What we’re reading (1/2)
“Dow, S&P 500, Nasdaq Fall As Comeback Bid Falters And Tesla, Apple Slide” (Yahoo! Finance). “Stocks erased session gains on Thursday to kick off the first trading day of the new year as Wall Street returned from a holiday break.”
“Mortgage Rates Kick Off 2025 With An Increase, Nearing 7%” (Fox Business). “Freddie Mac's latest Primary Mortgage Market Survey, released Thursday, showed that the average rate on the benchmark 30-year fixed mortgage jumped to 6.91%, up from last week's reading of 6.85%. The average rate on a 30-year loan was 6.62% a year ago.”
“Hindenburg Shorts Carvana, Alleging ‘Grift for the Ages’” (Bloomberg). “Carvana Co. was accused by prominent short-seller Hindenburg Research of impropriety in a report alleging that the auto retailer’s subprime loan portfolio carries substantial risk and its growth is unsustainable.”
“Are Tax Cuts Contractionary At The Zero Lower Bound? Evidence From A Century Of Data” (James Cloyne, et al.). “Popular New Keynesian macroeconomic models predict that cuts in various types of distortionary taxes are contractionary when monetary policy is constrained at the zero lower bound (ZLB). We turn to a long span of history in the United Kingdom to test this hypothesis. Using a new long-run dataset of narrative-identified tax changes from 1918 to 2020, we show that tax cuts are expansionary in both low-interest-rate environments and more normal times. We do not find evidence of a deflationary spiral at the ZLB. Tax cuts may therefore still be a useful tool to stimulate economic activity when monetary policy is constrained.”
“The Illusion Of Information Adequacy” (Hunter Gelbach, et al.). “Participants in our preregistered study (N = 1261) responded to a hypothetical scenario in which control participants received full information and treatment participants received approximately half of that same information. We found that treatment participants assumed that they possessed comparably adequate information and presumed that they were just as competent to make thoughtful decisions based on that information. Participants’ decisions were heavily influenced by which cross-section of information they received. Finally, participants believed that most other people would make a similar decision to the one they made. We discuss the implications in the context of naïve realism and other biases that implicate how people navigate differences of perspective.”
