What we’re reading (2/24)
“AI-Induced Tech Selloff Spoils The IPO Parade” (Wall Street Journal). “This was supposed to be a blockbuster year for initial public offerings. Artificial-intelligence fears spoiled the party. Investors have been thirsting for new issues, and big names including SpaceX, OpenAI and Anthropic are readying debuts for later this year. The momentum created an opening for dozens of smaller, mainly private-equity backed software firms that had been waiting in the wings.”
“Nvidia To Report Q4 Earnings Ahead Of Annual GTC Event” (Yahoo! Finance). “AI behemoth Nvidia (NVDA) will report its fourth quarter results after the bell on Wednesday, the most anticipated announcement of the earnings season. The news comes just a few weeks before the company is set to host its GTC 2026 event in San Jose, Calif., where it's expected to make a number of major product announcements.”
“Is There An Aggregate Demand Problem In An AGI World?” (Marginal Revolution). “No. Let’s say AI is improving very rapidly, and affecting the world more rapidly and more radically than I think is plausible. Let’s just say. All of a sudden there are incredible things you can spend your money on. Since there is (possibly) radical deflation, you might be tempted to just hold all your money and buy nothing. Pick vegetables from your garden. But the high marginal utility of the new goods and services will get you to spend, especially since you know that plenitude will bring you, in relative terms, a lower marginal utility for marginal expenditures in the future. You might even go crazy spending. If nothing else, buy new and improved vegetable seeds for your garden. That same example shows that spending is robust to you losing your job, even assuming no reemployment is possible. In this world, there are significant Pigou effects on wealth…[t]he whole Citrini scenario is incorrect right off the bat. Very little of it is based on sound macroeconomic reasoning.”
“It’s A Buyer’s Market, But Homeownership Eludes Many Americans” (New York Times). “High down payments. Elevated interest rates. A lack of affordable homes. Even in what economists call a buyer’s market — where supply outpaces demand — many house hunters say the math still doesn’t work.”
“Hidden Alpha” (Manuel Ammann, et al.). “We provide novel evidence suggestive of insider trading through concealed relationships identified using information from over 100,000 Facebook profiles and their 35 million friends. Focusing on connections between fund managers and firm officers, we demonstrate that hidden ties are linked to substantial abnormal returns averaging 135 basis points per month (exceeding 16% alpha annually, t-stat = 3.54) across the universe of mutual funds and public firms. These hidden ties emerge as the most powerful predictor of future stock returns among documented network characteristics, with predictive power increasing over time through the present day. The premium associated with such connections arises not from endogenous selection or familiarity bias; instead, fund managers exhibit specific timing ability in deciding when to hold (or avoid) stocks of firm officers linked through hidden ties. The value of trading information rises with the degree of concealment and is concentrated around earnings and M&A events. The premium is absent in index funds, where strategic stock selection and timing are infeasible. Our findings on the value of hidden ties remain robust across industries, investment styles, time periods, and firm types.”
