What we’re reading (9/4)
“Wall St Week Ahead Investors Grow Wary As Stocks Hit New Highs” (Reuters). “Investors are girding their portfolios for potential stock market volatility, even as equities hover near fresh highs after logging seven straight months of gains…[i]n derivatives markets, the gap in price between the front month Cboe Volatility Index futures contract and the VIX index itself is higher than it has been about 85% of the time over the last five years. This suggests some investors expect the calm in stocks to give way to more pronounced price swings in the coming weeks and months.”
“What Every Investor Should Understand About Stagflation—But Often Doesn’t” (Wall Street Journal). “The prospect that inflation’s recent spike may be more than transitory, coupled with the possibility the economy will grow slowly, has raised the specter of the ‘stagflation’ era of 50 years ago. But be careful about making investment decisions based on what happened in that era—marked by a combination of stagnant growth and higher inflation. While the general outlines of the stagflation era are widely known, there are many misconceptions about how particular asset classes fared.”
“Bitcoin Miners And Oil And Gas Execs Mingled At A Secretive Meetup In Houston – Here’s What They Talked About” (CNBC). “On a residential back street of Houston, in a 150,000 square-foot warehouse safeguarding high-end vintage cars, 200 oil and gas execs and bitcoin miners mingled, drank beer, and talked shop on a recent Wednesday night in August…Bitcoin miners care most about finding cheap sources of electricity, so Texas – with its crypto-friendly politicians, deregulated power grid, and crucially, abundance of inexpensive power sources – is a virtually perfect fit. The union becomes even more harmonious when miners connect their rigs to otherwise stranded energy, like natural gas going to waste on oil fields across Texas.”
“What You’ve Lost In This Bull Market” (Wall Street Journal). “You probably feel safer riding your bicycle fast if you’re wearing a helmet. You’d be more inclined to take curves on a mountain road at high speed in a sturdy SUV than you would in a compact car. In much the same way, the low-interest-rate policy of the Federal Reserve and other central banks around the world has made the market environment less risky—thereby prodding investors into behavior that’s more risky.”
“Network Effects Are Overrated” (DealBook). “The problem with this [network effects] narrative is that it ignores the numerous ways in which the new digital platforms actually make businesses more vulnerable to competitive attack compared with the analog models that they have disrupted. The ease with which customers can switch undermines captivity and the asset-light nature of these businesses both lowers entry barriers and the level of activity required to break even.”
