What we’re reading (6/22)
“Trump’s Airstrikes On Iran Leave Oil Market Poised For Surge” (Bloomberg). “The oil market has been wrestling for days with Donald Trump’s next act in an escalating Middle East conflict. Now American jets have struck Iran’s three main nuclear sites, a move that leaves traders preparing for a price surge — but still guessing where the crisis goes from here.”
“More On Repealing The Laws Of Economics” (Howard Marks, Oaktree). “Our elected officials may believe the status quo can be maintained forever, or more likely they count on being out of office by the time the wheels come off. But certainly, they’re not facing up to reality. The behavior in Washington with regard to both the fiscal deficit and the precariousness of Social Security remind me of the tale of the guy who jumped off the 20-story building. As he passed the 10th floor, he said, ‘So far, so good.’”
“Private Equity’s Fundraising Demands Far Outstrip Supply” (Institutional Investor). “Some 18,000 private capital funds are currently “on the road” seeking to raise a total of $3.3 trillion, according to Bain & Co. The problem is that for every $3 general partners seek, there’s only $1 dollar of potential allocations, the consultant estimated. Bain called it a ‘supply and demand’ problem. Private equity firms’ fundraising crisis, which has also been stoked by the lack of cash distributions for existing funds, is even prompting some investors to accept a haircut on their investments. ‘LPs are increasingly dissatisfied with partial or minority exits; instead, they are pushing for full, traditional realizations despite the headwinds faced by such transactions,’ according to Bain. It noted that some 63 percent of investors participating in a webinar poll conducted by the Institutional Limited Partners Association preferred a conventional exit “even accepting a valuation below recent marks if necessary.'“
“Want A Winning Stock-Market Play? Bet Against Meme Stocks.” (MarketWatch). “A lottery stock’s short-term potential traces in many cases to interest in the stock going viral on social media — becoming a meme stock, in other words. You can make a lot of money if you’re early to the party before a stock goes meme, but far more dollars are lost with meme stocks than gained. This was confirmed by a study of clients of Robinhood Markets Inc., a group of investors who disproportionately are drawn to meme stocks. Entitled ‘Attention Induced Trading and Returns: Evidence from Robinhood Users,’ the study was conducted by Brad Barber of the University of California at Davis, Xing Huang of Washington University, Terrance Odean of the University of California at Berkeley and Chris Schwarz of the University of California at Irvine. They found that ‘betting against Robinhood users is a profitable business; the top stocks bought by Robinhood users fall by 5% over the next month.’”
“Why Countries Are Suddenly Broadcasting Their Spies’ Exploits” (Wall Street Journal). “Instead, fighting in Ukraine and the Middle East is bringing a new doctrine to spycraft stemming from changes in both what their organizers seek to achieve and how information spreads. Operations that would have once been designed to remain under wraps are now meant to be seen, to produce spectacular optics. They play out not just on the battlefield, but also on social media, boosting morale at home while demoralizing the enemy watching from the other side of the screen.”
