Bespoke Brunch Reads: 7/31/16
Welcome to Bespoke Brunch Reads — a linkfest of the favorite things we read over the past week. The links are mostly market related, but there are some other interesting subjects covered as well. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
Big Thoughts
Staff Note For The G20: The Role of The SDR – Initial Consideration (IMF)
An overview of the current role played by Special Drawing Rights, an “international currency” that is the unit of the account for the IMF. [Link; 24 page PDF]
Corporations Are The Backbone of Modern Capitalism by Ben Southwood (Adam Smith Institute)
A succinct summary of the crucial benefits that the legal structure of the limited liability corporation creates for our modern economy. [Link]
Transportation
L Train Will Shut Down From Manhattan to Brooklyn in ’19 for 18 Months by Emma G. Fitzsimmons (NYT)
Williamsburg is in for a world of hurt as long-term maintenance requirements brought on by Hurricane Sandy force the closure of the neighborhood’s link to Manhattan for over a year. [Link; soft paywall]
A Michigan Man Tried The ‘Seinfeld’ Bottle Deposit Scam And It Didn’t End Well by Mike Pomranz (Food & Wine)
Fans of the craven thorn in Jerry’s side, Newman, will have found memories of a caper plotted by himself and Kramer that involved a bottle deposit arbitrage. It turns out that the scam is just as hard to execute in real life. [Link]
Politics
How Political Ideology Affects Hedge Fund Performance by Amy Whyte (AI-CIO)
If your preferred candidate can’t get to 270+ electoral votes this fall, be very careful betting against the market; you may be falling into the behavioral trap that cost fund managers 72 bps per month in the wake of the ’08 election. [Link]
Reassessing India’s ‘forgotten prime minister’ by Soutik Biswas (BBC)
8 Congressional election wins, a stint as Prime Minister, 10 languages, and coding in his 60s; that’s only part of the impressive life and legacy left by PV Narasimha Rao, one of the most successful leaders of India. [Link]
Sports Culture
Patriotic spandex and giant Q-tips: An oral history of American Gladiators by Andrew Lawrence (Sports Illustrated)
There’s nothing that says late ‘80s like the action game show American Gladiators. A gorgeous piece of Americana. [Link; auto-playing video, which we recommend watching]
‘I Can No Longer Stay Silent’ by Michael Jordan (The Undefeated)
The best basketball player of all time has donated two million dollars to the Institute for Community-Policy Relations and the NAACP’s Legal Defense Fund in an effort to bridge the current disconnect between communities and police around the country. [Link]
Twitter’s New Deals With MLB, NHL Sharpen Focus on Live Video by Sarah Frier (Bloomberg)
Twitter has signed up baseball and hockey as new partners to expand its use of live video, moving the “second screen” right into the same window as sports action. [Link]
Investors Invest
Warren Buffett Deputy Ted Weschler Makes His Mark by Miles Irish (Institutional Investor)
The man touted as one of Buffett’s most likely successors commutes from Virginia to Omaha, has missed one day of running in 36 years and gained 26% per year from 2000 to 2011. [Link]
The Unraveling of Harvard’s Star Trading Desk by Michael McDonald and Sabrina Willmer (Bloomberg)
The world’s largest endowment has underperformed and that’s driving shakeups of a desk that had acted as an internal hedge fund, with even worse returns. [Link]
Steve Cohen is making a big bet that computers can beat humans by Svea Herbst-Bayliss (Business Insider/Reuters)
Former hedge fund titan Steve Cohen (who now runs his own family office) is investing hundreds of millions in a Boston-based firm that develops investing models based on algorithims. [Link]
Hedge Fund Hijinks
How Does This Hedge-Fund Manager Make So Much Money? by Simone Foxman and Margaret Newkirk (Bloomberg)
The frankly ridiculous number of red flags and suspicious details behind one of the best performing hedge funds in the world are a lesson, in our view, for prospective investors. [Link; auto-playing video]
At World’s Largest Hedge Fund, Sex, Fear and Video Surveillance by Alexandra Stevenson and Matthew Goldstein (NYT)
A National Labor Relations board investigation has opened up after complaints of abuse at Bridgewater, long renowned for its unique approach to corporate culture. [Link; soft paywall]
Oil
Special Report: In Venezuela’s murky oil industry, the deal that went too far by Alexandra Ulmer and Girish Gupta (Reuters)
Commodity deals in emerging economies are often a bit shady, but the details behind PDVSA’s handout to a tiny trucking firm are something else entirely. [Link]
Pop Culture
In a pair of posts, The Guardian tries to convince us that everything we know about TV is wrong. Some of these opinions are, frankly, wrong. But the effort at pop culture trolling is admirable and the underrated shows list has some gems which we’re glad to see get attention.
Mad Men to Seinfeld – TV’s most criminally overrated shows [Link]
Pulling to Time Trumpet – TV’s most underrated shows [Link]
Food
Doughnut-Flavored Soda Will Make Your Dentist Very Rich by Bryan Menegus (Gizmodo)
One of the Piedmont Triad’s most famous exports – Krispy Kreme donuts – is now getting a mashup with one of the country’s most underrated drinks, North Carolina’s own Cheerwine soda. We admit…we’ll try this new flavor at least once, but would have preferred the chance to grab a Cheerwine donut instead. [Link]
David Chang Adds Plant Based ‘Impossible Burger’ to Nishi Menu by Serena Dai (NY Eater)
Avid carnivores will wince, but even more so than the new combo above we’re excited to try a meatless burger that ‘bleeds’. Of course, taste and texture are required before we’ll think about switching to non-meat alternatives for anything other than curiosity, but the food science here is getting interesting even for the hungriest meat-eater. [Link]
Free Lunches
CEOs Are Paid Fortunes Just to Be Average by Barry Ritholtz (Bloomberg View)
Recently, the performance of CEOs and their pay scale have been inversely correlated, with some of the biggest paydays going to the most hapless management teams. [Link]
Silicon Valley Elites Get Home Loans With No Money Down by Heather Perlberg and Prashant Gopal (Bloomberg)
Spiraling home prices in San Francisco have led to a new perk that allows employees to take out massive loans, with no money down. We don’t know where to start with what a bad idea large leverage on rising asset prices fueled by the confidence in often unrealized gains on equity in companies might be; the addition of a marketplace lending angle only throws up more reason to be concerned. [Link]
Narrative Meets Reality
Robots Are Actually Helping People To Buy More Stuff by Carolynn Look (Bloomberg)
In all the discussion over the hypothetical advent of “robots stealing jobs” (anybody with an even tenuous grasp of recent labor productivity statistics knows that’s not even close to happening at the moment), we rarely see the obvious benefit to increasing robotization: it lowers prices due to higher productivity and competition, making consumers better off, not worse off, in aggregate. [Link]
Income growth has been negligible but (surprise!) inequality has narrowed since 2007 by Gary Burtless (Brookings)
The long lag waiting for wages to accelerate after the recession appears to have hit its max and every major wage growth indicator is now trending steadily higher. Still, the slow wage growth during this expansion is seen by many as a sign of huge income inequality. The inconvenient reality is that income (note: not wealth!) inequality has gone down since the peak of the last economic cycle. While higher income groups have outperformed in the recovery, they drastically underperformed in the collapse and that means total income inequality has dropped since 2007. [Link]
Berkeley study finds scarce evidence of market ‘front-running’ by Herbert Lash (Reuters)
Not only do large high frequency trading shops lower spreads for average investors through increased competition, initial studies of new data collected from US equity markets suggest they do not, in fact, have much success “front-running” buyers of stocks. [Link]
Trump Campaign Revives Debate: Is the Unemployment Rate ‘Artificial’? by Josh Zumbrun (WSJ)
An excellent overview of the array of Bureau of Labor Statistics data with an eye to addressing the unfounded claim that the unemployment rate data is somehow being manipulated. [Link]
Why News Junkies Are So Glum About Politics, Economics, and Everything Else by Derek Thompson (The Atlantic)
As anybody that has consumed financial media regularly over the last 7 years knows, crises are a dime a dozen and ever present in the headlines. It turns out that’s not just true of financial coverage but the world at large, and people that consume lots of news tend to lose sight of just how negatively filtered their perceptions of the world are. [Link]
Fitness
Weak hands, weak body? Millennials lose grips by Kim Painter (USA Today)
As the job market has moved progressively away from manual labor and towards whiter-collar pursuits, hand strength has dropped. [Link]
Office workers must exercise for an hour a day to counter death risk by Laura Donnelly (The Telegraph)
Sitting all day can kill you. [Link]
Science
Israel Proves the Desalination Era is Here by Rowan Jacobsen (Scientific American)
Fueled by the desperation of a decade-long drought and few other natural options, Israel has successfully bet big on technology that removes salt from seawater. [Link]
Alzheimer’s drug that failed trial may still slow disease by Andy Coghlan (New Scientist)
Despite being of no help when combined with other medication, on its own a new drug showed significant progress slowing the advance of the disease. [Link]
Strange But True
Once all but left for dead, is cursive handwriting making a comeback? by Joe Heim (WaPo)
A chronicle of the strange popular moment currently being enjoyed by our least legible form of communication. [Link]
Herbalife and the end of the world by John Hempton (Bronte Capital)
The HLF bull and its most ardent defender has dragged up what has to be the strangest use of the product on the books. [Link]
