What we’re reading (12/3)
“Goodbye, Bull Market: This Spot-On Indicator Is Saying What You Don’t Want To Hear” (MarketWatch). “Contrarian investors are confident that a major stock-market top is on the horizon — they just don’t know when. That’s because investor optimism can stay dangerously elevated for months before the bull market breathes its last.”
“Sam Altman Has Explored Deal To Build Competitor To Elon Musk’s SpaceX” (Wall Street Journal). “Altman reached out to at least one rocket maker, Stoke Space, in the summer, and the discussions picked up in the fall, according to people familiar with the talks. Among the proposals was for OpenAI to make a series of equity investments in the company and end up with a controlling stake. Such an investment would total billions of dollars over time. The talks are no longer active, people close to OpenAI said.”
“The Case For A New Floating Rate Treasury Note” (Darrell Duffie, Donald Wilson Jr.). “The accelerating digitization of financial markets creates a clear and immediate need for a sovereign instrument that combines the safety of U.S. Treasury credit, the liquidity of overnight funding, and the transparency of on-chain settlement. The Treasury has an opportunity to meet this demand and to increase financial stability in digital-asset markets by issuing a new security, Perpetual Overnight Rate Treasury Securities (PORTS). These notes would be issued and redeemable at par, daily. Given their attractiveness as collateral and as a settlement medium, PORTS would likely yield below the Secured Overnight Financing Rate (SOFR), with a spread that depends on the supply. If we are right that there is significant latent demand for PORTS, the need to issue longer-maturity Treasuries would decline, saving taxpayer borrowing costs. PORTS would also advance the current U.S. administration’s strategy of further empowering the dollar with stablecoins.”
“Living In The Age Of Discontent” (Known Unknowns). “This is an age of discontent. Just note how often we use the word crisis—the affordability crisis, the housing crisis, the everything crisis. And yet we’ve never had so much, not only in terms of wealth (which I’ve written about before), but also income. It’s true the middle class is disappearing—but largely because so many people have become upper-middle class. And fewer people than ever live in poverty—even by real American poverty standards.”
“An Introduction To Auctions” (Homo Economicus). “We have both made incredible progress in estimating the parameters of auctions, and yet have so far to go. We know much less than we think we do about auctions. The assumptions needed to uncover the distribution of valuations are restrictive, and often not met in practice. These assumptions are not trivial, and often suffice to flip the sign of the results. I very often see papers make assumptions, often in a throwaway tone, which are wholly responsible for the observed results. This is not a field which you can very well venture into, reading only the abstracts and expecting never to be misled. One must, in order to choose to believe these papers, carefully consider how their assumptions interact with the results which they have found.”
