"...How and when will it all end?
- Someone pointed us to Hometown International (HWIN), which owns a single deli in rural New Jersey. The deli had $21,772 in sales in 2019 and only $13,976 in 2020, as it was closed due to COVID from March to September. HWIN reached a market cap of $113 million on February 8. The largest shareholder is also the CEO/CFO/Treasurer and a Director, who also happens to be the wrestling coach of the high school next door to the deli. The pastrami must be amazing.
...Another passage in the Greenlight letter may help explain the bold new thinking of Fed officials, who don’t seem too concerned about inflation risks as they continue to hold short-term lending rates close to zero, even as they have continued to create new money by expanding the Fed balance sheet.
Greenlight writes of the Fed:
...Furthermore, the Fed has indicated that it believes any abnormally high inflation will be transitory.
We wonder, how will the Fed know?
Do price increases come with a label that says “transitory”?
Our sense is that no matter how hot inflation gets in the coming months, the Fed will continue with zero interest rates and large-scale asset purchases.
After all, the U.S. Treasury has a lot of debt to sell and it isn’t clear who, other than the Fed, can absorb the supply...Read all!
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