Picture Credit: David Merkel, with an assist from Bing Chat in Creative mode || Twitter bird shops for groceries

Market Dynamics

• Transcript: Matt King Sees a $1 Trillion Liquidity Drain Coming to Markets https://t.co/kr9SMaMV9b  Monetarism, with bank reserve flows driving the market for risk assets. Mar 31, 2023
• Battered banks have been the most lucrative short bet in US stocks this quarter, while surging technology companies delivered the steepest losses https://t.co/2joY6G7xTn  It’s tough to make money shorting. Mar 31, 2023
• Citi’s Matt King sees a $1 trillion liquidity drain heading for the markets. Here are the charts that help explain why https://t.co/H47MKNQqF7  Some interesting graphs to see. Mar 31, 2023
• How wild was Treasury trading this month? https://t.co/LHtJYfmsRU  Much wilder than normal, but still, it’s a pretty liquid market. MOVE index is high but off peak levels Mar 30, 2023
• If you didn’t rely on the belief that rates would be low forever, you’re probably going to get through this downturn just fine, writes @ConorSen https://t.co/QiTunyQn6H  A reasonable statement Mar 30, 2023
• Governments want sustained growth, low inflation and financial stability, but they can’t expect to get all three for very long https://t.co/5ceYiH6EEw  Not true. Financial crises destroy more growth than monetary looseness creates Mar 29, 2023
• On Share Buybacks, Directors Should Stick with Economics, Avoid Politics https://t.co/5DlmyWraM9  I just want the companies I own to deploy capital for the best tax- and risk-adjusted returns. When opportunities are few, send us the excess capital. Mar 27, 2023
• Ray Dalio Warns Everybody Is Losing Money: ‘The World Is Leveraged Long’ https://t.co/ZtkcpO5xy4  Main point: Fed is keeping rates high to suppress inflation, while trying to mitigate the effects on bank funding, while the US Govt keeps borrowing. Difficult to do all at once. Mar 27, 2023
• A huge pile of hidden leverage that’s been quietly built over the past decade may be the next source of market volatility https://t.co/vOtDBHfkHh  Private equity is opaque, but most of its liabilities are longer-term. They may lose money, but it’s unlikely to be a rapid crisis Mar 27, 2023
• Double-digit losses suffered by several star traders is a dramatic reminder why investors are rapidly migrating towards bigger hedge funds run by an army of risk takers https://t.co/eztv91fEhD  Volatile strategies usually lose more than they win. Mar 27, 2023
• ‘Bonkers’ Bond Trading May Be Sending a Grim Signal About the Economy https://t.co/x9YVXMhLb7  When future policy is very uncertain, you should expect high volatility in fixed income. Mar 27, 2023
• Transcript: Betsy Cohen on SVB and Tech Dealmaking Now https://t.co/KQeACngT5e  Time to focus on profitability, then maybe deals come. Mar 27, 2023
• Where are the risks in the financial system? Here are 12 charts that highlight some big ones. https://t.co/mENl677FIP  A mélange of interest rate risk & credit risk Mar 27, 2023
• Estimating Future Stock Returns, December 2022 Update https://t.co/BadwQJLdDx  Are you happy with 3.12%/year returns for the next 10 years? Mar 26, 2023

Banking

• The NBA star grew up in Greece, where a sovereign-debt crisis in the early 2010s left citizens worried their cash wasn’t safe https://t.co/fzXzktYfP2  That takes some effort to maintain Mar 31, 2023
• US Bank Deposits and Lending Both Dropped Last Week Amid Turmoil https://t.co/PilffVDUph  On the bright side, deposits at small banks increased. Mar 31, 2023
• Will FedNow Enable Greater Deposit Flight from Troubled Banks? https://t.co/5C8H1ZxzT8  Interesting. I had not heard of this. Instant payments/receipts to almost anywhere once this is fully rolled out. Mar 31, 2023
• SVB’s collapse turbocharged the deposit flight from banks. That’s forcing a rethink about what role banks should play in the US financial system – and whether there are too many of them https://t.co/2ToZEoilIk  The Fed could lower the rate paid on reverse repos. Mar 31, 2023
• The FDIC may pressure the nation’s biggest lenders to pick up a bigger-than-usual portion of the $23 billion bill from recent bank failures https://t.co/a1V9ne9R6Q  It’s like the state guaranty funds for life insurers Mar 31, 2023
• As the Fed’s interest-rate hikes sent bond prices plunging last year, some of the country’s largest banks used a simple accounting maneuver to help keep billions of dollars of losses from piling up https://t.co/fgvdZViBso  Under ordinary conditions this is not allowed. Mar 30, 2023
• Though the Federal Reserve and FDIC have stopped contagion from Silicon Valley Bank for now, smaller and regional banks could face pressure for years to come https://t.co/rYDFFk5UGt  Slow motion train wreck created by overly loose then tight monetary policy Mar 29, 2023
• As the banking turmoil drags on, Schwab investors are starting to unearth risks that have been hiding in plain sight https://t.co/gZb8btFCMw  Whistling while walking past the graveyard… $SCHW Mar 29, 2023
• Rich Bank Dumb Bank https://t.co/mFZLYudWnt  The many problems of Signature Bank Mar 27, 2023
• How the banking crisis could ripple through the economy https://t.co/zYG1KxaIn6  Credit from banks will be harder to get as the stickiness of their deposits diminish. Mar 27, 2023
• Large US banks gained $120Bn in deposits while their smaller counterparts lost $109Bn https://t.co/MUbvEXHbxU  It would be smart for the Fed to make reverse repo facility less attractive, to reduce the flow to money market funds Mar 27, 2023
• Marc Lasry, the billionaire co-founder of Avenue, says there’s little benefit for small businesses and other depositors to keep their money with regional banks instead of Wall Street giants https://t.co/2nFcnuA0u4  Disagree. small banks tend to be more risk-averse Mar 27, 2023

Around the US

• MLB’s new pitch clock may reduce player workloads by the equivalent of one game per week. Team managers hope players feel less physical and mental fatigue as a result. https://t.co/psKvJtT7Vg  Will improve focus and rest Mar 31, 2023
• The world’s most important oil price is about to be transformed for good, allowing crude supplies from west Texas to help determine the price of millions of barrels a day of petroleum transactions https://t.co/MP4MmgkLuI  A sign of US dominance in producing light sweet crude oil Mar 31, 2023
• Americans returned $212 billion worth of merchandise last year. A host of startups are now working with retailers to the process more efficient — and even profitable https://t.co/slzM3eXCBs  Looks promising. Mar 30, 2023
• In repairing the damage done by highways that divided communities of color, the US risks creating new disasters https://t.co/i2A57bM4hg  Baltimore got the “worst of all worlds” on this one. Doing nothing or doing the whole thing would have been better. Mar 30, 2023
• Ken Fisher made a serious investment when he moved his money management firm north from California to Washington seeking a friendlier business climate to house its rapid expansion https://t.co/ueUzpzvQ7i  Low taxes attracts businesses Mar 29, 2023
• Why there may be no return to ‘normal’ for the U.S. used vehicle market https://t.co/xlYWybXETt  It is a capital-intensive cyclical business. This will eventually normalize. It may even overshoot on the downside. Mar 26, 2023
• Feral Hogs Are the Invasive Menace You’ve Never Thought About https://t.co/oDxSjznZi1  “Wild hogs destroy crops, uproot landscapes, and spread diseases—and not much is stopping them.” Mar 26, 2023
• 2 high schoolers say they’ve found proof for the Pythagorean theorem, which mathematicians thought was impossible https://t.co/gXRzswTHO5  I disagree. Proof #4 on this page does not rely on the unit circle. https://t.co/mb0cn3KBXx  Mar 25, 2023
• @guardian Is the paper available anywhere on the Internet? Mar 25, 2023
• A new study of nearly 12,000 women finds that getting married brings significant benefits in health and well-being, bolstering the case for marriage as a social good. https://t.co/yIrYcnr4FX  Marriage has great potential for happiness & sadness. Unselfish behavior is crucial. Mar 25, 2023

Artificial Intelligence

• Several tech executives and top artificial-intelligence researchers, including Elon Musk and AI pioneer Yoshua Bengio, are calling for a pause in the development of powerful new AI tools https://t.co/emJZrXpqiS  This will not happen. Mar 29, 2023
• Artificial intelligence experts are calling on AI developers to pause training any models more powerful than the latest iteration behind OpenAI’s ChatGPT https://t.co/3euzVgNP2d  Foolish. AIs are inexpensive to create. Trying to control AI is like grasping water w/your hand. Mar 29, 2023
• Google’s ChatGPT rival Bard is now open for public use https://t.co/rozmsae9A8  Since hosting my moderated chat between Bing and Bard, which went well, Bing no longer allows such chats. https://t.co/KrAqv77b4R  https://t.co/koYUIPXUr2  Mar 29, 2023
• A new study finds that AI tools could more quickly handle at least half of the tasks that auditors, interpreters and writers do now https://t.co/hEDpTk2TWV  This may be a “use it or lose it” scenario. Mar 29, 2023
• Introducing Two Friends https://t.co/KrAqv77b4R  A conversation between OpenAI ChatGPT-4 and Bard https://t.co/ohqyZTb15j  Mar 29, 2023
• Society’s Technical Debt and Software’s Gutenberg Moment https://t.co/5RC0yIdhFO  Thought-provoking commentary on the effect that Large Language Models may have on writing software. Mar 28, 2023
• The US Federal Trade Commission is paying close attention to developments in AI to make sure it isn’t dominated by major tech players https://t.co/Dp3vicuiV4  Foolish FTC, see “The genie escapes: Stanford copies the ChatGPT AI for less than $600” https://t.co/7VfE1GNtrr  Mar 27, 2023
• The genie escapes: Stanford copies the ChatGPT AI for less than $600 https://t.co/7VfE1GNtrr  It also implies that $MSFT overpaid for OpenAI. Not only can people build their own models, but they could do it quite cheaply. Mar 26, 2023

Companies and Corporate Life

• Munich Re has quit the world’s largest climate finance alliance, a step the German company says is necessary to protect itself from legal risks https://t.co/xrnFgjwdii  “German insurer cites the risk of antitrust allegations” There is a fiduciary angle to this also Mar 31, 2023
• The stock of Charles Schwab is on pace for its worst month in more than 35 years https://t.co/4cvffr5oOx  $SCHW cost of capital rising, and shares continue to fall. Mar 31, 2023
• Disney is using a Royal Lives Clause to extend its reign over Florida theme parks. https://t.co/rD3Squdbrl  How to create perpetual trusts Mar 31, 2023
• $AMC rose as much as 18% after the Intersect website reported that Amazon is weighing a possible acquisition of the struggling movie-theater chain https://t.co/CCJNaL2Hx6  Start by buying the $APE units. Mar 29, 2023
• This Citigroup Preferred Yields 10%. Is It Too Good to Be True? https://t.co/DtIzLn2GuH  There is likely a cheaper way to finance $C. I would not rely on the argument that accounting reasons matter more than economics. Mar 29, 2023
• The US Air Force’s test of a hypersonic missile was marred by failure to transmit in-flight performance data, sources say https://t.co/Z1kBgR5FyT  $LMT is paid a lot to do this. They should get it right. Mar 29, 2023
• In financial services, chief information officers are working more closely than ever with chief risk officers to ensure the right tools for analyzing risk are in place https://t.co/H7ORMMU6u7  Hire an investment actuary to eliminate interest rate risk. Follow his advice. Mar 29, 2023
• How The New York Times managed to avoid ruining Wordle https://t.co/bQdCK6QlXT  In hindsight, The New York Times was a natural buyer. Mar 25, 2023

Non-US

• Sweden’s construction industry may be facing years of drought as investment in housing plummets https://t.co/dYSThCm4pn  The effects of higher interest rates hit highly levered sectors first. Mar 31, 2023
• Heard on the Street: The European Union just moved an important step closer to turning its climate ambitions into law. The impact will be felt well beyond the energy industry https://t.co/bAnXYcNrQr  This will be difficult to achieve. Mar 30, 2023
• France’s financial prosecutor is searching 5 banks as part of a probe into tax fraud and money laundering, according to a statement https://t.co/VnIiCQ8Vlp  European banks are more opaque than US banks. Mar 29, 2023
• South Korea needs to adopt an “emergency mindset” to reverse its fertility rate that ranks as the lowest in the world, its president says https://t.co/LFvd9pcUSs  Changing a culture is very difficult. Once women think they are only rewarded by external work, kids are a burden. Mar 29, 2023
• A Russian economy that survived 2022 faces a long-term deep freeze. “There will be no money next year.” https://t.co/BpqFON0AA1  Russia is losing economic vitality, and quickly. Autarky is tough to pull off. It killed the USSR. Mar 29, 2023
• A significant buying opportunity in Asia—for longer-term investors—could be hiding in plain sight https://t.co/3W02aGynDH  Interesting opportunity. FD: + $EWY Mar 28, 2023
• @BubbleTIsland When I was young, I was told that Taipei had a lot of air pollution, but indeed, this is beautiful. Perhaps it is the same as America — the 1970s were smoggy. Mar 26, 2023

Commercial Real Estate

• Shares in German real estate firm Aroundtown slump to an all-time low https://t.co/wZUvArZzVp  Too much debt, and how will the losses get shared with lenders? Mar 31, 2023
• A 5% writedown on commercial real estate loans would wipe out almost a quarter of the banks’ profits in the European Union with the Nordic region potentially hit the most, Bloomberg Intelligence estimated this week. https://t.co/lqmcOl9KoF  Challenging times. Mar 31, 2023
• Everything is looking down for Europe’s worst-hit sector: Real estate https://t.co/Q5YpvaAZJy  Too much debt magnifies the effect of changes in property values, rents, etc. Mar 31, 2023
• Manhattan’s office-vacancy rate is at a record high as new developments add even more space to the struggling market https://t.co/KeLHbyn00B  This will be quite a transition for New York City Mar 31, 2023
• Signs of stress in commercial property https://t.co/pcmISa2L7s  Looks overdone. Mar 30, 2023
• Defaults and vacancies are on the rise at high-end office buildings, as remote work and rising interest rates spread pain to more corners of the commercial real-estate market https://t.co/rZHtubWQog  This is like the slow-motion pressure in the Great Financial Crisis w/subprime. Mar 29, 2023

US Politics

• Trump indictment is going to make US politics even more divisive https://t.co/N28inU5VJE  Really, it stinks that this indictment, which has its own issues, makes it more likely that Trump will be the GOP nominee. Apr 01, 2023
• Lawyers who have dealt with court-imposed limits on speech, often referred to as gag orders, say Donald Trump should be wary of giving judges cause for concern https://t.co/kcS6YLCZit  Inciting violence could be a reason to do so, or harming the ability for jurors to be neutral Mar 31, 2023
• Looming changes to Medicare and Medicaid may temper growth at the biggest health insurers. https://t.co/raovXdK9AO  Growth in government reimbursement levels falling Mar 31, 2023
• The looming failure of the Chips and Science Act shows all that’s wrong with American industrial policy https://t.co/azu23Kk56M  Aside from national defense, there is no reason for industrial policy Mar 28, 2023
• Rural America Grows Weary of Waiting for Its Mail https://t.co/U3pZWrX5ge  Wish we could remove the current postmaster general… Mar 27, 2023
• The pandemic split parents over schools. It’s tearing Mentor, Ohio apart https://t.co/ec9PTIVGV5  Schools mirror parenting culture(s). If there are wide differences in parenting cultures, you should expect fractious school board meetings Mar 27, 2023

Employment

• Accenture says it will cut 19,000 jobs over the next 18 months https://t.co/hLRF41Pxh4  Interesting to see lack of demand for consultants Mar 28, 2023
• The era of remote work has ended for millions of Americans https://t.co/IVuhIuwZNp  “Share of businesses with workers on-site most of the time neared prepandemic levels in 2022, Labor Department finds” Mar 28, 2023
• McKinsey is embarking on a rare round of major job cuts, with plans to eliminate about 1,400 jobs https://t.co/GV0xwLtg8p  Interesting place for job cuts. Perhaps demand for their services have declined Mar 28, 2023
• How to explain the covid baby boom https://t.co/vs4lpSRhGj  Very small boom, but it highlights a shift where those who are better off are more willing to have more kids, particularly when they can work from home. Mar 27, 2023
• It’s a debate playing out at workplaces: Who should be included in a layoff? The behind-the-scenes process is complicated. https://t.co/cUKUgK0KaL  Answer: it varies a lot. Mar 27, 2023

Cryptocurrencies

• Tether, the largest stablecoin, is continuing to extend its lead in the battle for supremacy among stablecoins https://t.co/fGveF8ZCt6  A money market fund with no accountability Mar 29, 2023
• Some banks are rolling out the welcome mat for cryptocurrency firms that found themselves in need of banking services after the downfall of Signature Bank and Silvergate Capital https://t.co/ongomIieAR  Surprising that they want that risk. What will the FDIC & SEC say? Mar 29, 2023
• US regulator sues top crypto exchange Binance, CEO for ‘willful evasion’ https://t.co/vdXVDZxHR6  KYC AML BSA allegedly violated. Mar 27, 2023
• A decent rule of thumb is that all cryptocurrency exchanges are doing crimes, and if you’re lucky your exchange is doing only process crimes. https://t.co/RvXJaSKeuu  Maybe peaker plants should be paid a commitment fee like revolving credit agreements @matt_levine Mar 27, 2023

China

• Chinese creditors are more hesitant to participate in sovereign debt restructuring because multilateral development banks are not offering debt relief, a senior official at China’s central bank says https://t.co/EdJWfijjBk  Chinese lenders want multinationals to eat their losses Mar 27, 2023
• Beijing wants to show it’s backing private businesses, but Jack Ma’s decision to spend months overseas suggests otherwise. https://t.co/Ojlf1AHllL  A CCP cell inside every significant business. Enterprise free enough to serve the Party. Mar 27, 2023
• Market confidence remains shaky for investors looking at China, revealing just how much damage has been done to the country’s credibility abroad. Here’s an explainer https://t.co/DMJmZhjXHH  Don’t confuse “rule of law” & “rule by law.” China has the latter: the CCP is not limited Mar 27, 2023
• Chinese billionaire Jack Ma’s trip home comes as Beijing eases up on a tech crackdown that has hit confidence among private businesses https://t.co/YpXMcFA2Oa  Is the coast clear? Mar 27, 2023

Monetary Policy

• Money-market mutual funds are proving an irresistible place for investors to park their cash right now instead of banks https://t.co/vAXF0RaoFH  Just lower the rates in the Fed’s reverse repo program. Is the Fed daft? Should have been done a year ago. Apr 01, 2023
• The Federal Reserve’s preferred inflation gauge rose less than expected last month, and consumer spending stabilized https://t.co/IIC82Pu9ux  Would you rather have a solvency crisis or inflation? Apr 01, 2023
• Is Japan’s new central banker the next big threat to global financial stability? https://t.co/1JF62TW9AT  Swelling bank balance sheet without economic purpose creates its own problems, as we are learning in the US. QE is not a free lunch Apr 01, 2023

Twitter

• Elon Musk is upsetting celebrities by tying Twitter’s blue check mark to platform subscriptions https://t.co/auhdGcfbjx  When the service is free, you are the product. Mar 31, 2023
• Elon Musk Values Twitter at $20 Billion https://t.co/hXbBPOz2JF  Let the banks that lent the $13 billion know that the debt-to-equity ratio went from 42% to 186%. Mar 27, 2023
• Why advertisers aren’t coming back to Twitter https://t.co/A5vzydhrIU  When Twitter goes broke, the banks will hold an auction. Some entity will buy it for $1B or so, and rebuild it so advertisers will trust Twitter. Or, Musk will re-buy it. Mar 25, 2023

College

• A majority of Americans don’t believe a college degree is worth the cost, according to a new Wall Street Journal-NORC poll, a new low in confidence in what has long been a hallmark of the American dream https://t.co/mT3jmg3YfV  People are getting more practical about college. Mar 31, 2023
• College students are about to put a robot on the moon before NASA https://t.co/rLcHpj3ism  Pretty cool, and cost less than $1 million. Mar 30, 2023
• Relief is expected for Howard University undergrads who have had to deal with questionable conditions living on-campus at some of the school’s dorms https://t.co/OQg94HLk5N  The economics of running a college are difficult. Mar 27, 2023

Space

• Russia’s Viasat Hack Exposed Satellite Industry’s Security Flaws https://t.co/Vu5wpDoRqU  Scary stuff. Time to start encrypting satellite transmissions Mar 30, 2023
• Astronomers Were Not Expecting This https://t.co/jjpzfnsTTQ  The universe looks a lot younger than expected. Faraway galaxies look fully formed, as near galaxies do. Mar 25, 2023
• Russia’s (Civilian) Space Program Is in Big Trouble https://t.co/Ir1z499qzS  Lacks funding. Has increasing numbers of accidents. Even Kazakhstan has foreclosed on Russian space assets in their country for nonpayment on the Baikonur spaceport. Mar 25, 2023

Adani Group

• Two months on, Hindenburg’s short seller attack has left the Indian tycoon Gautam Adani’s empire reevaluating its ambitions, reverting his focus to core projects https://t.co/C2fRGWNLsG  This is sensible — focus on core businesses & reduce debt Mar 31, 2023
• In the aftermath of Adani Group’s woes, another sprawling Indian conglomerate—miner Vedanta Resources—looks vulnerable https://t.co/aYQuATQI7y  The bear phase of the credit cycle forces examination of badly-financed assets. Mar 31, 2023
• Adani execs meet with US investors from BlackRock , Blackstone and Pimco as part of its plans to market some privately placed bonds https://t.co/O8fkBKEd6k  Unless the notes are secured, I don’t see why anyone would buy an 8% yield for 10-20 years from a complex firm like Adani. Mar 29, 2023

Materials Science

• Snack companies are experimenting with packaging that uses less plastic without sacrificing taste https://t.co/TkTxU0eNFp  The economics of this is challenging Mar 27, 2023
• Electrical steel, a crucial material used in EV motors, can be less than a quarter of a millimeter thick for the highest grade. It’s in high demand. https://t.co/CYzVkw3xyn  I had never heard of electrical steel before today. Mar 27, 2023