Well, it is mid-summer, and the markets — and the business world — just get weirder and weirder. Rather than connect five points directly to one theme this week, we are going to take a look at five news items that have recently made me do a double-take, and have reminded me that there is never a dull moment in business and in investing. Yes, the business world remains — always — surprising and unique.

Trump’s Powell obsession

U.S. President

Donald Trump

wants to fire Federal Reserve chief

Jerome Powell

. He seems obsessed with it, and it has gotten to the point of school-yard name calling bullying. But my question is: Why? Trump of course wants lower

interest rates.

Investors, home buyers and consumers like low rates, and lower rates will also substantially help the U.S. budget by lowering its massive interest rate charges. But let’s take a look at Powell’s record: He managed to successfully slay the

inflation dragon

of 2022; he steered the U.S. economy through the COVID pandemic and essentially by doing so saved the world; unemployment is low and stock markets are near record highs. What’s not to like? Trump needs to understand that simply lowering the Fed rate does not always work, anyway. The market is smarter than that. Market interest rates can still rise even if Fed overnight rates fall. Before making any Fed personnel moves to enhance his own agenda, Trump might want to look at the economic record of Turkey, which pursued a lower interest rate policy before it was ready. (Hint: It’s not good.)

Sarepta Therapeutics Inc.

It’s been a long time since we have seen a blow-up fist fight between a company and the U.S. Food and Drug Administration (FDA). But Sarepta came close. The company is developing drugs and therapies for Duchenne Muscular Dystrophy, a horrible disease affecting mostly boys. Elevidys, its gene therapy treatment, showed promise in treating the disease. But then three patients died taking the drug and the FDA asked the company to stop shipments. On July 18, the FDA met with the company and the company essentially said, ‘

Nah, we are not

going to do that.’ Eventually the company relented and voluntarily stopped shipments. This week, it was allowed to resume shipments after patient advocacy groups lobbied for the drug’s return. How has all this worked out for Sarepta? Shares are down about 87 per cent this year.

Palantir Technologies Inc.

Palantir

has been one of the best-performing large-cap stocks this year, up more than 100 per cent. Market capitalization is now about US$370 billion. Its focus on

artificial intelligence

and data analytics has been in the sweet spot of this year’s tech rally, and the company has reported solid growth in revenue and earnings. That being said, every single analyst report on the company discusses its extreme valuation. It is certainly notable: The stock trades at 267 times earnings and at nearly 100 times forward sales. Some analysts view it as the most expensive stock ever. Of course it was expensive at the start of the year too, before its big move. So, considering this, we looked at the short interest of the company. Right now, it is 2.5 per cent. So while it may be very expensive, the short sellers are not really committing capital to this call by shorting it. As a comparison, Manulife Financial Corp., the conservative and stable insurance company, has a higher short interest, at 2.8 per cent. And, by the way, its price-earnings ratio is only 11 times earnings. Maybe all the short sellers in Palantir have given up. They have certainly lost money so far. But the situation is a good example of how some companies can stay expensive for a long time. Or, sometimes they are expensive for a reason.

What year is it again?

Despite lots of worries in the world investors seem to have lots of confidence. Yes,

meme stocks are back

again, like they were in 2021. Companies such as QuantumScape Corp., GoPro Inc. and Kohls Corp. have seen their stock prices soar as retail traders and Reddit chat boards hype up their prospects. Being on the right side of this trade can be very profitable but investors are not exactly buying “quality” here. Meme stock traders are buying with the expectation, simply put, that someone is going to pay more. We heard a new phrase this week regarding the phenomenon: One noted analyst called it a “flight to crap.” Meme stocks are causing some excitement during the slow summer months, but, like prior instances, we doubt it is going to end well for traders.

If it sounds too good to be true, it could yield trouble

We have been watching with interest this year’s obsession with very-high-yield

exchange-traded funds (ETFs)

. There are products out there, such as YieldMax MSTR Option Income Strategy ETF (symbol MSTY), that have an indicated yield of — wait for it — 72.91 per cent. This ETF uses a synthetic option strategy on a single stock, MicroStrategy Inc. to enhance yield, which is paid out to unitholders. MicroStrategy is among the largest corporate holders of bitcoin right now, and with bitcoin’s rally, the stock has done very well. But even with such a high yield the units of MSTY are down more than 20 per cent this year. ETF owners, attracted by the giant income, still haven’t made any real money, even though MicroStrategy stock itself is up about 36 per cent so far this year. Yet, this has not stopped investors from pouring money into the ETF, now at about US$5.6 billion in assets. And this is just one example. There are now many dozens of such super-high yielding ETFs. We think investors need to be careful here. In addition to getting seduced by high yields, investors could be in trouble in a different type of market, or if the derivative market seizes up, as it has done before.

Peter Hodson, CFA, is founder of 5i Research Inc., an independent investment research network helping do-it-yourself investors reach their investment goals. He is also portfolio manager for the i2i Long/Short U.S. Equity Fund. (5i Research staff do not own Canadian stocks. i2i Long/Short Fund may own non-Canadian stocks mentioned.)

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