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Feature Article

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?

Topics

Please click on a topic below to read individual stories

Articles of Interest:

Gold

"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...

APR 22, 2016

Gold

"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.

NOV 14, 2014

Gold

"Let's bury the gold"

A friend proposes to strike it rich in gold by giving the public what it wants. What the public wants is mining stock. We know that by the stupendous valuations accorded mining companies at a time of stable gold prices. People want mines -- so let's give them mines, our friend proposes. Let's buy some gold, bury it, dig it up and sell it.

SEP 21, 1987

Financial History / Cycles

"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?

FEB 26, 2016

Financial History / Cycles

"Inside ACE Securities’ HEL Trust, Series 2005-HE5"

The nation is running out of magazine covers on which to announce the coming collapse of house prices. From which fact it could be inferred that . . .

SEP 8, 2006

Financial History / Cycles

"The slowest asset"

In Houston, office rents are falling again, fully a decade after the Texas energy business stopped inflating and began deflating. Rents continue to fall in New York, too...

APR 24, 1992

Global Macro Stories

"The balance sheet that ate Switzerland"

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

SEP 19, 2014

Global Macro Stories

"Beijing to Sydney"

Herewith an update on China (sinking), Australia (sympathetically sinking), and a handful of Grant's short-sale names (also sinking, except for the one that soared).

JUN 14, 2013

Global Macro Stories

"Nikkei put warrants"

The wonderful Herbert Stein remark about patience--"If something can't go on forever, it won't"--has been as good a motto as any to lose money by in this epic bull market.

JUL 7, 1989

Equity Longs

"The thrifts are coming! The thrifts are coming!"

A discussion of newly converted thrifts coming to the market.

OCT 29, 2010

Equity Longs

"Certifiably formerly toxic "

A discussion of the transformation of Innospec.

SEP 17, 2010

Equity Longs

"Pariahs’ club "

The stock market is, by our lights, absurd, but it is becoming slightly more symmetrically absurd. There is a growing list of cheap valuations to complement a considerably larger number of extravagant ones.

FEB 4, 2000

Equity Shorts

"Anticipating Mr. Friedman "

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.

DEC 11, 2015

Equity Shorts

"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.

JAN 23, 2015

Equity Shorts

"Drug dealer"

A financialized age has at last produced a financialized pharmaceutical company. Herewith, a long look at an enterprise that does its compound-hunting not in the laboratory but in the stock market.

MAR 7, 2014

Fixed Income Longs

"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.

MAR 11, 2016

Fixed Income Longs

"Introducing the Grant’s Supermodel Credit Portfolio"

Credit is what we are bullish on--cast-off residential mortgage-backed securities, senior bank loans, convertible bonds and corporate...

DEC 12, 2008

Fixed Income Longs

"Klarman baits a hook"

Seth A. Klarman, an investor of private capital in Cambridge, Mass., is now, and has been for some weeks, buying junk bonds--a few issues--with conviction.

FEB 16, 1990

Fixed Income Shorts

"Yield to worst"

"The food is terrible," to quote the famously ambivalent restaurant review--"and the portions are so small." Much the same can be said of today's junk-bond market.

APR 4, 2014

Fixed Income Shorts

"Napoleon advances on Moscow"

Although opulent, the 1987 Campeau Corp. annual report is dated. On April 1, two months after the close of the Campeau fiscal year, Federated Department Stores entered the corporate fold...

JUN 24, 1988

Fixed Income Shorts

"Junk debunked"

In the bond market, this is a day of high hopes and low interest-coverage ratios. It is a day of the near extinction of the triple-A corporate credit and the rise to investment respectability of the sub-Baa credit...

SEP 24, 1984

Alternative Assets

"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.

AUG 8, 2014

Alternative Assets

"Zero-coupon trees"

While Wall Street has disavowed extreme leverage since the crisis of 2008, foresters practice it as a matter of course. Dig a hole, plant a seedling and wait 25 or 30 years.

JUL 13, 2012

Alternative Assets

"Trump for the bid"

A coincidence in the latest Playboy: Donald J. Trump, the subject of the Playboy interview, and Miss March, Deborah Driggs, share the same basic philosophy of life.

FEB 2, 1990

Grant's Archive

Subscribers may download whatever they wish. Non-subscribers may search the archives and download past issues at the cost of $115 per issue.

To license individual articles for reprint, please email us at reprints@grantspub.com

September 20, 2019, Vol. 37, No. 18

The surprise factor

Conditioned to believe that someone’s in charge, we factored out the unexpected. On the physics of Coors Field.

Fiscal-crisis preview

Too many securities, not enough liquidity.

Renaissance of value?

“Safe and cheap” equities, so long in the shade, may be ready to shine.

AOC, CFA

When she is right, she’s right.

Margins to go

In the dining-out business, a kind of profitless prosperity.

‘Epitome of the cycle’

We remain bearish on the first-ever experiment in late-stage venture capital combined with private equity combined with a transaction tempo resembling that of a fast-paced hedge fund.

Whole lot of nothing

Did the European Central Bank actually cut rates?

September 6, 2019, Vol. 37, No. 17

Monetary paradigm shift

Insiders shockingly demand top-to-bottom reform. An outsider has a plan.

Different ratings agency

The catalyst is on the table, but tell that to Mr. Market.

Gilt by association

A quartet of stocks of the smallish, illiquid and hairy type. Value is returning to Britai

‘Buy,’ we said

We write to acknowledge an error of judgment, gather appropriate lessons and glare into the future.

Laurels for the long bond

Stocks for the long run? Stocks and bonds has been closer to the mark.

August 9, 2019, Vol. 37, No. 16

Bonfire of the yields

Yen for yen and euro for euro, no balance sheets make more mischief than the ones deployed by the sponsors of today’s negative nominal yields. What’s safe about a guaranteed loss?

‘Big passion project’

A high-risk, still early-stage arbitrage play between the divergent prices of crude oil and natural gas.

Uneconomic animals

A small bet against the Hong Kong dollar still seems entirely rational.

Incumbency advantage

In the contest between, on the one hand, the merits of free cash flow and, on the other, the prospective fruits of business disruption, the innovators are pledging to build a new industry on the ashes of the old one.

No cheese whiz

A known Grant’s pick-to-not-click previews the problems in relisting pricey leveraged buyouts.

The story of 24 hours

With everything that is going on, the most noteworthy item is what China is not doing.

July 26, 2019, Vol. 37, No. 15

The best economist on the lowest rates

Harnessing a formidable body of work to solve the mystery of today’s topsy-turvy bond market and to answer the question “have bond prices reached a permanently high plateau?”

Monetary jumping bean

This former Grant’s pick-to-click had 36% sawed off its share price. Seven lean years later, we reaffirm our bullishness.

Raising the roof

“Existing” home sales for May fell by 1%, the 15th consecutive monthly decline, while June housing permits dropped by 7%. Even so, a hopeful look at the housing situation and a bullish analysis of a certain homebuilder.

Savers’ consolation prize

There is one corner of the money market where rates are still levitating.

July 12, 2019, Vol. 37, No. 14

Mr. Market’s fiscal escape route

Unbalanced operating budgets, seemingly hopeless deficits in pension funding, relentless out-migration, fearsome property taxes, irksome gasoline taxes, the threat of soak-the-rich income taxes – you wonder where it will lead, and when.

Model trains

Few have made money by approaching the ill-managed cyclicals of yesteryear from the vantage point of reversion-to-the-mean – or with the attitude that the shelf life of any management cult is finite. Maybe it’s time.

Art of the exit

You’d be excused for assuming that anybody and her sister-in-law could close a private-equity deal, but exiting is another story. Is the public market ready to receive a zombie mouse?

Scooping the CPI

Monday’s Wall Street Journal birthday supplement marking the 120th anniversary of the first edition of Charles Dow and Edward Jones rather buried the lead.

‘IOER’ made easy

The Federal Reserve cut rates on May 1, not that you would know that from perusing the president’s tweets. Herewith an exploration of an important, if recondite, corner of U.S. monetary policy.

Dots unconnected

A bull market in cognitive dissonance roars on.

June 28, 2019, Vol. 37, No. 13

Trillions seek stable home

A speculation on the end game of this extraordinary chapter in monetary affairs.

172 years young

The apple of Grant’s eye can ride out a recession or to continue to prosper in the absence of one.

Mega-style drift

It must mean something when low-cost Vanguard eyes the high-fee private-equity business.

Mud Bowl

The wettest summer in modern American record-keeping is good for something.

Bids wanted

Liquidity transformation needs liquidity.

June 14, 2019, Vol. 38, No. 12

All in favor

In monetary matters, Mike Pence agrees with Donald Trump. And because Larry Summers agrees with Pence, it follows that the former president of Harvard University is on the same page as the sitting commander-in-chief. A hardened consensus of financial opinion ought not to be comforting.

Long-shot nation

A gamble on the long-running inflation-devaluation-corruption-default-recession-statism champion of the Western Hemisphere.

Its own planet

No valuation like it, not on this planet.

Future shop

Opportunities for self-insuring against the unexpected.

Curve ball

What the historical record suggests for an investment strategy in the 12 months following an inversion of the 10-year/3-month yield curve.

May 31, 2019, Vol. 37, No. 11

Fresh faces for America’s currency

An action plan to advance the cause of monetary diversity in America.

In which we erred

In the issue of Grant’s dated May 3, we had bullish things to say about a trio of baby bonds that yielded more than 6%. We wrote before we truly understood what we were talking about.

New misery index

Presenting the New Grant’s Misery Index. For a financialized America in which the S&P 500 has taken over the national mood.

Small big bet

China’s “special administrative region” isn’t your father’s Hong Kong and confidence is the most important kind of capital.

Headline news

Investors seek risk in muni-land.

Total addressable hope

The levitating share prices of a pair of hot stocks may point to the certain and final automation of the bond market – or to nothing more newsworthy than the familiar fact that EZ money is good for the stock market.

Dots need connecting

When do deficits matter?

May 17, 2019, Vol. 37, No. 10

Just call it the ‘bizzle’

History may remember these times as a golden age of invention and entrepreneurship, but those flattering descriptors should come with an asterisk. Introducing the bezzle’s first cousin.

For steeper and choppier

A fund for anyone who expects, or dreads, a reversal of the steady states of being in fixed income today.

Free interest rates!

On May 7, the editor of Grant’s addressed the Bradley Foundation Prize event in Washington, D.C. What’s to be done about Jack Daniel’s-grade financial disinhibitors?

Fear factor

A case of soaring revenues failing to deliver where it counts.

Cash wanted

An update on a certain global avatar of growth-at-any cost.

On your honor

Across the Atlantic, a controversial fund and its founder presage trouble for America’s illiquid-securities business.

On strike

The bet on a more dovish Fed is not predicated on a slowdown in inflation but in the S&P 500. What’s the strike price of Chair Powell’s put?

May 3, 2019, Vol. 37, No. 09

Buried alive in ‘Businessweek’

Things have come to such a sorry pass for the ancient scourge of paper money that Bloomberg BusinessWeek has written its obituary. Inflation dead declaims the April 22 cover story. “Dormant” is the word, we demonstrate.

Update on GE

On the inadvisability of having a taxable address in the City of New York.

Energy super-bulls

“When this is all over, every publicly traded Permian Basin name will be taken over.” Herewith the meaning of the word “this,” along with an assortment of bullish investment ideas related to that suggestive pronoun.

Corporate debt pre-mortem

A must-read anticipatory analysis of what will go wrong in the next, yet unscheduled, financial train wreck.

Risk and reward

Wary of both the income famine and the private-equity boom that prompt the outpouring of middle-market corporate debt, we nonetheless find bullish words for a pair of business development companies and a triplet of BDC baby bonds.

Charge it – off

It’s not just the flat yield curve that worries America’s bank chieftains.

Let’s emulate China

Doubtful advice from the senior, non-voting kibitzer of American monetary policy.

April 19, 2019, Vol. 37, No. 08

In the words of Paul Krugman

Propounded by the economist Abba Lerner, modern monetary theory is an old thing made new. A close and lucid reasoner was Lerner, but his disciples? Not a model, rather an “attitude.”

Lifting the veil

Half of the moon is dark, but 85% of the leveraged-loan market is shrouded. Shedding a new bright light on the credit profile of that $1.1 trillion accident-waiting-to-happen.

‘It is not a cycle’

“China will elect to float the renminbi,” speculated Russell Napier, leadoff speaker at the Spring 2019 Grant’s Conference, “and a jarring deflationary shock will quickly give way to rip-roaring global inflation.”

The power of ideas

“If you pay a price expecting an incremental reinvestment of 14% and it’s on its way to 7%, it can be an expensive lesson.”

Outside the lines

“I’m looking forward to having my Warhol Campbell’s Soup painting arrive at my doorstep in an Amazon van.”

FOMO headed here

“You will get new highs on all of the averages,” observed Wall Street’s best stock-market technician.

Muse to central bankers

On money and banking and the duty of a central bank to clean up after a boom: Thoughts from the Greatest Victorian prove especially timely.

In the Age of Trump

“I like the market here, but I don’t like the direction we’re going.”

Deflation on the brain

“You don’t need much of an increase in inflation to change the market tone of TIPS, because expectations right now are a deflationary kind of thing.”

A retiring country

“In Mexico, people retire when they are 72 years old, in Brazil at 59, so this is an impossible system.”

Interest-rate overview

Seated with your editor onstage at the Plaza, the financial market historian Richard Sylla came prepared with a multi-millennia view.

‘It just ain’t so’

“You can have no certainty that stocks will beat bonds over multi-decade intervals,” our speaker informed the Grant’s audience, “and I would not assume that you can get 6.6% real in stocks.”

Melting to the upside

Volatility takes a cat nap.

April 5, 2019, Vol. 37, No. 07

To the gnomes of Zurich

On April 4, the editor of Grant’s addressed the wealth-management forum of the Swiss publication Finanz und Wirtschaft. Opportunities abound from central bank manipulation.

Class of 1929

You have money to invest, but stocks are trading near all-time highs and investment-grade bonds, half of which are rated a single notch away from junk, yield a measly 3.7%. A trio of closed-end funds, trading at deep discounts to NAV, offer the value-minded, bubble-phobic investor a fighting chance.

Standing on a box

A little-known fact about unicorns is that they feed on interest rates. They like low, little rates – the tinier, the better. What do unicorns, the humans of private equity and the bulls of Wall Street all have in common?

Cost of low rates

In the post-2008 bull markets, think of the “everything bubble” as the moon overhead. We see but one side, the assets. It’s the obverse, the liabilities, that cry out for attention.

Snowflakes of leverage

Is a 3% interest rate an economy-killer?

March 22, 2019, Vol. 37, No. 06

Larry Summers sings the blues

“Secular stagnation” is upon us – watch out, or we’ll become Japan.

What everyone needs

A trio of ideas for the income-famished investor.

Monetary pain points

A speculation on the investment consequences of the central bankers’ big ideas.

Don't look down

All about a business strategically situated at the intersection of ingenuity, credit, price control and bull-market psychology.

Lights out

The not so little statistical white lies of the People’s Republic start to add up.

March 8, 2019, Vol. 37, No. 05

The ‘Post’ rates New York

“Strong budgetary management” is not what you think of first when you gaze upon City Hall.

Can’t stand 1%

Corporate rivets begin to pop when the real rate of interest approaches even 100 humble basis points.

Not so ‘cheep’

On perhaps the greatest retail stock of the 21st century, we make bold to be bearish.

Eyes unblinkered

If the pulse on which Grant’s has its finger is indeed the pulse of investor sentiment, credulity is a short sale. A speculation on a turn in the Wall Street zeitgeist

Dollars take flight

Russia’s central bank goes to cash.

February 22, 2019, Vol. 37, No. 04

The great non sequitur

The trouble with investing in the 21st century is that you become blasé about the quirks of the age. Before you know it, you start to think, well, negative-yielding debt isn’t so bad. Someone’s buying it.

All ahead full

You can have low prices and bad news or high prices and good news, but you can’t have low prices and good news. A survey of the opportunities in ocean-going shipping.

Dim the lights

Safety is inherent in no investment. And not in the securities of many a putatively safe and secure American electric utility. A demonstration of how little utilities in general, and one utility in particular, answer the description of port in a storm.

Dueling prices

We continue to identify Masayoshi Son’s corporate creation as one of the top contenders for the unwanted cyclical crown of Least Likely to Succeed.

How to stop a bear market

January was one for the record books with RMB 4.6 trillion ($687 billion) in new credit issued to Chinese borrowers. What ever happened to Xi Jinping’s deleveraging drive?

February 8, 2019, Vol. 37, No. 03

An open letter to Bill Dudley

What I was writing to tell you is that the Fed is technically insolvent.

Political risk in America

Even if Alexandria Ocasio-Cortez winds up losing the 2020 presidential election, one tax-related shock looms unavoidable. A survey of deeply discounted opportunities in a bond market not exactly overflowing with bargains.

Fast food take out

You could almost say – we’ll say it – that the tribulations of the American restaurant industry are a mirror to the 2019 state of the Union. A parable of ultra-low interest rates and put-upon franchisees.

Out with the old

If all goes according to plan, the post-Libor transition will be the money market’s own version of the anticlimactic, year-2000 computer-clock changeover, Y2K.

Growth? Not much

After opening up the taps to businesses in December, bankers are having second thoughts.

January 25, 2019, Vol. 37, No. 02

A 500-year bull market shows its age

It’s nobody’s idea of breaking news that interest rates have tended to rise and fall in generation-length intervals. More striking is a young scholar’s contention that these decades-long undulations are only the wavelets of a half-millennium decline, a trend that will carry to still lower lows in the next recession.

RIP, John C. Bogle

Jack insisted he has enough money. His fans may doubt he received enough thanks.

Peak superhero

Creative destruction costs money, as the holders of low-yielding debt in heavily encumbered businesses may presently be reminded.

Waldo's the name

A new/old method of regulatory arbitrage.

Hospitalized biotech stocks

Illiquid, unfollowed, undesired and battered, micro-cap biotech stocks tick nearly every contrarian’s boxes.

They ask so little

This may be a problem for newly invigorated bond buyers.

January 11, 2019, Vol. 37, No. 01

On returning to life as the stock market

The man who could topple the Commander-in-Chief is himself constrained by a greater power.

No waiting required

Netflix, Inc. was the best-performing stock in 2018, with a total return of 39%. It is also the only FAANG to generate negative free cash flow. Herewith a connection between these facts and a collection of stocks that just might excel in 2019.

Lottery Tickets, Inc.

The rolling-up of the red carpet of liquidity makes for winners and losers alike. Within this varied grouping, a trio of investment candidates, of which the reader will confront the daunting vocabulary that redirected many a would-be doctor to

Sacrificial securities

Suspense remains the order of the day for the Old Continent’s banks and their black-and-blue shareholders.

Dancing in the dark

This poses a conundrum for the Federal Reserve: Our money mandarins are “data dependent,” or so they tell us, but on what data can they rely?

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