What we’re reading (6/14)
“Hot Funds And The Curse Of ‘Self-Inflated Returns’” (Wall Street Journal). “What your exchange-traded fund owns is important. Who else owns your ETF might be even more important. That’s because a fund’s returns often don’t depend merely on the behavior of the investments it buys, but also on the behavior of the investors who buy the fund. Hot money—a sudden influx of cash from people trying to get rich quick—can overheat an ETF and create what new research calls ‘self-inflated returns.’ The result, sooner or later, is self-inflicted losses. Fortunately, you can protect yourself with some common sense.”
“Larry Summers Isn’t Second-Guessing The Government On Inflation” (New York Times). “Dissatisfaction with high interest rates and the unavailability of consumer credit explains why consumer sentiment is worse than would be expected given current levels of inflation and unemployment, Lawrence Summers, the former Treasury secretary and Harvard president, wrote in February in a working paper with three other economists…You might be surprised, then, that Summers is not arguing for the Bureau of Labor Statistics to put interest rates in the Consumer Price Index. ‘I don’t think the purpose of the C.P.I. is to predict people’s sentiment,’ he told me this week. ‘The purpose is to measure the cost of goods and services.’”
“Caught You Faking: Wells Fargo Firings Expose Workplace Surveillance Dilemma” (Axios). “Wells Fargo’s decision to fire more than a dozen employees for ‘simulation of keyboard activity’ points to a simmering tension in the post-pandemic workplace…Major employers are using surveillance tools to ensure that no matter where people work, they're at their computers — but polls suggest doing so is risky for morale…Wells Fargo didn't say whether the employees — from the company's wealth- and investment-management unit — were working remotely, or how they were faking the ‘impression of active work,’ Bloomberg reports.”
“Why The Stock Market Has Risen Even With No Fed Rate Cuts” (New York Times). “The Federal Reserve has disappointed investors this year, but no matter. The markets have adjusted. Even without any interest rate cuts so far in 2024 — and with the likelihood of just one meager rate reduction by the end of the year — the stock market has been purring along. That’s quite an achievement, given the expectation in January that the Fed would trim rates six or seven times in 2024 — and that interest rates throughout the economy would be much lower by now.”
“Roaring Kitty Becomes The 4th Largest GameStop Shareholder After Nearly Doubling His Position To 9 Million Shares” (Business Insider). “Keith Gill, better known as Roaring Kitty on social media, appears to have nearly doubled his position in GameStop stock. According to a screenshot of his E*Trade portfolio posted to Reddit on Thursday, Gill now owns nine million shares of GameStop. Gill had previously owned 5 million shares of GameStop and 120,000 call option contracts with a $20 strike price that were set to expire next week. With Gill's massive options position in the money, he partially sold the options and exercised some to acquire an additional 4 million shares at $20 each.”
