Apr 2, 2023
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.
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ChatGPT
The Jobs Most Exposed to ChatGPT by Lauren Weber and Lindsay Ellis (WSJ)
UPenn and ChatGPT’s overseers predict one-fifth of the US workforce is at risk of being displaced by so-called artificial intelligence programs like ChatGPT. [Link; paywall]
Italy temporarily bans ChatGPT over privacy concerns by Madhumita Murgia and Silvia Sciorilli Borrelli (FT)
National data protection authorities in Italy have moved to temporarily ban the software until it can determine whether the software does enough to protect privacy. [Link; paywall]
Real Estate
He Wasn’t Thinking About Renting His Arizona Home. Then Rihanna Came Knocking. by E.B. Solomont (WSJ)
The owner of a one-acre five bedroom near Phoenix didn’t plan to be a landlord, but when a $500k offer (almost 7% of the value of the house) to rent it for a week came in from Rihanna, how could he say no? [Link; paywall]
Some Guy Bought the Flatiron Building and Didn’t Pay for It (Hell Gate)
The iconic Flatiron Building sold for $190mm, but the buyer immediately defaulted by failing to make the $19mm down payment required to close the transaction. [Link]
Disney
Disney cuts metaverse division as part of broader restructuring by Rebecca Bellan (TechCrunch)
As part of an effort to boost profitability after over-investing in streaming, Disney will completely eliminate the division it had staffed up to focus on the metaverse. [Link]
Demographics
Social Security Reserves Projected to Run Out Earlier Than Expected by David Harrison (WSJ)
A new estimate projects that the Social Security’s trust fund will be consumed in 2034, with incoming payments only covering about 80% of outgoing payments. The issue also impacts Medicare, and both programs could rely on transfers from the government’s general fund or changes in payrolls taxes or benefits to allow full payments to continue. [Link; paywall]
Why are Americans dying so young? by John Burn-Murdoch (FT)
While the US enjoys drastically higher standards of living when measured by income and purchasing power, other metrics measuring well-being like life expectancy are almost unbelievably worse. [Link; paywall]
Speculators
‘Degenerate Gambling’ in Zero-Day Options Thrills Retail Traders by Claire Ballentine and Charlie Wells (Bloomberg)
The fastest-growing derivatives markets in finance can be found in options which exist for less than a day, giving them a unique degree of leverage to underlying stocks. [Link; soft paywall]
Star-Led Hedge Funds Hit by Steep Losses, Stunting Their Comeback by Nishant Kumar (Bloomberg)
Macro-oriented hedge funds which saw returns soar last year and have broadly performed well in the post-COVID environment have gotten positively torched by the latest banking stress-driven swing in interest rates. [Link; soft paywall]
Billionaire Whimsy
Can a billionaire die without anyone noticing? by Tim Fernholz (Quartz)
A $7bn collection of estate and gift taxes on February 28th was the largest for a single day since at least 2005. If that whole collection came from one source, it would imply an estate or gift of more than $17bn. [Link]
TikTok
Two New Bills on TikTok and Beyond: The DATA Act and RESTRICT Act by Justin Sherman (Lawfare)
Legal analysis of two bills attempting to ban TikTok in the US, with one including a much broader protectionist framework that would turn anyone accessing banned social media apps a felon with punishments of up to 20 years behind bars. [Link]
Visualizing California’s Water Storage – Reservoirs and Snowpack (Engaging Data)
With reservoirs filled above the typical year and an all-time record snowpack, California has more water on hand than at any point in the state’s history. [Link]
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Have a great weekend!
Mar 29, 2023
Searching for ways to better understand the fixed income space or looking for actionable ideas in this asset class? Bespoke’s Fixed Income Weekly provides an update on rates and credit every Wednesday. We start off with a fresh piece of analysis driven by what’s in the headlines or driving the market in a given week. We then provide charts of how US Treasury futures and rates are trading, before moving on to a summary of recent fixed income ETF performance, short-term interest rates including money market funds, and a trade idea. We summarize changes and recent developments for a variety of yield curves (UST, bund, Eurodollar, US breakeven inflation and Bespoke’s Global Yield Curve) before finishing with a review of recent UST yield curve changes, spread changes for major credit products and international bonds, and 1 year return profiles for a cross section of the fixed income world.
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Mar 29, 2023
Bespoke’s Global Macro Dashboard is a high-level summary of 22 major economies from around the world. For each country, we provide charts of local equity market prices, relative performance versus global equities, price to earnings ratios, dividend yields, economic growth, unemployment, retail sales and industrial production growth, inflation, money supply, spot FX performance versus the dollar, policy rate, and ten year local government bond yield interest rates. The report is intended as a tool for both reference and idea generation. It’s clients’ first stop for basic background info on how a given economy is performing, and what issues are driving the narrative for that economy. The dashboard helps you get up to speed on and keep track of the basics for the most important economies around the world, informing starting points for further research and risk management. It’s published the last Wednesday of every month at the Bespoke Institutional membership level.
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Mar 26, 2023
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.
While you’re here, join Bespoke Premium with a 30-day trial!
This Week In Banking
How Goldman’s Plan to Shore Up Silicon Valley Bank Crumbled by Anna Maria Andriotis, Corrie Driebusch, and Miriam Gottfried (WSJ)
As the pressure on Silicon Valley Bank rose in February amidst losses on their bond portfolio and declining deposits, management came to Goldman for solutions. The result was an equity offering that sparked a bank run and the second-largest ever bank failure in US history. [Link; paywall]
The first social media bank run? A newsletter popular with VCs may have been the domino that started the Silicon Valley Bank implosion by Steve Mollman (Yahoo! Finance)
A newsletter sent out back on February 23rd and widely read by the VC community described Silicon Valley Bank as “technically insolvent” and “levered 185:1”. That was one possible catalyst for the sudden evaporation of the bank’s deposit base a couple of weeks later. [Link]
Policy
How Biden saved Silicon Valley startups: Inside the 72 hours that transformed U.S. banking by Adam Cancryn, Ben White, and Victoria Guida (Politico)
The collapse of Silicon Valley Bank caught many offsides, including members of the Biden administration who frantically huddled through the weekend to understand the problem and start developing solutions. [Link]
European regulators criticise US ‘incompetence’ over Silicon Valley Bank collapse by Laura Noonan (FT)
The scramble last weekend to come up with a plan for stabilizing the banking system in the US has been met with dismay in Europe, where the decision to protect depositors is being described as “total and utter incompetence” for how they “killed a fly with a sledgehammer”. [Link; paywall]
Why Barney Frank Went To Work For Signature Bank by Isaac Chotiner (The NYer)
A remarkable interview with the king of giving interviewees enough rope to hang themselves. Former Representative Barney Frank attempts to explain why he flipped his view on bank regulation when he joined the board of a bank that ended up in FDIC receivership this weekend. [Link; soft paywall]
Republican U.S. Senator Rick Scott, Democrat Warren unveil Fed oversight bill by David Morgan (Yahoo!)
A bipartisan bill introduced in the Senate would replace the Federal Reserve’s internal inspector general with one appointed by the President and confirmed by the Senate. [Link]
What Have We Learned?
SVB, Bailouts, and How to Regulate Capitalism by Yakov Feigen (Building A Ruin)
Since we’re apparently going to be doing some kind of bank bailout regularly anyways, why not cut out the chaotic middlemen and direct investment publicly? [Link]
Investment Management
Star-Led Hedge Funds Hit by Steep Losses, Stunting Their Comeback by Nishant Kumar (Bloomberg)
Financial market chaos in March led to modest losses at multi-strategy funds with a diverse range of portfolio managers. Some more concentrated funds that hit it big last year got absolutely pounded with one fund actually shuttering. [Link; soft paywall]
What You Gain—and Lose—When You Lock Money Up for the Long Run by Jason Zweig (WSJ)
A proposed fund would see investors pay lower fees the longer they hold, but pay a penalty for withdrawals before a lockup period ended
. [Link; paywall]
Visible Prices
Pay Transparency in Job Postings Has More than Doubled Since 2020 by Cory Stahle (Hiring Lab)
A combination of hot labor markets and regulatory intervention in some large states is pushing a change in norms around pay transparency in job listings. [Link]
Bowling for $418? Surge Pricing Creeps Into Restaurants, Movies, Gym Class by Harriet Torry (WSJ)
A widening range of industries are experimenting with surge pricing that changes based on supply and demand at any given time of day or date. [Link; paywall]
Investment
Exclusive: Samsung’s new Texas chip plant cost rises above $25 billion by Alexandra Alper, Stephen Nellis and Heekyong Yang (Reuters)
Soaring raw materials costs are the primary source of price inflation for the huge manufacturing facilities that the chips industry has planned for a variety of locations across the US. [Link]
Boardrooms
Wealthy Executives Make Millions Trading Competitors’ Stock With Remarkable Timing by Robert Faturechi and Ellis Simani (ProPublica)
Well-connected operators are conducting some awfully suspicious trading not in their own company’s shares but in stocks linked to their company including both suppliers and competitors. [Link]
Paging Costanza
The New York Yankees are worth $6 billion, but players still need to pay $9 for Wi-Fi on team flights by Nicolas Vega (CNBC)
The Yankees really need a new travel manager to handle the same duties as Seinfeld’s co-star while he worked for the Steinbrenners. Cheapskate policies on flights are keeping ballplayers off the internet unless they pay up. [Link]
Real Estate
Home remodeling is slowing down, but ‘historic boom’ is coming by Dani Romero (Yahoo!)
An aging housing stock, low fixed mortgage costs, and huge home equity balances are all factors likely to continue driving significant home remodel spend in coming years. [Link; auto-playing video]
New York nears deal to ban gas stoves in new homes by Marie J. French (Politico)
As part of a broader trend and amidst concerns over everything from climate change to indoor air quality, New York is on the verge of a ban on gas furnaces, water heaters, clothes dryers, and stoves. [Link]
Land-use reforms and housing costs: Does allowing for increased density lead to greater affordability? By Christina Stacy et al (Sage)
Using machine learning, this paper creates a dataset of land-use (zoning) reforms that increase or decrease density, and uses that dataset to show that looser zoning restrictions increase housing supply (especially at the upper end of the market) though don’t have strong impacts on rents. Conversely, increased zoning restrictions lower densities and mean higher rent growth and fewer units available to middle-income renters. [Link]
Mangia
Everything I, an Italian, thought I knew about Italian food is wrong by Marianna Giusti (FT)
An incredible retrospective laying bare the lies that are the foundation of a national cuisine. What we think of as “Italian” cuisine is a relatively recent invention that has more to do with marketing than history. [Link; paywall]
AI
The Age of AI has begun by Bill Gates (GatesNotes)
Microsoft’s founder thinks the ChatGPT model is equivalent to the graphical user interface that kick-started personal computing for the masses in the 1980s as far as technical marvels go. [Link]
Labor Markets
Job Listings Abound, but Many Are Fake by Te-Ping Chen (WSJ)
Just because a job is listed as open, it doesn’t mean that there’s actually any interest in hiring. As many as half of online job listings are only kept up to give the impression of growth. [Link; paywall]
Elon
How Elon Musk knocked Tesla’s ‘Full Self-Driving’ off course by Faiz Siddiqui (WaPo)
Personal interventions in the development process by Elon Musk have dragged down the once high-flying progress Tesla had made towards autonomous driving. [Link; soft paywall]
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Have a great weekend!
