What we’re reading (10/26)
“How Gold Became One Of The World's Hottest Investments” (Business Insider). “The price of gold has soared this year. The precious metal hit a record high of $2,772 per troy ounce this week and has risen in six of the past seven weeks. With year-to-date gains of about 33%, gold returns have outpaced the broader stock market, including the tech-heavy Nasdaq 100, by about 10 percentage points. And since the bull market in stocks began in October 2022, gold has outpaced equity gains, returning 67% compared to the S&P 500's return of about 63%, according to data from YCharts.”
“Bond Trading Frenzy Risks Giving Market Makers A False Sense Of Security” (Bloomberg). “On the surface, the corporate bond market has never looked more stable and liquid. In the US, the market recorded its busiest month ever for trading volume in September. But history suggests that the ability to trade smoothly is only there until you need it, and the International Monetary Fund warned this week that tight spreads are raising the risk of an abrupt repricing of credit.”
“In This Election Cycle, ‘Bond Vigilantes’ Are Voting Too—And They Don’t Like What They See” (Fortune). “Suburban moms, crypto bros, and Swifties aren't the only voters making their presence felt this election season. Bond investors are voting with their dollars in financial markets, and they don't like what they see. ‘In exit polls, the Bond Vigilantes are saying they are voting against Fed Chair Jerome Powell’s dovish monetary policy because the economy is running hot, and the Fed’s premature 50bps rate cut on September 18 raises the risk that it will overheat,’ they said.”
“Pfizer’s Activist Battle Might Fizzle—But Its Stock Probably Won’t” (Wall Street Journal). “For Pfizer Chief Executive Officer Albert Bourla, the activist campaign launched by Starboard Value marks a pivotal moment in his career. For shareholders, the activist push is largely a distraction as the pharmaceutical company has limited options to implement immediate changes that would drive significant growth. That doesn’t mean investors should abandon hope in the stock, though.”
“The Uneven Effects Of AI On The American Economy” (Marginal Revolution). “To see how this is likely to play out, start with a distinction between sectors in which it is relatively easy to go out of business, and sectors in which it is not. Most firms selling computer programming services, for example, do not typically have guaranteed customers or revenue, at least for long. Employees have to deliver, or they and their company will be replaced. The same is true of most media companies: If they lose readers or customers, their revenue disappears. There is also relatively free entry into the sector in the US, due to the First Amendment. Another set of institutions goes out of business only slowly, if at all. If a major state university does a poor job educating its students, for example, enrollment may decline. But the institution is still likely to be there for decades more. Or if a nonprofit group does a poor job pursuing its mission, donors may not learn of its failings for many years, while previous donors may pass away and include the charity in their wills. The point is, it can take a long time for all the money to dry up. Which leads me to a prediction: Companies and institutions in the more fluid and competitive sectors of the economy will face heavy pressure to adopt AI. Those not in such sectors, will not.”
