What we’re reading (11/19)
“The Return Of The Bond Market Conundrum” (Pragmatic Capitalism). “It feels an awful lot like the 2000’s scenario where the Fed will want to raise rates, but if they do they risk inverting the curve and crashing the economy. But this time, if they start raising rates they don’t have 5% of wriggle room before they invert. They have barely any room at all. As of now it looks like the long end of the curve seems to be staunchly in the “inflation is transitory” camp which means that Conundrum 2.0 looks to be on the table here.”
“Turkey Currency Crisis Threatens Economy, Posing Challenge To Erdogan Rule” (Wall Street Journal). “The Turkish lira hit a record low against the dollar on Thursday after the Central Bank cut a key rate by one percentage point. The currency has lost more than a third of its value since March and is the worst-performing major emerging market currency this year so far. The depreciating lira is a self-inflicted wound for Mr. Erdogan, who has pushed for lower interest rates as part of an unconventional economic strategy that he argues will encourage growth. Thursday’s rate cut was the third in three months and came after the president fired a series of senior officials who opposed his unorthodox economic vision.”
“Cathie Wood Says We Are In A Strong Bull Market And As Long As There Is No Recession, ‘We Will Probably Be Fine’” (Insider). “Cathie Wood believes the bull market for stocks has shown its strength by shrugging off mounting price pressures, and unless an economic downturn hits, it'll probably keep up its winning ways. The Ark Invest chief acknowledged the "wall of worry" being climbed by investors faced with hot-running inflation, speaking in an interview with Barrons on Wednesday. But Wood pointed to how equity markets shrugged off bond moves earlier this year.”
“Biden’s Bank Regulator Pick At Risk After Tough Senate Grilling” (Financial Times). “The most intense and personal grilling came from Republican senators who accused her of being a communist. ‘I don’t know whether to call you ‘professor’ or ‘comrade’,’ quipped John Kennedy, the Republican senator from Louisiana. Pat Toomey, the top Republican on the panel, said she would “end banking as we know it” and criticised Omarova’s undergraduate thesis on Karl Marx as evidence that she was a ‘radical’ choice.”
“Zillow Tried to Make Less Money” (Matt Levine, Bloomberg). “I don’t know, it’s a weird story about technology and scale, about how many businesses — in particular, many public companies — aim to maximize not profit but size. In concept, a business model like ‘send everyone in America a bid on their house that is too low, and then buy the houses from the minority of suckers who take your bid’ seems … obviously … lucrative? Like, I would be happy to do that business? I don’t have the capital for it, but I’m sure there are hedge funds who would do this business if they could.”
