A lot can be done with index futures by scaling exposure & leverage to reduce drawdowns & boost returns. You can get started by reading this: Volatility Targeting.
Markets this Week
Market now pricing in two rate cuts by year end.
More here: country ETFs, fixed income, currencies and commodities.
Links
Research
Do Sell-Side Analysts Say “Buy” While Whispering “Sell”? (oup)
We study here say-buy/whisper-sell behavior wherein analysts issue optimistic recommendations to attract retail investors while providing more accurate information to fund managers in private, sometimes resulting in fund managers selling the recommended stocks. We test whether fund managers return the favor using their votes for analysts in a Chinese “star analyst” competition. Managers are more likely to vote for analysts who exhibit greater “say-buy/whisper-sell” behavior toward these managers. This suggests that analysts reduce the accuracy of their public recommendations, thereby maintaining the value of their private advice to funds.
Crowded Spaces and Anomalies (SSRN)
A trading strategy that invests in the most crowded stocks and sells the least crowded stocks delivers a large and significant alpha.
Meritocracy across Countries (NBER)
We document that workers' skills better match their jobs' skill requirements in higher-income countries.
Investing & Economy
India
The story of Manpasand Beverages, as told by SEBI (sebi).
Indian banks are slipping on a banana peel of tech adoption (livemint).
Indian multinationals have to pay 15% global minimum tax in Europe (livemint)
India’s top stock exchanges are luring investors with new products and lower fees as they battle for a share of the derivatives market, in turn fueling a surge in trading activity that is drawing regulatory scrutiny. (reuters)
What Kind of a Superpower Is India Becoming? (theringer)
The Indian Economy is Doing Well, But Not Many Indians Are (theindiaforum)
The trouble with inheritance tax is that it is notoriously expensive to collect for tax administrators. The wealthy tend to be good at exploiting loopholes as they are able to afford savvy tax lawyers. Revenue from such taxes in OECD nations as a share of total government revenue has fallen sharply since the 1960s. That’s why countries have been abolishing it.
Why India loves to hate inheritance tax and estate duty—wrongly (livemint)
Lant Pritchett says that 99 per cent of the variation in the poverty rate across countries is explained by one number: The median income. If we want to change the poverty rate, the number to focus on is the median income. All the redistributive efforts of the state, through taxes, social programmes, etc sit in the residual 1 per cent (of the variation of the poverty rate which is not explained by the median income) and come at the price of reduced growth of the median income. The emotions of envy, of resentment, of takers rather than makers, should be excluded from public life.
What makes wealth and inheritance taxes bad for India's economic progress (business-standard)
RoW
About one-third of all S&P 500 stock trades are now executed in the final 10 minutes of trading sessions. Index funds, which typically execute trades at the day's close to align with benchmark prices they track, have been a significant driver behind this shift. (investing)
Fox News has destroyed American confidence in itself (jabberwocking).
Imagine New York City only had 100 residents and they all went to dinner. When the bill came due, the person with the most income would cover nearly half of it, the next 9 people (ordered by income) would pay a fourth of it, the next 40 would pay a fourth, and the remaining half of the table would cover the 2% left on the bill. Is this fair?
Whose Tax is it Anyway? (ofdollarsanddata)
The reckoning: Chinese car wars (asiatimes)
Apple is trying to move some of its production out of China. Yet, Chinese firms are taking over an increasingly high-tech share of Apple's manufacturing (high-capacity).
Comparative advantage is only realised in the exchange of goods, and not in their production. The fact that China dominates certain manufacturing sectors is perfectly consistent with free trade and comparative advantage. It is excess savings that creates a problem for the global economy. The problem is that these excess savings represent the suppression of domestic wages, and thus domestic demand, to achieve global competitiveness.
These are classic beggar-thy-neighbour trade policies. These surpluses must be absorbed by trade partners, usually in the form either of higher unemployment, higher fiscal deficits or higher household debt.
China’s problem is excess savings, not too much capacity (ft)
An awful lot of prominent people still don't understand how the balance of payments works. (@michaelxpettis)
A.I.
Data center developers in Northern Virginia are asking utility Dominion Energy Inc. for as much power as several nuclear reactors can generate. (bloomberg)
something that has always been theoretically possible on a small scale becomes practically possible on a massive scale, and that changes what it means.
AI and problems of scale (ben-evans)