Thursday 28, April 2022
Wrap
GDP was a big miss, but FB earnings were a big beat, so the indexes responded positively. The dollar continued to rise, as did energy and food. Tesla and Alibaba were exceptions, but most US-listed stocks rose. Crypto joined the party, with a 1.8% bounce for $BTC.
I still think that the direction of travel for stocks is down. Earnings are a backward looking indicator, but with so much stock shorted, a big earnings beat like $FB can give rise to a short squeeze.
Image
Lee Miller by Man Ray pic.twitter.com/u1am4ejDjC
— Daniel Brami (@Daniel_Red_Eire) April 28, 2022
Tweet
Heard someone ask whether mkts could “break” the BoJ's yield control like Soros broke the GBP. But Soros “won” because the ERM was forcing the BoE to do things that were not consistent with its own objectives. It had to hike aggressively in a recession, just to defend the FX.
— Dario Perkins (@darioperkins) April 28, 2022
Thoughts
The general idea of public choice theory is that to understand the behaviour of institutions one has to understand the incentives facing the individuals who run those institutions. This is most obviously, and productively, applied to politics, but I think it can be applied to other institutions. In education, those who run the institutions (the university administrators) seek to maximize fee and endowment income rather than the income of those who graduate. In religion, the hieratic class are focussed on amassing devotees, and wealth, rather than on saving souls and helping the poor, although charitable works do help achieve the other goals. In charities, the status and comfort of the trustees and administrators often comes above the beneficiaries as defined by the constitutional duties. I could go on, but you get the idea.
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