Comic relief Financial markets are mechanisms for aggregating the behaviors and preferences of lots of human beings, which means that financial economics is essentially the study of human behavior. Mostly the behavior that gets studied is, you know, buying and selling stocks, stuff like that. Sometimes, though, it's jokes: We examine analysts' and managers' use of humor during public earnings conference calls. Using a sample of 85,793 conference calls from 2003-2016, we find that experienced analysts and analysts with positive views of the company are more likely than other analysts to use humor on conference calls. We also find that analysts tend to use humor when the tone of their question is unusually negative, and that analysts who use humor on conference calls are allowed to speak for a longer period of time and receive longer responses from managers. When managers use humor, abnormal returns surrounding the call are higher, and analysts' stock recommendation revisions following the call are more positive. Our study provides new evidence on the use of humor in corporate disclosure events, and our findings indicate that humor has economically meaningful implications for public earnings conference calls. That is from "Analysts' and Managers' Use of Humor on Public Earnings Conference Calls," by Andrew Call, Rachel Flam, Joshua Lee and Nathan Sharp, and it is part of that lovely genre of financial papers that confirm what you would have guessed if you've ever met a human. One day in the not too distant future equity research analysts will be replaced by robots, and then sometime after that corporate managers will also be replaced by robots, and then earnings calls will be brief and joyless. But for now these are all human beings who have to work with each other, and who try to make their work days pleasant, and who reward each other for making their days pleasant. Here you all are on a boring conference call, why not lighten it up with a joke? Here you are asking a negative question, why not soften the blow with a joke? Here you are having a nice chat with managers who make you laugh, why not recommend that your customers buy their stock? It's all pretty straightforward. Also this is fun: We also find that the market reaction in the three days surrounding the earnings conference call is more positive when managers use humor, a result that is partially driven by a muted reaction to negative manager tone when managers use humor. When a company announces bad news, the managers tend to joke about it, and then the market assumes that the managers are only kidding about the bad news. Or something? "He said revenue would be down, but he said it with a laugh, so, buy?" Naturally I flipped immediately to the back of the paper to see if there was an appendix listing all the jokes. There is not an appendix listing all the jokes. There is however a pleasingly deadpan discussion of methodology ("Measurement of Humor"): We measure humor by searching conference call transcripts for editorial tags indicating instances of laughter. The laughter tags are delineated by parentheses and include "(LAUGHTER)", "(LAUGH)", "(LAUGHS)", "(LAUGHING)", and "(ALL LAUGHING)". We identify the conference call participant who speaks immediately prior to the laughter tag as the individual who made the humorous comment and elicited the laughter. If the person speaking immediately prior to the laughter tag speaks fewer than three words, we assign the humor to the second person immediately prior to the laughter tag. Well, I submit that sometimes you can assign the humor to the speaker of a two-word punchline. Or one word, or wordless physical comedy, though perhaps not on a conference call. Surely Calvin Coolidge was the one being funny in that famous "you lose" story. It goes on: We drew a random sample of 100 conference calls identified as having humor in them and read the transcripts to manually verify that the transcripts accurately identified the existence of humorous content and to determine who made the humorous statement. Our manual review of the transcripts confirmed the presence of humorous content and validated our process for identifying the speaker who used the humor. I can confirm the presence of humorous content in that paragraph. Imagine being a finance professor and hiring a research assistant and sitting them down and saying "okay here is a stack of earnings call transcripts; I want you to confirm that the jokes are funny." Really it's the best possible training for a career in academia. Well, I am sorry to say, there are a few sample jokes. For instance: When asking for extra information, for example, analysts might state their question in a humorous manner, such as, "I only have 20-30 questions for you," or "Thank you for calling on me last, so I can ask multiple questions." Ah. Well. And: In Sally Beauty's Q2 2009 conference call on April 30, 2009, Mimi Knowles, analyst for Sidoti & Co., asked, "I wanted to know, Gary, if it's too much to ask if you could comment on what kind of trends you are seeing in April so far?" Gary Winterhaulter, CEO of Sally Beauty, responded "It is too much to ask." Mimi Knowles responded, "All right" after which call participants laughed. Ah. Indeed. Look as I said they're boring calls, you take the laughs you can get. Startup economics (1) Here is a profile of Brex, a startup that gives credit cards to other startups. Its founders "noticed how difficult it was for entrepreneurs to get bank credit from traditional sources, which required a credit history and a personal guarantee," and so they went into the business of giving money to startups based not on traditional underwriting methods but on, like, startups are cool and deserve lots of money. This strikes me as perfectly reasonable: The modern Silicon Valley financial environment does seem different from the world of traditional bank lending, and it's perfectly possible that some combination of (1) huge growth opportunities and (2) limitless availability of equity financing mean that startups are generally better credit risks than they seem. (Sure this startup isn't profitable, but if it can raise $100 million of venture capital it will probably be able to pay back a loan, etc.) So, fine, yes, good job, you have understood a fact about the world that old-school banks did not understand, and you have used it to profit. But then I read that Brex "is unprofitable," and that it has "stockpiled money" from venture capitalists. And this: Since most start-ups fail, hundreds of Brex's customers have gone out of business. Brex tries to be understanding when that happens, Mr. Franceschi said. Unlike credit card providers that tell customers, "You're running out of business, you didn't pay us, I'm going to cut you off now," he said, Brex sees failed entrepreneurs as future customers who may try again with a new idea. Okay! So … it's a … credit card company that … intentionally lends money to customers who can't pay it back … because … startups are cool? Money-losing entrepreneurs are a rare and valuable breed, and you can't stop lending them money just because they stop paying it back. They might come back with a new money-losing idea and borrow some more money! And not pay it back! No, I kid, I kid; I'm sure Brex tries not to lend money that can't be paid back. ("To mitigate risk, the company constantly monitors customers' bank accounts and adjusts credit limits.") Also Brex works with a bank that issues the cards. Still. We have talked a few times about what is sometimes called "the MoviePass economy," the idea that in the modern economy there are lots of money-losing startups that provide products to consumers at below their cost, subsidized by limitless venture-capital funding. This looks a little like that, only the product is money. Venture capitalists give business to a money-losing startup whose business is giving money to money-losing startups. It just feels like a particularly pure approach. Startup economics (2) Elsewhere in "lending to money-losing startups is no problem as long as you know they can raise limitless equity": WeWork Cos. is setting up $6 billion in financing to pursue its global ambitions, but there's an unusual catch: It must first succeed in its initial public offering next month. The company has been meeting with analysts this week, outlining its business and plans for expansion as it prepares for a stock-market debut. Behind the scenes, the firm is seeking to borrow in two ways: a $2 billion letter-of-credit facility and a $4 billion delayed-draw term loan, people with knowledge of the matter said, asking not to be named because terms are private. But in a twist, banks will have to make good on their commitments only if at least $3 billion is raised in the offering, upping the stakes for the IPO. Yeah look it is not arithmetically true that a company that raises $3 billion of equity can definitely pay back $6 billion of debt, but it's a good sign. We have talked a couple of times about my theory that WeWork is essentially a financial-structure arbitrage, raising money from equity investors by looking like a tech startup, and raising money from real-estate investors by looking like a real-estate company. But really it is more complicated and interwoven than that, and in fact there is recent precedent for investors in the debt of technology companies taking comfort in the "equity cushion" provided by the tech-boom enthusiasm of equity investors. (I have sometimes called this "Netflix Theory.") If equity investors like it, then, sure, it's a good credit risk. And if you can make the extension of credit conditional on equity investors liking it, then that's a good trade. Also of course if you're a big lender ("JPMorgan Chase & Co.'s representatives have told rivals it's poised to commit as much as $800 million to the two facilities") to the right sort of tech unicorn, you can also get some IPO fees: WeWork Cos. is close to naming JPMorgan Chase & Co. and Goldman Sachs Group Inc. to lead its initial public offering next month, while sweetening the fees it pays banks, according to people with knowledge of the talks. The office-sharing venture is expected to award JPMorgan the coveted first -- or lead left -- position in its syndicate of banks handling the deal, according to the people, who asked not to be identified because the negotiations are private. … The fee pool for WeWork's IPO -- which at a target of roughly $3.5 billion would be the year's second-largest offering -- has inched higher in recent days as the company sets up a $6 billion debt-financing package that would fall into place only if the listing is a success. That unusual pairing of transactions is designed to diversify the funding sources of WeWork's global expansion. Earlier this week, WeWork was poised to carve out 2.5% to 3% of the total money raised via the IPO to pay underwriter fees. That portion under discussion has since climbed to 3.5%, according to the people -- though that, too, is in flux. Some crypto One convenient way to think about cryptocurrency news is that it usually involves cryptocurrency enthusiasts rediscovering and recapitulating the history of finance. So here's a story about crypto discovering the efficient market hypothesis: What was supposed to be a sure-fire way to drive up the cryptocurrency Litecoin's price is at risk of quickly turning into a liability. Hype around Litecoin's so-called halving, which has been trumpeted as a catalyst for reducing future supply, helped more than quadruple its price this year. But as the event itself has neared, investors have turned sour on the fourth-largest digital token, pushing it down 18% last month. … Whereas miners now receive 25 new Litecoins per block, they will get 12.5 following the halving. Another halving will happen in four years. And the coin's previous cut, about four years ago, coincided with a huge run-up in its price, pushing many crypto evangelist to believe the party can continue. "In the bear market, a lot of traders saw the Litecoin halving as a good fundamental trade and it became pretty crowded," said Eric Turner, director of research at Messari. "Now that the halving is here, some investors are starting to exit the trade. Halvings tend to be priced in, so the event itself isn't the positive catalyst that many expect." The basic rule, out here in normal finance, is that if a future event (1) will predictably happen and (2) will predictably increase the price of an asset, then the price of the asset should have already increased, so that when the event actually happens the effect on the price will be unpredictable. Now I guess that's the rule in crypto too. Elsewhere: After being touted with much fanfare Wednesday on crypto news sites, LedgerX, a U.S.-regulated Bitcoin derivatives exchange and clearinghouse, said Thursday that it was a bit premature in announcing the availability of the futures to retail investors. Events soon took a turn. Paul Chou, the chief executive of LedgerX, took to Twitter to blast the U.S. Commodity Futures Trading Commission for "breaking the law" in several expletives-filled tweets. He later pulled some of the remarks, saying the agency asked him to censor his comments, while defending his right to free speech. LedgerX's public relations representative tweeted that he was no longer working with the company. I guess in the 1920s corporate promoters didn't go around swearing at regulators on Twitter, but still this does feel like a bit of financial-regulatory history that needs to be rediscovered. Rivalry A while back I decided, as a sort of comedic conceit, that I should develop a television show loosely based on the life of hedge fund manager Steven A. Cohen. The elevator pitch was that the Cohen character, let's call him Sam Caplan, is "barred from the hedge fund industry after an unfortunate misunderstanding involving insider trading," so he "moves his family office to a charming small town and gets into a series of misadventures with his quirky neighbors that ultimately cause him to learn a lot about himself and embrace his softer side." In Season 3 he regains the ability to manage outside money, reopens his hedge fund, and has to prove himself to the outside world all over again, but his time away has changed him, and there is a continuing tension between the hard-charging hedge fund manager he was and the small-town coffeeshop regular and community-theater director he's become, etc. etc. etc., it really writes itself. Sadly this joke has ruined me for all actual Steve Cohen news, which I can now interpret only as potential plots for my sitcom. For instance Cohen's firm, Point72 Asset Management LP, has a fierce and long-running rivalry with Ken Griffin's Citadel LLC, which seems to be heating up these days: In 2008, Mr. Griffin's Citadel LLC nearly collapsed, losing $8 billion. Sensing an opportunity, Mr. Cohen traveled to Chicago, Mr. Griffin's home base, to interview Citadel employees for a new office he was planning. This irked Mr. Griffin, who caught wind of Mr. Cohen's plans and called him, people familiar say. Citadel has since surged. It now manages about $32 billion, more than double Point72's size of $14 billion. In recent months, Citadel poached some of Mr. Cohen's longest-tenured money managers, upsetting Mr. Cohen. And: "After one portfolio manager announced earlier this year he was taking a job at Citadel, Mr. Cohen refused to shake his hand." This all just works great for the show, no? I would move it back in time a bit, though, to like Season 2, before he gets his hedge fund back. Like there Sam Caplan is, stranded in a small town, slowly opening up emotionally, mounting his production of "Pirates of Penzance" in the gazebo in the park, and suddenly his old rival Dan Griffith shows up, "accidentally" runs into Caplan at the local diner, undermines his contentment with a series of cutting remarks, and then hires away his Frederic—the handsome and volatile town auto mechanic—to be a convertible-arbitrage trader in Chicago. Things happen HSBC to Cut Thousands of Jobs to Control Costs After Flint's Exit. Abrupt Ousters, Public Missteps Sink Morale Inside New York Fed. Banks Confront Fed on Faster Financial Payments. Renminbi falls past Rmb7 per dollar for first time in 11 years. Putin's Pledge to Ditch the Dollar Is Slowly Becoming a Reality. Barclays reins in bonuses in push to hit profit target. Data Boom Fuels London Stock Exchange's Deal With Refinitiv. Piles of Dirty Money Have Europe's Banks Racing to Keep Up. The Algorithm Will Hire Your Patent Lawyer Now. Bill Murray and Warren Buffett spotted at Ted and Wally's in downtown Omaha. Giant tortoise in 'world's slowest police chase.' If you'd like to get Money Stuff in handy email form, right in your inbox, please subscribe at this link. Or you can subscribe to Money Stuff and other great Bloomberg newsletters here. Thanks! | 
↠〖*HDvideo~〗 2020 Skyggen i mit øje PelÃcula Completa En LÃnea released 2020. story: Skyggen i mit øje PelÃcula Completa En LÃnea. ↞◬∺Skyg...
Post a Comment