What we’re reading (10/5)
“Markets Break When Interest Rates Rise Fast: Here Are The Cracks” (Wall Street Journal). “Major U.S. stock markets recorded their worst first nine months of a calendar year since 2002, before rallying this week. Treasury bonds, one of the world’s most widely held securities, have become harder to trade. There also are signs of strain in markets for corporate debt and concerns about emerging-market debt and energy products.”
“Is The Era Of Low Interest Rates Over?” (Paul Krugman, New York Times). “Many commentators have asserted that the era of low interest rates is over. They insist that we’re never going back to the historically low rates that prevailed in late 2019 and early 2020, just before the pandemic — rates that were actually negative in many countries. But I don’t see that happening. There were fundamental reasons interest rates were so low three years ago. Those fundamentals haven’t changed; if anything, they’ve gotten stronger. So it’s hard to understand why, once the dust from the fight against inflation has settled, we won’t go back to a very-low-rate world.”
“Housing Is Slumping, But This Real Estate CEO Explains Why It’s Not 2008 All Over Again” (CNN Business). “‘We probably are technically in a housing recession,’ he [Howard Hughes Corp. CEO David O’Reilly] said, referring to a term used to describe a decline in home sales for at least six months. ‘We are clearly in a downturn, but this is much different.’ O’Reilly said that in the years leading up to the 2008 collapses of Bear Stearns, Lehman Brothers, Washington Mutual and others, there was a glut of new homes that had been built. ‘We had a massive oversupply when Lehman hit the wall,’ he said. ‘But housing starts now have significantly trailed formations.’”
“Is The Efficient Market Hypothesis True?” (U.S. News & World Report). “A 2003 study published in the Journal of Finance pointed to another stock market quirk. The study examined "the relationship between morning sunshine in the city of a country's leading stock exchange and daily market index returns" in 26 countries between 1982 and 1997. ‘Sunshine is strongly significantly correlated with stock returns,’ it reads, noting that sunny weather is associated with positive moods.”
“Fugitive Justin Costello Arrested For $35 Million Fraud Based On ‘Mirage’ Of Being Billionaire, Harvard MBA, Iraq Vet” (CNBC). “Las Vegas resident Justin Costello, 42, is accused by federal prosecutors and the Securities and Exchange Commission of swindling thousands of investors and others as part of a complex scam that touted his purported efforts to build a cannabis conglomerate, among other things.”
