Nasdaq Biotechnology Index has rallied by a cool 39%. And now?

Turn of the tide?

Kind words for an orphaned sector of seaborne commerce. A funny thing happened on the way to its supposed insolvency.

Now he's got a blog

In his maiden post on the Brookings Institution Web site, Ben Bernanke contends that fragile economic conditions, not radical monetary policy, pushed interest rates to the floor. Did the former chairman check with the Bundesbank?

March 20, 2015, Vol. 33, No. 06

Operation Barn door

Incapable of predicting financial crises, our central bankers are doing their utmost to prevent them. Should you rest easier on that account? You should not.

Bullish even now

"Settle in" for a period of relatively weak oil prices, Rex Tillerson, CEO of ExxonMobil, resignedly advised analysts the other day. Reconsider the values inherent in a pair of orphaned energy stocks, Grant's proposes.

Monetary diversity

That currency in your wallet, Ms. or Mr. American, is it all the same color green? If so, you are in violation of the time-honored investment precept of diversification. The case for diversifying into a new and different color combination

'Patient' is--still--the word

From the vantage point of Tuesday, the Fed will stand pat on Wednesday. We hereby make brave to forecast an event that will have occurred before the forecast is issued. Patience, Ms. Yellen.

March 6, 2015, Vol. 33, No. 05

Inflation can surprise you

The meager rate of rise in the CPI for 2014—up by just 0.8%—made news by the very fact of its meagerness. Since 1929, only nine other years have featured an a comparably weak increase in the cost of living. The meaning of this arresting fact is the subject at hand.

Get out of town

You’ve decided to vacation on the French Riviera with family, in-laws, cousins. You could book six or eight hotel rooms—or a single villa in Saint-Tropez. This being the 21st century, you can, and you do, book the villa. Now unfolding is a bearish story on the company that helped you secure it.

Last to first

Gold needs a hug—as central bankers run riot, the legacy monetary asset languishes at $1,200 an ounce—but don’t go feeling sorry for a certain unesteemed and over encumbered mining company. Its fortunes are on the upswing.

Cash for cops

The fact is that currency, under the law, in large denominations. has become non-negotiable. Just try to withdraw $100,000 in hundred-dollar bills from your local JP Morgan Chase branch.The burden of proof is on you, Mr. or Ms. Moneybags.

Nasdaq 5,000—in bonds

Tech stocks matched their March 2000 highs this week. Bonds did them even one better by taking out any known previous high of any recorded era (or so it seemed).

February 20, 2015, Vol. 33, No. 04

In the petrified forest of debt

RadioShack, whose founding dates from the administration of Warren G. Harding, filed for bankruptcy protection on Feb. 5. The question before the house: What took it so long?

Mistaken identity

Either the great lake of redundant crude oil points to long-term oversupply in fossil fuels, or it doesn't. The price of oil hangs in the balance. Not so--by rights, we herein contend--the price of the shares of a certain value-laden chemicals company.

File under 'opportunity'

Like any other branch of distressed investing nowadays, the secondary market in illiquid partnership interests is short the essential element of distress. But that doesn't mean there's nothing to plan for.

Leaving something to chance

Two thirds of investors just surveyed by Citigroup said "action from central banks in Europe and the U.S. would be the principal force driving credit market spreads" in 2015. The principal force? More than even the myriad events that the central banks don't control and can't anticipate?

February 6, 2015, Vol. 33, No. 03

To outsmart a snowstorm

Humility before the financial future seems especially well advised in the wake of the Jan. 27 blizzard that wasn’t.

Essence of China

The supposed once and future driver of world economic growth remains a laboratory experiment in how much debt a society can bear without absolutely collapsing.

Passage to capitalism

A storied investor opens a new India fund. Just the vehicle for a “dynamic and changing environment.”

Not such a lock

Save us from the security experts. What, exactly, do they do?

A future in fed funds

How to place an extremely leveraged bet on everybody being wrong.

January 23, 2015, Vol. 33, No. 02

Havens to hide in

The world’s central bankers have thrown the kitchen sink at a threatened deflation. What would they do in response to the real McCoy?

House of mirrors

Ultra-low interest rates have facilitated bloated inventories and grandiose building plans at a certain high-end retailer. When the roof caves in the aggrieved bulls can take their complaints, or some of them, to Janet Yellen.

Good news for a change

This publication is on record decrying the mass, interest-rate-induced levitation of the property REITS. There is, however, a special, underachieving, value-laden exception.

Generation ZIRP

Lenders and borrowers may be reasonable people, but they periodically miscalculate. There is feast, then there is famine, world without end. It’s the credit-related business models that come and go.

Chinese road show

Whatever the resurgent Shanghai market may portend, it isn’t (so far) the return to good health of the credit structure of the People’s Republic.

January 9, 2015, Vol. 33, No. 01

Central bank of the robots

The Fed stands opposed to the progress of the age.

Christmas came early

The oil price is halved, but so what? A certain well-financed, low-cost producer of an unfashionable energy source is cheaper than ever.

Final last gasp?

Expectant but not bullish on everyman's safe haven.

Follow that trend!

Success is the best salesman.

Early bird special

Stephen A. Schwarzman, CEO of Blackstone, said that energy was going to be an "amazing investment opportunity." He seems to have meant it.

E-Z does it, Ms. Yellen

Ecuador on Tuesday secured a $5.3 billion credit line from China's Eximbank at a cost of just 2%. Whatever happened to the Monroe doctrine?

December 23, 2014, Vol. 32, No. WB

Happy and Merry 2014

To the readers, and--especially--potential readers, of Grant’s: This anthology of recent articles, our annual Grant’s Holiday e-issue, is for you. Please pass it along, with our compliments, to any and all prospective members of the greater Grant’s family. Not yet a subscriber? Make yourself the gift of a year’s worth of Grant’s and get two issues added on to your subscription. That’s a $200 value. We resume publication with the issue dated Jan. 9 (don’t miss it!). Sincerely yours, James Grant

December 12, 2014, Vol. 32, No. 24

Hugs for the hedged investor

In the year to date, the S&P 500 has risen by 11%, the average hedge fund hardly at all. For many long years, to hedge has been to lose. To all things come their season.

Baiting a hook

Panic, or the lack of it, is the subject under review. “Speculate like you mean it” is the message.

Remit No. 3

Monetary reaction to the whiplash markets of the ides of October is one point of focus. The cartoonishly oversupplied New York money market makes a second. Is the Fed willing or able to tighten?

Debt on the outs

Leverage comes a cropper on Tuesday.

Letter from Jack C. Bogle

November 28, 2014, Vol. 32, No. 23

Quest and ye shall find

There ought to be deflation, these pages have long contended. As the cost of making things falls, so should the price of buying them. Which brings us to a certain Big Board-listed case study in the progress of the species.

Built by bonds

RIP, Jim Lebenthal.

Preferred income

Mortgage REITs deliver income but not always serenity. The common shares pay big dividends until the yield curve becomes disarranged or mortgage prepayments accelerate. Then—poof! There are safer yield vehicles.

Opportunity in confusion

Herewith a survey of risk and opportunity in the junk bond market, post the energy bust. This is the time for security analysis.

Rootin’ for Putin

As to credit risk, these bonds share the triple A credit rating of their issuer. As to currency risk, they bear the mark of Cain. If a widow or orphan is reading, would he or she kindly now refrain?

Trap of a different kind

Try as they might, all the central banks can’t devalue every currency. At least, they can’t successfully devalue—all at the same time—against each other. But they seem to be testing the possibilities.

November 14, 2014, Vol. 32, No. 22

Read the footnotes

Vanguard Group Inc., which beats the mutual fund industry by not trying to beat the stock market, attracted more money in the first 10 months of 2014 than it did in any calendar year of its storied 39-year history. Costs, returns and fads are the topics under discussion.

Unaccountably cheap

If efficient-market doctrine were correct, the share price of a certain alternative asset manager would likewise, necessarily, be correct. As we doubt the doctrine, so do we doubt the price. It is too low.

Pick to not click

Mr. Stock Market is fully attuned to the problems of this major oil producer. Mr. Bond Market needs to focus.

Monetary action agenda

With respect to the radicalization of monetary policy, investors en masse resemble the sleepy frog in the warming saucepan. They don’t jump out while the jumping’s good.

Race to debase

A strong exchange rate is the Old Maid of global trade. If neither the dollar nor the euro nor the yen nor the franc nor the renminbi will bear a high exchange rate, which monetary medium will consent to excel?

October 31, 2014, Vol. 32, No. 21

Rise of the machines

On Oct. 15, the steady-eddy markets in senior securities underwent a 24 hour personality transplant. Was this a flight to safety, or a stampede from it?

Case for inactivism

Rare is the eminence who willingly addresses an unwelcoming audience. Martin Lipton holds forth at the Oct. 21 Grant's conference on the menace of activist "wolf packs," members of which had front row seats.

Ackman on Lipton

After lunch, the microphone passes from critic to alpha wolf.

Extreme contrary opinion

Cullen Thompson and Ian Hague sing the praises of pariah markets.

Red sunset

China has twice as much debt as a year's GDP. That debt is growing twice as fast as GDP. Charlene Chu probes the consequences of those interesting facts.

Three thousand millionaires

Capitalism, the rise of Home Depot, margin debt, political investing and common stocks are the subjects on Ken Langone's mind.

Man with a plan

Plan 'A' for the serious investor is to deal with the financial world as it is. Plan 'B' is--or ought to be--a monetary alternative. So says Simon Mikhailovich.

Just stay home

In lending and borrowing--and tractor maintenance, too--the local market's best, according to Bruce Greenwald.

Banking on Africa

Bob Diamond identifies the problem: undercapitalized, overly complex, meagerly profitable, too-big-to-fail European Banks. Now for the solution.

SNBN is the Ticker, in Zurich

The Swiss National Bank (it's a stock, incidentally) finds itself in the crosshairs of an angry public.

October 17, 2014, Vol. 32, No. 20

Case for an un-taper, Part II

America and the world are joined at the economic hip (a joint evidently in need of replacement). So the Bank of Yellen will do its duty for the world as it sees that duty. We write to refresh and reiterate the forecast that the Federal Reserve is stuck with the radical policies it has foisted on all the earthlings.

Yield times four

Savers need something besides consolation and a Social Security check. What they need is income—safe, dependable and (to the extent possible) lavish. Pending the return of the 6% Treasury bill yield, next best alternatives are the subject under discussion.

Yield to hope

The weight of debt in the world is one topic at hand. The puny yields attached to that debt is a second. Finally, just what does it take for a sovereign to be denied access to the bond markets?

America the defaulter?

A deep and textured topic is emerging market sovereign debt.

The Rule of 72—a deflationary update.

People weaned on rising prices are struggling with stable ones.

October 3, 2014, Vol. 32, No. 19

What they wish for

Mario Draghi worries lest the euro go from hard to very hard. As it is, the single currency buys too much, holds its value too faithfully, the ECB president says in so many words. His preferred North Star? The consensus of speculative opinion concerning the remote future.

Yield on sale

Income is what many need nowadays—while balancing credit and interest rate risk, of course. Herewith, some ideas on how to procure it.

Bonds of debt

A certain Latin American energy company’s debts are ubiquitous. Are bondholders being compensated for the risks they bear? A story of credit, interest rates, politics--and liquidity too.

The dollar’s strength saps Asia’s

Over the past three months, the U.S. Dollar index has rallied by 7.7%. Export powerhouses like South Korea and Japan, you would think, should be booming. They aren’t.

September 19, 2014, Vol. 32, No. 18

The balance sheet that ate Switzerland

Like a celebrity in flight from the paparazzi, the Swiss Confederation demands protection from its pesky admirers.

‘Timing artist,’ RIP

Paul Macrae Montgomery, proprietor of the Universal Economics technical service, died on Sept. 6 at the age of 72.

Sell advisory

Physicians get sick, lawyers run afoul of the law and financiers make ill-advised financial choices. Herewith a skeptical look at the recent doings of some of the leading lights of Wall Street.

Heavy seas

Toward Russia, Ukraine, and the West, these pages have taken the approach, “this too shall pass.” It hasn’t yet, Mr. Market continues to remind us.

Wages of complexity

Central banks are printing rules almost as fast as they’re printing money. With apologies to Hyman Minsky, this is a monetary moment.

A cloud no bigger than a man’s hand.

Outside of the go-go, upsizing world of tech investing—Twitter and Alibaba make handy examples—cracks in corporate financing are starting to appear.

September 5, 2014, Vol. 32, No. 17

So long then, Cristina Fernandez de Kirchner

Inflation. price controls, capital controls and expropriation, do, ultimately, bear fruit in the shape of collapsed asset values. The Argentine opportunity is the subject at hand.

Ebola, ISIS, deflation

Two of the above-captioned perils exist in fact. The third is a phantom.

Narcolepsy blues

Sky-high margins, ultra-low tax rates and blisteringly fast sales growth are the historical facts surrounding a certain pharmaceuticals business. Falling margins, a rising tax rate and decelerating sales growth prove to be the prospective salient features.

Three amigos

That we love ‘em and leave ‘em—our long ideas, that is—is a longstanding criticism of the management of these pages. Hence the following “where are they now?” analyses of a trio of Grant’s names.

Cutting out the middle man

New Chinese credit flows in May and June jumped by 51%, year-over-year. The People’s Bank twice cut reserve requirements for smaller banks in April and June. Yet the world’s second-largest economy sputters.

August 22, 2014, Vol. 32, No. SB

Vacation delectation 2014

To the readers, and potential readers, of Grant’s:
This anthology of recent articles, our summertime e-issue, is for you. Please pass it along, with our compliments, to any and all prospective members of the greater Grant’s family.
Not yet a subscriber? Make yourself the gift of a year’s worth of Grant’s and get two issues added on to your subscription. That’s a $200 value.
We resume regular publication with the issue dated Sept. 5 (don’t miss it!).

Sincerely yours,

James Grant

August 8, 2014, Vol. 32, No. 16

Leave your worries in the inbox

To herd income-starved savers into junk bonds and equities was no trouble at all. To manage a comprehensive exit from those overvalued positions will prove a tougher undertaking.

Yield to steepness

Obscure, scarce, illiquid, generally callable, potentially volatile and not quite self-explanatory, these oddball securities may be. We judge that their merits trump even their flaws.

For the outcasts

Concerning a worrying, far-away geopolitical conflict, Grant’s takes the position, “This, too, will pass.” A bullish survey of pariah stocks.

Soil erosion

Farmland values climbed with rising corn prices and tumbling interest rates. Now the cycle turns. We write for urbanites, suburbanites, exurbanites and agriculturalists alike.

Macro-prudential Swiss cheese

Low rates and easy money are making waves across the Atlantic. An endless supply of a certain “hard” currency.

July 25, 2014, Vol. 32, No. 15

A short history of 2%

Having money and needing income, yield-deprived investors will invest in the opportunities that the promoters put in front of them. First comes the laughter, then the tears.

Hello, Jay Carney

On the market timing of the press secretary—and that of Grant’s.

Meet Valeant Jr.

With its zippy share price and fashion-forward business model, Valeant Pharmaceuticals International Inc. has become a kind of drug industry idol. One of Valeant’s many votaries is the subject at hand.

Good dog, Snoopy

One particular passage in the text of last week’s Humphrey-Hawkins testimony had the owners of life insurance stocks blowing kisses at Janet Yellen. The bulls wish that she had said not one word more.

Fasten your seatbelts

This long-successful distributor of nuts and bolts faces intensifying competition and diminishing profitability. Is multiple compression next?

Stay-cations for Wall Street

Nearly four million pounds of paper money do create a sense of inflationary anticipation. But where’s the thing itself?

July 11, 2014, Vol. 32, No. 14

Sell to whom?

A revered bond mutual fund plays fast and loose with the gospel of liquidity. Advice to its investors: If it ever comes down to a run, run early.

Just you wait

Many lush bull-market months have skipped by since our upbeat analysis on a certain leveraged real estate company. The subsequent derisory rise in the share fairly demands a reappraisal.

Fun starts now

An influx of talent and capital into the single-family rental market has dampened the rate of rise in house rents to well below that of apartment rents. A temporary disappointment?

Left hand, right hand

Addressing a friendly audience at the International Monetary Fund last week, Janet Yellen pledged to tackle emergent financial risks with rules, not interest rates. “Good luck with that,” we say.

Green shoots have windows

Banks are lending and someone, of course, is borrowing, but to what end?

June 27, 2014, Vol. 32, No. 13

‘Doesn’t have to be a reason’

Millions of people can’t predict baseball, and billions can’t predict soccer. As for interest rates, commodity prices, exchange rates, GDP growth, the weather, and equities, the cream of Wall Street can’t seem to predict them, either. On the difficulties—and opportunities—in the top-down branch of the speculative arts called global macro.

FedEx’s little friend

A small REIT with a big dividend is the subject under discussion—that and the boom in e-commerce, the widening of the Panama Canal and the gift of scrawny interest rates.

Lucky or smart?

Almost exactly one year ago, this publication pitched an investment in warrants to buy bank shares coming out of the crisis-era TARP program. The warrants have levitated, though not for every reason adduced in our analysis.

Neighborhood’s changing

A defining characteristic of today’s boom is the legacy of yesterday’s bust—not just the memory, but the consequences. Herewith a survey of the central-bank-engorged commercial real estate market.

Bye-bye, Jay Carney

This publication wishes to thank the now former press secretary for his public service—and his market timing.

Ugly contest

Scandal-ridden New Jersey, where the Christie administration is under investigation for possible defrauding of bondholders, is just one issuer of dubious credit quality sporting a miniature interest rate.

June 13, 2014, Vol. 32, No. 12

Springtime for price discovery

Uber and Adam Smith stand for price discovery, the central bankers for price administration. The latter may be futile, but it’s not without consequences—or opportunities.

Piketty’s charges

On the magic of compound interest.

Book’s closed

The road to riches is poorly marked, long and winding. A bullish analysis of a complex financial business that travels some of the most remote stretches of that storied thoroughfare.

A million for Pierre

A survey of some of the most unloved and under-owned stocks in the world. Can you guess which legacy monetary medium they dig from the earth?

Heads I win

Single-B rated Cyprus, recently returned from the dead, is ready to meet the clamoring demand for new, low-yielding debt. Thoughts on better ways to snag a euro yield.

May 30, 2014, Vol. 32, No. 11

Upside breakout on heavy volume

Narenda Modi, who won the world’s largest election not so much in a landslide as in an earthquake, has already achieved the seemingly impossible. The meaning of this signal event for the readers of Grant’s is the subject at hand.

Going down

On May 21, a leading Chinese daily crystallized the mainland’s real estate situation: “The rich have sold, the banks are scared, the government won’t come to the rescue and developers are frantic.” On turning this predicament to profit.

All ahead full

A half-decade ago, few spared a thought for liquefied petroleum gas. Today, the United States is a growing net exporter of that shale-derived substance. One company, in particular, stands to benefit.

No way to win

In the "high"-yield market of 2014, Wall Street and the Federal Reserve have combined to create securities that present their holders with the near certainty of loss, should the price level rise or fall.

Reality check

One might suppose that corporate accounting conventions furnish less scope for make-believe than national income accounting protocols do. The truth is otherwise.

May 16, 2014, Vol. 32, No. 10

From Russia with value

You can have cheap stocks or good news, but you can’t have both at once. The profitable application of the Joe Rosenberg dictum is the subject at hand.

Couldn’t be better

A certain capital-equipment lessor has not one complaint about America’s weak-as-water business expansion—wherein lies the trouble.

Rentiers wear sweaters

The in-house schizophrenia of the pink paper has come to a full boil.

Siren song of 6%

“Laws are like sausages. It is better not to see them being made.” In 2014—with all due respect to Count Otto von Bismarck—yields are like sausages.