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March 2021
Does the Fed Have Our Back?
February 2021
What Goes Up...
Does the Fed Have Our Back?
The Fed has a dual mandate: pursue full employment while keeping inflation low. As the years have passed, they seem to have added even more to their plate. They have shown concern for instability in both domestic and overseas markets, a weakening or strengthening dollar, the fiscal deficit and debt, climate change, and income inequality. Some say they have one arrow and multiple targets. Actually, they have created more arrows for themselves by becoming a key purchaser of both Treasuries and mortgage-backed securities. Once again, the markets are leaning on the Fed for continued support and fearing when that support might begin to be curtailed.
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Well, I guess we have to talk about GameStop. First, let’s give a little history about how GameStop got here. The company has been struggling for years as gaming businesses moved to online distribution and relentlessly away from the business model of selling hard copies at local brick and mortar stores. GameStop had gone from a price of $57 a share in 2013 to less than $3.00 in April of last year. Revenue has declined over 40% in less than three years. Earnings have been negative in five of the last six quarters. GameStop actually bought back about one-third of their stock in late 2019 and early 2020, but was unable to move the price of the stock out of the single digits. Needless to say, this is not a company you will find in a Dana portfolio.
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