Charlie’s mid-month reading list

Finance Articles December 2019

It’s time for the next installment of my reading list, which recaps articles we’ve been digesting and circulating internally at Fort Pitt Capital.

Reuters recently published a piece examining China’s largest private shipbuilder, China Rongsheng. The article, “Is struggling shipbuilder China Rongsheng too big to fail?,” recaps the appeal for government aid made by the company. As the government decides whether or not to bail out the employer of nearly 20,000 workers, a familiar question comes into play – are they too big to fail? And if such a large employer is forced into (some form of) bankruptcy, what does this say about the new Chinese economic regime?

Robert Auerbach, professor of Public Affairs at The University of Texas at Austin, contributes an article to the Huffington Post that examines, “Massive Misconceptions About Where the Bernanke Fed’s Money Explosion Went.” The piece states that, “Although the Bernanke Fed has disbursed $2.284 trillion in new money (the monetary base) since August 1, 2008, one month before the 2008 financial crisis, 81.5 percent now sits idle as excess reserves in private banks.” Auerbach argues that these reserves are not stimulating the economy, and that Bernanke should take action to entice banks to lend to consumers and businesses, which would ultimately lead to employment.

“Derivatives are not always ‘financial weapons of mass destruction,’ as Warren Buffet famously called them. However, they are often weapons of mass deception,” states a New York Times article published late last month. The article offers a look at how derivatives have been used by governments and corporations to deceive. Click here to read the entire article.

Finally, be wary of second quarter earnings. This is the topic of a Zerohedge article entitled “Here Is Why Alcoa Just “Beat” Earnings.” It breaks down how the company barely got over the (severely lowered) bar of Wall Street earnings estimates.

We’ll have more coverage of second quarter earnings and other topics of interest at the end of the month. Be sure to check in again.

Nathan Boxx, Bradley Newman, Jason Seltzer

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