What we’re reading (8/15)
“Stock Indexes Rally After Data Calm Economic-Slowdown Fears” (Wall Street Journal). “The S&P 500 climbed 1.6% Thursday, rising for a sixth consecutive session. The tech-heavy Nasdaq Composite added 2.3%, while the Dow Jones Industrial Average rose 1.4%, or about 550 points. A trio of fresh data points reassured investors that consumer spending, the backbone of the U.S. economy, is holding up.”
“Investors Are Piling Into This Area Of Fixed Income For Protection Against Election And Market Volatility — And For Lower Taxes” (Business Insider). “Dan Close, head of municipals at the $1.2 trillion global investment manager Nuveen, is seeing increased appetite for these government-backed debt instruments. While 2022 and 2023 saw large net outflows from the muni market, 2024 has seen $12 billion of inflows year-to-date.”
“The Change That Realtors’ Powerful Trade Group Resisted For Decades Is Finally Happening” (CNN Business). “Starting this Saturday, the days of the standard 6% commission — two to three times what agents make in other developed economies — are effectively over. Sellers, who historically have paid both the listing agent and the buyer’s Realtor, will be on the hook for their agent’s fee. Buyers and their agents will negotiate a compensation plan upfront. ‘It’s a partial deregulation of a marketplace that was regulated not by government, but by the industry,’ said Stephen Brobeck, senior fellow at the Consumer Federation of America, a nonprofit advocacy group. ‘In the long run, it’s going to be a very good thing.’”
“The Unraveling Of A Crypto Dream” (New York Times). “But Mr. Pierce’s vision of a crypto-fueled economic turnaround has yet to materialize, according to hundreds of pages of court records and interviews with more than two dozen people familiar with his efforts in Puerto Rico. His business partners have turned on him, and some colleagues say he is running out of cash. There is no clear evidence that the arrival of tech entrepreneurs has helped the local economy.”
“Tax-Free Tips” (Marginal Revolution). “If the demand for labor is inelastic, the value of a wage subsidy is captured primarily by the employer. The wage subsidy arrives, and the employer does not start trying to hire more labor as a consequence. After all, the demand for labor is inelastic. Since the demand for labor has not gone up, the net wage does not go up in the final equilibrium. The employer can just keep the subsidy, or if the subsidy is given to the worker, the employer can lower wages (or the quality of working conditions), leaving the previous net wage intact and the worker will not leave. So if you think minimum wage hikes are a decent idea, you also ought to think that non-taxed tips will benefit the boss, not the workers.”
