Economist: “A growing body of work suggests that corporations, far from being passive observers, are some of the market’s most effective arbitrageurs. In 2000 Malcolm Baker of Harvard University and Jeffrey Wurgler, then of Yale University, found a tight connection between firms’ net equity issuance and subsequent stockmarket returns. Years in which companies issued relatively more stock were typically followed by weaker market performance. More tellingly, companies seemed to issue precisely when valuations were rich, and especially when other frothy signals, such as buoyant consumer sentiment, were drawing attention. Timing the market is impressive; out-trading the professionals is even more so. Yet firms that issue or retire their own shares routinely do exactly that. In 2022 David McLean of Georgetown University and co-authors showed that corporate-share sales and buy-backs forecast future returns more accurately than the trades of banks, hedge funds, mutual funds and wealth managers. What explains this prowess? Part of the answer lies in firms’ access to private information. Few are better placed to forecast a company’s future cashflows than insiders. When a company begins buying back its own shares—or employees convert their options into stockholdings—investors should pay attention.”
FT: “According to LinkedIn’s chief product officer Tomer Cohen, “business cards lost their relevance a long time ago”. Of course, LinkedIn has a stake in their demise. The Microsoft-owned corporate social network has made it easier to connect online, avoiding some of the awkwardness that comes with asking someone to give you their contact details when face to face. In the future, Cohen claims, LinkedIn will make remote contact building even easier by using AI to look for profiles when users can only half-remember someone’s name or company.”
McKinsey: “When everyone is responsible for acquiring customers and driving growth, no one is. It’s a common issue. Using publicly available information, we analyzed the executive suites of Fortune 500 companies and found that companies with a single customer- or growth-oriented role in an executive committee (such as a CMO, chief commercial officer, chief revenue officer, or chief growth officer) see up to 2.3 times more growth than those with multiple roles. And even if the CEO has installed someone with that single role, that doesn’t necessarily mean they have also given that person full ownership and responsibility for the customer. The solution to this fragmentation is right under the CEO’s nose: Pull the CMO back to the center, have them align with the CFO, and get everyone moving in the same direction.”
WSJ: “Take a spin in the time machine, back to an era when the [US] federal budget deficit didn’t look like a problem at all. In 2000, the federal government actually ran a surplus and the Congressional Budget Office, Capitol Hill’s nonpartisan scorekeeper, projected the Treasury would keep collecting enough revenue to pay for all government programs and generate continuing surpluses. Fast-forward to 2025, and the U.S. is running record deficits outside of wars, recessions or crises. The nation’s publicly held debt is nearing 100% of gross domestic product and is projected to surpass the post World War II record of 106% in a few years.”
