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.

Retail

Wal-Mart’s Deal for Jet.com Said to Hinge on Keeping Its Founder by Spencer Soper and Eric Newcomer (Bloomberg)

E-commerce upstart (and Amazon “competitor”) Jet.com has been purchased by Wal-Mart in a bid to beef up the retail giant’s online presence. [Link; auto-playing video]

Store Wars by Christina Binkley (WSJ)

A combination oral history and update on the aggressive, competitive, and always changing retail landscape of New York City. [Link; paywall]

Hedge Funds

Hedge Funds Face New Blow as $83 Billion Pension Cuts Them Out by Oliver Suess (Bloomberg)

With low returns and a shocking run of underperformance (not to mention high fees which also deduct from returns) many institutions are moving further away from the space. [Link; auto-playing video]

Hedge fund number to shrink, first drop since crisis: Barclays by Svea Herbst-Bayliss (Reuters)

The number of hedge funds around the world is expected to drop by 340 or about 4% in 2016, the first time since the 4% decline in 2009. [Link]

Economics

When Banks Expand Credit, Who Actually Receives It? by David Andolfatto and Johannes Stroebel (St Louis Fed On The Economy)

While this is a video rather than a read, we think the subject matter and subjects themselves are worth your time in understanding how banks pass credit on to the rest of the economy. [Link]

The First, Forgotten Conspiracy Theory About the Unemployment Rate by Josh Zumbrun (WSJ Real Time Economics)

There have been some wild claims made over the course of the recovery about the veracity of the Bureau of Labor Statistics employment numbers, but the generally unfounded claims have nothing on a real scandal involving the BLS. [Link]

Does Fiscal Stimulus Work when Recessions Are Caused by Too Much Private Debt? by Yuliya Demyanyk, Elean Loutskina, and Daniel Murphy (Cleveland Fed Economic Commentary)

With the entire developed world debating the need for more fiscal stimulus in the current global expansion, this paper wonders whether fiscal spending is effective during recessions. [Link]

The State of Macro Is Sad (Wonkish) by Paul Krugman (NYT)

Krugman does a good job diving into the debate over the various models macroeconomists use to understand the broad economy. [Link]

Investing

Thirty Years: Reflection on the Ten Attributes of Great Investors by Michael J. Mauboussin, Dan Callahan, and Darius Majd (Credit Suisse)

A long, slow meandering through changes in the investment landscape and ten attributes which remain a constant amongst successful investors. [Link; 21 page PDF]

Stocks with growing dividends have been the way to go since 1972 by Lawrence Lewitinn (Yahoo Finance)

High dividend stocks are all the range right now as bond yields around the world sit at or near record lows, but their outperformance is nothing new. [Link; auto-playing video]

Watch Out Below

LendingClub’s Quarterly Loss Widens; CFO Dolan Steps Down by Noah Buhayar (Bloomberg)

After a scandal involving securitization of loans earlier this year that eventually lead to the ouster of the CEO, LendingClub is now without a CFO as well. [Link; auto-playing video]

There Are All Kinds of Signs of a High-End Real Estate Slowdown by Julie Verhage (Bloomberg)

An excellent summary of data points that suggest the very top of the US real estate market is rolling over despite strong housing activity for most of the country. [Link]

Prospect Capital: The Enemy Within by Roddy Boyd (Southern Investigative Reporting Foundation)

A deep dive into the business model and accounting choices of a battleground stock in the world of business development companies. [Link]

Human Interest

Police in Rome dish out love — and spaghetti — to lonely couple by Bianca Britton (CNN)

In a very, very dark period in terms of day-to-day headlines, this heartwarming story is guaranteed to get a smile on your face; we certainly enjoyed the touching gesture by the Roman police. [Link]

12-year-old boy to begin classes at Cornell University this fall by Nick Canedo (New York Upstate)

Just in case your ego needed a check, have a look at the youngster that is six years ahead of his peers and bound for the Ivy League. [Link]

Thanks to This Man, Airplanes Don’t Crash Into Mountains Anymore by Alan Levin (Bloomberg)

The fascinating story of the man that bought topographic maps right after the fall of the Soviet Union and has played an instrumental role in saving airline passengers’ lives. [Link]

Tech

P&G to Scale Back Targeted Facebook Ads by Sharon Terlep and Deepa Seetharaman (WSJ)

Large advertisers like Proctor & Gamble aren’t seeing the return on investment they need to keep buying so many ads from the social network. [Link; paywall]

China’s tech trailblazers (The Economist)

A summary of the policies, strategies, and firms that are shaping the landscape of tech investing and the broader relationship with society in China. [Link]

Amazon Has Big Plans for Alexa: Running the ‘Star Trek’ Home by Nick Wingfield (NYT)

More on Alexa, the speaker-assistant that Bezos & Co hopes can become your link to the digital world in a more pervasive way that Apple’s Siri. [Link]

Noodling

The false realism of lesser-evil voting by Carl Beijer

While the subject of this write-up is tactical voting, we think it does an even better job as a critique of uninformed opinion that has become so prevalent in the modern media landscape. [Link]

Reflections on Rationalia by Neil DeGrasse Tyson (Facebook)

The premise of Tyson’s argument here (that human society could ever opt for pure “rationality”, whatever that means) is a bit silly, but some of his arguments around good policy making are interesting as stand-alones. [Link]

My Speech to the Graduates by Woody Allen (Skeptic)

Meandering, soulful, and loaded with dry wit: that’s the meat on the bone of this speech given by Woody Allen in 1979 that we think is worth a look-over. [Link]

Science

Martians Might Be Real. That Makes Mars Exploration Way More Complicated by Kevin Carey (Wired)

We had no idea just how covered the world is in germs, or that the NASA employed an “interplanetary sheriff”. A great read on the battle to prevent our microorganisms from reaching Mars. [Link]

Long in the tooth: the Greenland shark may live four centuries by Will Dunham (Reuters)

The world’s oldest shark has been discovered near Greenland, and it just as easily could have been caught back when the Bard was still penning his works. [Link]

Crossed Up Currencies

Bond Market’s Big Illusion Revealed as U.S. Yields Turn Negative by Brian Chappatta, Andrea Wong, and Shigeki Nozawa (Bloomberg)

As we’ve pointed out a few times in our Fixed Income Weekly, it’s possible to turn negative yielding bonds into positive yields and vice-versa using cross currency basis swaps. Here’s a look at the impact on Japanese investors. [Link; auto-playing video]

Pokémon Go Illustrates a Currency Problem by Julie Wernau (WSJ)

Big moves in relatively illiquid markets are causing huge headaches for corporations with a global presence, and the changes can pop up in unexpected places. [Link; paywall]

Canada

Maple Syrup Cartel Battles a Black Market Rebellion by Jen Skerritt (Bloomberg)

The government-sponsored control board which regulates production and sales of maple syrup from millions of Canadian trees is looking to ease quotas. [Link]

Labor Market

No degree? No problem as tight labor market changes the game by Paul Davidson (USA Today)

As the share of workers without jobs continues to shrink, employers are moving down the perceived desirability spectrum to fill open positions. [Link]

More than 2,400 stocks have reported earnings this season, and the average stock has gained just under 0.5% on its earnings reaction day (the first trading day following its report).  Below is a list of the stocks trading over $5/share that have gained the most on their earnings reaction days this season.  As shown, DXP Enterprises (DXPE) tops the list with a huge one-day gain of 58.26%.  The next closest earnings winner is Acacia (ACIA) with a gain of 33.35%, followed by EXACT Sciences (EXAS) at +30.10%.  Silicon Graphics (SGI) and Freshpet (FRPT) round out the top five with one-day gains of more than 28%.  A few other notables on the list of this season’s winners include Valeant Pharma (VRX), GrubHub (GRUB), Endo (ENDP), Cirrus Logic (CRUS), 3D Systems (DDD) and Macy’s (M).

More than 2,400 companies have reported earnings since this quarter’s reporting period began back on July 11th.  As shown below, 64% of the 2,400 companies have beaten consensus analyst earnings estimates.  Earnings season comes to an end next Thursday when Wal-Mart (WMT) reports, but if the 64% reading holds, it will be the highest beat rate since the Q4 2010 reporting period.

While the bottom-line earnings beat rate currently sits at 64% this season, the top-line revenue beat rate stands at 56%.  While relatively low compared to revenue beat rates going back to 1999, if 56% holds through next Thursday, it will be the highest top-line beat rate seen since Q4 2014.