What we’re reading (10/26)
“Eating The Seed Corn: How Long Can Consumers Rely On Savings?” (Wells Fargo). “Consumers have yet to lose their staying power, and our analysis of household finances suggests consumers still have the ability to rely on their balance sheets for some time yet. The catch: The more consumers rely on their balance sheets to spend today, the larger deterioration we'll see in overall household finances and the worse the eventual economic downturn may be.”
“Stock Picking Isn’t Dead. But For Most Investors It Might As Well Be” (CNN Business). “‘Actively managed funds have failed to survive and beat their benchmarks, especially over longer time horizons,’ said Bryan Armour, director of passive strategies research for North America at Morningstar, in a report last month. He noted that just one of every four active funds beat their passive benchmarks over the ten years ending in June.”
“Tech Stocks Tumble As Growth Falters” (DealBook). “Microsoft’s sales rose at their slowest rate in five years, as rising energy costs and a strong dollar ate into profits. And Alphabet, the parent company of Google, missed analyst expectations and said growth in its core advertising business had slowed to its weakest point since 2013 (apart from a short period at the start of the pandemic), as companies slashed marketing budgets.”
“Accounting Errors To Cost Executives Their Bonuses Under SEC Rule” (Wall Street Journal). “Regulators will make public companies take back executives’ incentive pay if they find significant errors in financial statements, aiming to improve corporate accountability at a time of rising shareholder discontent over pay practices. The Securities and Exchange Commission voted 3-2 Wednesday to complete the so-called clawback rule, with all Democrats approving and Republicans dissenting. Required by the 2010 Dodd-Frank Act to discourage fraud and accounting mischief, the rule’s implementation has been delayed for years.”
“Belated Bonus Watch ’17: Deutsche Bank’s First Bad Bank” (Dealbreaker). “Deutsche Bank just reported its ninth-consecutive quarterly profit, a whopping €1.1 billion, far above the level analysts expected. Which, as far as Shikha Gupta is concerned, is good, because she’d like her fair share, at last…At the time Gupta was laid off, back in March 2017, two-plus solid years of profitability at Deutsche Bank must have seemed like a hilarious pipe dream. As must have being paid “more than ever.” But then again, the Germans needed folks like Gupta to help clean up the gigantic mess they had built Chernobyl-style walls around and hung a sign reading “Bad Bank,” as though the epithet could not be applied to Deutsche Bank as a whole[.]”
