What we’re reading (11/9)
“Dow, S&P 500, Nasdaq Futures Rise As Hopes Grow For End To Government Shutdown” (Yahoo! Finance). “The move higher comes as investors watch closely for a deal in Washington. Lawmakers spent the weekend negotiating a deal, hoping to restore government funding after a 39-day shutdown that has disrupted federal services and frozen key economic data releases.”
“Gold Advances With Weakening US Economy Aiding Haven Demand” (Bloomberg). “Gold rose for a second day as a weakening US economy outweighed progress on ending the government shutdown in Washington. Bullion traded near $4,045 an ounce after finishing last week little changed. The precious metal built on gains made on Friday as a measure of US consumer sentiment fell to near the lowest on record, with the shutdown and rising prices souring the outlook.”
“Will Private Equity’s ‘Window of Opportunity’ Last?” (Institutional Investor). “‘For much of the past two and a half years, valuation mismatches have represented the greatest obstacle to deal making,’ Witte said. ‘As recently as last December, investors cited the valuation gap as the single largest impediment to transactions. Today that barrier has meaningfully receded.’ Two thirds of general partners that EY surveyed recently said that the gap has narrowed, ‘enabling buyers and sellers to find common ground and move forward with confidence,’ he said.”
“The Year’s Hottest Crypto Trade Is Crumbling” (Wall Street Journal). “The hottest crypto trade has turned cold. Some investors are saying ‘told you so,’ while others are doubling down. It was the move to make for much of the year: Sell shares or borrow money, then plow the cash into bitcoin, ether and other cryptocurrencies. Investors bid up shares of these “crypto-treasury” companies, seeing them as a way to turbocharge wagers on the volatile crypto market. Michael Saylor pioneered the move in 2020 when he transformed a tiny software company, then called MicroStrategy, into a bitcoin whale now known as Strategy. But with bitcoin and ether prices now tumbling, so are shares in Strategy and its copycats. Strategy was worth around $128 billion at its peak in July; it is now worth about $70 billion. The selloff is hitting big-name investors including Peter Thiel, the famed venture capitalist who has backed multiple crypto-treasury companies, as well as individuals who followed evangelists into these stocks”
“Build, Baby, Build: How Housing Shapes Fertility” (Benjamin K. Couillard, Univ. of Toronto). “Many developed countries face low and falling birthrates, potentially affected by rising costs of housing. Existing evidence on the fertility-housing cost relationship typically uses geographic variation (raising selection issues), neglects unit size, and says little about policy. To progress on these fronts, I first specify a dynamic model of the joint housing-fertility choice allowing choices over location and house size, estimated using US Census Bureau data…To study the causal effect of rising housing costs on fertility, I vary them directly within the model, finding that rising costs since 1990 are responsible for 11% fewer children, 51% of the total fertility rate decline between the 2000s and 2010s, and 7 percentage points fewer young families in the 2010s. Policy counterfactuals indicate that a supply shift for large units generates 2.3 times more births than an equal-cost shift for small units.”
