What we’re reading (5/8)
“Market’s 2022 Slide Has Already Changed Investor Behavior” (Wall Street Journal). “For much of the past two years, individual investors had rushed to the options market to place ultrabullish bets on stocks. Options bets became synonymous with the frenzy surrounding meme stocks, as shares of companies such as GameStop Corp. and AMC Entertainment Holdings Inc. soared. Now, much of that speculation appears to be winding down. Net call option volumes in single stocks recently hit the lowest level since April 2020, according to Deutsche Bank.”
“Day Trader Army Loses All the Money It Made In Meme-Stock Era” (Bloomberg). “It’s ending as fast as it began for retail day traders, whose crowd-sourced daring was the pre-eminent story of pandemic equities. Nursing losses in 2022 that are worse than the rest of the market’s, amateur investors who jumped in when the lockdown began have now given back all of their once-prodigious gains, according to an estimate by Morgan Stanley. The calculation is based on trades placed by new entrants since the start of 2020 and uses exchange and public price-feed data to tally overall profits and losses.”
“Market Pain Isn’t Over, But You Will Get Through This” (New York Times). “If you are looking for patterns in the market’s wild swings, the answer is simple: The financial markets are coming to grips with a stunning policy change by the Federal Reserve. Over the last two decades, financial markets may have become so accustomed to encouragement from the Fed that they just don’t know how to react, now that the central bank is doing its best to slow down the economy.”
“Airbnb CEO Brian Chesky, Who Recently Announced Employees Can Work From Home Forever, Calls The Office An ‘Anachronistic Form’ And ‘From A Pre-Digital Age’” (Insider). “‘I think that the office as we know it, is over,’ he [AirBnB CEO Brian Chesky] told Time. ‘We can't try to hold on to 2019 any more than 1950. We have to move forward.’”
“Three World Wars: Fiscal-Monetary Consequences” (George J. Hall and Thomas J. Sargent). “This paper describes how the US government made ‘the public pay for’ surges in expenditures associated with three world wars. We apply an approach of Becker (1962) by focusing exclusively on a consolidated government budget constraint and ignoring other parts of macroeconomic models…It is striking how little of the War on COVID-19 has thus far been financed by explicit taxation, even compared to World Wars I and II.”
