What we’re reading (5/10)
“NFTs Are Plunging In Popularity? Yeah, That Makes Sense.” (MSNBC). “two problems the market is facing. First, the number of active traders has plummeted from almost a million accounts at the start of the year to about 491,000, NBC News reported Thursday. A lack of new interest or sustained interest in an asset is rarely a good sign for its longevity. Second, there’s been a flood of supply. “There are about five NFTs for every buyer, according to data from analytics firm Chainalysis,” the [Wall Street] Journal reported.”
“I Bonds: The Nearly Risk-Free Asset Yielding 9.6%” (U.S. News & World Report). “The U.S. Department of the Treasury recently announced that I bonds will pay a 9.62% interest rate through October 2022, their highest yield since they were first introduced back in 1998. These I bonds are protected against inflation and backed by the U.S. government, making them essentially risk-free investments – the only way these investments fail is if Uncle Sam doesn't pay his debts.”
“‘Buy The Dip’ Believers Are Tested By Market’s Downward Slide” (Wall Street Journal). “Individuals’ willingness to backstop markets throughout this year’s selloff demonstrates that the group—for now—has been more resilient than analysts and trading professionals anticipated. Few were surprised when individual investors pounced on small dips as the market churned higher last year, helping the S&P 500 cruise to 70 records and rewarding those who waded in.”
“A Legal Test For Evaluating Modern Corporate-Executive Self Dealing” (RealClear Markets). “Corporate executives increasingly proudly proclaim that they’re acting in the interests of parties – ‘stakeholders’ – other than their shareholder bosses, creating an agency problem…[t]o be sure, they usually append a line asserting that their actions are also in the long-term interests of shareholders, in some nebulous and ill-defined way. But if these self-serving assertions are sufficient…then the self-dealing exception to the business-judgment rule has been eliminated, and the ability of shareholders to have even the most tenuous control over the actions of their managers has been eliminated.”
“Data And Market Power” (Jan Eeckhout and Laura Veldkamp, NBER). “[W]e craft a model in which economies of scale in data induce a data-rich firm to invest in producing at a lower marginal cost and larger scale. However, the model uncovers much richer interactions between data, welfare and market power. Data affects risk, firm size and the composition of the goods firms produce, all of which affect markups.”
