What we’re reading (12/27)
“Did the Tesla Story Ever Make Sense?” (Paul Krugman, New York Times). “The question is: Where are the powerful network externalities in the electric vehicle business? Electric cars may well be the future of personal transportation. In fact, they had better be, since electrification of everything, powered by renewable energy, is the only plausible way to avoid climate catastrophe. But it’s hard to see what would give Tesla a long-term lock on the electric vehicle business.”
“Tesla’s 2022 Collapse Hits 69% After Deepest Selloff Since April” (Bloomberg). “The tailspin in Tesla Inc. shares accelerated Tuesday, marking their longest losing streak since 2018, as a report of a plan to temporarily halt production at its China factory rekindled fears about demand risks.”
“Cash Cushions Dwindle At U.S. Pension Funds” (Wall Street Journal). “Cash holdings hit 1.9% of assets at state and local government pension funds and 1.7% of assets at corporate pension funds as of June 30, according to an annual snapshot from Wilshire Trust Universe Comparison Service. Those figures compare with the 15-year average of 2.45% at public pensions and 2.07% at corporate pensions. The recent figures are lower than in 2008, when some retirement funds had to sell whatever they could to pay benefits during the financial crisis. Pension managers have always faced a dilemma: keep too much of a fund’s assets in cash and you drag down returns. Keep too little in cash and you risk having to liquidate assets at unfavorable prices.”
“The World Just Doesn’t Have Enough Planes As Travel Roars Back” (The Straits Times). “Boeing and Airbus, the planemaking giants that largely enjoy a duopoly supplying passenger jets, are sold out for their most popular single-aisle models through until at least 2029. Compounding the demand from airlines as people once again take to the skies with a vengeance and carriers look to refresh ageing fleets are supply chain challenges – everything from getting the necessary components to labour shortages.”
“The Economy’s Fundamental Problem Has Changed” (The Atlantic). “After the Great Recession, we went through a decade in which economic life was defined by a lack of demand. Now, after the COVID recession, we’ve entered a period in which economic life is defined by a lack of supply.”
