What we’re reading (3/19)
“The Fed Must Do Much More to Fight Inflation—And Fast” (Larry Summers, Time). “It is now likely that inflation will continue to accelerate for at least several more months as commodity price hikes work through the system. Then it may recede but not in all likelihood anywhere near the Fed’s 2 percent target.”
“The End Of Zero: Prepare For A World With Higher Rates” (Wall Street Journal). “Warren Buffett has compared interest rates to gravity. That is an especially useful way to think about them right now. For the last two decades the developed world went from living on Mars, with barely a third of Earth’s pull, to the Moon more recently with even less. Now we might finally return to what used to be normal. For consumers, businesses and even governments, the transition will feel alien. Many will find it crushing at first, while others will be reinvigorated by a world where money costs something. Some that grew up on those extraterrestrial colonies simply won’t survive the transition.”
“The Stock Market Faces A Lost Decade Of Zero Returns Through 2031, According To Stifel's Chief Equity Strategist. Here's How Investors Should Prepare.” (Insider). “Instead of the S&P 500's compounded annual rate of return of more than 13% during the 2010's, investors should prepare for the likelihood of a lost decade ahead, or returns of 0% in the US stock market from the end of 2021 through the end of 2031, Bannister told Insider in an interview on Wednesday.”
“Unlike Trump, Biden Has Stock Market Far Down His Priority List” (Bloomberg). “On Twitter, the favored forum for politicians to boast about accomplishments, Trump posted about stocks dozens of times, treating a rising Dow as an alternative approval rating of his administration. Biden has yet to tweet about the market at all, despite a string of records in his first year in office.”
“A Nickel-Trading Fiasco Raises Three Big Questions” (The Economist). “The trading of commodities is an arcane activity that makes it into the public eye only at times of extreme hubris. That is when names like the Hunt brothers, who tried to corner the silver market in 1980, and Hamanaka Yasuo, or ‘Mr Copper’, who in 1996 produced huge losses for Sumitomo, a Japanese trading house, became household ones. Xiang Guangda, a Chinese tycoon known as ‘Big Shot’, vaulted into the news this month by taking a position on nickel that went badly wrong. The result has been one of the biggest tremors in the 145-year history of the London Metal Exchange (LME).”
