What we’re reading (3/13)
“Why The Real Market Shock Is In Long Bonds” (Yahoo! Finance). “In each of the four times the 30-year neared or broke above 5% in the past three years, stocks took a short-term hit, only to recover as yields quickly sank again, each time for different reasons.”
“U.S. Economic Outlook Cut By Goldman Over The Iran War — And The Fear Goes Beyond Oil” (MarketWatch). “Their rule of thumb is that a sustained 10% increase in oil boosts the inflation rate by 0.2 percentage points, and the core inflation rate by 0.04 points. Similarly, a sustained 10% rise in oil lowers GDP growth by a tenth, though that could be tempered depending on how domestic producers respond. The impact of tighter financial conditions also weighs on the economy. For every 1 percentage point tightening in their financial conditions index, GDP growth is hurt by 1 point over the following year. So far, Goldman’s financial conditions index has tightened by 0.2 percentage points.”
“An Exodus Of Money Endangers Wall Street’s Private-Credit Craze” (Wall Street Journal). “The private-credit engine that powered massive growth on Wall Street is sputtering, with investors trying to pull money out of big funds, forcing firms into uncomfortable decisions and endangering their future profits. The latest example came Wednesday when Cliffwater told clients that investors in its largest fund asked to cash out 14% of their money this quarter. The $33 billion fund will pay out about 50% of the redemption requests, meaning that the other half will need to wait at least another quarter to exit.”
“Do Current Trends In Drone Technology Favor Offense Or Defense?” (Marginal Revolution, from 3/16/24). “Overall, current drones seem to increase the vulnerability of fixed assets such as tanks or troop formations, or for that matter oil refineries or Moscow or Ukraine fixed landmarks. A very large and sophisticated U.S. aircraft carrier might be able to repel the drones (albeit at high dollar cost), but a bunch of tanks in an open field will not have comparable protection. In the abstract, “mid-valued assets become more vulnerable” could favor either offense or defense. The more obvious trend is that it favors nations willing and able to lose lots of mid-sized assets. That is either because a) the nation doesn’t care, because it is evil, or b) because the nation can replace them quickly, for instance by building more tanks or by drafting more soldiers.”
“Winston Churchill To be Scrapped From Banknotes As Bank Of England Panel Labels Decision ‘Overdue’” (GBI). “The Bank of England has confirmed Sir Winston Churchill will be scrapped from banknotes and replaced with images of wildlife. The central bank will soon ask the public which animals they want to appear on the next set of £5, £10, £20, and £50 notes - but confirmed the wartime hero Prime Minister would not be staying. The move to replace historical figures with animals was described as ‘significant’ and ‘overdue’ by celebrity bird-watcher Nadeem Perera, who sits on the bank's panel of wildlife experts who will choose which English species will appear on the next set of banknotes.”
