What we’re reading (8/29)
“Feuding Founders Of Two Sigma Hedge Fund Stepping Down” (Wall Street Journal). “The founders of mega hedge fund Two Sigma are stepping down as co-chief executives in a bid to resolve a yearslong clash that had riven the $60 billion quant-trading powerhouse. Disagreements between John Overdeck and David Siegel, first reported by The Wall Street Journal, were so intense and distracting that they inhibited decision-making, according to people at the firm. Things got so bad Two Sigma felt compelled to disclose the strife to investors. Over the years, the relationship between the two had evolved “from irritation to cold war to hot war,” according to a person familiar with them.”
“SpaceX’s Risky Mission Will Go Farther Into Space Than We’ve Been In 50 Years” (Vox). “The team will spend five days aboard SpaceX’s Crew Dragon vessel, and will travel 870 miles away from Earth, in the farthest crewed mission since 1972’s Apollo 17 spaceflight to the moon. That distance will put the craft more than 200 miles inside the Van Allen radiation belts — regions in space that encircle the planet and are highly radioactive. They were detected on the first US space mission, in 1958, and their highly charged, energetic particles can damage spacecraft instruments.”
“What’s Going On With Leveraged Treasury Trades” (Capital Flows and Asset Markets). “Reading the excellent article by Brian Meehan of Bloomberg Intelligence, ‘Basis Trade Growth Is Massive’, I was reminded just how stupid clearinghouses really are. If you ever meet a head of a clearinghouse, I can assure it was not brains that got them to this key position in global finance. As the article points out, their is now a USD 1.2 trillion notional short position in US treasury futures. You should not read this as the market being bearish on treasuries. It is a levered trade to make a ‘risk free’ return on the difference in price between off the run treasuries and treasury future positions. For every short position in the treasury futures, there should be a long position in the physical market.”
“Wobbling Trump Trades, Harris Rise Have Wall Street Rethinking Bets” (Bloomberg). “Indexes from Goldman Sachs Group Inc. that track trading strategies for each party show the Democratic one started outperforming the Republican one right around the time Biden stepped down as candidate. And options positioning shows traders are paying more for protection against volatility around Election Day, even though overall volatility is expected to remain below the long-term average.”
“Fare Evasion Surges On N.Y.C. Buses, Where 48% Of Riders Fail To Pay” (New York Times). “Every weekday in New York City, close to one million bus riders — roughly one out of every two passengers — board without paying. The skipped fares are a crucial and growing loss of revenue for the Metropolitan Transportation Authority, which is under severe financial pressure. New York’s long-running fare evasion problem, among the worst of any major city in the world, has intensified recently; before the pandemic, only about one in five bus riders skipped the fare.”
