What we’re reading (11/25)
“Hassett Emerges As Frontrunner In Trump Fed Chair Audition” (Bloomberg). “White House National Economic Council Director Kevin Hassett is seen by advisers and allies of President Donald Trump as the frontrunner to be the next Federal Reserve chair, according to people familiar with the matter, as the search for a new central bank leader enters its final weeks.”
“Meta Is In Talks To Use Google’s Chips In Challenge To Nvidia” (Wall Street Journal). “A deal could be worth billions of dollars, but the talks are continuing and may not result in one. It is still up in the air whether Meta would use the chips, known as tensor processing units or TPUs, to train its AI models or to do inference, one of the people said. Inference, the process a trained model uses to generate the response to a query, requires less computational power than training.”
“Lofty Valuations Of US Stocks Are Sparking Anxiety – Here’s What History Tells Us” (Ken Fisher). “For most investors, the forecasting power of valuation metrics is pure gospel. With the price-to-earnings ratio of US stocks hovering near 30, many are starting to taking it on faith that these are the last days of the bull market. Yet valuations don’t predict stocks’ direction – and they never have. Heresy? More like history – more than a century of it – proving that today’s lofty PEs mean little.”
“Traders Are Flooding Markets With Risky Bets. Robinhood’s CEO Is Their Cult Hero.” (Wall Street Journal). “Risk-taking is back for individual investors, and few people have done more to stoke those spirits than the 38-year-old Tenev. Robinhood’s trading app makes it easy not just to buy and sell ordinary stocks, but to invest in options, cryptocurrencies and other exotic financial products, even to make sports bets and play the prediction markets. The company’s critics liken the environment to a casino, but its fans credit Robinhood with democratizing the lucrative world of sophisticated investments.”
“Confidently Wrong” (Marginal Revolution). “If you’re going to challenge a scientific consensus, you better know the material. Most of us, most of the time, don’t—so deferring to expert consensus is usually the rational strategy. Pushing against the consensus is fine; it’s often how progress happens. But doing it responsibly requires expertise. This isn’t just my anecdotal impression. A paper by Light, Fernbach, Geana, and Sloman shows that opposition to the consensus is positively correlated with knowledge overconfidence…Light, Fernbach, Geana and Sloman do something clever. They ask respondents a series of questions on uncontroversial scientific topics…The authors then correlate respondents’ scores on the objective (uncontroversial) knowledge with their opposition to the scientific consensus on topics like vaccination, nuclear power, and homeopathy. The result is striking: people who are most opposed to the consensus…score lower on objective knowledge but express higher subjective confidence. In other words, anti-consensus respondents are the most confidently wrong—the gap between what they know and what they think they know is widest.”
