A roundup of what The Globe and Mail's market strategist Scott Barlow is reading this morning on the World Wide Web.
Secret tapes, Michael Lewis, hyperbole and Goldman Sachs on its heels – this story has everything. In a Bloomberg column released Friday, Michael Lewis describes the secret taping by a Federal Reserve employee during the central banks' regulatory negotiations with Goldman Sachs.
Mr. Lewis describes the story as the finance industry's "Ray Rice moment," equating dull discussions with the domestic violence case that rocked the NFL. This has successfully annoyed most of the professional manages and traders on Twitter as a huge exaggeration.
There could be some fascinating details on the tapes, but the parts Mr. Lewis recounts don't sound very earth shattering:
"The report quotes Fed employees saying things like, 'until I know what my boss thinks I don't want to tell you,' and 'no one feels individually accountable for financial crisis mistakes because management is through consensus.' Beim was himself surprised that what he thought was going to be an investigation of financial failure was actually a story of cultural failure. "
"The secret Goldman Sachs tapes" – Lewis, Bloomberg View
I'm not sure if I've stated this so bluntly before, but I'm convinced that managing emotions and psychological tendencies is far more important for investors than specific investing techniques. Investors still ignore this despite Daniel Kahneman's Nobel Prize-winning work on behavioural psychology and the admirable collection of research on Psy-Fi's blog.
The Atlantic's online business magazine Quartz contributed to the discussion this morning by detailing another mental tendency that can hurt investment returns – a concept called value atrophy.
"Why you're terrible at calculating risk" – Quartz
Not content with brighter economic futures, it seems wealthier U.S. high schools are also beating their poorer opponents on the football field. "Won-loss records for all the high schools in Eastern Massachusetts with the median incomes of the communities the high schools serve. His number crunching has uncovered a clear pattern. Teams from richer towns regularly win."
"America's distinctly unequal playing fields" – Inequality.org
Reuters reports that China's steel consumption declined for the first time in 14 years in August as construction activity stalled. Canadian investors in all resource sectors can hope this is a temporary slowdown. But the existence of millions of empty apartment units and the government's express desire to transition the economy away from infrastructure-related investment and towards household consumption aare strong hints that peak commodity demand may be behind us.
"China steel demand shrinks for first time in 14 years as slowdown stings" – Reuters
Tweet of the day "@ivanthek Amazon hardware is not exactly flying off the shelves lately. pic.twitter.com/R4xmbKGkl3 "
Diversion: This story is bizarre. Apparently there's a private armed mercenary force in California dropping into marijuana fields by helicopter and cutting them down.
"The new Pinkertons: Private security outfit raids pot farms in California" – Talking Points Memo
Follow Scott Barlow on Twitter @SBarlow_ROB