Elon Musk’s rapid bitcoin flip-flop

David MoonBlog

In only a week, GameStop has been dethroned as the darling of millions of newbie day traders. Bitcoin regained that distinction, aided by the news that Elon Musk’s electric automobile company Tesla purchased $1.5 billion of the digital currency in January. In addition to making headlines on investment-oriented information platforms, news of Tesla’s purchase was widely broadcast in the general media. What wasn’t widely broadcast, however, was that a month prior to the company’s huge bitcoin purchase, Tesla co-founder and CEO Elon Musk appeared openly negative about the digital currency. On December 20, Musk, now the world’s richest man, tweeted … Read More

GameStop saga (sort of) explained

David MoonBlog

A bunch of small day traders recently took aim at some billionaire hedge fund managers by driving up the price of the failing video game retailer GameStop. Many of the small traders loosely organized their efforts via a Reddit message board and executed their plan on the free mobile trading platform Robinhood. GameStop stock increased 1,600 percent in January. Hedge funds who bet against the company have lost almost $20 billion. Observers have called it a victory of the small guy over The System, enabled by the free trading offered by upstart brokerage company Robinhood. But this story really isn’t … Read More

Not all stimulus spending equal

David MoonBlog

Through the end of December, the federal government had authorized $3.5 trillion in coronavirus related stimulus spending – every penny of it borrowed. President Biden’s proposed stimulus package would add an additional $1.9 trillion of new debt to that figure. Much of that new debt is paying for much needed societal insurance and repairs, somewhat akin to borrowing money to fight a military assault on our shores or to rebuild following a natural disaster. Almost $180 billion went to hospitals and healthcare providers. Another $18.8 billion was spent or earmarked for vaccine development and distribution. Federal funding of additional employment … Read More

Shutdowns reveal uneven vulnerabilities

David MoonBlog

It will take some time to learn whether COVID-19 has permanently changed aspects of our economy, accelerated inevitable changes or some combination of the two. But there is little doubt that haphazard shutdowns and stimulus benefits have revealed huge discrepancies in safety nets, productivity and the permanence of economic gains. When discussing economic matters, people often unknowingly switch back and forth from macro (the economy as a whole) issues to micro (the economics of the individual.) Federal stimulus checks don’t create economic growth; they merely accelerate future economic activity into the present. But at the individual level, a person without … Read More

Market climbs during DC riots

David MoonBlog

If Marty McFly had brought you a newspaper four years ago describing the 2021 Capitol Hill riot and asked you to guess the stock market’s reaction to events that day, you would have almost certainly guessed wrong. At 4:00 pm on January 6, just as the D.C. National Guard deployed to secure the Capitol Building, the closing bell rung at the New York Stock Exchange, ending a trading day that saw the Dow Jones Industrial Average jump 437 points and set another record high. News headlines do not always help you understand the movements of the stock market. Riots and … Read More

Statistics are funny things

David MoonBlog

I have never seen a college athlete vilified as badly as Tennessee football fanatics attacked Vols’ quarterback Jarrett Guarantano this past season. Sure, he had thrown some interceptions, but surely, he hadn’t been the turnover machine regularly denounced in Knoxville.  Or had he? I looked at the data. Jarrett Guarantano’s 1.9% interception ratio is the lowest in the history of Tennessee football. Better than that of Peyton Manning and Heath Shuler. Forty-two percent better than Josh Dobbs and Tee Martin. Hard to believe?  Look it up. Statistics are funny things. They can surprise us, mislead us, and inform us. They … Read More

The best thing from 2020?

David MoonBlog

Despite the divisive nature of shutdowns, the effort to develop and produce a COVID-19 vaccine has actually fostered, if not inspired, a sense of creative unity that will likely pay dividends for generations. I’m not a fan of the phrase “the war on COVID,” but wars have often been uniting events.  During both World Wars, the federal government unified private companies, universities, the military and other organizations in a coordinated effort to speed development and production of certain essential products.  When Japan cut off the world’s natural supply of rubber during World War II, the U.S. marshaled resources and invested … Read More

Forecasts for 2021

David MoonBlog

With tongue firmly planted in cheek, here are some notable things I expect to happen in 2021. Or not. Don’t be surprised if the Southeastern Conference announces that its football teams will play a 24-game regular season schedule in 2021, with each school playing twice a week. If injuries and in-season surgeries deprive a team of having 22 moderately healthy players available, teams will be allowed to borrow players from the Vanderbilt women’s soccer team to complete their starting roster. Proclaiming affordable housing a human right, Congress will announce the cancellation of all mortgage debt on residences located in urban … Read More

President’s party poor market predictor

David MoonBlog

Last month the S&P 500 increased 10.8 percent. Clearly, the stock market loves Democrats. But in the 70 days between Donald Trump’s election in November 2016 and his inauguration, the market also increased 10 percent. Wall Street must love Republicans. Except the stock market also jumped 10 percent when Trump lost last month. Maybe Wall Street loves Republicans but hates Trump. No; that can’t be it. In the month Bush 43 was elected the stock market dropped 6 percent. Investors hate Republicans. Except the market jumped 10 percent the month Reagan was elected. So maybe investors do hate Democrats. In … Read More

Restarting economy proven complicated

David MoonBlog

During my recent semiannual trip to the mall, the only evidence I saw of a pandemic was the prevalence of masks, even among the packed food court customers, many of whom were less than 6 feet from each other. Early reports indicate that in-person retail sales will likely decline from a year ago, but compared to April, West Town Mall looked like pre-pandemic Disney World on Free Fast Pass Day. As I wrote in March, it is much simpler to immediately and completely shut down an economy than it is to reopen one. The disparity of the economic recovery has … Read More