Rex Tugwell on the origins of the New Deal

We didn't admit it at the time, but practically the whole New Deal was extrapolated from programs that Hoover started.

~ Rexford Guy Tugwell, economist who served in FDR's administration until 1936

June 25, 1934

Tom Lee: 9 month rally "is the start of a new bull market"

In our view, the stock market bottomed October 12, 2022, and the rise over the past nine months is the start of a new bull market.  We have had a huge decline in inflation, and the inflation war is the war the Fed is waging and seemingly winning.

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If inflation is cooling, and therefore people become more confident that two rate hikes are the most, or maybe there’s not even two hikes, then I think it’s going to ease financial conditions, so interest rates and bond-market volatility should be diminishing

~ Tom Lee, "He called the 2023 stock-market rally. Here’s what Wall Street’s biggest bull sees for the second half.," MarketWatch, July 6, 2023

Wall Street Journal on the intense competition for deposits

Montana-based Glacier Bancorp (GBCI) benefited from the glut of money that flooded the economy during the pandemic, as well as the acquisition of a small Utah bank.  Its deposits nearly doubled over the course of 2020 and 2021. 

When more customers started to pull deposits at the end of last year, Glacier had to pivot quickly to try to hold on to them.  In the first quarter, Glacier paid $46 million in interest, up from $5 million a year earlier. Total deposits still fell 7%. 

“We went through a decade of zero to low rates, and so there was a little muscle memory that had to be developed in terms of competing for deposits,” CEO Randy Chesler said on a call with analysts in April. 

Businesses and wealthy customers were the first ones to start looking for higher rates last year.  Now, every type of customer with extra cash is looking for more interest, said Chip Reeves, CEO of MidWestOne Financial Group (MOFG), which is based in Iowa City, Iowa. 

“It’s probably the greatest deposit competition that I’ve seen in my banking career,” said Reeves, who has worked in the industry for three decades. 

Houston-based Prosperity Bancshares (PB) found that even public-sector clients such as counties, cities and school districts were pulling deposits and moving them to higher-yielding investment vehicles.  “I don’t really see those coming back,” CEO David Zalman said on an earnings call in April.

~ Rachel Ensign and Gina Heeb, "Everyone Wants Interest on Their Deposits. That's Bad for Main Street Banks.," The Wall Street Journal, July 6, 2023

Lawrence White on banks runs, the FDIC and latest round of bank failures

If the uninsured depositors in Bank A can't access their funds, that's going to make the depositors in Bank B nervous, we have contagion and then we're back to 1933.

I think on the one hand, FDR [Franklin Delano Roosevelt] would be wincing and saying, "ah, man, I thought we wouldn't have screwups like this."  On the other hand, I think he would smile and say, "ah, it didn't spread, we haven't had contagion.  We haven't had widespread runs.  That was my goal in creating the FDIC."

~ Lawrence White, NYU Stern economics professor, "Everyone Wants Interest on Their Deposits. That's Bad for Main Street Banks.," The Wall Street Journal, July 6, 2023

Friedrich Hayek on Walter Block's libertarian classic

Looking through Defending the Undefendable made me feel that I was once more exposed to the shock therapy by which, more than 50 years ago, the late Ludwig von Mises converted me to a consistent free market position.  Even now I am occasionally at first incredulous and feel that this is going too far, but usually find in the end that you are right.  Some may find it too strong a medicine, but it will still do them good, even if they hate it.  A real understanding of economics demands that one disabuses onself of many dear prejudices and illusions.  Popular fallacies in economics frequently express themselves in unfounded prejudices against other occupations and, in showing the falsity of these stereotypes, you are doing a real service, although you will not make yourself more popular with the majority.

~ Friedrich Hayek, commentary about Defending the Undefendable, 1991 edition

Miguel del Gallego on Robinhood's pay for order flow business model

The argument can be made that its real end clients are these high frequency traders who are actually taking this information and trading against what's referred to as uninformed investors.

~ Miguel del Gallego, ClearBridge Investments analyst, "In the Wake of GameStop, A New Test for Robinhood," Barron's, February 6, 2021

Sam Walton on focus

I have concentrated all along on building the finest retailing company that we possibly could.  Period.  Creating a huge personal fortune was never particularly a goal of mine.

~ Sam Walton, founder of Wal-Mart