What we’re reading (5/17)
“The Fed Has A New Plan To Avoid Recession: Party Like It's 1994” (CNN Business). “The history of central bank rate hikes does appear to support the inevitability of an economic downturn, but there have been rare instances when the Fed has made a soft landing: Once in 1965, and again in 1984 and 1994.”
“Powell Says Fed Has Resolve To Bring U.S. Inflation Down” (Wall Street Journal). “‘Restoring price stability is a nonnegotiable need. It is something we have to do,’ Mr. Powell said in an interview Tuesday during The Wall Street Journal’s Future of Everything Festival. ‘There could be some pain involved.’”
“Ben Bernanke Sees ‘Stagflation’ Ahead” (New York Times). “‘Even under the benign scenario, we should have a slowing economy,’ he said. ‘And inflation’s still too high but coming down. So there should be a period in the next year or two where growth is low, unemployment is at least up a little bit and inflation is still high,’ he predicted. ‘So you could call that stagflation.’”
“AQR Gets Rewarded For Its ‘Sins’” (CityWire). “Asness’s Greenwich, Connecticut-based quant shop AQR has nine mutual funds across various alternative categories sitting top or near top of their peer groups. In some cases, they are ahead of the competition by an eye-watering margin…much of the firm’s outperformance is down to what Asness has previously described as a ‘sinning a little’ – namely factor timing, specifically overweighting value.”
“What Is The Point Of Crypto?” (Vox). “The claims proponents have long made about cryptocurrency — that it’s an inflation hedge, that it’s digital gold — appear increasingly dubious. Well before the current downturn, a lot of what was going on was fishy. Hackers have stolen tens of millions of dollars in crypto, and the sector is rife with stories about various scams. One big trend in the space might pretty blatantly be a Ponzi scheme.”
