Macro & Multi-Strats are Hot—
Stock pickers are Not Hot—
Hedge Funds Paid for Stockpicking Genius Show Little of It
Equity hedge funds are down 15% this year, according to data compiled by Bloomberg. Chase Coleman’s Tiger Global is in the worst shape among large players, losing almost 52%. Dan Sundheim’s D1 Capital Partners has slumped 28%, and Ross Turner’s Pelham Capital is down 32.5%. Lone Pine Capital, run by Steve Mandel, has seen firmwide assets slump 42%, to $16.7 billion.
Econ
Are you certain that the Fed has tightened?
Some monetary hawks want Jay Powell to emulate Paul Volcker. I wonder if they realize what that means. After Paul Volcker was appointed to chair the Fed in August 1979, monetary policy remained highly expansionary for another 2 years. NGDP growth averaged over 10% between 1979:Q3 and 1981:Q3. And this was not due to “policy lags”; indeed nominal growth actually sped up to an annual rate of over 14% in Volcker’s second year (the period from 1980:Q3 to 1981:Q3.) Only in the summer of 1981 did Volcker get serious about inflation. Unfortunately, the myth of Volcker has crowded out the reality.
There’s currently a vigorous debate about whether the Fed’s “tight money” policy is too restrictive. But what if both sides of the debate are wrong? What if the Fed hasn’t even adopted a tight money policy?
Fixing bank runs (sort of) wins the Nobel prize.
Bernanke v. Kindleberger: Which Credit Channel?
Two Important Fed Programs that Should Be Mutually Reinforcing Are in Conflict. Why?
the Fed is not allowing any banks in their internal liquidity stress tests to point to the SRF as the way that they would monetize their assets.
After enjoying a long period of deflationary conditions, the global economy is being pushed by a wide range of forces toward a new and more difficult equilibrium. Surges in demand that used to be accommodated by expansions in supply will now lead more frequently to higher prices.
related: Inflation in Services Likely to Rise Further Despite Slowing Goods Prices
Inflation dovishness—Five facts about inflation
UK credit crunch arguing for QT cancellation
Recent dramatic tightening of UK credit conditions along with Bank of England plans for large-scale QT and a “significant” rate hike could tip current weak broad money growth over into contraction, in turn threatening a deflationary depression.
Disentangling Rent Index Differences: Data, Methods, and Scope
With Abundant Reserves, Do Banks Adjust Reserve Balances to Accommodate Payment Flows?
“I am very bullish on the oil market.”
The incoming physical tightness in the product market will catch most financial market participants by surprise. Couple that with lower crude exports from Saudi and Russia, and we see a scenario where refineries scramble for crude going into 2023. SPR is expected to end by the end of November and US shale oil production growth is disappointing to the downside. The oil bulls just need demand to hold up going into year-end. If so, then oil prices will finish much higher by year-end.
Hedge Fund Investor Who Called Housing Crash Eyes Venezuela Debt—makes sense.
You can’t have a party without chips.
IMHO, the likelihood of Chinese aggression towards Taiwan is meaningfully higher after the US export controls.
China chip ban a US exercise in extreme self-harm
The damage to capital investment and R&D in the Western semiconductor industry will exceed Washington’s modest subsidies for the chip industry by a factor of five or more.
Xi could simply threaten an air strike on TSMC's facilities, and the risk of ensuing economic fallout might be enough to convince the US to ease export restrictions on key semiconductor manufacturing goods to China, especially if such action would avert an armed conflict.
US Export Restrictions, Intel Layoffs, Applied Materials, and TSMC
The real fear is that this forces China’s hand to something much more punitive. Namely invading Taiwan. That scenario is hard to discount, but I feel like the US delivered a solid blow in this round of economic war. It’s unlikely China can return the blow economically, so it might have to resort to something different. Time will tell.
Xi Jinping Is Weaker Than You Think
Foreign Affairs
How Close Is Vladimir Putin to Using a Nuclear Bomb?
We Are On A Path To Nuclear War.
NATO would thus officially break along the lines Putin knows it is already broken. The EU’s commitment to Ukraine would also fracture. The U.S.-German alliance would be no more. Even a small nuclear explosion would send markets crashing, and the German economy would grind to a halt. All of Europe would enter a depression more severe than anything Russia has experienced to date. It would no longer make sense to speak of “the West.” This, as much as reclaiming lost territories, would be Putin’s life’s work.
How to Lose Friends and Influence Over People—A decade of Obama-Biden foreign policy has broken the Middle East and America’s security order.
Culture/Miscellany
Making Energy Too Cheap To Meter
I have a confession: I’m an ergophile. I love energy-intensive processes and increasing the amount of power (in the physics sense) each of us can access.
Big Veganism is coming for you
Mind you, the veganised masses will be too feeble to protest against the loss of their humanity: in June last year the American Journal of Clinical Nutrition found that children on vegan diets were, on average, 1.2 inches shorter and had up to 6% lower bone mineral content than meat-eating peers.
The Cult of the Individual—The Origins of the Nihilistic Left
One could forgive the Boomers of the sixties their youthful excesses: they had seen firsthand the horrors of racial segregation, the atrocities of Vietnam were in the headlines every day, and nuclear brinksmanship dangled over their heads like an atomic sword of Damocles. Fewer excuses can be found for today’s radical activists, who have embraced nihilism as their secular religion for the sheer narcissistic gratification of it. They burn down city blocks over transparent lies. They defend drug cartels over the users who die for their gains. They cosplay as protectors of the oppressed while indulging the ideological fantasies of the elite.
'Baby Al Capone' to pay $22m to SIM-swap crypto-heist victim—Too young to drive, old enough to bribe AT&T staff, apparently. Someone hire this kid.
Kinsey Gaffe Instant Classic—
The Eternal Struggle Between Court And Country In American Politics
The struggle between Court and Country is most evident in the years following the Glorious Revolution, when Sir Robert Walpole — Britain’s first real Prime Minister — sought to stabilize a fractious political landscape by bolstering the Crown and strengthening Parliament. Cunning and highly capable, Walpole wielded considerable influence over the Hanoverian kings, and through personal connections, patronage, and skillful bribery, he was able to control parliamentary business and dominate foreign affairs. Walpole’s breakneck consolidation of money and power and his reputation for corruption earned him many enemies, most notably Jonathan Swift and Samuel Johnson. But his fiercest adversary was Tory luminary Lord Bolingbroke, who excoriated Walpole’s ministerial usurpations in The Craftsman and advocated for an energetic opposition outside of government.
Americans Are Fake and the Dutch Are Rude!
Hundreds Of FBI Employees Are Simply Walking Away From Misconduct Charges
The Declining Leverage and Status of Ordinary People
In my view, the fundamental reason for the inegalitarian turn — not just in the United States, but throughout the advanced economies — was a qualitative downward shift in the leverage and status of ordinary people. The contributions that ordinary workers are able to make to the organized division of labor are simply less important than they used to be, and as a result those workers and their families have suffered a loss of collective power and a decline in social status.
The World’s Largest Camera Is Nearly Complete
High Protein? You Need More Biotin
Alpha-ketoglutarate, the longevity drug you were born with
…42 subjects took a daily supplement containing 1 gram of calcium-bound alpha-ketoglutarate [Ca-AKG] for 4-10 months.
Before and after the supplementation period, the researchers determined the aging at the molecular level using the TruAge test. This test measures in saliva how many methyl groups are attached to the DNA. The more methyl groups there are attached to the DNA, the further the aging process has progressed. Based on these measurements, the researchers concluded that Ca-AKG had reduced molecular age by 8 years.