Inflating the Future?

Is deflation over?


Around the world markets have been worried about deflation. And the latest CPI release seems to validate these worries. Year-over-year, inflation is flat. And it was flat last month as well. Are we about to turn Japanese, struggling with deflation, where folks stop buying because things just get cheaper every month?

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The Passing of a Giant

Lee Kuan Yew died yesterday. What is his legacy?


Lee Kuan Yew was Singapore’s leader, then senior advisor, for five decades. He’s called Singapore’s founding father. For many, modern Singapore and Lee are synonymous. He oversaw the city-state’s transformation from an underdeveloped British backwater with almost no natural resources to a modern Asian Tiger.

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Scoring Credit Scores

What’s a FICO score?

Source: St. Louis Fed

A FICO score is a way for lenders to find out how creditworthy someone is. It was designed by a couple of engineers to measure a consumer’s risk of default. It weighs your payment history, credit capacity, the length of your credit history, and a couple other factors to come up with a score between 350 and 850.

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The Emotional Investor (Part 4)

Do you have to be brain-damaged to win at investing?

Source: FXCM

Sometimes it seems that way. A researcher wanted to study the effect emotions on investors. So he gave a group of normal and brain-damaged participants each $20 and asked them to choose whether or not to bet on a coin toss 20 successive times. If they lost, they lost a dollar; if they won, they won $2.50.

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Patiently Impatient

Why does the Fed talk so much?

Source: Wordsmithing Ink

Today the Fed statement will tell us that they don’t need to be patient anymore. Then Janet Yellen will give us a press conference where she’ll tell us she can be patient. We’ve gotten to the point where Fed members are telegraphing the deletion of a two-syllable adjective in their 529-word statement. What’s next: literary analysis and source-criticism? I can see it now: “Governor Brainard assented to the policy—her experience of economic stagnation in communist Poland as a young child makes her skeptical of central planning. President Evans agreed as well ….”

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Rising Dollar, Rising Markets?

What does a strong dollar mean for the rest of the world?

Source: Digital Juice

Over the past six months the trade-weighted dollar has risen 25%. A strengthening labor market here, monetary stimulus by the Bank of Japan, Q€ in Europe, falling oil prices in Canada, and a slowdown in China have depressed those currencies relative to ours.

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Chinese Fortunes

Where is China headed?

Global Market Update - People's_Republic_of_China_(orthographic_projection).svg
Source: Wikipedia

The Chinese economy is the second largest in the world, about half that of the US. It is the world’s largest importer and exporter of goods and services. Indeed, exports constitute over a quarter of their economy. By contrast, exports are only an eighth of ours. Clearly, China is a major factor in the global economic picture.

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Douglas Tengdin's Global Market Update