What we’re reading (12/8)
“S&P 500 Closes Lower As Investors Tap Brakes Before Fed Decision This Week” (CNBC). “Weighing on stock sentiment was the 10-year Treasury yield continuing its recent run higher. The benchmark has moved up this month despite the likelihood that the Fed is going to cut this week as investors worried about the state of inflation in the new year and whether the central bank will be able to continue easing.”
“Paramount Makes $77.9 Billion Hostile Bid For Warner After Netflix Struck Deal” (Wall Street Journal). “Paramount launched a $77.9 billion hostile takeover offer for Warner Bros. Discovery, taking its case for acquiring the storied entertainment company directly to shareholders just days after Warner agreed to a deal with Netflix.”
“Leaked Paramount Memo Reveals What CEO David Ellison Told Staffers About Its Hostile Bid For Warner Bros. Discovery” (Business Insider). “‘We believe the combination of Paramount and Warner Bros. Discovery represents a powerful opportunity to strengthen both companies and the entertainment industry as a whole,’ Ellison wrote in the memo to staffers, which was first obtained by Business Insider.”
“The Price Of Free” (Smead Capital Management). “In a textbook world, active managers would simply step into the widening mispricing and restore elasticity. In the real world, they are terrified of being fired. Haddad’s model shows that active managers do respond—by trading more aggressively when surrounded by passive capital, but only enough to offset about two-thirds of the distortion. The remaining one-third festers. Career risk, quarterly benchmarking and consultant scorecards cap how far any human being is willing to deviate before the redemption notices arrive.”
“The Quiet Surrender Of Fed Independence” (EightateEight). “[I]t is my view that financial markets will ultimately endure, adapting resiliently to the altered landscape of a partially independent Fed. Indeed, markets and economic actors alike will continue to forge a consensus on interest rates, navigating the uncertainties with pragmatic resolve. Yet, this shift evokes a poignant analogy: the US; and, by extension, the global economy, will have traded a sleek, fuel-efficient, and dependable vehicle for a dilapidated, second-hand relic, voraciously consuming resources while rattling precariously along the road. It may still convey us to the haven of consensus, but with an ever-present peril of catastrophic failure en route, underscoring the fragility of institutions once deemed inviolable and the profound stakes of their erosion.”
