What we’re reading (10/13)
“Doing Economics As If Evidence Matters” (Paul Krugman, New York Times). A bold, provocative claim from a bold, provocative Nobel Laureate: “the political use of economic theory has tended to have a right-wing bias. But now we have evidence that can be used to check these arguments, and some don’t hold up. So the empirical revolution in economics undermines the right-leaning conventional wisdom that had dominated discourse. In that sense, evidence turns out to have a liberal bias.”
“BofA Warns The Fed Won’t Rush To Stock Market’s Rescue This Time” (Yahoo! Finance). “‘The Fed may be less willing to so easily deviate from tapering plans and talk the market back up as during the last cycle,’ BofA strategists including Riddhi Prasad and Benjamin Bowler said in a note. As reasons for their skepticism they cite equity valuations and returns accelerating to ‘extremes,’ and ‘increasingly real’ risks of inflation overshooting.”
“IMF Cuts Global Growth Forecast Amid Supply-Chain Disruptions, Pandemic Pressures” (Wall Street Journal). “Supply-chain disruptions and global health concerns spurred the International Monetary Fund to lower its 2021 growth forecast for the world economy, while the group raised its inflation outlook and warned of the risks of higher prices. In the IMF’s latest World Economic Outlook report, released Tuesday, economists cited the spread of the Covid-19 Delta variant and said the foremost policy priority is to vaccinate an adequate number of people in every country to prevent dangerous mutations of the virus.”
“Cathie Wood Says Exodus From High-Cost Cities Will Push Down Inflation As Ark Heads To St. Petersburg” (CNBC). “Wood has been vocal about her theory on deflation. While many market participants are concerned about rising prices, the Ark Invest founder expects deflation amid a breakdown in commodity prices, gridlock on tax policy in Washington and innovation trends taking off.”
“Loans Will Be The Key To Banks’ Future Fortunes” (DealBook). “Loan growth was way down at the beginning of the pandemic and has so far been slow to recover. Consumers and businesses benefited significantly from government stimulus efforts, which reduced demand for credit and helped them pay off their debts or amass more cash. But Richard Ramsden, an analyst at Goldman Sachs, wrote in a recent report that demand for loans was showing signs of increasing. ‘We believe that we have reached the inflection point,’ he wrote. “We see the outlook as increasingly encouraging.’”
