Welcome to Bespoke Brunch Reads, our Saturday morning summary of interesting things we’re reading this week. The links are mostly market related, but there will be some other interesting subjects covered as well. The links are in no particular order. We hope you enjoy the food for thought as a supplement to the research we provide you during the week.
Smaller, Faster, Cheaper, Over: The Future of Computer Chips by John Markoff (NYT)
A quick history of Moore’s Law, the computerization of everything, and the path ahead for commercial scientific research in one of the most competitive industries on earth. Link [Paywall].
A Better Government, One Tweak at a Time by Justin Wolfers (NYT Upshot)
An investigation of A/B testing and behavioral economics in the normally staid world of the federal government. Link.
The Three Major Trends that Shaped the Global Economy or Decades Are About to Change by Luke Kawa (Bloomberg Markets)
A falling dependency ratio and less low-hanging fruit from an already very open global economy are going to have major implications for inflation and the distribution of wealth in the next few decades. Link.
Economic data-gatherer Premise Data raises $50 million by Mike Wheatley (siliconAngle)
A startup is working to generate economic data in emerging markets by paying smartphone users for access, with the potential for much more up-to-date data on growth, inflation, and employment. Link.
From Boom To Bust: A Typology of Real Commodity Prices In The Long Run by David S. Jacks (NBER)
This dense and lengthy paper – along with pages upon pages of charts – creates a new model for commodity price cycles, suggesting that “grown” commodities suffer persistent real price declines and “dug” commodities are real price appreciators, but that they both suffer from huge multi-year “boom” and “bust” cycles. Link.
I.M.F. Cautions on Concentrated Positions in U.S. Mutual Funds by Landon Thomas Jr. (NYT Dealbook)
The real problem in the high yield bond market might not be the ETFs that get so much media attention, but instead the portfolios of mutual funds. Link.
The Financial Times and The Future of Journalism by John Cassidy (The New Yorker)
A recap of the purchase of pink-sheeted FT by Japanese media company Nikkei, and the path forward for defensible media – especially business media – business models. Link.
IMF Global Financial Stability Report 2015 (Chapters 2 and 3) (IMF)
The IMF investigates two critical concerns for investors, market liquidity and emerging market corporate debt. Cyclical and structural factors are considered for both, along with policy recommendations. We include the summaries as full chapter PDFs are quite large.
Natural Experiment Sheds Light on the Market Effects of Herding by Sushant Acharya and Alvaro Pedraza (NY Fed Liberty Street Economics)
The New York Fed’s economists take a look at the behavior of pensions in Colombia around a reform in their regulation that created an incentive to avoid something close to reputational risk. Link.
Voters’ Mood: Surly Side Up, With a Side of Optimism, Poll Shows by Janet Hook (WSJ Washington Wire)
WSJ/NBC News polling data is used to analyze the moods of voters across the country and the bottom line is that “the status quo is unacceptable”. Link.
Traders Seek Ways to Benefit From ETFs’ Woes by Rob Copeland and Bradley Hope (WSJ)
ETFs aren’t perfect, and can’t offer investors perfect liquidity in all circumstances, so hedge funds are using a variety of trading factors to profit from the occasional gaps in liquidity or structural problems with the design of some vehicles. Link [Paywall].
My Thoughts on Hedge Funds by Ben Carlson (Ritholtz Wealth Management)
A well-informed, nuanced, and comprehensive view of what hedge funds are, how they work, and what investors have come to expect from an almost impossible diverse and institutionalized “asset class”. Link.
A Roadmap for a World Without Drivers by Alex Rubalcava (Medium)
We hear a lot about the death of the car in a world where everyone takes an Uber, but there’s good evidence that auto demand would actually soar, or at worst stay about even, in a world of cheap, on-demand, and automated personal transportation. Link.
Apple’s Clever Tech Makes The iPhone 6S Nearly Waterproof by Brian Barrett (Wired)
The iPhone 6S can’t come on a scuba diving expedition with you any time soon, but Apple has given its interior features that should make it much more resistant to short trips in to the drink. Link.