What we’re reading (5/5)
“Dow, S&P 500 Slide More Than 3% As Investors Reassess Fed Comments” (Wall Street Journal). “The stock market took its biggest U-turn since the early days of the pandemic Thursday, with the Dow Jones Industrial Average posting its largest decline this year just 24 hours after its largest gain since 2020.”
“2022 Selloff Has Left The U.S. Stock Market Undervalued” (Morningstar). “[W]e think this selloff has pushed the broad U.S. equity market down too far. Following this downturn, our measure of market valuation is now well into the undervalued territory. According to a composite of the stocks followed by Morningstar’s equity research analyst team, the broad U.S. equity market is now trading at a 12% discount to fair value.”
“Who Wins From Carnage In The Credit Markets?” (The Economist). “For bondpickers, divergence will be further fuelled by a withdrawal of liquidity from the market. On June 1st the Federal Reserve will begin winding down its $5.8trn portfolio of Treasuries; by September, it intends to be shrinking it by $60bn a month. That amounts to the disappearance of an annual buyer of 3% of publicly held Treasuries, whose yields are thus likely to rise. As a result corporate borrowers will have to work harder to convince investors to buy their debt rather than seek the safety of government paper. Such a buyers’ market means more scrutiny of debt issuers, and more variance in the yields they have to offer.”
“The Myth Of The Genius Tech Inventor” (New York Times). “It’s practically an insult in Silicon Valley to say that an executive is extremely capable at running a company. Inventors, not great managers, are often the ones celebrated in technology…[b]ut the fixation on an individual’s ingenuity above all other abilities is a selective memory of tech history. Triumph is often the result of imagination combined with obsessive business savvy.”
“Tiger Is Suffering One Of The Biggest Hedge Fund Drawdowns In History” (Financial Times). “Back of the envelope calculations based on the reported $35bn size of Tiger’s overall public equities book at the end of last year indicate that it has probably suffered a nominal loss of at least $15bn in 2022…. To put that into perspective, Citadel lost 55 per cent for an estimated $8bn loss in the 2008 financial crisis, which led CNBC to camp a van outside its Chicago headquarters and nearly caused it to perish.”
