One hour east of Austin, the small post-industrial city of Rockdale, Texas has been suffering through a bit of an identity crisis. Its roots date back to 1873 and its history is largely tied to the expansion of railroad lines hauling local cotton and coal. The salad days for this community began in 1920 when oil was first discovered. Life there only got better in 1952 when the Aluminum Company of America opened the largest smelting operation in the country, eventually producing 1.67 million pounds of aluminum a day for use in everything from U.S. skyscrapers to fighter planes. A Saturday Evening Post article immediately featured Rockdale as “The Little Town That Rained Money”, and these were happy days for everyone. Governing recently reported that, together with the adjacent power plant and mine, Rockdale Works employed about 2,000 locals at its peak. But in 2008, the company announced that it was shutting down all aluminum production due to market conditions. The plant started laying off workers and finally closed in 2014.

Things reached rock bottom for the small city and surrounding Milam County when both local hospitals closed, but then two miracles occurred. The high school football team won the 2017 state championship and the big Chinese company Bitmain arrived with a $500 million plan to build a mammoth plant with 325,000 cryptocurrency mining computers on the old Alcoa site. Unfortunately, the price of bitcoin plummeted in 2018, and the project was dramatically scaled back.

There was national media coverage of Rockdale’s bad turn of events, however, and the area came to attract the attention of another company: the Whinstone Group, a subsidiary of Germany’s Northern Data AG. Whinstone is now constructing one of the largest bitcoin computing mines in the world in Rockdale. So, there are now two crypto mining operations setting up rows of tall computer servers running the lengths of multiple hometown “Tiger” football fields. These mining machines will be used to build a blockchain needed to unlock as much as possible of the limited supply of bitcoins that becomes available. The world’s top operators run thousands of miners and consume massive amounts of electricity to obtain the cryptocurrency, but facilities in this city, county and state are now becoming global competitors. Texas has formed a Blockchain Council to make the state a leader in national blockchain growth, education and business development. Rockdale is simply hoping to become the Little Town That Rained Cryptocurrency.

Bitcoin, first proposed by an anonymous programmer in a 2008 white paper, is a decentralized, independent, digital currency, not regulated or associated with any one country or authorized by a central issuer. It made the headlines this week when Twitter was hacked and several noteworthy user accounts were used to post a crypto giveaway scam. Some consider cryptocurrencies to be worthless or fraudulent and there has been talk of a U.S. ban, but others such as the former chair of the Commodity Futures Trading Commission are lobbying for a U.S. central bank digital currency.

The cryptocurrency creation process is hard to explain as are the transactions which are performed in a network maintained by miners who process and verify them through algorithms. But there is no doubt that institutional demand for the end product is growing; Grayscale’s Bitcoin Investment Trust reported $1 billion of inflows in the most recent quarter. In addition, the pandemic has caused something of a coin shortage such that some banks are offering $5 for every $100 worth of coins brought in from piggy banks and couch cushions. Many businesses are no longer accepting paper currency for fear that it can be a vector for spreading coronavirus.

These days, we find that our lives and routines are changing in so many ways, perhaps permanently. Alternative currencies may in fact continue to become more popular. Major companies including AT&T, Expedia, Microsoft, and PayPal already accept cryptocurrency. At the time of this writing, one bitcoin is worth $9,361.16, up from $5,082.26 in mid-March, but down from its all-time high of $18,571.57 in late December 2017.

Money is all forms is central to every discussion at present. Federal grants and loans have rained on America since March. The Administration and Congress are debating a fifth aid package to extend unemployment assistance and provide additional funding for essential service providers. Furloughed workers are taking withdrawals from retirement accounts. Households are adjusting budgets to meet the new realities created by the pandemic. Students considering a return to campus are negotiating with colleges for more financial aid. Caribbean nations are selling residency certificates, passports and citizenships for major contributions. Corporations are borrowing at record paces. State and local governments, agencies, and nonprofits faced with major revenue losses are taking on new debt at very low rates and lots of investors are wrestling for access to their bonds. OPEC+ is adjusting production limits to maintain prices in the $40-$50 range. Law firms are filing wrongful Covid-19 death tort lawsuits in pursuit of high-dollar damages or settlements. With only 100 days to go until election day, political candidates are asking for lots more donations.

Earnings season began and the first few 2Q20 reports were terrible, as expected, but not as awful as some feared. Covid-19 cases have been increasing, the prospects for recovery remain uncertain, and many cities and states are starting to reverse some re-openings. But traders continue to look to every bright side. The Nasdaq has hit another all-time high and has gained 4.4% since the start of July; the Dow is up 3.3% and the S&P 500 has gained 4%. The investment grade corporate bond calendar totaled $11 billion last week, bringing the year-to-date total to an astonishing $1.2 trillion. The high yield corporate slate, led by Carnival Cruise and Norwegian, added up to $6 billion and mutual fund inflows exceeded $840 million. On the commodity side, gold futures have seen 6 weeks of gains. Oil prices have climbed 3.4% to $40.59 a barrel and gold is up 1.5% to $ 1,810 per ounce.

The U.S. Treasury has also strengthened in July, although not as much as tax-exempts. The 2-year is flat on the month at 0.14%, the 10- year yield is down 3 basis points to 0.62% and the 30-year at 1.32% has fallen 9 basis points. In the municipal bond market, customer selling was at the low point of the year last week and investors are refusing to part with their higher coupon holdings. Primary dealer inventory is at all-time lows. The new issue calendar this week should exceed $8 billion but that will not be able to satisfy the relentless four month-long demand. As of the close on Friday, the 2 -year muni AAA general obligation benchmark yield has fallen 10 basis points to 0.17% so far in July, the 10-year yield has fallen 15 basis points to 0.75% and the 30-year at 1.47% is down 16 basis points. The only thing placing a lid on a bigger rally is the unbelievable upswing in higher risk equity markets.

The open prairies, sandstone quarries, and coal mines gracing the land halfway between the cities of Seattle and Portland in Washington attracted many American settlers back in the 1860s and the Town of Tenino became a popular whistle stop on the Northern Pacific Railroad route. The Town’s fifteen minutes of fame came some seventy years later during the Great Depression when the Citizens Bank closed, all bank accounts were frozen, and cash became very scarce. In December 1931, the local chamber of commerce came up with the idea of issuing Tenino Wooden Dollars to restore confidence and spur commerce. The scrip was printed in one-dollar denominations and was redeemable in Thurston County stores during the month it was issued. The alternative currency circulated for two years. Ninety years later, the community decided to break out those old wooden presses again to help workers who have lost income due to the pandemic. Residents are eligible for up to $300 a month to spend for necessities and services from local providers. The bills are made of wood veneer, issued in $25 denominations, and engraved with the Latin phrase Habemus autem sub potestate, translated as “We’ve Got This Handled.”

Communities with less than 2,000 people like Tenino, as well as cities with more than 1.5 million across the country and around the world have been taking maximum advantage of state, federal and private aid but have also been coming up with their own creative solutions to handle a wide range of individual needs as the pandemic rages. A focus on the health and safety of neighbors, customers and employees is in fact contributing to the demise of coin and currency usage. Cashless, contactless transactions have been increasing as case counts have surged. At this writing, there are more than 3.4 million confirmed cases in the U.S. and there have been 136,463 deaths. The Centers for Disease Control reports an overall cumulative Covid-19 hospitalization rate at 107.2 per 100,000, and the median cost of each stay is $45,000. The number of employed workers has fallen to 137.8 million, down 14.7 million from the 152.5 million reported in February. More than 32.9 million Americans were receiving some type of unemployment assistance as of June 20. At the end of the month we will have the first estimate of second quarter growth but it is estimated to show a drop of at least 30%.

U.S. financial markets appear convinced that there is a fall safety net beneath them, fashioned with the shock absorbing synthetic mesh of the Federal Reserve and the U.S. Treasury. Many investors feel certain that a worsening of the pandemic will only produce more stimulus, making COVID-19 in the words of one trader “inversely related” to market performance. But the massive social and economic disruptions and mitigation response that have produced a $2.7 trillion U.S. budget deficit and $7 trillion Fed balance sheet nine months into the fiscal year seem destined to create at least a few market bubbles.

For five months now, we have been relying on government officials to handle decisions affecting just about every waking hour of our lives. They exercise unprecedented control over our whereabouts and activities and, in the process, we have lost so many of our most pleasant summer distractions. Vacations are being postponed, barbecues limited, beaches closed. We miss seeing our favorite seasonal competitions for baseball’s all-star MVP, the Tour de France’s yellow jersey, the British Open’s Claret Jug, and Wimbledon’s trophies. Instead, we listen to the field chatter of central bank officials, follow the wrestling matches involving teachers’ unions and epidemiologists and parents over fall school openings, make wagers on the changing names of professional football teams, and cheer or boo some of the more unusual alliances formed in recent U.S. Supreme Court opinions. In one such ruling last week, the Court decided that nearly half of Oklahoma is Native American reservation land allocated under an 1866 treaty, suddenly raising a host of new tax, zoning, and law enforcement issues for 39 counties.

This week, taxpayers are scrambling to finish 2019 returns after a three-month blanket extension granted for state and federal filers. Traders are watching the first reports of second quarter corporate earnings, assuming that the worst of the coronavirus impact will be reflected therein, more interested in the forward guidance offered by chief executives and progress on vaccine trials. It is hard to say at this point whether the markets have baked in some of the uglier possible scenarios. The S&P 500 is currently trading at 25 times estimated earnings, the highest point since the era of the dot-coms. It has risen 42% since its low point in March 23. A record $184 billion was raised in U.S. equity capital markets in the second quarter according to Refinitiv IFR data. Investors are also fueling rallies in the bond markets. The $1.2 trillion of investment grade corporate bond issuance in the first half of the year is the highest on record. Municipal bond mutual fund and ETF flows have been positive for 10 consecutive weeks, and the ICE BoAML tax-exempt muni index has seen 10 straight weeks of positive returns.

The municipal bond calendar may total as much as $14 billion this week, with nearly $5 billion coming as federally taxable bonds, led by hospital, college, port and airport deals. The 30-day visible supply exceeds $19.1 billion, a high reached only on seven other occasions according to Municipal Market Advisors. On the corporate bond side, investment grade issuance is expected to come in at $20 billion, bringing us closer to a July total of $100 billion. The high yield corporate calendar changes daily; so far this year, new issue volume adds up to more than $219 billion. At this writing, the 10-year Baa corporate bond yield stands at 3.28%, 11 basis points lower on the month. The 2-year AAA rated municipal general obligation bond yield at 0.24% is down 3 basis points on the month while the 2-year Treasury yield is basically flat at 0.15%. The 10-year muni benchmark yield at 0.81% has fallen 9 basis points, outperforming the Treasury 10-year counterpart, nearly flat at 0.64%. The 30-year muni benchmark yield at 1.53% is 10 basis points lower as compared to the 30-year Treasury at 1.33%, which is down 8 basis points in July. The long muni has not seen a 2-handle or 2% yield since May 7; the long bond has not seen a 2-handle since February 19.