Sowing and Reaping

By | 2014-09-05T20:15:24+00:00 August 31st, 2010|Global Market Update|

Many wonder what will get the US economy moving again. For them I have one word: Wheat. Our farms are about to experience perhaps their best harvest ever. A combination of ideal weather at home, crop failures abroad, and increasing global demand for cereal grains have created a perfect anti-storm, in which high prices and record yields combine in a cash-flow bonanza for the American farmer. Some of the beneficiaries of this prosperity will be the usual suspects: states like North Dakota and Nebraska, [...]

Low Hanging Fruit

By | 2014-09-05T20:14:43+00:00 August 30th, 2010|Global Market Update|

If we told our leaders that there was a magical way to stimulate the economy, generate new tax revenues, increase demand for housing, and boost wages for American workers, would they go for it? Not a chance. The magic is through immigration. The San Francisco Fed recently published a study which showed increased immigration leads to higher wages for everyone. Over the long run a net inflow of immingrants equal to 1% of employment increases income per worker by around .7%. Nobel laureate Gary [...]

Good News?

By | 2014-09-05T20:14:13+00:00 August 29th, 2010|Global Market Update|

The economy turned out to be weaker than expected. Why is this good news? On Friday the Commerce department reported that the economy grew at a rate of 1.6% during the second quarter rather than 2.4% as originally reported. That’s down significantly from the growth rate of the first quarter, which was almost 4%. So if the economy is slowing, why did interest rates rise, stock prices rally, and oil prices go up? Isn’t slower growth bad news? It is if you’re a doom-and-gloom [...]

Charging Around

By | 2014-09-05T20:13:27+00:00 August 27th, 2010|Global Market Update|

Have we become a plugged-in nation? In the US there are now over 285 million active wireless devices, and that number could double in 7 years or less. All those devices are taxing our outlets and taxing our minds. A couple of recent studies show that all our time on-line may be affecting our brains. The constant stimulation of Facebook, Twitter, and texting can alter our brain’s neuro-pathways and make it difficult to think deeply and creatively. But it’s also affecting our power grid. [...]

Counting Change

By | 2014-09-05T20:12:58+00:00 August 26th, 2010|Global Market Update|

The nation’s chief accountant is stepping down. What does it mean for investors? Robert Hetz, the Chairman of the Financial Accounting Standards Board, is stepping down as its chief two years ahead of schedule. This comes at a time of tremendous financial uncertainty and as the body is enmeshed in a battle over expanding the use of mark-to-market accounting, which requires companies to use market prices rather than management estimates to value financial holdings. The fight over mark-to-market has been every bit as contentious [...]

Retirement Benefit?

By | 2014-09-05T20:12:19+00:00 August 25th, 2010|Global Market Update|

Is the 401(k) good for what ails us? Recent discussion of municipal finance has focused on pensions. It seems that the State of New Jersey lied to investors when it masked the massive underfunding of its two biggest pension plans. Because of Article X of the U.S. Constitution, the Federal Government cannot sue a state. But that doesn’t mean that they can’t investigate fraud! But New Jersey’s fraud is one thing. Underfunded pensions are another. Around the country, state pensions are underfunded by some [...]

The Kindness of Strangers

By | 2014-09-05T20:11:14+00:00 August 23rd, 2010|Global Market Update|

The Big Agency Discussion (BAD) is in the bag. What did we learn? The consensus is that the Government’s guarantee of Fannie Mae and Freddie Mac will be part of the picture for a long, long time. Bill Gross, the proverbial fox guarding the chicken coop, chaired a Treasury-sponsored conference on the housing market. At that conference he noted that without Fan and Fred, mortgage rates would be 1 or 2 percent higher, curbing demand and putting downward pressure on the housing market. Gross, [...]

Car Talk

By | 2014-09-05T20:10:29+00:00 August 20th, 2010|Global Market Update|

Is the GM stock sale anything new? It sure seems like it. By selling stock to the public the automaker may be able to reduce the Government’s 61% stake. Many are impressed by GM’s sales in China and Brazil, where the company plans to launch nearly 20 new models over the next several years. But there’s a problem in the auto market. It’s called overcapacity. Every country under the sun seemingly has a car company or two. France has Renault and Peugeot. Italy has [...]

(Un)usual Uncertainty

By | 2014-09-05T20:09:52+00:00 August 19th, 2010|Global Market Update|

Is the Fed on hold for the next two years? A lot of folks think so. Bill Gross of PIMCO noted that the two-year Treasury Note is essentially predicting that Fed policy will be unchanged until mid-2012. Jim O’Neill of Goldman Sachs thinks the Fed won’t raise short rates until almost 2013, a year and a half away We know market economists are paid to make predictions, and that the structure of the Treasury market implies a rate forecast, but this is nuts! No [...]

Blowing Bubbles?

By | 2017-07-17T12:35:18+00:00 August 18th, 2010|Global Market Update|

Is Hong Kong real estate in a bubble? It’s easy to think so. After all, prices have surpassed their previous highs, and speculation is rampant. A wave of buying from the mainland has pushed housing prices up over 30% in the past year, on top of a 45% jump last year. If the past is prologue, a contraction in real estate will wipe out property owners equity and saddle Hong Kong banks with massive real estate holdings at a loss. But the Hong Kong [...]