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.

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Recessions

The Financial Crisis at 10: Will We Ever Recover? by Regis Barnichon, Christian Matthes, and Alexander Ziegenbein (FRB SF)

A blog post fleshing out the argument that the drop in the trend of GDP growth following the global financial crisis was a permanent effect of the recession. [Link]

Beware of a Recessionary Bias Among Analysts by Tim Duy (Fed Watch)

Following some notably extreme data points this week, economist Tim Duy cautions against cherry-picking data, and instead advocates a more comprehensive analysis which yields very different conclusions. [Link]

Distress Dynamics

Distressed Mergers And Acquisitions (Wachtell, Lipton, Rosen & Katz)

A very useful background on the area of distressed M&A, which investors may find useful as a piece of reference material or as an initial foray into the special situations space. [Link; 241 page PDF]

Why Banks Can’t Be a Bridge Over Troubled Markets by Paul J. Davies (WSJ)

Linking capital requirements to VaR calculations which raise the capital cost of inventorying securities during periods of high volatility could have negative side-effects down the line. [Link; paywall]

Criminal “Justice”

The NYPD’s new DNA dragnet: The department is collecting and storing genetic information, with virtually no rules to curb their use by Allison Lewis (NY Daily News)

DNA sampling by police is broadening, and the wide nets being cast by police is generally falling in areas least able to defend themselves from attacks on civil liberties. [Link]

Domineque Ray Died So the Death Penalty Could Live by Matt Ford (The New Republic)

In a shocking move this week condemned from across the political spectrum, the Supreme Court denied an Alabama death row inmate the right to have his imam present during his execution, disregarding basic questions about the state’s motivations and constitutional protections against state sanctioned religion. [Link]

California

California Governor Proposes Digital Dividend Aimed at Big Tech by Kartikay Mehrotra (Bloomberg)

In a major recent policy rollout, California Governor Gavin Newsom announced a new tax on large tech companies based in Silicon Valley. [Link; soft paywall, auto-playing video]

America’s Signature Mode of Transportation Is High-Cost Rail by Jacob Bacharach (Hmm Daily)

Newsom was in the news this week, radically scaling back plans for high speed rail in California. That raises a variety of questions related to the utterly ridiculous cost of any large infrastructure project in the United States. [Link]

APNewsBreak: Teach for America slammed over Oakland strike by Sally Ho (AP)

Successful NGO Teach for America suggested that corps members who do not cross picket lines during an Oakland teachers strike would be punished financially. [Link]

International Matters

China’s Demographic Danger Grows as Births Fall Far Below Forecast by Liyan Qi and Fanfan Wang (WSJ)

Recent demographic data has shown that China is aging – and failing to reproduce – a t a drastically worse rate than had been previously estimated. [Link; paywall]

Taiwan insurers skirt restrictions to load up on dollar bonds by Edward White and Robin Wigglesworth (FT)

An explanation of the absolutely ludicrous Taiwanese insurance market, which depends on massive overseas bond holdings which are vulnerable to an appreciation of the Taiwan dollar. [Link; paywall]

The Case for a Significant German Stimulus Is Now Overwhelming by Brad W. Setser (Council on Foreign Relations)

With fiscal surpluses dating back to 2014, slowing growth, a surging household savings rate, and low debt levels, Germany is the poster-child for the sort of economy that ought to be engaging in fiscal stimulus. [Link]

Investing

For Boeing, juggling cash flow often means ‘another “Houdini moment”‘ by Dominic Gates (Chicago Tribune)

With contracts that give it enormous leeway to pull forward or push back cashflow, Boeing (BA) is able to play a delicate financial game and make its operations look healthier – or at the very least, more consistent – than they actually are. [Link]

How a Nasdaq Loophole Fueled One Stock’s Rise of 3,750% by Dave Michaels and Alexander Osipovich (WSJ)

A Nasdaq-listed firm with a massive stock of restricted shares is listed on the large market despite its dubious ability to meet listing requirements. [Link]

Malfeasance

Exclusive: FBI investigating top Vitol executives in Americas – sources by Brad Brooks and Gary McWilliams (Reuters)

One of the largest players in the physical oil trading market has executives under investigation in connection to the massive bribery scandal still unfolding in Brazil. [Link]

The former Apple lawyer who was supposed to keep employees from insider trading has been charged with insider trading by Sara Salinas (CNBC)

Three different times during 2015 and 2016, the Apple employee responsible for keeping Apple compliant with securities law traded ahead of earnings. [Link]

Wealth

Wealth concentration near ‘levels last seen during the Roaring Twenties,’ study finds by Christopher Ingraham (Seattle Times)

New research from UC Berkeley economist Gabriel Zucman suggests that the 400 richest Americans control more wealth than the bottom 60 percent of the distribution (150mm people), with that massive swathe of the population holding only 2.1% of total wealth. [Link]

Americans’ Confidence in Their Finances Keeps Growing by Jim Norman (Gallup)

The highest percentage of American population expects to be better off over the next year since 1998, with 69% of those Gallup surveyed optimistic. [Link]

Social Media

Writer Sues Twitter Over Ban for Criticizing Transgender People by Georgia Wells (WSJ)

In a novel legal strategy, a Canadian writer is suing Twitter on competition grounds after being banned under the Twitter hateful conduct policy. [Link; paywall]

Money Ball

Machado and Harper haven’t signed because baseball teams are now run like Wall Street ‘quant funds’ by Michael Santoli (CNBC)

A very slow free agent signing season has led analysts to compare the behavior of MLB teams to quants that underweight high-flying and glamorous stocks that garner all the headlines. [Link]

Migration

Americans continue their march to low-tax states by Jonathan Williams (The Hill)

Williams argues that tax rates and low budget deficits are driving the movement of Americans from large population states to booming Sunbelt locales. [Link]

EVs

Electric truck start-up Rivian announces $700 million investment round led by Amazon by Robert Ferris and Paul A. Eisenstein (CNBC)

A small company aiming to fill a high-performance niche in the EV markets with a pickup truck and SUV got a big funding boost from Amazon this week. [Link]

Trade

Measuring Trump’s 2018 Trade Protection: Five Takeaways by Chad P. Bown and Eva (Yiwen) Zhang (PIIE)

In addition to the sheer size and scale of tariffs introduced by the Trump Administration, some products are being hit multiple times. [Link]

 

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Have a great weekend!

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