What we’re reading (12/5)
“The Puzzle Of Low Interest Rates” (New York Times). “In the evolution of the U.S. economy over the past four decades, one fact stands out as especially puzzling: the large and fairly steady decline in interest rates…It may be tempting to blame the Fed…[but in the long-run] [t]he Fed aims to set interest rates at levels that will produce full employment and stable prices. This level is sometimes called the natural rate of interest. The natural rate is determined not by the central bank but by deeper market forces that govern people’s supply of savings and businesses’ demand for capital. When the Fed sets low rates, it is acting more like a messenger, telling us that the economy needs them to maintain equilibrium.”
“These Investors Are Riding The Bitcoin Wave To New Highs” (Wall Street Journal). “Bitcoin is surging to records, a rally driven in part by the emergence of new investors from passionate individuals to return-starved hedge funds looking to profit from the digital currency’s momentum. The cryptocurrency rose as high as $19,834.93 on Monday, according to CoinDesk, topping the previous intraday record of $19,783.21 set on Dec. 18, 2017. After trading as low as $3,867 in March, bitcoin has nearly tripled in 2020 and is up 90% since early September. It settled Friday at $18,832.76.”
“Elon Musk Will Love This: Tesla Short Sellers Lost More Than U.S. Airline Industry This Year” (CNN Business). “The incredible year for Tesla stock has created a bloodbath for those shorting its shares. According to analysis by S3 Partners, short investors in Tesla— those who placed bets in the market that its shares would lose value — have lost $35 billion on those positions so far this year.”
“Here Are Three Under-The-Radar Market Story Lines That Could Surprise Investors In 2021” (CNBC). (1) “Will a booming recovery test the Fed’s dovish doctrine?” (2) “Will the release of pent-up demand help Main Street more than Wall Street?” (3) “Might we be on the verge of ’90s-style investor excitement?”.
“As U.S. Stock Markets Grow Pricey By Some Measures, Are European Equities Worth A Bet?” (MarketWatch). “By one measure, investor exposure to Europe has trailed that of the U.S. and has only recently started to pick up ground in recent weeks, according to a Deutsche Bank research note, tracking hedge funds and commodity trading advisers which use futures to gain exposure to the market…Bloomberg reported that some $1.7 trillion flowed into Stoxx Europe 600 benchmark in November alone, as the value drift took hold.”
