What we’re reading (9/6)
“Real-Estate Doom Loop Threatens America’s Banks” (Wall Street Journal). “With the commercial real-estate market now in meltdown…trillions of dollars in loans and investments are a looming threat for the banking industry—and potentially the broader economy. Banks’ exposure is even bigger than commonly reported. The banks are in danger of setting off a doom-loop scenario where losses on the loans trigger banks to cut lending, which leads to further drops in property prices and yet more losses.”
“The Mistake-Prone Federal Reserve Could Be Sending Us Into Recession” (New York Post). “Milton Friedman famously taught that inflation is always and everywhere a monetary phenomenon. Had the Fed heeded this teaching, it wouldn’t have paved the way for multi-decade-high inflation in 2022 by allowing the broad money supply to balloon by a staggering 40% between the beginning of 2020 and the end of 2021. Despite that experience, the Fed is now letting the money supply contract at a pace unprecedented in the post-war period. That could be setting us up for the opposite problem of great economic weakness and another period of flirting with inflation. At this year’s start, a number of regional banks, including most notably Silicon Valley Bank, failed as a result of large interest-rate-induced losses on their bond portfolios.”
“Markets Brief: Will The Fed Really Cut Rates 5 Times Next Year?” (Morningstar). “As of Sept. 1, futures prices indicate that traders anticipate about 1.2 percentage points of rate cuts next year, according to Bank of America rates strategist Meghan Swiber. If the Fed lowers rates a quarter-point at a time, that would mean roughly five cuts over the course of the year. In contrast, strategists at Bank of America are anticipating just 0.75 percentage points of cuts in 2024. Swiber attributes the difference to the risk baked into futures markets.”
“Even Charter Thinks That Cable TV Sucks Now” (Insider). “Just how broken is cable TV? So broken that Charter, the second-biggest cable company in the US with nearly 15 million subscribers, says it's willing to walk away from the business entirely. Charter is currently locked in an ugly dispute with Disney over what are called carriage fees, or how much it pays to give its subscribers access to channels like ESPN. That's led to a blackout of Disney-owned channels that's taken the US Open, among other programming, off the air.”
“Five Steps To Navigating Fiduciary Duties In The ESG Era” (Dealbreaker). “The landscape of fiduciary duties is evolving rapidly, and ESG (Environmental, Social, and Governance) considerations are at the forefront of this transformation. Corporate boards find themselves under the scrutiny of various stakeholders, including investors, politicians, regulators, clients, and activists, each with strong opinions on how ESG should be integrated into corporate decision-making. Strong corporate governance is essential in this context. Fiduciary duties are the bedrock upon which responsible corporate governance is built.”
