Remembering 9/11 on the 20th Anniversary

Remembering 9/11 on the 20th Anniversary

Twenty years ago tomorrow, I was in Manhattan with colleagues, attending a financial industry conference.

At the time, we didn’t know how fortunate we were that our 9:00 a.m. meeting had been changed to 11:00 a.m.

I was on route when the unimaginable happened. The cell phones in the city stopped working, but mine had a San Antonio area code, so I was able to get through to the U.S. Global Investors office to let everyone know we were safe.

With me were two company executives and the extraordinary Nancy Holmes (no relation, although she would often joke that I was her adopted son). She was advising my company as a PR strategist at the age of 82.

I’ve written about Nancy before. She led one of the most interesting and full lives I have ever known. She was a code clerk for the U.S. Army, a model in Paris for Balmain, a photojournalist for Columbia Pictures and a bestselling author and editor, including editor-at-large for Worth magazine. Like me, she was a world traveler, but in that dark hour we all just wanted to go home to Texas.

The night of 9/11, New York City completely shut down. The cabs disappeared and the subways stopped running. The airports would remain closed for many days.

The next morning, I found a driver to take us to New Jersey, where I had reserved one of the last available rental cars in the area. The four of us loaded into a Ford Expedition and began the long ride home. An adrenaline rush enabled me to drive us straight through for 30 hours.

We turned off the car radio because the nonstop coverage of the tragedy was too much to bear. Instead, Nancy entertained us with stories of her incredible trailblazing life, including her close friendships with the rich and famous, from Joan Collins and Elizabeth Taylor to Sean Connery and former hedge fund manager Julian Robertson. A bright light, Nancy passed away in 2007.

On the 20th anniversary of 9/11, I remember all the people who didn’t get to return home to their families, and I give thanks that I was among those lucky enough to do so.

Managing One Crisis to the Next

So much of life is managing risk. That’s true on a micro, personal-level scale as well as a macro, country-level scale. Crises often can’t be prevented, but how you deal with them makes all the difference.

Here we are 20 years following 9/11, and one poll shows that a growing percentage of Americans believe the event changed the country for the worse. According to the poll, which was conducted between August 28 and September 1, more than eight in 10 Americans say the events of that day changed the U.S. in a lasting way. Of those, 46% say the change has been for the worse. That’s up from the 42% who said the same in 2011, and way up from the 27% one year after 9/11.

Nearly Half of Americans Believe 9/11 Changed the U.S. for the  Worse

I can’t definitively say why people feel this way. I will point out that the terrorist attacks handed us the Transportation Security Administration (TSA), the Department of Homeland Security and the PATRIOT Act, all of which some see as unfavorable government overreaches.

This makes me wonder how people will reflect on our handling of the current health crisis one year, 10 years and 20 years into the future. Will the decisions made by today’s leaders be revered, or will they be reviled? I’m thinking specifically of President Joe Biden’s announcement this week that people working in businesses with more than 100 employees must either get vaccinated or else submit to weekly health screenings.

Then there are the lockdowns. I’ve heard some suggest that the states and countries that have enacted the most restrictive lockdown measures have among the most fragile health care systems. Perhaps a consequence of the pandemic should be that we strengthen health care, including responsiveness, equity and efficiency.

Toward that end, we should focus on preventing the underlying medical conditions that worsened many COVID patients’ diagnosis and recovery. A July report by the Centers for Disease Control and Prevention (CDC) found that a vast majority of Americans hospitalized with COVID between March 2020 and March 2021 suffered from at least one other underlying health issue, the most frequently observed being critical hypertension (50% of cases), disorders of lipid metabolism (49%) and obesity (33%).

Where’s the Yield?

Speaking of managing risk, with real rates below zero, many yield-starved investors are being forced into riskier and riskier assets, including high-yield junk bonds. But even these are no longer offering a positive real return, what with inflation at multiyear highs.

According to one estimate, by Deutsche Bank’s Jim Reid, a whopping 85% of the U.S. high-yield bond market currently yields below the annual inflation rate. It’s important to note that this figure has never been above 10% in the past. Even if the consumer price index (CPI) were to fall to 3% (from 5.4% currently), that would still be above 35% of the high-yield market.

85% of the U.S. High-Yield Bond Market Currently Yields Below the Annual Infation Rate

And it’s not just the U.S. For the first time ever, inflation-adjusted yields on junk-rated debt have turned negative after consumer prices increased the most in over a decade in Europe.

Real Yields on European June Debt Turn Negative for the First Time Ever

Stock prices have gained significantly so far this year, which is good, but this has the effect of making the dividend yield look less appealing. As of today, the S&P 500 dividend yield was 1.32%, the lowest point since March 2002, and well below the annual inflation rate.

S&P 500 Dividend Yield at Nearly 20-Year Low

So, where’s the yield? Some investors had hoped to try their hand at crypto lending, but the future legality of this activity is now in the air.

Coinbase’s Crypto Lending Program Halted by Regulators

Before I proceed, it’s important to note that crypto lending isn’t entirely new. Similar to securities lending, it allows investors to earn interest on select crypto assets. Some online platforms have already been letting customers lend out their assets in exchange for income.

But not Coinbase, the largest U.S. cryptocurrency exchange, which has been hoping to launch its own crypto lending platform for months.

That’s because the Securities and Exchange Commission (SEC) has warned the company that if it takes the next step in launching the service, nicknamed Lend, the SEC will sue. Making matters worse, the SEC refuses to explain what law Coinbase is in danger of violating; nor will it give guidance on how Coinbase can launch Lend and still comply with federal securities law. That’s according to Coinbase’s chief legal officer Paul Grewal, who detailed the company’s legal struggles this week in a blog post.

All Coinbase knows at this point, Grewal writes, is that it can “either keep Lend off the market indefinitely without knowing why or we can be sued.” He adds that regulatory uncertainty and ambiguity “only serve to unnecessarily stifle new products that customers want and that Coinbase and others can safely deliver.”

Indeed, investors are starving for yield right now, and it appears some will remain so.

As I’ve said before, commonsense regulations are important to help maintain a safe, level playing field for all parties. Imagine a basketball game with no referees. Cheating would have no repercussions. Now imagine the same game, but with many referees, and with the rules changing arbitrarily. Unfortunately, that’s the scenario Coinbase finds itself in right now.

For more news and updates on this unique and up-and-coming industry and other major markets, subscribe to Frank Talk at

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Index Summary

  • The major market indices finished down. The Dow Jones Industrial Average lost 2.15%. The S&P 500 Stock Index fell 1.69%, while the Nasdaq Composite lost 1.61%. The Russell 2000 small capitalization index lost 2.81% this week.
  • The Hang Seng Composite gained 0.84% this week, while the KOSPI fell 2.35%.
  • The 10-year Treasury bond yield gained 2 basis points to finish at 1.28%.


Energy and Natural Resources Market


  • Aluminum prices are the highest in a decade as the coup in Guinea has clouded the supply outlook, reports Bloomberg, with the risk of mining disruption threatening to expedite the global market’s descent into deepening deficits. One leading supplier, United Co. RUSAL International PJSC, warned it may need to evacuate staff if the situation deteriorates. 
  • Western lumber pricing continued to make gains this week with mills reporting their strongest sales in months. Prices ended the week up 8% at $425 per thousand board feet, down 62% relative to the second quarter of the year, down 55% year-over-year, and up 76% year-to-date.
  • U.S. natural gas prices have broken out of the $3.85-$4.15 per metric million British thermal unit (mmBtu) trading range since late-July, rallying approximately 20% in the past week to $4.71/mmBtu. The move was initially triggered by a large surprise in storage injections, which has added to existing winter storage concerns, further increasing the winter risk premium priced in the market.

Natural Gas Prices Continue to Move Sharply Higher


  • The Chilean Copper Commission reported copper production at 465 kt in July, which is flat versus the previous year. Production saw a decline of 3% month-to-month. Year-to-date copper production in Chile currently totals 3,262,000 tons, 1% below 2020 levels (3,297,000 tons). Peru’s Ministry of Mines and Energy reported that copper mining production in July decreased 4% year-to-year.
  • Hurricane Ida appears to have most impacted the Chlor-Alkali and Vinyls chains. While overall damage assessments remain underway, early indications suggest that the bulk of chemical production in the Baton Rouge area has returned to full operation while facilities in the southern Louisiana region (i.e., Taft, Plaquemine, Geismar, etc.) remain shut down. Chemical producers have largely been reporting limited physical damage to facilities. However, several factors including restoration of power, utilities, hydrogen / nitrogen supply, feedstocks availability and logistics continue to limit the restart of facilities across this southern Louisiana region.
  • According to Goldman Sachs, after a strong share price performance between January and May 2021 for refining (up 40%), the performance of the group has broken down from June to September (refining as measured by the S&P 1500 now only up 17% year-to-date). The bank attributes the recent weakness in the equities to (1) demand and COVID concerns, consistent with negative recent global GDP revisions, (2) tight inland crude differentials and (3) negative earnings-per-share (EPS) revisions around the second-quarter earnings season.


  • China’s steel industry consolidation has been showing signs of acceleration in recent months, with seven major merger and acquisition (M&A) related transactions announced over the July to August timeframe, bumping up the share of China’s top five steelmakers’ output in the process. The Asian nation wants its top five steelmakers to account for 40% of the country’s total steel output by 2025, as it aims to meet its ambitious decarbonization goals. China’s steel industry accounts for around 15%-20% of national carbon emissions, annually. The recent M&A transactions have raised the share of China’s top steelmakers from 26% to 30% of total steel production. 
  • The European Union (EU) is suggesting that the U.S. impose tariff-rate quotas on steel and aluminum imports in a bid to reach an agreement with the U.S. on exempting the EU from its Section 232 measures, sources told FastMarkets. The U.S. and EU are widely expected to reach an agreement by November 1, 2021, on an exemption for European steel and aluminum.
  • Coal was up 12% this week to $289 per ton. Imported met coal into China was up 9.3% this week to $470 per ton. Met coal was up again as supply disruptions in China drove further market tightness, outweighing weaker steel demand due to production cuts.


  • Bank of America is sticking to its view that U.S. exploration and production (E&P) capital expenditure (capex) could be up about 30% in 2022. This includes year-over-year Private / Public E&P capex growth of 50% / 20%. Adjusted for M&A, the Private E&P rig count is now up 85% year to date, with activity clearly driven more by robust wellhead economics than capital discipline. This drilling could have a negative impact on oil prices.
  • Oil weakened as the dollar rose this week, offsetting bullish Chinese trade data that added to positive economic signs emerging from key energy users. A stronger dollar is making commodities priced in the currency less attractive. Prices earlier got a lift from a surge in Chinese trade data, suggesting sturdy demand for goods in the U.S. and Europe.     
  • Coal shipments fell on the month, hampered by the delta variant outbreak in key supplier regions like Indonesia and Mongolia. Coal cargoes have slipped 10%, helping to boost domestic futures markets to record highs.

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September 10, 2021

By Frank Holmes
CEO and Chief Investment Officer
U.S. Global Investors