🍋 Computers Taking Over Wall Street

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Good Morning! Hope everyone is having a better week than the NYU science department - the school fired an organic chemistry professor after a student-led petition claimed his class was too hard. Facebook announced they will allow users to customize what they see in their feed, and Elon Musk teased a new super-app that will debut when his Twitter deal closes.

Dozens of de-SPACs are running out of cash, potentially spelling trouble for the rest of the economy. And for those of you looking to enhance your bucket list of travel spots, the bar named the best in the world is hidden behind a Barcelona deli.

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1. Story of the Day: Computers Taking Over Wall Street

This past year hasn’t been all doom and gloom for the hedge fund industry. Equities are down, and your 401(k) might be closer to a 201(k), but one class of investors has been crushing it — computers.

Quantitative hedge funds, which rely on algorithms and computing power when making trading decisions, are having their best year on record. Amidst a global bear market, some funds are up between 40-60% on the year (for context the S&P 500 closed down over -21% YTD on Wednesday).

Quantitative fund algorithms take into account risk, inflation, instability, high debt levels, de-globalization, and a slew of other trends currently impacting the global economy. Ultimately, funds execute trades based on their algorithms automatically, almost like a robot would.

Quant funds put the finance world on notice when they were one of the few groups to deliver a strong performance during the 2007-08 financial crisis. Since then, however, they have experienced relatively mediocre gains.

Public perception towards quant funds is changing. While some investors would have turned their nose at the thought of appointing a computer as their money manager even a decade ago, many are now experiencing a change of heart.

August saw $45 billion in outflows in the hedge fund sphere as investors brace for an economic slowdown. Yet, despite many investors pulling out of hedge funds, algo-driven funds raised over $7 billion in new investments.

Takeaway: Does a rise in quant-driven funds point to a new era of money management? In a time of uncertainty, many investors are putting their faith in computers rather than other people. The algorithms these funds use encompass significantly more factors and trends than the models your MD tells you to ‘pls fix’.

Finance has evolved to become more data-centric, and many argue algorithms have blind spots. While these funds are ultimately managed by people, the rise and performance of these funds begs the question - are you more trusting of giving your money to humans or computers?

2. Markets Rundown by We Study Markets

Stocks closed slightly lower on Wednesday following the largest two-day rally since 2020.

Movers & Shakers

• (-) Tesla ($TSLA) -3% after CEO Elon Musk confirms he'll buy Twitter.

• (+) Schlumberger ($SLB) +6% after OPEC+ will cut daily oil output by 2 million barrels.

• (–) Enphase Energy ($REV) -9% after a solar energy stock sell-off.

Private Dealmaking

• Cellarity, a cell behavior therapy developer, raised $121 million 

• Sidetracker, a work management platform for infrastructure companies, raised $96 million 

• Liquid Death, a canned fizzy water company, raised $70 million

• Elliott Associates and Vista Equity Partners completed a $16.5 billion buyout of Citrix Systems, a workplace software platform

• LanzaTech, a waste carbon recycling company, received a $500 million investment from Brookfield Renewable

• Immerok, a data processing platform, raised $17 million

3. Top Reads

• Stocks smell a Fed pivot, bonds not so much (Axios)

• How your paycheck could lead the U.S. into a recession (CNN)

• The winners and losers of Musk’s Twitter deal (Axios)

• This stock market comeback is unprecedented by one measure (CNBC)

• This year’s venture-fueled layoffs (Axios)

• Merger fees are the only antitrust common ground (Axios)

• Wall Street slides as rising Treasury yields snuff out stock rally (Reuters)

• The bond market is starting to worry Wall Street (CNN)

• Streaming bundles are forming, but don’t expect cable-like package any time soon (CNBC)

• Tellurian chairman says U.S. gas at $4-$5 per gallon is thing of the past (Reuters)

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4. Book of the Day: Adrift: America in 100 Charts

We are only just beginning to reckon with our post-pandemic future. As political extremism intensifies, the great resignation affects businesses everywhere, and supply chain issues crush bottom lines, we’re faced with daunting questions – is our democracy under threat? How will Big Tech change our lives? What does job security look like for me?

America is on the brink of massive change – change that will disrupt the workings of our economy and drastically impact the financial backbone of our nation: the middle class.

In Adrift, Galloway looks to the past – from 1945 to present day – to explain just how America arrived at this precipice. Telling the story of our nation through 100 charts, Galloway demonstrates how crises such as Jim Crow, World War II, and the Stock Market Crash of 2008, as well as the escalating power of technology, an entrenched white patriarchy, and the socio-economic effects of the pandemic, created today’s perfect storm.

Adrift attempts to make sense of it all, and offers Galloway’s unique take on where we’re headed and who we’ll become, touching on topics as wide-ranging as online dating to minimum wage to the American dream.

Just as in 1945 and 1980, America is once again a nation at a crossroads. This time, what will it take for our nation to keep up with the fast and violent changes to our new world?

“An urgent examination of the future of our nation – and how we got here.”

5. Short Squeez Picks

• 7 powerful fitness hacks nobody’s told you about

• 10 smart - not soft - skills for leaders

• An exercise to help you define and conquer your fears

• How to meet the three sets of needs in every relationship

• 10 quotes that will boost your productivity

A Message from Biotech Stock Market News

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6. Daily Visual: Auto Loans Surge

Average monthly payment on a new vehicle loan

Source: Axios

7. Daily Acumen: Say No Paradox

“Take on less, accomplish more.

Success doesn’t come from taking on everything that comes your way.

It comes from focus—deep focus on the tasks that really matter.

Say yes to what matters, say no to what doesn’t.

Protect your time as a gift to be cherished.”

Source: Sahil Bloom

8. Crypto Corner by Web3 Daily

• Feds seized $311 million in Bitcoin - and the hacker stole it back

• The economic tinkerer who takes the long view of crypto

• Bankrupt crypto lender Celsius loses another top executive and co-founder

• Investors should be wary of all the crypto PR stunts

• Wall Street is warming up to crypto

9. Memes of the Day

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