In case you haven’t noticed the pick-up in market volatility lately, the chart below does a good job of highlighting it.  In the chart, we show the average absolute daily change that the S&P 500 has experienced over the last 50 trading days.  As shown, after hitting a multi-decade low of just +/-0.22% in mid-November 2017, the S&P’s average daily change is now ticking up towards 1%.  As of today, the S&P has averaged a move of +/-0.92% over the last 50 trading days.

Prior to the S&P’s peak on January 26th, the index hadn’t experienced a 1% move in either direction over the prior 60 trading days.  In the 41 trading days since the peak, nearly half (18) have been 1%+ moves!

If you feel like the recent uptick in volatility is too much to take, one look at the chart shows you that really we haven’t seen anything yet.  During the current bull market, there have been three periods where the reading moved well above +/-1%, and at the height of the Financial Crisis at one point, the S&P was averaging a daily change of more than 4%!

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Facebook (FB) has hit new lows intraday today and assuming the current prices hold will have declined by 2% or more in five of the last six days. That’s fueled an enormous boom in volume and turnover (total value of shares traded). Over the last six trading days, more than $80bn of FB stock has changed hands, roughly double the prior record. As a percentage of market cap, that number is more modest with about 18% of current market cap being traded in total over the past six days. During the 2012-2014 period, when market cap was dramatically lower, that measure of activity ran as high as 40% and often ran in the 20s or higher as a matter of course.

In the two charts below, we show the value traded in Facebook on a rolling 6 session basis and that turnover’s share of market cap. While this isn’t definitive in terms of price direction, it does suggest that there’s been a large shift in ownership over the last week or so.

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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.

Politics

American corporations come out against Donald Trump’s proposed tariffs (The Economist)

Thus far only three of forty seven major trade associations have publicly commented in favor of new tariff programs, with the balance opposed. [Link; soft paywall]

Friended: How the Obama Campaign Connected with Young Voters by Michael Scherer (Time)

One irony of the Cambridge Analytica situation: the Obama For America app was doing the same thing back in 2012. Of course, in that case users knew a political campaign would have access to their friend lists, instead of a personality quiz passing the data on to a campaign later. [Link]

Ex-Obama Campaign Director Drops Bombshell Claim on Facebook: ‘They Were on Our Side’ by Jason Howerton (IJR)

Back in 2012, the Obama campaign pushed the boundaries of rules set by Facebook about how outside organization can use the information users allow apps to access. [Link]

Economics

Why Are Prime-Age Men Vanishing from the Labor Force? by Didem Tuzeman (Kansas City Fed)

Evidence that the prime age employment rate for men has fallen because of polarization in the labor force, with all sorts of negative consequences as a result. [Link; 26 page PDF]

Pent-Up Demand and Continuing Price Increases: The Outlook for 2018 by Jordan Rappaport (Kansas City Fed)

Catch-up effects in household formation, mean reversion declining average household size, and cyclical factors are all significant tailwinds for housing demand, but low worker availability, limited land availability, and land use regulation are all constraining factors that mean prices are likely to continue accelerating. [Link]

Can big data revolutionise policymaking by governments? by Robin Wigglesworth (FT)

A walk through the world of big data and how it can be used to generate private sector – and maybe one day, official sector – statistics about the state of output and activity. [Link; paywall]

Read The 10-K

Hedge-fund managers that do the most research will post the best returns, study suggests by Thomas Fracnk (CNBC)

A new data set shows that hedge funds which download more annual reports from the SEC’s EDGAR filing system tend to outperform the market. [Link]

Inequality

Talent, luck and success: simulating meritocracy and inequality with stochasticity by Hongsup Shin (Medium)

A longform summary of simulations which show where inequality comes from and what can exacerbate it. Very helpful as a toy model. [Link]

Extensive Data Shows Punishing Reach of Racism for Black Boys by Emily Badger, Claire Cain Miller, Adam Pearce, and Kevin Quealy (NYT Upshot)

New research shows enormous racial bias in the relationship between endowment effects (how rich a child’s parents are) and outcomes (how rich the children end up). Controlling for the huge advantages of growing up in a high income family, black children still end up much, much less well off than white children. [Link]

European Affairs

German Mittelstand faces generational crisis by Olaf Storbeck (FT)

In the coming half-decade, more than 800,000 small and medium business owners in Germany will be faced with the question of who will take over when founder-owner-operators hang up their spurs. [Link; paywall]

Italy Is Latest Nation to Become a Gas Exporter by Chiara Albanese and Tommaso Ebhardt (Bloomberg)

European natural gas supplies have historically been heavily dependent on Russian exports, but new Mediterranean lines that reach northern Europe via Italy are changing that. [Link]

Characters

Who Goes Nazi? by Dorothy Thompson (Harper’s)

An essay from 1941 reflecting on what sort of person in that era found appeal in the Nazi regime; while authoritarianism never found even a small foothold in America, its appeal seems like it would have been inevitable. [Link]

Why He Kayaked Across The Atlantic AT 70 (For The Third Time) by Elizabeth Weil (NYT Magazine)

In his 7^th decade, Polish kayaker Aleksander Doba ended a 110 day solo crossing of the Atlantic. It’s almost indescribable how impressive that physical and mental feat is. [Link]

My Candid Conversations with Extremely Online Folks Who Suffer From Internet Broken Brain by Luke O’Neil (Esquire)

What’s it like to spend more time on Twitter than anything else you do? Very funny, but also a bit sad, and completely absurd. [Link]

China

Understanding China’s Rise Under Xi Jinping by Kevin Rudd (Sinocism)

A reproduction of former Australia Prime Minister Rudd’s views on the most powerful man in China. This essay is extremely long and wide-ranging but provides as comprehensive of a view of the man as exists anywhere. [Link]

China’s Rise: How It Took on the U.S. at the WTO by Gregory Shaffer and Henry S. Gao (SSRN)

An underrated fact about China is that when it acceded to the WTO, it invested enthusiastically in legal capacity to defend its trade policies and attack others’ in international forums. [Link]

Mapping shadow banking in China: structure and dynamics by Torsten Ehlers, Steven Kong and Feng Zhu (BIS Working Papers)

If you’re interested in keeping track of how the financial system in China operates, this paper is an extremely helpful piece of background and reference. [Link]

Uber

A Self-Driving Uber Killed a Woman. Whose Fault Is It? by Matt Ford (New Republic)

Ford does a thoughtful job deconstructing how to think about accidents – especially those involving fatalities – when an algorithm is behind the wheel. [Link]

Uber’s Self-Driving Cars Were Struggling Before Arizona Crash by Daisuke Wakabayashi (NYT)

In the months ahead of an accident which killed a pedestrian in Arizona this week, Uber was struggling to keep up in the race to deploy self-driving vehicles. [Link; soft paywall]

The Fed

The Fed Makes a Risky Bet on Overshooting Its Inflation Target by Tim Duy

In the latest SEP, the FOMC’s forecasts implicitly mean that the central bank will overshoot its inflation objective while unemployment is extremely low, effectively guaranteeing that it will have to hike hard and fast to catch up with inflation. [Link]

Guns

Citi sets restrictions on gun sales by retail clients by Ross Kerber and David Henry (Reuters)

Customers who use Citi’s services to operate retail businesses will have to conform to new policies around the sales of guns or face the end of their banking relationship. [Link]

Yahoo

The Glory That Was Yahoo by Dan Tynan (Fast Company)

Once upon a time, Yahoo was dominant. Then, almost overnight, it all unraveled into a $5bn sale to Verizon. [Link]

Cybersecurity

Average website gets attacked 44 times a day by Ian Barker (Beta News)

New research on more than 6 million websites showed that the average site could be attacked as often as 16,000 times in a given year. [Link]

College

Cinderella Story? It’s True for U.M.B.C. in Academics, Too by Erica L. Green (NYT)

The University of Maryland Baltimore County is the first men’s basketball 16 seed to win a game in the NCAA’s annual tournament, but its academic history and achievement is arguably more impressive. [Link; soft paywall]

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Have a great Sunday!