Oct 23, 2022
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!
Energy
The Case for Energy Optimism by Alex Turnbull (Syncretia)
A contrarian case that not only is the worst of the energy shock stemming from the Russian invasion behind us, but that other supply problems related to the energy transition are unlikely to be truly persistent. [Link]
Dozens of LNG-laden ships queue off Europe’s coasts unable to unload by Marwa Rashad and Belén Carreño (Reuters)
Dozens of giant ships filled with super-cooled natural gas are waiting for unloading in Europe, where regassification capacity is tight and storage is rapidly filling ahead of the peak demand period this winter. [Link]
BBC prepares secret scripts for possible use in winter blackouts by Severin Carrell and Jim Waterson (The Guardian)
Ahead of a winter where the UK is likely to suffer severe electrical grid pressure, the national broadcaster is preparing scripts discussing the energy shortages. [Link]
Axium Infrastructure and Canadian Solar’s Subsidiaries Recurrent Energy and CSI Energy Storage Announce Operation of World’s Largest Single Phase Energy Storage Project (Seeking Alpha/PR Newswire)
The world’s largest grid-scale storage project is now operating in California, with enough capacity to power tens of thousands of homes. The project will allow the grid to bridge electricity between peak production mid-day and peak demand in the evening. [Link]
Central Banks
Tug of War That Markets Fear Is Central Banks Versus Governments by Ben Holland and Liz Capo McCormick (Yahoo!/Bloomberg)
Central banks are rapidly raising rates to flight inflation even as fiscal authorities loosen policy in order to soften the blow of higher costs for critical standard of living goods, creating a push and pull that stands in stark contrast to the lockstep monetary and fiscal policy of the pandemic era. [Link]
British U-Turn Shows Central Banks Still Rule (and That’s Not Always Good) by Jon Sindreu (WSJ)
The Bank of England refused to provide more runway for the new Conservative Prime Minister’s fiscal plans, illustrating the power central banks still have over governments. [Link; paywall]
Big Narratives
We Will See the Return of Capital Investment on a Massive Scale by Mark Dittli (The Market)
Market strategist Russell Napier, who long believed in a disinflationary global cycle, is worried that a capital investment boom that will eventually lead to stagflation. [Link]
Active Trading
As Covid Hit, Washington Officials Traded Stocks With Exquisite Timing by Rebecca Ballhaus, Joe Palazzolo, Brody Mullins, Chad Day, and John West (WSJ)
Privy to all sorts of non-public information, civil servants across the government busily traded as markets fell and rose, delivering some impressive calls. [Link; paywall]
Day Traders Go Back to Their Day Jobs as Stock Market Swoons by Peter Rudegeair and Gunjan Banerji (WSJ)
The massive stock market craze in the wake of COVID is not continuing, as the bear market pushes active day traders out of their brokerage accounts and back into the labor force. [Link; paywall]
Demographics
The COVID-19 Baby Bump: The Unexpected Increase In U.S. Fertility Rates In Response To The Pandmeic by Martha J. Bailey, Janet Currie, and Hannes Schwandt (NBER)
Birth rates plunged during the pandemic, with a bottoming out 9 months after the onset of COVID. But fertility then took off, with the first sustained sequential increase in years for the US, especially among US born women. [Link; 38 page PDF]
College Enrollment Declines Again Though Online Schools, HBCUs See Increases by Douglas Belkin (WSJ)
Over the past three years college enrollment has plunged, with 1.5mm fewer students than pre-pandemic. Enrollment was already falling before the pandemic, but declines appear to have accelerated in its wake. [Link; paywall]
Work From Home and The Office Real Estate Apocalypse (NBER)
This working paper estimates the pandemic reduced the value of NYC office buildings by 45% and the shift towards working from home would push NYC office asset prices to a level roughly 40% lower than pre-pandemic. [Link; 77 page PDF]
Greenback Woes
How the surging U.S. dollar is making it almost impossible to afford anything in countries around the world by Paul Wiseman, Kelvin Chan, Samy Magdy, and Ayse Wieting (Fortune/AP)
A soaring dollar is crushing currencies around the world, exacerbating the already-severe cost of living shock that was brought on by the invasion of Ukraine. [Link]
Supply Chains
Ikea hikes prices by up to 80% blaming ‘surging’ transport and material costs by Sam Courtney-Guy (Metro)
Prices at Ikea in the UK are going up dramatically in response to the collapsing pound, soaring transport costs, and high inflation for raw materials. [Link]
Freight Operators’ Peak Shipping Season Is Crumbling by Paul Berger and Paul Page (WSJ)
Cancelled shipments of imports, low inventories, and slower shipping through-put mean the busy season for trucking lines across the country is coming in much slower than expected. [Link]
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Have a great weekend!
Oct 19, 2022
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.
In this week’s report we discuss the collapse in mortgage market activity amidst soaring spreads.
Our Fixed Income Weekly helps investors stay on top of fixed income markets and gain new perspective on the developments in interest rates. You can sign up for a Bespoke research trial below to see this week’s report and everything else Bespoke publishes free for the next two weeks!
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Oct 19, 2022
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.
You can access our Global Macro Dashboard by starting a 14-day free trial to Bespoke Institutional now!
Oct 17, 2022
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!
Billionaire Whimsy
Elon Musk Has the World’s Strangest Social Calendar by Joseph Bernstein (NYT)
A categorization of the strange and fragmented social life enjoyed – or perhaps, not enjoyed – by the Tesla CEO, who hops from one fragmentary encounter to the next across a sea of private jet flights, galas, and VIP lounges. [Link; soft paywall]
‘I Am Energy’: Inside the Bang Billionaire’s Reeling Empire by Anders Melin (Bloomberg)
A heartrate-popping profile of an energy drink company taking on the giants of the industry fueled by the mashup of hype, energy, and shady dealings that scream “Florida” from top to bottom. [Link; soft paywall]
China
World Bank Cuts China Growth Forecast as Covid-19, Real-Estate Crunch Take Toll by Jason Douglas (WSJ)
The combination of collapsing property activity and restrictions on activity related to COVID-19 are suppressing Chinese growth that is also hampered by Fed tightening. [Link; paywall]
Ocean plastics: How much do rich countries contribute by shipping their waste overseas? by Hannah Ritchie (Our World In Data)
A ban on imports of plastic waste to China has helped push down global plastics trade volumes dramatically, helping to reduce the volume of plastic being transported by sea and therefore plastic waste that makes it in to oceans. [Link]
Labor Relations
Exxon’s Exodus: Employees Have Finally Had Enough of Its Toxic Culture by Kevin Crowley (Bloomberg)
A revealing narrative that illustrates how pressure on companies to decarbonize or behave more ethically often comes internally, rather than externally from investors following the precepts of ESG investing. [Link; soft paywall]
Medical Marvels
Human hibernation is a real possibility – this is how it might work by Alex Wilkins (NewScientist)
Our ancient ancestors may have hibernated, a common survival strategy among mammals. Dormant brain paths may be the key to recovering that ability which has since been lost. [Link; paywall]
How a Diabetes Drug Became the Talk of Hollywood, Tech and the Hamptons by Sara Ashley O’Brien (WSJ)
A drug meant to help manage Type 2 diabetes is being used off-label for weight loss; another drug that uses a similar active ingredient is approved for weight loss among those with clinical weight management challenges. [Link; paywall]
Policy
Biden Proposal Could Lead to Employee Status for Gig Workers by Noam Scheiber (NYT)
A proposed rulemaking by the Labor Department would create a test to determine whether gig workers are employees or contractors, opening up a potential requirement to pay benefits and minimum wages at scale. [Link; soft paywall]
It’s Official: The Fed’s in the Red by Tracy Alloway (Bloomberg)
Rising payouts of interest amidst a stable yield on portfolio securities mean the Federal Reserve is now recording operating losses on a weekly basis. [Link; soft paywall]
How California’s Bullet Train Went Off the Rails by Ralph Vartabedian (NYT)
Good old fashioned corruption turned a laudable effort at building a high speed rail link into a boondoggle of historic proportions. [Link; soft paywall]
Astrophysics
Black Hole Pukes Up Star Years After Eating It by Isaac Schultz (Gizmodo)
After gobbling down a star three years ago, a black hole spit back up material at half the speed of light. Scientists are trying to understand why. [Link]
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Have a great weekend!
