What we’re reading (9/23)
“Pentagon Redirected Pandemic Funds To Defense Contractors” (Washington Post). “A $1 billion fund Congress gave the Pentagon in March to build up the country’s supplies of medical equipment has instead been mostly funneled to defense contractors and used to make things such as jet engine parts, body armor and dress uniforms.”
“How Nikola Stock Got Torched By A Short Seller” (Wall Street Journal). “It took research from Mr. Anderson, an unknown in the investing world, to cut Nikola’s market value. The company’s value has fallen to under $11 billion from as high as $30 billion earlier this month. ‘This is all happening because of his report,’ says Gabriel Grego, who runs hedge fund Quintessential Capital Management, which placed its own Nikola short positions after reading Hindenburg’s research.”
“Johnson & Johnson Enters Late-Stage Trial Testing Its Coronavirus Vaccine” (CNBC). “Johnson & Johnson said Wednesday it has begun its phase three trial testing its potential coronavirus vaccine. J&J is the fourth drugmaker backed by the Trump administration’s Covid-19 vaccine program Operation Warp Speed to enter late-stage testing. The others are Moderna, Pfizer and AstraZeneca. The trial will enroll up to 60,000 adult volunteers across 215 locations in the U.S. and other countries, according to the National Institute of Allergy and Infectious Diseases. Participants will be randomly selected to receive a dose of the potential vaccine or a placebo, according to details of the trial, which will determine whether the vaccine is safe and effective.”
“Justice Ginsburg Was A Leader In Protecting Intellectual Property Rights” (Real Clear Markets). “Ginsburg understood that innovation is what drives the free-market economy. In her nearly three decades on the bench, she adamantly defended their rights — working tirelessly to ensure that her rulings closed loopholes that left their property, ideas, and creations vulnerable.”
“Gangs, Labor Mobility and Development” (National Bureau of Economic Research). Fascinating new study: “We study how two of the world’s largest gangs—MS-13 and 18th Street—affect economic development in El Salvador. We exploit the fact that the emergence of these gangs was the consequence of an exogenous shift in American immigration policy that led to the deportation of gang leaders from the United States to El Salvador. Using a spatial regression discontinuity design, we find that individuals living under gang control have significantly less education, material wellbeing, and income than individuals living only 50 meters away but outside of gang territory. None of these discontinuities existed before the emergence of the gangs. The results are confirmed by a difference-in-differences analysis: after the gangs’ arrival, locations under their control started experiencing lower growth in nighttime light density compared to areas without gang presence. A key mechanism behind the results is that, in order to maintain territorial control, gangs restrict individuals’ freedom of movement, affecting their labor market options. The results are not determined by exposure to violence or selective migration from gang locations. We also find no differences in public goods provision.”
