Tuesday Night Links

• You see way more stocks that are dramatically overvalued in your career than you will see stocks that are dramatically undervalued. I mean there — it’s the nature of securities markets to occasionally promote various things to the sky, so that securities will frequently sell for 5 or 10 times what they’re worth, and they will very, very seldom sell for 20 percent or 10 percent of what they’re worth. So, therefore, you see these much greater discrepancies between price and value on the overvaluation side. So you might think it’s easier to make money on short selling. And all I can say is, it hasn’t been for me. I don’t think it’s been for Charlie. It is a very, very tough business because of the fact that you face unlimited losses, and because of the fact that people that have overvalued stocks — very overvalued stocks — are frequently on some scale between promoter and crook. And that’s why they get there. And once there — And they also know how to use that very valuation to bootstrap value into the business, because if you have a stock that’s selling at 100 that’s worth 10, obviously it’s to your interest to go out and issue a whole lot of shares. And if you do that, when you get all through, the value can be 50. In fact, there’s a lot of chain letter-type stock promotions that are sort of based on the implicit assumption that the management will keep doing that. And if they do it once and build it to 50 by issuing a lot of shares at 100 when it’s worth 10, now the value is 50 and people say, “Well, these guys are so good at that. Let’s pay 200 for it or 300,” and then they could do it again and so on. [Warren Buffett]
• “One side or the other is going to win,” Justice Alito told the woman, Lauren Windsor, at an exclusive gala at the Supreme Court. “There can be a way of working, a way of living together peacefully, but it’s difficult, you know, because there are differences on fundamental things that really can’t be compromised.” [NY Times]
• Today, the FDA rescinded the MDOs issued in June 2022 to JUUL Labs, Inc. This action is being taken, in part, as a result of the new case law, as well as the FDA’s review of information provided by the applicant. Rescission of the MDOs is not an authorization or a denial and does not indicate whether the applications are likely to be authorized or denied. Rescission of the MDOs returns the applications to pending status, under substantive review by the FDA. The FDA's regulations significantly limit what the agency can disclose regarding the content of pending applications. [FDA]
• They then review the geophysical and geochemical processes that take place in the mantle, the crust and the atmosphere and describe the redox states of minerals in the mantle and how the atmosphere on the surface is held at a more oxidized state by hydrogen escape. (This chapter is the most in-depth and best introduction to the field of geochemistry that I’ve ever read.) The reduced state of the mantle and the oxidized state of the atmosphere turns the Earth into a giant redox battery (which has precisely the right energy difference to run the organic reactions of life) with the barrier being the crust itself and hydrothermal vents acting to concentrate this diffuse redox energy to specific points on Earth. [Fermi's Envelope]
• The software’s design and growing reach have raised questions among real estate and legal experts about whether RealPage has birthed a new kind of cartel that allows the nation’s largest landlords to indirectly coordinate pricing, potentially in violation of federal law. Experts say RealPage and its clients invite scrutiny from antitrust enforcers for several reasons, including their use of private data on what competitors charge in rent. [Pro Publica]
• Jacobson held that mandatory vaccinations were rationally related to “preventing the spread” of smallpox. Jacobson, however, did not involve a claim in which the compelled vaccine was “designed to reduce symptoms in the infected vaccine recipient rather than to prevent transmission and infection.” The district court thus erred in holding that Jacobson extends beyond its public health rationale—government’s power to mandate prophylactic measures aimed at preventing the recipient from spreading disease to others—to also govern “forced medical treatment” for the recipient’s benefit. [United States Court of Appeals for the Ninth Circuit]
• Nowadays, in rereading a Bond novel or one of Fleming’s brilliant short stories, I find the experience is more wistful—it is like taking a holiday to a far-off time where men were still men, women still women, and little green men from Mars still little green men from Mars; where the exhausts of the luxurious airplanes smelled strongly, one cigarette followed another, and every trip was an exotic adventure. Our cauterized and neutered era seems bland and gray in comparison. It really pays off, by the way, to read the books and stories if you haven’t. They are similar, but never the same as the movies based upon them. You will recognize the dashing Bond you already know, but will spend more time with him driving through England thinking more conservative thoughts than you would expect and fussing around in a prissy way about how his eggs are prepared. In the books you will be amused to learn that Bond harbors a particularly strong dislike for tea. [Eduard Habsburg-Lothringen]
• There are three main techniques for making green steel. One of the most promising but early-stage from Electra and others uses electricity and chemistry during production. The other two substitute hydrogen for fossil fuels and trap emissions with carbon capture. These two methods have shown promise but still face significant cost and logistical challenges despite government subsidies.
  Electra’s technique for making clean iron begins by dissolving iron ore in an acid-based solution, a step that is similar to putting salt in water. The company runs electricity through the system to separate pure iron from impurities. Another electric current is then used to turn the iron into plates roughly the size of door frames. [WSJ]
• The market tries, but just can't shake its Phillips Curve instincts, which is why any news that is considered to increase the likelihood of interest rates being "higher for longer" is deemed bad for the economy and bad for stocks, and vice versa. It's not surprising that this is so, since decades of experience have taught the market that recessions reliably follow periods of tight monetary policy. ("Tight" being defined, traditionally, as high and rising real interest rates, and a flat to inverted yield curve, and a strong currency. I've maintained for many years, however, that a better definition of tight money would include high and rising credit spreads.) What the market is missing is that the Fed in 2009 adopted an abundant reserve regime that changed everything. Higher interest rates since then have not equated to bad news for the economy because abundant reserves mean abundant liquidity, and that in turn is what keeps the economy on an even keel and credit spreads low. [Scott Grannis]
• Last week, I had a drink with a Catholic priest friend who works with young people in custody. Inevitably, our talk turned to how radically unchurched they are – not badly disposed to Christianity, just unfamiliar with much of the doctrine and almost all the forms of worship, even though many had a Catholic granny or a non-practising parent. He mused over the startling speed of the secularisation of society. ‘Protestantism has collapsed,’ he said, and not in any triumphalist spirit. [The Spectator]
• “Enforcement against illegal e-cigarettes is a multi-pronged issue that necessitates a multi-pronged response,” said Brian King, director of the FDA’s Center for Tobacco Products. “This ‘All Government’ approach – including the creation of this new Task Force – will bring the collective resources and experience of the federal government to bear on this pressing public health issue.” [Tobacco Reporter]