Unremember, unremember all of November. Well, at least for the short-sellers in the financial markets.
If you bet against the Dow Jones Industrial Average or the Russell 2000 index this month, you probably lost a handsome chunk of change. After Pfizer and BioNTech announced a coronavirus vaccine with a 90% effective rate and the certainty coming out of the 2020 election, the equities arena went on a tear, with the leading benchmarks seeing green across the board.
A Hole in Your Shorts
But the paper short losses were mostly concentrated in travel and leisure. According to data from Ortex Analytics, here is a list of stocks that quoted Bela Lugosi from The Raven: “That’s what I’m going to do to you now – fare the skin from your body… slowly… bit by bit!”
- Carnival Corporation: -$520 million
- Expedia Group: -$382 million
- Booking Holdings: -$345 million
- Royal Caribbean Group: -$320 million
- Visa: -$316 million
Disney also made the list, costing investors who sold short more than $236 million. At this point, who would ever bet against the company that is competing against Amazon to rule the world?
The Cost of Mortgage Freeman Slides
For the fourth time this year, the long-term mortgage rate has declined to a record low. According to the Mortgage Bankers Association, the 30-year mortgage rate averaged 2.98% in the week ending November 6. This is the first time it has slipped below the 3% mark. Why is this happening? Liquidity and the coronavirus.
First, the Federal Reserve has pumped so much money into the financial markets that the economy is swimming in freshly injected cash that was printed from the basement in the Eccles Building.
Second, the resurgence of COVID-19 is leading to concerns that Joe Biden will give the nod to another nationwide lockdown. This would decimate the U.S. economy in a myriad of ways. When the economy is not picturesque, investors will pour into a traditional safe-haven asset, like mortgage bonds. This trend pushes down yields and lowers interest rates.
The consensus on The Street is that the 30-year mortgage rate will likely come down even more. But could it fall to 0% and perhaps even into subzero territory?
Overseas, several countries have financial institutions that offer a negative rate on mortgages since it is more expensive to hold the cash than to lend it. However, in the United States, it is unlikely that the central bank would ever allow the fantasy of a 0% mortgage rate to become a reality unless the age demographics shift or investors reduce their role in mortgage-backed securities.
Put simply, do not get greedy. If you are in the market for a home, now is the best time for it because of these absurdly low borrowing costs.
Getting Taxed for Working
Are you working in your pajamas in your kitchen? Get ready to pay a tax if one bank has its way.
It is estimated that 42% of the U.S. labor force is now working from home. Despite the crash in Zoom stock prices, it is widely believed that companies will maintain their work-from-home policies after the COVID-19 pandemic. And why not? This decision has more benefits than drawbacks. Well, unless you are an employee who will be punished for finally attaining this perk.
The research arm of scandal-plagued Deutsche Bank proposed slapping a 5% tax on more than half of workers who want to continue working from home once the public health crisis is over.
Should you get penalized for working from the comfort of your sofa for two to three days a week, the 5% fine could raise as much as $48 billion per year. Across the pond, the pecuniary punishment could generate £6.9 billion in the U.K. and 15.9 billion euros in Germany. The revenues could then be used for people who cannot work from home and earn a lower income.
In the end, the big bank is making the statists salivate over another outrageous, egregious, and preposterous penalty. What about workers who have no choice but to fulfill the duties of their positions remotely? How would the government justify this legalized larceny? Deutsche Bank thematic strategist Luke Templeman does not think it matters because such people are “lucky enough to be in a position to ‘disconnect’ themselves from the face-to-face economy.”
This is the vision of the anointed.
Read more from Andrew Moran.