What we’re reading (11/23)
“Fed Minutes Show Most Officials Favored Slowing Rate Rises Soon” (Wall Street Journal). “Most Federal Reserve officials thought they should slow the pace of interest-rate increases after approving a 0.75-percentage-point rate rise at their meeting earlier this month to battle high inflation. Their discussion at the meeting, described in minutes of the gathering released Wednesday, suggests they could downshift to a rate rise of 0.5 percentage point, or 50 basis points, at their meeting next month.”
“The Worst Bond Market Ever” (Morningstar). “In the grand scheme of things, balanced portfolios have not performed terribly in recent months…The same, regrettably, cannot be said for bonds. Among fixed-income securities, there has been no refuge. Interest rates have spiked across the yield curve, thereby sinking all investment-grade debt. Lower-quality notes have also struggled. Sometimes when interest rates rise, junk bonds perform well, because credit spreads tighten. Not this year. Instead, credit spreads have widened owing to fears of a recession. The result has been comprehensive bond market losses.”
“The Bad Bet Tech Companies Made That Got Them Into This Mess” (Slate). “One by one, the tech CEOs apologized. They had failed to anticipate that their users’ extremely online behavior would return to normal once COVID restrictions lifted. So their projections for growth—in streaming, e-commerce, and the like—were way off. …That Big Tech completely missed its COVID surge ending—something that seemed obvious—is astonishing, but it’s more than a simple oversight. These companies understood their lockdown-augmented growth curves might not last forever, but they planned as if they would. Because while being wrong would mean cutting staff and missing earnings expectations, not attacking the opportunity would mean losing a market if COVID-inspired behavior did persist. So they took the risk.”
“How Airlines Squeeze You For Every Penny” (Vox). “‘It’s a behavioral economics question — airlines try to figure out how people are going to behave, and they have policies and prices that respond to that,’ said Bob Mann, an aviation analyst. ‘It’s a game.’ And an annoying one at that. It’s not just that fees add onto the final price tag; they can also warp travel in other ways, making the experience more miserable, however much money passengers fork over.”
“Poverty’s End?” (American Institute for Economic Research). “Worldwide, the fraction of humans living in extreme poverty (defined by the U.N. as less than $1.90 per day) declined from more than 80 percent in the early 1800s to less than 10 percent today. This, despite a six-fold increase in the world population. Since the 1990s, the absolute number of people living in extreme poverty has fallen 60 percent, while the population increased almost 40 percent.”
