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.

North American Relations

What it’s like when your Tinder date lives across the U.S.-Mexico border by Alana Levinson (Fusion)

A very twenty-first century conundrum brought about by international borders, new technology, and the age old problem of trying to find love any place it exists. [Link]

Sympathetic Canadians Have a Message for Americans: You Guys Are Great by Liam Stack (NYT)

With election year hyperbole and division boiling up, Canadians have, in their classically Canadian way, decided that the USA needs a pep talk. The results are wonderful. [Link; paywall]

Inflation

The A/S and A/D Curves Are Not A Wassily Kandinsky Painting by Matt Busigin (Medium)

A basic critique of the primacy with which policymakers hold inflation expectations over other analytical models we can use to think about inflation. [Link]

“Limited Attention” and Inflation Expectations of Households by Claudia Sahm and Jason Sockin (FEDS Notes)

A quantitative investigation of consumers’ reported inflation expectations and the skew between negative consequences of high and low inflation. [Link]

Labor Markets

4 newspaper headlines tell the whole story of the US labor market by Myles Udland (Yahoo Finance)

When wages aren’t rising quickly and there are ample supplies of workers to get jobs done, you don’t see the kind of media coverage that is becoming near-typical recently. [Link]

Black Workers See Fastest Wage Growth in More Than 15 Years by Eric Morath (WSJ Real Time Economics)

In a fantastic piece of news, Q3 data from the BLS reports that black workers saw their median weekly earnings surge 9.8% YoY, a dramatic acceleration that’s been part of their strong post-recession increase of 15.7%, the better than white, Latino, or Asian workers. [Link]

Lululemon warns it might move HQ out of Vancouver by Tina Lovgreen (CBC)

Facing untenable delays from regulations requiring that it must give a first look on jobs to Canadians, the athleisure titan is considering a move away from Vancouver in search of more flexible labor laws. [Link]

Long Reads

David Letterman (and His Beard) Shop at Target These Days by Dave Itzkoff (NYT)

The end of a 33 year career steering the comedic tack of CBS’s “Late Show” has Letterman as relaxed as any former (or even current?) pop culture icon could possibly be. [Link; paywall]

The Soviet InterNyet by Benjamin Peters (Aeon)

A fascinating dive into the strong effort put towards digital communism by the USSR; the foibles of the system that was devised as a competitor to the decentralized internet remain relevant to this day. [Link]

The cult of the expert – and how it collapsed by Sebastian Mallaby (The Guardian)

In a preview of his new book on the Fed, Mallaby traces out the career of Allen Greenspan as a case study in the rise and fall of expert technocrats’ sway over policy in modern democracies. [Link]

Hedge Funds

Hedge Fund Managers Struggle to Master Their Miserable New World by Saijel Kishan (Bloomberg)

With returns lagging (badly, in many cases), the hedge fund industry is desperate to explain to itself and the rest of the financial world how the brutal series of losses have piled up. [Link]

Hedge Fund Launches Dwindle to 16-Year Low as Returns Lag: Chart by Nathaniel Baker and Suzy Waite (Bloomberg)

With returns lacking for existing funds, the environment for hedge fund capital raising is dour and the result is a tiny number of launches for the vehicles relative to the past few years. [Link]

Firm Economics

The Rise and Fall of Industries by Barbara Lejczak (Credit Suisse)

Change is a constant of capitalism, and this summary of Credit Suisse’s returns yearbook for 2015 (linked to in the post) does a good job of illustrating that fact. Do click through to the whole PDF as well; it’s filled with interesting data and observations. [Link]

Is The ClassPass Model Sustainable? by Ruth Reader (Fast Company)

One of the most successful on-demand startups of the past few years is being squeezed as it tries to balance user cost with how it pays providers – an age-old margin problem for any distribution business. [Link]

Business of Banking

How Banks Are Losing Clients to Their Own Employees by Neil Weinberg (Bloomberg)

Lured by the stable fee income from an RIA model, billions of dollars are moving out of traditional brokerage industry advisor networks and into new independent businesses. [Link]

How One Goldman Sachs Trader Made More Than $100 Million by Justin Baer (WSJ)

Acting in its traditional role as a liquidity provider, Goldman Sachs’ high yield desk stepped in and bought when credit markets got hairy in January, yielding massive profits as bond prices recovered later in the year. [Link; paywall]

Investing

Investor Cash Levels Jump Toward Levels Not Seen Since 9/11 by Sid Verma and Luke Kawa (Bloomberg)

Per recent data collected in BAML’s Fund Manager Survey, cash positions across the industry are higher than at any point since the post-tech bear market and recession start around 9/11. [Link]

Bitesize: 250 years of the bond-equity correlation by Matt Roberts-Sklar (BoE Bank Underground)

Over the last decade or so, the mechanical inverse movements of stocks and bonds have become accepted wisdom; when risks rise, interest rates fall. But that’s an historical anomaly; for most of history, the two kinds of prices have moved together, not opposite. [Link]

Deep Credit

Fighting Armed Gangs Becomes New Page in Creditor Handbook by Luca Cairaghi and Volodymyr Verbyany (Bloomberg)

If bond investors can seize an asset, they’ll try and do so – but that process becomes a bit harder when said asset is being held by 30 armed intruders. [Link]

The Ultimate Ebitda Fighting Championship by Lizz Hoffman and Matt Wirz (WSJ)

With a couple of creative spreadsheet line items, pre-tax cashflow for the combat promoter nearly doubled, illustrating the relatively pliable assumptions underpinning many models of bank regulation and the remarkably buoyant market for bank loans. [Link; paywall]

Housing

Texas Builder Aggressively Markets Starter Homes by Chris Kirkham (WSJ)

The combination of aggressive marketing and low cost building have allowed Texas builder LGI Homes to achieve what few others can in the modern housing market: delivering low-cost entry-level supply. [Link; paywall]

As Land-Use Rules Rise, Economic Mobility Slows, Research Says by Laura Kusisto (WSJ)

Research from Harvard’s Daniel Shoag and Peter Ganong of the NBER show that tightening restrictions on land use results in less economic mobility up the income distribution and therefore higher inequality. [Link; paywall]

Trade

Cumulative U.S. Trade Deficits Resulting in Net Profits for the U.S. (and Net Losses for China) by Federico S. Mandelman, Makalaya Palmer, and Giulia Zilioa (Atlanta Fed Macroblog)

Lost in the discussion of the yawning trade deficit between the US and China is the uncomfortable fact that some of that deficit is recycled back to the United States via US companies’ ownership of production in China. So while Americans may be buying more Chinese goods and services than vice-versa, there’s an effective rebate to the US economy via US investment in Chinese enterprises. [Link]

The Game Theory Inherent In Brexit by Gavin Jackson (FT Alphaville)

An excellent summary of a couple of different game theoretical models for thinking about the daunting task of UK negotiators trying to secure a negotiated departure from the EU – hard Brexit is going to be very hard indeed under this line of thinking. [Link; registration required]

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