What we’re reading (8/23)
“U.S. Expansion Slowed In August, Survey Shows” (Wall Street Journal). “The U.S. economic expansion is losing momentum. Softening demand at a time of rising Covid-19 cases, labor shortages and persistent knots in shipping networks are restraining businesses in the U.S. and across the globe, according to private-sector surveys released Monday.”
“Dividend Payouts To Hit $1.4 Trillion In 2021, Nearing Pre-Pandemic Levels, Research Shows” (CNBC). “Dividends paid to investors are projected to hit $1.39 trillion in 2021, reflecting a recovery that’s stronger than expected, according to a new report from British asset manager Janus Henderson. The 2021 forecast for dividends is just 3% below the pre-pandemic peak, the firm found. Dividend payments in the second quarter jumped 26% from the same period last year to $471.7 billion, just 6.8% below the levels seen in the second quarter of 2019. Janus Henderson projected that dividend payouts will return to pre-pandemic highs within the next 12 months.”
“God, Money, YOLO: How Cathie Wood Found Her Flock” (New York Times). “Ms. Wood and her firm’s unusual approach to investing — which combines high levels of risk with high levels of transparency about her views to produce, at least last year, astronomically high returns — have connected with new investors in a way the financial industry had only dreamed of. Her aggressive bets on often unprofitable technology stocks are a better fit for traders who brag on Reddit about YOLO-ing their rent money than it ever was for the endowments and institutions that rely on the traditional money management industry, where she spent more than 30 years.”
“A Painful Trade Shock Is Coming To Afghanistan” (Full Stack Economics). “Afghanistan’s economy is in for a difficult year. Even beyond the stresses of rule by the Taliban, the state has some economic weaknesses that will be greatly exacerbated by Taliban rule and political isolation…[t]he last IMF report on the country prior to the collapse of the government counted imports at about $7 billion annually, a huge fraction of Afghanistan’s $19 billion GDP. Imports exceeded exports by about a factor of five…that high level of imports was sustainable under the unusual circumstances of the U.S. presence, it won’t be sustainable going forward…[g]iven that its currency reserves have been frozen to prevent the Taliban from accessing them, it will need to balance its trade deficit quickly, without any adjustment period.”
“Physical Pain, Gender, And Economic Trends In 146 Nations” (Macchia and Oswald in Social Science & Medicine). “More than a quarter of the world's citizens are in physical pain. Physical pain is lower in a boom and greater in an economic downturn…[and] increases in pain are borne almost exclusively by women and found principally in rich nations…[t]he counter-cyclicality of physical pain is not what would be predicted by conventional economic analysis: during an expansion, people typically work harder and longer, and accidents and injuries increase. Nor are the study results due to unemployed citizens experiencing more pain (although they do). Instead, the study's findings are consistent with an important hypothesis proposed recently, using different kinds of evidence, by brain and behavioural-science researchers (e.g., Wiech and Tracey, 2009). The hypothesis is that economic worry can create physical pain.”
What we’re reading (8/22)
“Citadel To Redeem About $500 Million From Melvin Capital” (Wall Street Journal). “Ken Griffin’s Citadel LLC and Citadel partners are planning to redeem roughly $500 million of the $2 billion they put in Melvin Capital Management after Melvin got slammed by bad short bets on GameStop Corp. and other soaring stocks, said people familiar with the matter.”
“Check, Please? How New York’s Restaurants Suddenly Got So Expensive — And Why That’s Probably For The Best.” (GrubStreet). “The food-service research firm Technomic pegs typical annual menu inflation at around 2.5 percent, accounting for natural fluctuations in costs of goods and labor. But according to the U.S. Bureau of Labor Statistics, prices at full-service restaurants have risen 4.3 percent in the past year, the largest 12-month increase ever recorded. So, what’s really going on? Well, restaurants are enmeshed within a vast and highly sophisticated ecosystem of supply and demand, which is being tested by a perfectly terrible storm of events.”
“A Big Study About Honesty Turns Out To Be Based On Fake Data” (Buzz Feed). “A landmark study that endorsed a simple way to curb cheating is going to be retracted nearly a decade later after a group of scientists found that it relied on faked data. According to the 2012 paper, when people signed an honesty declaration at the beginning of a form, rather than the end, they were less likely to lie. A seemingly cheap and effective method to fight fraud[.] […] [yet] [y]ears later, he [Ariely] and his coauthors found that follow-up experiments did not show the same reduction in dishonest behavior…[and] more recently, a group of outside sleuths scrutinized the original paper’s underlying data and stumbled upon a bigger problem: One of its main experiments was faked “beyond any shadow of a doubt,” three academics wrote in a post on their blog, Data Colada, on Tuesday.”
“Bad News: The Selling The Story Of Disinformation” (Harper’s). “A common account of social media’s persuasive effects provides a convenient explanation for how so many people thought so wrongly at more or less the same time. More than that, it creates a world of persuasion that is legible and useful to capital—to advertisers, political consultants, media companies, and of course, to the tech platforms themselves. It is a model of cause and effect in which the information circulated by a few corporations has the total power to justify the beliefs and behaviors of the demos. In a way, this world is a kind of comfort. Easy to explain, easy to tweak, and easy to sell, it is a worthy successor to the unified vision of American life produced by twentieth-century television. It is not, as Mark Zuckerberg said, “a crazy idea.” Especially if we all believe it.”
“The Economics Of Taliban Finance” (FT via Marginal Revolution). “An example of Islamist governance can be found on the stretch of road from Kabul to the Mile 78 border crossing in south-west Farah province that borders Iran. The road has more than 25 government checkpoints and a fee is charged at multiple points on the journey. By contrast, the Taliban who police the same road have far fewer checkpoints and give a receipt, so only a single payment is necessary. Ibraheem Bahiss, an Afghanistan consultant at International Crisis Group, said the Taliban sought to portray themselves as better administrators.”
What we’re reading (8/21)
“Global Stocks Fall As Delta Variant Concerns Intensify, With Oil Extending Its Losses” (Business Insider). “[T]he spread of the Delta variant of COVID-19 was front of mind [for investors this past week], and what that could mean for economic recovery in the US as well as Asia and elsewhere. Hospitalizations and deaths are on the rise in the US, where average daily cases on Thursday topped 130,000 for the first time since February, official data showed. Investors concerned about economic growth are looking ahead to the Federal Reserve Chair Jerome Powell's comments at the Jackson Hole symposium next week. They are bracing to hear more about its timeline for tapering and easing of economy-stimulating policies.”
“In Nod To Delta Variant, Fed Moves Jackson Hole Meet Online” (Reuters). “The Federal Reserve Bank of Kansas City said on Friday its annual economic symposium in Jackson Hole, Wyoming, will take place on Aug. 27 virtually and not in person as planned, the clearest sign yet of the impact of the COVID-19 Delta variant on the Fed's plans.”
“Ark’s Cathie Wood Says Stock Market ‘Couldn’t Be Further Away From A Bubble.’ Here’s Why.” (MarketWatch). “[S]tar investor Cathie Wood, who runs a suite of popular ETFs in Ark Investment Management, says that there’s no reason to fear that the market is becoming too bubblicious…Wood’s view on the market…is that investors are acting much more sedately and prudently, compared with the euphoria that was characteristic of the late 1990s and early 2000s dot-com boom. ‘In a bubble…and I remember the late ’90s…our [Ark Invest’s] strategies would have been cheered on,’ she told the business network. ‘You remember the leapfrogging of analysts making estimates one higher than the other, price targets one higher than the other,’ she said on ‘Tech Check.’”
“SEC Weighs Requiring Companies To Give More Details On Workers” (Wall Street Journal). “The Securities and Exchange Commission is considering asking public companies to disclose more information about their workforces. ‘Investors want to better understand one of the most critical assets of a company: its people,’ SEC Chairman Gary Gensler said earlier this week in a Twitter thread. ‘I’ve asked staff to propose recommendations for the Commission’s consideration on human capital disclosure.’ Mr. Gensler previously said the disclosures would likely be mandatory for public companies and could touch on a number of metrics, including turnover, skills and development training, compensation, benefits, workforce demographics including diversity, and health and safety.”
“Here’s More Evidence That Factor Investing Works In Fixed Income” (Institutional Investor). “NTAM [Northern Trust Asset Management] researchers found that 70 percent of excess returns of actively managed fixed income funds can be traced to simple exposures to factors such as duration and credit [quality]. They also determined that systematic factors may offer more opportunities to earn income without taking too much credit risk or tying up money in illiquid investments.”
What we’re reading (8/20)
“Money Managers Race To Launch First U.S. Bitcoin ETF After SEC Signal” (Wall Street Journal). “Asset managers are jockeying to create the first U.S. bitcoin exchange-traded fund after a top securities regulator signaled a path to approval. In the past two weeks, ProShares, Invesco Ltd. , VanEck, Valkyrie Digital Assets and Galaxy Digital have all filed plans for bitcoin futures ETFs. If approved, the funds would make trading bets on bitcoin’s future value akin to buying a stock. Earlier in August, Securities and Exchange Commission Chairman Gary Gensler indicated that he would be receptive to ETFs that will trade in bitcoin futures rather than cryptocurrency itself as long as they follow stricter rules usually reserved for mutual funds. The SEC has already approved the first U.S. bitcoin-futures-based mutual fund, which started trading last month.”
“Second-Largest U.S. Mortgage Lender Will Accept Payment In Bitcoin” (CNBC). “Starting later this year, U.S. homebuyers will have the option to pay for their mortgage in bitcoin. United Wholesale Mortgage, which made its public debut in January via a special purpose acquisition (SPAC) merger, announced plans this week to accept cryptocurrency for home loans, in what is being billed as a first for the national mortgage industry.”
“The Next Taper Is A Big Deal For Very Different Reasons” (Real Clear Markets). “Jay Powell’s current Fed is likely to announce tapering its current QE, once again based solely upon recent payroll figures and a quickly falling unemployment rate. With those, he is preparing the public for the stepping down the pace of its purchases. This Chairman doesn’t want Bernanke’s [2013] [taper] tantrum.”
“Fed Fear Is Back. Investors Are Getting Antsy” (CNN Business). “Wall Street is fighting its Federal Reserve hangover and the Dow booked its third straight day of losses after the central bank suggested Wednesday it could ease off the stimulus gas as early as year-end. So the investor angst continues, sending CNN's Fear & Greed index back into ‘extreme fear’ from ‘neutral’ just two days ago…[n]ext week's central bank symposium at Jackson Hole will be watched closely for any more signals for the eventual and inevitable taper. The central bank has three meetings left in 2021, and analysts at Bank of America think the November meetings are when the Fed is most likely to clamp down on the amount of monthly purchases.”
“Big Tech And The Taliban” (DealBook). “Social media platforms were caught as much by surprise by the Taliban’s takeover of Afghanistan as Western leaders were. Accounts and content linked to the group are rapidly multiplying, as governments around the world decide whether to officially recognize the Taliban as Afghanistan’s rulers. U.S. tech giants like Facebook, Twitter and YouTube, which have largely designated the Taliban a terrorist organization, have been put in a tricky position as the Taliban try to establish their authority and legitimize their rule online.”
What we’re reading (8/19)
“Bets Against Cathie Wood's ARK Innovation Fund At Record High - S3” (Reuters). “Short interest in star investor Cathie Wood's flagship ARK Innovation ETF was at a record high, data from analytics firm S3 Partners showed on Wednesday, as several hedge funds disclosed this week they had bet against the top performing ETF of 2020.”
“The IMF Acts Against The Taliban” (Wall Street Journal). “Late Wednesday…the U.S. and the IMF signaled the Taliban won’t have access [to ~$400 million in Special Drawing Rights from the IMF] due to the chaos on the ground and the ‘lack of clarity’ from the international community on who should be recognized as the legitimate government of Afghanistan. This is an excellent start, but it is only a temporary fix. The Taliban will surely come back and seek recognition once they are in full control of the country.”
“Three Former Netflix Engineers Charged With Insider Trading” (CNN Business). “Three former Netflix engineers and two of their associates have been charged with illegally profiting more than $3 million in a long-running insider trading scheme, the Securities and Exchange Commission said Wednesday. The SEC complaint said that the person at the center of the scheme, Sung Mo Jun, traded on nonpublic information about the growth of the platform's subscriber base, both while he was employed at Netflix and after he left the company in 2017.”
“Are Television Ratings Rigged, Or Merely Inaccurate?” (RealClearMarkets). “While they may not agree on nearly anything else, one issue manages to unite Fox News Channel, MSNBC and CNN: an archaic television ratings system that is known to wildly misrepresent viewership. At a time when cord-cutting has brought about many new ways to consume television news and entertainment, the industry’s primary measurement tool, Nielsen Ratings, seems stuck in another era. Those chosen as “Nielsen families” have complained for years about the cumbersome, almost primitive methods used to track their viewership.”
“What Happens When All Of Your Co-workers Quit?” (The Cut). “The so-called great resignation has created a seismic power shift that has already forced corporations like McDonald’s, Walmart, and Starbucks to boost wages or offer perks to entice new hires. There has been an endless parade of Schadenfreude-inducing headlines about employers who are now on their knees begging for staff like desperate suitors…[but] in the meantime it has been devastating to those left behind whose unbearable workloads have led to depression, substance abuse, and trips to the hospital. After all, not everyone can quit.”
What we’re reading (8/18)
“Investors Bet Corporate Spending And Buybacks Will Support Stocks” (Wall Street Journal). “Investors are betting that cash-rich companies will increase spending on everything from factories to share buybacks, a combination many believe can boost stocks in coming months. Businesses including Tyson Foods Inc., consumer-products firm Newell Brands Inc., Morgan Stanley and alcohol seller Constellation Brands Inc. have said in recent weeks they plan to build factories, expand research budgets, pay down debt or seek acquisitions while also giving priority to dividends or share repurchases.”
“Palantir Bought $50 Million In Gold Bars In August As Cash Pile Grows” (CNBC). “While some companies such as Tesla are diversifying into bitcoin, data analytics software company Palantir is betting on gold. Palantir bought $50 million in gold bars in August, the company disclosed in its latest earnings statement. The move reflects a growing company stashing cash in an unconventional asset in response to economic uncertainty spurred by the coronavirus pandemic and governments’ response to it.”
“The S&P 500 Is Due For A 10% Correction And Will Slump For The Next Few Quarters As Tapering, Taxes, And Slow Earnings Growth Weighs On Returns, Morgan Stanley's Stock Chief Says” (Business Insider). “Morgan Stanley's chief US equity strategist doesn't see much upside left for the S&P 500 for the remainder of 2021. The firm's year-end price target for the benchmark index is 4000, a roughly 10% drop from current levels. Additionally, between now and the end of the year, Morgan Stanley expects a correction of even greater than 10%.”
“Why The S&P 500 Could Be Headed For An Imminent 7% Decline, According To BofA” (Business Insider). “The bank highlighted rising credit spreads as a big risk for the S&P 500, as it signals deteriorating credit conditions even as the market hits new record highs. The S&P 500 closed at a record high on Monday for the 49th time so far this year, and is up more than 2% over the past month.”
“Bill Ackman’s SPAC Gets Sued” (DealBook). “[The SPAC] run by the billionaire hedge-fund investor Bill Ackman, got sued this morning in a novel case that could have far-reaching implications for the SPAC industry. The case…contends that Ackman’s SPAC isn’t an operating company, but is actually an investment company like Ackman’s funds, which should be regulated by the Investment Company Act of 1940. If certain SPACs were regulated as investment companies, much of the industry could be affected because it would make it harder for anyone in the investment business to participate in a SPAC.”
What we’re reading (8/17)
“S&P 500 Doubles From Its Pandemic Bottom, Marking The Fastest Bull Market Rally Since WWII” (CNBC). “The broad equity benchmark has rallied 100% on a closing basis from its Covid trough of 2,237.40 on March 23, 2020. It took the market 354 trading days to get there, marking the fastest bull market doubling off a bottom since World War II, according to a CNBC analysis of data from S&P Dow Jones Indices.”
“A New Theory Suggests That Day-To-Day Trading Has Lasting Effects On Stockmarkets” (The Economist). “In a recent working paper Xavier Gabaix of Harvard University and Ralph Koijen of the University of Chicago study how the aggregate value of America’s stockmarket responds to buying and selling. Researchers have studied flows before, typically finding noticeable effects as investors sell one stock and buy another. Messrs Gabaix and Koijen are interested in whether this finding scales up to move the market as a whole—a thesis that is consistent with the smaller-scale findings, but more provocative.”
“Retirement Planning Upgrade Turns Your 401(k) Into A Cash Machine” (Investor’s Business Daily). “Congress has given 401(k) plan sponsors like your employer the green light for offering investments that provide guaranteed lifetime income — annuities — to plan members like you. The introduction of annuities would add a major power tool to workers' retirement planning kits.”
“Weak Oversight Plagues Audits Of Billions In Private Assets” (Wall Street Journal). “Firms that audit private entities essentially police each other, often with no public disclosure. A Wall Street Journal analysis of the system shows that auditors give top grades to one another, hardly ever find fault with the biggest accounting firms and often don’t disclose failures among smaller auditors…[r]esearch by the government and data from the auditing industry trade group show significant flaws in audits of private organizations, particularly those done by smaller firms.”
“Michael Burry Of ‘Big Short’ Bets Against Cathie Wood’s ARKK” (Bloomberg). “Michael Burry, the investor made famous by “The Big Short” movie, has taken aim at one of Wall Street’s hottest stars. Burry’s Scion Asset Management owned bearish put contracts against 235,500 shares of the ARK Innovation ETF (ticker ARKK) at the end of the second quarter, according to a regulatory filing Monday. The new position was valued at almost $31 million, the filing says. The flagship exchange-traded fund of Cathie Wood and her firm Ark Investment Management lured billions in the past year after her thematic tech-focused bets trounced the market in 2020.”
What we’re reading (8/16)
“Growth Prospects Are High, But Valuations Are at Nose-Bleed Levels. Here’s What Investors Can Do.” (Institutional Investor). “As early- and late-cycle indicators conflict, Neuberger Berman analysts suggest investors turn toward private debt — senior loans to private-equity-backed companies. According to a report from the investment management firm…investors are facing a central paradox in the market. Early-stage predictions show growth is coming in the near future, a signal to investors to put money to work. In fact…the Federal Reserve is forecasting U.S. GDP to be 7 percent larger in 12 months and 3 percent larger than it was before the Covid-19 pandemic shut down economies around the world. But valuations are extremely high, the mark of a mid- to late-stage economic cycle that is pushing investors to be risk averse.”
“Millennials Plowed Their Money Into Apple, Tesla, And Disney During The Pandemic. Here Are Their 10 Favorite Stocks.” (Business Insider). “Millennials' favorite stocks over the past year include Apple, Tesla, Ford, and Pfizer, according to a study by DailyFX. The financial-news website turned to Robinhood to figure out which companies were most popular among young investors. DailyFX looked at data from the trading app - whose users are predominantly aged 18 to 35 - for the 12-month period to April 1, 2021. Millennials piled into several stocks that were hammered by pandemic-related travel restrictions and lockdowns, including Disney, Delta Air Lines, and Carnival, the cruise operator. GameStop was excluded[.]”
“Carvana’s Success Rides On Used-Car Loans” (Wall Street Journal). “When Carvana makes a car loan to a buyer, it packages it with other loans and sells the debt to investors. While other auto lenders also sell loans to investors, they typically keep the debt on their books, recording gains and losses over time. Carvana, on the other hand, doesn’t retain the debt and immediately books gains on the cash sales. For now, that bolsters revenue. Critics warn the practice could leave the company vulnerable if debt-market conditions change or if the loans Carvana makes start to sour. Indeed, loan-sale revenue sank when securitization markets shut down in the first half of 2020. A linchpin of the transactions is that Carvana is able to sell its car loans to investors at a premium to their face value.”
“Don’t Let Inflation Anxiety Undermine Our Future” (Paul Kurgman, New York Times). “Much of the media coverage of the budget resolution just approved by the Senate on a party-line vote…suffers from two common problems in fiscal reporting: lack of quantitative context and failure to distinguish clearly between spending increases and fiscal stimulus, which aren’t necessarily the same thing…the fact is that America desperately needs to invest in its future — both in hard assets like roads and bridges and in its people, especially its children. And there are no good economic reasons not to make those investments. Debt isn’t a problem given low interest rates; inflation wouldn’t be a problem given the economy’s ability to absorb higher government spending. Build we can, and build we must.”
“From Saigon To Kabul: Biden’s Response To Vietnam Echoes In His Views Of Afghanistan Withdrawal” (Washington Post). “Three weeks before the fall of Saigon, top Ford administration officials pleaded with Biden and other senators for more U.S. military aid, according to newspaper accounts…[i]n a closed-door briefing, top officials at the State and Defense departments told Biden and other senators on the Senate Foreign Relations Committee that the South Vietnamese army had “a chance” to defend Saigon and the Mekong Delta area with more U.S. military aid, the newspaper accounts said. ‘I am convinced there is absolutely no chance,” Biden told reporters[.]”
What we’re reading (8/15)
“Party Like It’s 1999—Investors Send These Stocks Into Record Territory” (Fortune). “There's nothing scary about these markets. U.S. futures are off their lows, trading higher. Europe is doing a bit better. The only drama I can see: can the benchmark indexes grind out yet another all-time high? Looks that way.”
“Used Car Price Hikes May Soon Be Over” (CNN Business). “Used car prices may finally be peaking. Prices shot up like a rocket earlier this year, soaring 30% between March and June according to the consumer price index, the federal government's main inflation barometer. That was by far the steepest three-month increase in those prices, according to government data that goes back nearly 70 years. Before the recent run-up in used car prices, which started last fall, the biggest 3-month rise in prices was only a 12% jump in 1974. But prices edged up only 0.2% in July, and gauges from the industry have raised hopes that the prices are at least leveling off if not about to start a modest decline.”
“The New Inflation: Don't Expect Food Or Gas Prices To Fall Any Time Soon” (The Hill). “The outlook for inflation has deteriorated sharply since the pandemic began and the Fed took inflationary monetary policy actions. Because of the lagged effects of monetary growth on inflation, it is likely that this new episode of inflation will continue for quite some time — even with a speedy response by the Fed, which grows more likely by the day. The Biden administration’s policies will worsen the outlook for inflation. Increased regulations have created an energy price shock, and introduced other supply shocks that will slow productivity and output growth and boost inflation.”
“These People Who Work From Home Have A Secret: They Have Two Jobs” (Wall Street Journal). “They were bored. Or worried about layoffs. Or tired of working hard for a meager raise every year. They got another job offer. Now they have a secret. A small, dedicated group of white-collar workers, in industries from tech to banking to insurance, say they have found a way to double their pay: Work two full-time remote jobs, don’t tell anyone and, for the most part, don’t do too much work, either.”
“The Limits Of Vacation” (DealBook). “Leaders’ first priority should be to stop glorifying exhaustion, said Dr. Maslach of Berkeley. After that, she suggests that managers ask employees what they need, rather than assume that they know, since there is no one answer. For example, companies have sought to improve morale by installing a volleyball court on the rooftop of an office or by providing free food during the day. What may have made more of a difference to employees was receiving fewer emails from bosses during evenings and weekends.”
What we’re reading (8/14)
“Consumer Sentiment Suddenly Crashes Below Early-Pandemic Levels” (CNN Business). “Americans are extremely worried about the Delta variant and the spike in Covid-19 cases. A key survey of consumer confidence plunged in August below where it was in April 2020 when the first Covid-19 outbreak slammed the brakes on the US economy. The University of Michigan said that its influential consumer sentiment index plunged 13.5% from July to August and hit a level of 70.2. That's the most bearish reading for this measure since December 2011.”
“How Millennial Investors Lost Millions On Bill Ackman’s SPAC” (Institutional Investor). “The structure was too complicated for both investors and their brokerages to quickly unpack, and the stock, along with the warrants and options attached to it, tanked. Within weeks, the Securities and Exchange Commission stunned Ackman, essentially killing the deal by telling his lawyers that it did not meet the New York Stock Exchange’s requirements for a SPAC — even though Ackman said on CNBC that the NYSE had given him the go-ahead months earlier.”
“The Robinhood Bros Who Keep Their Stock Losses Secret From Their Wives” (Mel Magazine). “Driven by the stock-market craze earlier this year, there are a number of men who gambled their entire family’s savings on single stocks without ever telling their significant other…‘When I first started, I really didn’t know anything about trading stocks,’ he explains. A graphic designer by trade, Austin often found himself frantically googling terms like ‘limit order,’ ‘calls’ and ‘earnings reports,’ as he dumped additional installments of $100 to $250 into his account.”
“American Motherhood vs. The American Work Ethic” (Vox). “Mothers working from home during the pandemic have reported higher rates of anxiety, depression, and loneliness than fathers. Last year, 3 million women dropped out of the workforce — and 1.6 million of them still have not returned. That means companies have lost employees with valuable perspectives that have been proven to make companies more innovative and profitable. It also shrinks the talent pool for companies who are desperately seeking workers. That all creates an unfolding crisis, not only for women and their families, but for society and the economy as a whole.”
“Yale Researchers Say Social Media’s Outrage Machine Has The Biggest Influence On Moderate Groups” (Fast Company). “For the study, the team of researchers built machine-learning software capable of identifying moral outrage in Twitter posts, which then trawled nearly 13 million tweets from over 7,000 users. After tracking the users’ pages over time, they discovered those who racked up more ‘likes’ or ‘retweets’ after showing outrage were more likely to keep doing so in future posts. This was subsequently backed up by controlled behavioral experiments conducted by the team.”
What we’re reading (8/13)
“Welcome To The Peak Everything Market And Economy” (CNN Business). “The rapid shutdown of the economy in the spring of 2020 led to a brief but painful recession. But the resulting reopening has caused a massive boom that has some wondering if America is now in the midst of a new Roaring Twenties...just like 100 years ago. Still, there are indications that the economy and market may soon be reaching peak levels -- for just about everything…[e]arnings momentum should begin to fade…housing prices may finally pull back a bit…inflation could cool, but it won’t go away for good[.]”
“A Fed Policy Shift Could Be Near. Buying Bank Stocks Looks Like A Good Strategy.” (Barron’s). “Federal Reserve Chairman Jerome Powell could more definitively signal an end to the easy-money policies that have propelled the equity market ever higher over the past 21 years, at the Fed’s annual summer gathering in Jackson Hole, Wyo., on Aug. 26-28. Such a shift could make it harder to thrive in the stock and options market.”
“GameStop’s Power Player: How Outsider Ryan Cohen Wrested Control” (Wall Street Journal). “Ryan Cohen rose to become chairman of GameStop Corp. with the verve of an old-school corporate raider. Wielding little more than a minority stake and a sharp tongue, Mr. Cohen pushed out GameStop’s executive team and installed longtime associates on the company’s board. The tactics made the co-founder of online pet store Chewy Inc. a favorite of the individual investors who sent GameStop’s stock on a roller coaster this year; they call him ‘Papa Cohen.’”
“The Elan Of Elon Musk” (DealBook). “Much has been written about Carson Block, the volatile and sometimes venomous short-seller who runs Muddy Waters Capital. Now, Block is penning some rare words of his own. Block just sent clients his first shareholder letter since starting a hedge fund in 2015. In the letter, obtained by DealBook from a source familiar with the fund, Block, a longtime critic of Elon Musk, Tesla’s C.E.O., said that his firm’s multiyear bet against the electric carmaker had been sent to ‘heaven,’ with no plans to revive it. Block said Musk’s ‘narcissism’ drew his disdain and stoked the belief that Tesla’s business would crater. But Block added that he underestimated Musk’s ability to raise capital in huge amounts, reinvent himself and captivate shareholders.”
“Half Of Lumber Dealers Now Sit On Excess Inventory In The U.S.” (Bloomberg). “In July, 49% of building-material dealers and manufacturers said they had excess lumber capacity, while none described their levels as “very tight,” in a survey by John Burns Real Estate Consulting LLC. Back in April, 40% said their wood inventories were ‘very tight.’ Lumber prices have come down from records in May, when sawmills were caught off guard with low inventories amid a surge in home building and renovation. Producers have since increased output, and a shortage of other building supplies such as siding and windows has slowed the pace of construction.”
What we’re reading (8/12)
“Inflation Is Spreading To More Parts Of The US Economy” (CNN Business). “America's soaring price hikes moderated last month, signaling that inflation may have peaked. But investors should pay heed to another trend: the spread of higher prices across more sectors of the economy. What's happening: Consumer price inflation remained elevated in July, according to the Bureau of Labor Statistics. Prices rose 5.4% from a year earlier, flat compared with June when the index hit a 13-year high.”
“Prices Rise 5.4 Percent In July Over Last Year As The Economy Claws Back From Pandemic Depths” (Washington Post). “Prices rose 5.4 percent in July compared with a year ago, as policymakers at the Federal Reserve and the Biden administration grapple with how long — and how high — inflation could climb as the economy rebounds. Data released by the Bureau of Labor Statistics on Wednesday showed prices rose 0.5 percent in July compared with June, a slight easing of the monthly pace of inflation. For months, the Fed and White House have said inflation will keep climbing as consumer demand surges while supply chains struggle to catch up. Their expectation is that as supply backlogs have time to clear, inflation will settle back down closer to the Fed’s 2 percent annual target.”
“The Cool Down In July’s CPI Data” (Fisher Investments). “This month, what really jumped out at us was the shelter component, which rose 0.4% m/m and contributed over one-fourth of CPI’s monthly rise. Hotels contributed about half of that. The other half came from rent. Not rent of primary residences, which is what you actually think of when you think of rent. That figure rose 0.2% m/m, and it is only 7.6% of the total CPI basket, making its impact on headline inflation negligible. The real culprit: Owners’ equivalent rent (OER), which rose 0.3% m/m and is a whopping 23.6% of the CPI basket. Yes, you read that right, nearly one-fourth of the CPI basket is imaginary. Owners’ equivalent rent isn’t real—it is the hypothetical amount homeowners would pay to rent their own home, if they rented instead of owning it. It is not something anyone ever pays. It is instead a crude stand-in for home prices, which are an investment, not a capital good, and therefore excluded from CPI. We will leave it to you whether it is sensible to put this made-up service in CPI, but it is there nonetheless.”
“Why Lumber Prices Have Already Bottomed, But Will See Upside Capped At 15% Over The Next 2 Years, According To An Investing Chief” (Business Insider). “The price of lumber has already bottomed, according to Mace McCain, chief investment officer at Frost Investment Advisors. But he's not expecting a runaway rebound either. Instead, McCain sees lumber trading rangebound in the $500 to $600 per thousand board feet range for the next two years, reflecting just 15% upside from current levels over the period.”
“Lordstown Eyes Contract Manufacturing, Leasing Space At Its Ohio Plant” (Bloomberg). “Lordstown Motors Corp, which previously warned it needs to raise additional funding, hung the "open for business" sign on its northeastern Ohio plant on Wednesday, saying it was in talks to build vehicles for other automakers or lease space in the factory. Shares of the electric vehicle startup, which also said it will begin limited production of its Endurance pickup truck in late September, rose 6.1% in after-hours trading.”
What we’re reading (8/11)
“The Harmful Death Of Modern Merger Review” (Real Clear Markets). In a recent blog post, the acting director of the FTC’s Bureau of Competition announced the Commission can no longer guarantee it will meet statutory deadlines for merger reviews under the HSR [Hart-Scott-Rodino] Act. For deals that cannot be sufficiently investigated—a standard and quantity unknown to the public, and which the Commission does not even attempt to describe in its blog post—the Commission will be sending out form letters ‘alerting companies that the FTC’s investigation remains open and reminding companies that the agency may subsequently determine that the deal was unlawful.’”
“Hackers Steal $600m In Major Cryptocurrency Heist” (BBC). “Blockchain site Poly Network said hackers had exploited a vulnerability in its system and taken thousands of digital tokens such as Ether. In a letter posted on Twitter, it urged the thieves to ‘establish communication and return the hacked assets.’ In scale, the hack is on par with huge recent breaches at exchanges such as Coincheck and Mt Gox.”
“How Much Carbon Comes From A Liter Of Coke? Companies Grapple With Climate Change Math” (Wall Street Journal). “From farm to bottler to supermarket cooler, a liter of Coca-Cola creates 346 grams of carbon dioxide emissions, the company’s data show. That’s less than half the tree-to-toilet 771-gram carbon footprint of a mega roll of Charmin Ultra Soft toilet paper, as measured by the Natural Resources Defense Council, an environmental group. Math like this is fast becoming obligatory. Investors are increasing pressure on businesses to disclose the emissions of greenhouse gases related to their products and services. Regulators are starting to ask about that, too. Within the next couple of years, every public company in the U.S. might well be required to report climate information.”
“Pfizer Jumps 6% To Eclipse Record High Reached In 1999 As Strength From COVID-19 Vaccine Continues” (Business Insider). “Shares of Pfizer surged as much as 6% on Tuesday to a record all-time-high, surpassing its previous record reached in April of 1999. The move higher in Pfizer comes amid ongoing strength of its COVID-19 vaccine, which was developed by its partner, BioNTech. Second-quarter earnings results from BioNTech on Monday revealed their view that demand for its COVID-19 vaccine will be strong into 2022 and beyond.”
“Demand For Air Conditioning Is Set To Surge By 2050” (The Economist). “When Joe Biden was a newly elected senator, he asked James Eastland, his fellow in Congress, to tell him the most significant thing that occurred during his long time in the chamber. “Air conditioning,” Mr Eastland replied. Summer in Washington is stifling, so in the past members of Congress departed by June. “Then we put in air conditioning, stayed year round, and ruined America,” he reportedly said, sardonically.”
What we’re reading (8/10)
“Millions Of Americans Are Unemployed Despite Record Job Openings” (Wall Street Journal). “The 10.1 million job openings in June is the highest level since record-keeping began in 2000, but a two-year average of monthly openings—which includes the drop in hirings in spring of 2020—shows a depressed rate, indicating that the current surge has yet to fully offset the halt in hiring seen last year.”
“U.S. Small Business Optimism Drops As Labor Shortages Persist” (Reuters). “Small business owners across the United States grew less confident in the economic recovery in July as labor shortages remained an issue, according to a survey released on Tuesday. The National Federation of Independent Business (NFIB) Optimism Index fell 2.8 points to a reading of 99.7 in July, almost erasing all of June's gain. Six of the 10 index components declined, three improved and one was left unchanged.”
“SoftBank Unit Behind Risky Multibillion-Dollar Tech Bets Dumps Microsoft, Facebook, Alphabet And Netflix Shares” (CNBC). “SoftBank has offloaded shares of U.S. tech giants like Facebook, Microsoft, Alphabet and Netflix, according to its latest financial report released on Tuesday. The Tokyo-headquartered conglomerate invests in publicly listed shares through its SB Northstar trading unit and provides a breakdown of the unit’s portfolio companies in its quarterly results.”
“No Mystery In Falling Bond Yields” (Fisher Investments). “[A]fter the rebound back to pre-pandemic GDP levels, more pedestrian pre-pandemic growth rates should follow. Countries that reopened earlier—and regained their pre-pandemic peaks—like China and America, are already experiencing this. Meanwhile, economists are penciling in similar, with quarterly eurozone GDP growth estimates falling back to sub-1% q/q next year—its typical rate range. Inflation also seems to be leveling off, with June’s reading decelerating to 1.9% y/y. Inflation fears have tapered off as well, and most pundits now presume this year’s inflationary pressures are temporary anomalies. Falling eurozone bond yields are perfectly consistent with the economic outlook many see: slower economic growth and milder inflation than they initially expected.”
“Brands Are Already Marketing To Generation Alpha” (Vox). “Both new and traditional kid-focused brands have, for the most part, abandoned the kitschy, rainbow-colored packaging used in the ’90s and early aughts. Think of the commercials for Fruit Gushers candy and Kid Cuisine microwavable meals. Instead, they’ve defaulted to the minimalist aesthetic familiar to any millennial-aged shopper, with serif fonts and cohesive pastel color schemes that subtly inform the consumer that this brand is ethical, economical, and safe for their child. ‘You can tell Gen Alpha are kids of millennials because their snacks are filled with these labels,’ tweeted Andrea Hernández, a food and beverage trend analyst. ‘Paleo, keto, probiotic, low carb, low sugar, plant based.’”
What we’re reading (8/9)
“Warren Buffett's Berkshire Hathaway Recovers From Coronavirus Slowdown” (Reuters). “Warren Buffett's Berkshire Hathaway Inc on Saturday said many of its businesses are enjoying strong recoveries from the early depths of the coronavirus pandemic, fueling rebounds in profits and revenue. The company Buffett has run since 1965 also signaled the billionaire's confidence in its future by repurchasing $6 billion of its own shares in the second quarter, even as its stock price regularly set new highs.”
“Oil Prices Slide on Worries Over China Delta Variant Outbreak” (Wall Street Journal). “The price of oil and other key industrial commodities slid Monday after Chinese government measures to halt the spread of the Delta variant spooked investors about global energy demand. Brent crude oil, the global benchmark, fell 4% to $67.87 a barrel and West Texas Intermediate futures—the main U.S. benchmark—were down 4.3% at $65.38 a barrel. At those prices, both gauges were set for their lowest close in around 2½ months.”
“Gold And Silver Claw Back Losses After Friday's Stellar Jobs Report Ignited Concerns Over Tighter Fed Policy And Unleashed A ‘Flash Crash’” (Business Insider). “Gold and silver prices on Monday recovered slightly from a sharp slide at the start of Asian trading, but were weighed down by rising expectations that the US Federal Reserve will cut back on its bond buying sooner than expected. Spot gold prices declined 4% to $1,707 per ounce late Sunday, while spot silver prices dropped 9% from $24.34 to $22.10 an ounce. Both metals are paring losses after the "flash crash". Gold was trading at $1,748 per ounce at 4:55 a.m. ET Monday, down 0.8% on the day and at its lowest level since April. Silver was down 1.7% at $23.90 an ounce after touching its lowest level since December.”
“Malls Are back. But For How Long?” (CNN Business). “It's an amazing rebound from the dire conditions just more than a year ago. Many, especially the traditional indoor malls, were closed by stay-at-home orders, and rent collections from tenants came to a halt. Anchor tenants such as JCPenney (JCP) and Nieman Marcus filed for bankruptcy and closed many stores permanently. Others, such as Lord & Taylor, went out of business altogether. There were also bankruptcies by major mall operators including Washington Prime Group and CBL Properties, each of which operate more than 100 malls.”
“Senators Go Beyond Biden To End Private-Equity Tax Break” (Bloomberg). “Two senior Senate Democrats are proposing to end a prized tax break for the private-equity industry in a new bill that would go further than President Joe Biden’s plan and potentially raise quadruple the revenue. Senate Finance Committee Chairman Ron Wyden and Rhode Island’s Sheldon Whitehouse, a member of the panel, are introducing legislation Thursday to repeal the break for carried interest, which allows private equity fund managers to pay lower tax rates on their earnings than they would for regular income. The bill would also prohibit them from deferring tax payments on those earnings, another benefit embedded into the current law.”
What we’re reading (8/8)
“Companies Thought They Had Plans For Fall. Now They Are Scrapping Them” (Wall Street Journal). “Up until a few weeks ago, corporate leaders felt confident about what to expect this fall. Offices would reopen after Labor Day. Business travel would resume more broadly. Long-delayed work gatherings, conventions and off-site meetings would finally take place. The pandemic has, once again, upended many of those plans. The swift, startling resurgence of Covid-19 cases and hospitalizations across the U.S. is causing corporate leaders to rip up playbooks for the next few months.”
“How Virtual Reality Will Change Trading For Pros And Everyone Else” (CNBC). “The work-from-home boom has given several virtual reality (VR) companies incentive to experiment with new ways of trading. While platforms are rapidly evolving and firms are putting themselves in a position to sell the new technology, it’s not a big business yet — but many believe it will be soon…’Traders just don’t have enough real estate on their desk,’ said [FlexTrade] Managing Director Andy Mahoney. ‘We can do better than a keyboard, screen and a mouse.’”
“What Zomato’s $12 Billion IPO Says About Tech Companies Today” (Harvard Business Review). “In mid-July, Zomato, a food delivery company, listed its shares in Indian stock markets. Its initial public offering (IPO) was oversubscribed 35 times, giving it a valuation of $12 billion. Why does a loss-making company — with no real properties or assets — command such high valuation and attract global celebrity investors like Fidelity, Morgan Stanley, Canadian Pension Fund, and the Singapore Government? Despite operating a traditional food business, Zomato epitomizes a modern tech company.”
“The Pandemic Business Boom” (The Atlantic). “As a general rule, business formation is cyclical: People are more apt to start companies when net worths are rising, confidence is soaring, and lenders are itching to lend. People are less apt to start companies when family finances are stressed, the business outlook is cratering, and credit conditions are tightening. It was no surprise, then, that the pandemic recession led to a huge drop in new business starts last spring. What was a surprise was that business formation surged strongly in the second half of 2020, when much of the country was still shut down, and the surge just kept going. Entrepreneurs launched 500,000 more new businesses considered likely to hire employees from mid-2020 to mid-2021 than from mid-2018 to mid-2019, and today Americans are starting companies at the fastest-ever recorded pace.”
“Where Are The Robotic Bricklayers?” (Construction Physics). “Blocks are quite heavy, which means the machines to manipulate them will likely always be more expensive than the machines for manipulating a lighter building system. And even large blocks individually make up a small fraction of the overall building. So automated masonry systems might end up being more expensive and have lower production rates than other building types. We could see a situation where there’s a small window of time where automated masonry becomes extremely popular/competitive, but then is quickly overshadowed as the technology gets adapted for other building systems.”
What we’re reading (8/7)
“Cathie Wood, Meme-Stock Champion Who Bet Big On Tesla And Bitcoin, Stands Her Ground” (Wall Street Journal). “Fans of fund manager Cathie Wood have built websites that track her every investment move. They sell T-shirts with her picture in the style of the Barack Obama “Hope” poster and with the ticker symbol of her flagship exchange-traded fund, ARK Innovation. On social media, they call her ‘Mamma Cathie,’ ‘Aunt Cathie’ and, in South Korea, ‘Money Tree.’ Behind the adoration is her unchecked enthusiasm for a certain kind of speculative investment: companies that generate little or no profit but have what she says is the potential to change the world through ‘disruptive innovation.’”
“This Is The Job Market We’ve Been Waiting For” (New York Times). “America is getting back to work. That’s the simplest, clearest analysis of the labor market that emerges from nearly every line of the July employment numbers released Friday morning. It is a welcome sign that, as of the middle of last month, the economy is healing rapidly — and that the previous couple of months reflected healthier results than previously estimated.”
“It May Look Like A Bubble, But The US Isn't Heading For Another Housing Crisis” (CNN Business). “Home prices have surged during the pandemic, leaving many to believe we're either in a housing bubble or heading toward one. The good news, however, is that the United States is not about to repeat the 2005-07 housing boom and bust, which led to the Great Recession. Basic supply and demand factors — not speculation, predatory lending and/or bad underwriting — are driving home prices. Moreover, a series of mortgage-market safeguards should prevent a hard landing when home prices recede.”
“What Is Direct Indexing?” (Morningstar). “Two things that have made direct indexing a more viable option for more investors in recent years are the rise of commission-free trading, and fractional share stock investing, which allows investors to purchase fractional shares in a certain dollar amount. It works like this: Amazon.com is currently trading at around $3,300 per share, so if we invest $1,000 we would own 0.3 shares of Amazon. Because stock prices vary so widely, having the ability to invest fractionally makes it much easier to match the index’s proportions.”
“Why Biden Will (Probably) Keep This Republican on His Team” (New York Times). “Some have speculated or reported that Mr. Biden will select a more progressive successor. But Mr. Powell, a former investment banker and a Republican, brings to the job unmatched experience, disarming political savvy and a record of positive, transformative change at the Fed. It will be hard for Mr. Biden to look past those attributes.”
What we’re reading (8/6)
“The Chip Shortage Is Getting Worse” (Vox). “Starting next week, General Motors is again halting the assembly lines of several pickup truck plants because the company doesn’t have enough computer chips. The plants had been back up and running for just a week following a shutdown in July, which was also caused by the chip shortage. These production halts may not stop anytime soon.”
“JPMorgan, Led By Bitcoin Skeptic Jamie Dimon, Quietly Unveils Access To A Half-Dozen Crypto Funds” (CNBC). “With little fanfare, JPMorgan Chase has started giving its wealth management clients access to six crypto funds in the past month. On Thursday, financial advisors were allowed to begin placing private bank clients into a new bitcoin fund created with crypto firm NYDIG, according to people with knowledge of the move. The fund is nearly identical to one NYDIG offers to clients of rival bank Morgan Stanley, said the people.”
“Exclusive: Intel Agencies Scour Reams Of Genetic Data From Wuhan Lab In Covid Origins Hunt” (CNN). “[S]enior intelligence officials still say that they are genuinely split between the two prevailing theories on the pandemic's origins, or some combination of both scenarios. CNN reported last month that senior Biden administration officials overseeing the 90-day review now believe the theory that the virus accidentally escaped from a lab in Wuhan is at least as credible as the possibility that it emerged naturally in the wild -- a dramatic shift from a year ago, when Democrats publicly downplayed the so-called lab leak theory.”
“Apple's Plan To ‘Think Different’ About Encryption Opens A Backdoor To Your Private Life” (Electronic Frontier Foundation). “Apple has announced impending changes to its operating systems that include new ‘protections for children’ features in iCloud and iMessage. If you’ve spent any time following the Crypto Wars, you know what this means: Apple is planning to build a backdoor into its data storage system and its messaging system.”
“AFL-CIO President Richard Trumka Dead At 72” (Politico). “Richard Trumka, president of the powerful AFL-CIO labor organization, has died unexpectedly, the federation announced Thursday. Trumka, 72, had served as president of the AFL-CIO, which represents more than 12.5 million workers, for more than a decade and was called a ‘dear friend’ by President Joe Biden…’He was a relentless champion of workers’ rights, workplace safety, worker-centered trade, democracy and so much more,’ AFL-CIO Communications Director Tim Schlittner said in a statement.”
What we’re reading (8/5)
“SEC Chief Gary Gensler Braces For Clash With Crypto Traders” (Wall Street Journal). “Securities and Exchange Commission Chairman Gary Gensler this week declared war on what he called the Wild West of crypto trading, promising a vigorous attack on fraud and misconduct. But progress is likely to be more piecemeal and incremental than wholesale and sudden. Mr. Gensler outlined his desire to regulate digital assets such as bitcoin and other crypto products to the same extent as stocks, bonds and commodity-related trading instruments.”
“Container Shipping Rates Between U.S. And China Exceed $20,000, Hitting A Record” (CNBC). “Container shipping rates from China to the United States have scaled fresh highs above $20,000 per 40-foot box as rising retailer orders ahead of the peak U.S. shopping season add strain to global supply chains. The acceleration in Delta-variant Covid-19 outbreaks in several counties has slowed global container turnaround rates. Typhoons off China’s busy southern coast in late July and this week have also contributed to the crisis gripping the world’s most important method for moving everything from gym equipment and furniture to car parts and electronics.”
“Lessons From America’s Decade-Old Downgrade” (Fisher Investments). “10 years ago today, Standard & Poor’s made a $2.1 trillion math error, fought with the Treasury for several hours, then downgraded America’s credit rating from AAA to AA+. Not because America’s debt was problematic, but because they didn’t like how politicians were squabbling over the debt ceiling. They thought it would undermine the stability of America’s debt and scare off investors. Headlines globally agreed, warning debt costs would soar absent the AAA rating. How wrong they were. Yields fell in the immediate aftermath … and kept on falling. Over the next few years, debt got more affordable as buyers competed to own the world’s deepest, most liquid government asset. If ever you needed proof that credit ratings are inconsequential to markets, the events of a decade ago are required reading.”
“The Stock Market Is At Record Highs, But Corporate Debt Is Ballooning. Here Is One Stock That Should Benefit.” (Forbes). “Credit agencies may be one of the big winners of the post-pandemic build back, as they ride the waves of economic instability and decide which consumers and businesses are worthy of credit lines and extra lending. They wield very real power. For consumers, they dictate mortgage capability, car lease agreements, mobile phone contracts and store credit. But for businesses fighting for a comeback, credit agencies are the last throw of the dice for a much-needed cash injection. As consumers tighten their belts in the post-COVID world, businesses continue to feel the squeeze and there’s speculation it’s going to get harder before it gets better…[t]he power of the credit agency has therefore grown to an all-time high, and The Edge thinks stocks in this field are worth watching. One credit agency which has caught our attention is Dun & Bradstreet Holdings, Inc. (DNB).”
“As More Defaults Loom, China’s Finance Regulators Face A Dilemma” (The Economist). “A document circulating among Chinese banks in early July has caused unease among investors and local officials. Known as “Document No. 15”, the regulatory directive says that banks should stop lending to heavily indebted local-government financing vehicles (lgfvs), companies set up by city or provincial governments to finance building projects and public works. The groups, which have not so far been allowed to default, have about 48.7trn yuan ($7.5trn) in debts, 11.9trn yuan of which is held in fixed-income securities. They routinely use bank loans to pay interest on bonds. Ending the steady stream of credit is a recipe for turmoil. ‘If banks don’t give them a blood transfusion’, a local investor told Chinese media, ‘lgfvs will face a default crisis.’”
What we’re reading (8/3)
“A Hawkish Bullard Sees More Volatile Economic ‘Regime’ Emerging In U.S.” (Reuters). “The coronavirus pandemic may have pushed the United States into a volatile era of stronger growth and better productivity, but higher interest rates and faster inflation as well, St. Louis Federal Reserve president James Bullard said, elaborating on why he thinks the U.S. central bank should end its crisis-era policies.”
“Apartment Rents Increase As Young Workers Head Back To Cities” (Wall Street Journal). “Apartment rents are rising fast, boosted by young professionals returning to cities and an expensive housing market that keeps many of them renting. Stock prices of publicly traded apartment companies have jumped in stride. The FTSE Nareit Equity Apartments index, which tracks these landlords, is up 42% since January, trouncing the S&P 500’s 17% gain during the same period.”
“PepsiCo To Sell Tropicana And Other Juice Brands For $3.3 Billion” (CNBC). “PepsiCo announced Tuesday it has agreed to sell Tropicana, Naked and other North American juice brands to a French private equity firm. The deal with PAI Partners will net pretax cash proceeds of $3.3 billion for Pepsi. The food and beverage giant will also receive a 39% stake in a newly formed joint venture with PAI and the exclusive U.S. distribution rights for the juice brands for certain channels, like food service.”
“Hedge Funds Are Taking On Venture Capitalists In The Battle To Back The Best Startups. Investors At Funds Like Two Sigma And Point72 Reveal Their Strategies To Stay Ahead.” (Business Insider). “Hedge funds, long considered the world's best public market investors, have been losing their edge. Quants are squeezing out inefficiencies while funds struggle to justify their cost. In turn, these managers have turned to the murkier private markets to boost returns. Like in the public markets, strategies run the gambit.”
“Inside The Epic Infrastructure Bill” (DealBook). “The bipartisan infrastructure plan, drafted during a marathon weekend session in the Senate, may go to a vote in the chamber this week. It is just over 2,700 pages long, with allocations for everything from broadband and bridges to ports and pedestrian crossings, plus proposals for how to pay for it all.”