What we’re reading (2/5)
“Shooting Oil In A Barrel” (Doomberg). “With demand for oil and gas already surpassing pre-Covid levels and set to rip higher once the global economy fully reopens, the stage is set for an epic blowoff top in energy prices. The gap between suppressed supply and unquenchable demand could stretch to unthinkable levels, just as a sizable wedge of the world’s population sits on the cusp of a well-known and substantial step-up in demand.”
“Rate-Hike Bets Wipe Out $1.5 Trillion Of Sub-Zero Debt In A Day” (Bloomberg). “The world’s enormous pool of negative-yielding debt shrank by a record 20% in just a day, signaling that negative yields might be a thing of the past if ever-bolder bets on policy normalization pay out. In both Germany and Japan, the world’s major bastions of negative rates, five-year yields climbed above zero on Friday for the first time in years. In the U.S., 30-year real yields turned positive for the first time in eight months after jobs growth in January far exceeded economist estimates. They were once part of a pile of such debt, which has dwindled to $6.1 trillion, a three-year low.”
“The Last Sane Man on Wall Street” (New York Magazine). “[Nate] Anderson [of Hindenberg Research] belongs to a cranky cohort of ‘activist’ short sellers. They make money by taking positions in the stocks of shaky or shady companies, which pay off if the price goes down — an outcome the shorts hasten with public attacks, publishing investigations on their web platforms and blasting away at their targets (and sometimes at one another) on Twitter…[h]e used to poke around in shadowy corners, but lately he has been seeing fraud sitting right in the blazing light of day.”
“Why The 60/40 Portfolio Continues To Outlast Its Critics” (Morningstar). “To widespread surprise, the 60/40 portfolio promptly blitzed the competition [after 2011]. It didn’t surpass Yale’s return [the Yale University endowment] over the ensuing decade, thanks to David Swensen’s continued (and unrivaled) ability to identify, in advance, top-performing investment managers, but this time around the 60/40 strategy outgained Yale. That's an impressive achievement given that Yale was heavily invested in risky private-equity and leveraged-buyout funds.”
“Michael Lewis Revisits ‘Liar’s Poker’” (DealBook). “I vividly thought that I was trying to describe Brigadoon. It could never survive. They were willing to pay me probably millions of dollars, but certainly hundreds of thousands, to dish out financial advice when I certainly didn’t know what you should be doing with your money. I just thought, this is impossible. It felt like the end of an era. Michael Milken was going to jail. It was like one thing after another. Society is going to get its arms around Wall Street. And this financialization business is going to stop or be slowed. I was wrong about that.”
