What we’re reading (9/10)
“U.S. Job Opening Leveled Off Late In The Summer” (Wall Street Journal). “The increase in the number of job postings, a real-time measure of labor-market activity, has slowed dramatically since late July, and last week stood about 20% below 2019 levels, according to data the job-search site Indeed.com shared with The Wall Street Journal.”
“Factors That Could Derail Stocks in Q4” (U.S. News & World Report). In short: a prolonged recessionary environment, deteriorating U.S.-China relations, sudden domestic economic policy changes. For the last one, the article really focuses on the prospects for higher corporate tax rates and a less permissive regulatory environment under a potential Biden Administration, but that doesn’t seem fair to me. It depends a little on your definition of “derail,” but while we might reasonably expect lower returns in a higher-tax environment, it seems like it should be pretty uncontroversial to expect lower volatility too. If you care about risk-adjusted returns instead of just gross returns, that could be a pareto improvement in market conditions.
“Urban Flight Means Home Improvement And DIY Trends Are More Than A Pandemic Bounce. They’re a New Habit” (CNBC). “In the research note, Wells Fargo senior equity analyst Zachary Fadem spelled out factors that have driven some people out of cities. Among them, he said, about 65% of early Covid-19 cases were concentrated in dense cities. People have sought out more space as they work and learn at home and as aspects of city life from public transit to high-end restaurants are unavailable or unappealing. He pointed to recent earnings reports by retailers that soared past Wall Street expectations, citing de-urbanization as one of the causes.”
“Northrup Grumman Wins $13 Billion Contract To Replace U.S. Ballistic Missiles” (Washington Post). NOC just won a massive USAF contract to replace America’s “aging stock of intercontinental ballistic missiles.” Treaty limitations cap the existing stock of actual nuclear warheads, but this deal is all about the “missile infrastructure that would be used to deliver those warheads[.]”
"43% Of Retail Investors Are Trading With Leverage: Survey” (Yahoo! Finance). The most interesting finding from this survey to me is not the use of leverage, but rather that 44 percent of respondents said they had been trying to “time the market.” That’s a surprising result in light of decades of research (discussed a bit in an earlier blog post here) that people tend to leave money on the table when they try to time the market.
