The Road Ahead

By | 2014-09-09T17:27:21+00:00 December 30th, 2011|Global Market Update|

So what’s the outlook for 2012? For the record, we believe that next year will bring a continuation of the modest growth we’ve seen since the recession. The economy will grow around 2 ½ percent, as we work off the excess housing stock brought about by the boom and bust. Interest rates will be largely unchanged, and the stock market will reflect the economy’s modest recovery. There are risk’s to this scenario, particularly from Europe, which appears to be in a mild recession right [...]

Hypothetically Speaking

By | 2017-07-17T12:34:58+00:00 December 29th, 2011|Global Market Update|

The game is rigged. That’s one lesson from MF Global. Because brokerage accounts are designed by and for the broker, customers agree to all kinds of things without knowing what they’re signing up for. One of these is margin—by borrowing against your securities, you give the broker the right to use your securities for other purposes. Another is securities-lending, where the brokerage can lend out the customer’s stocks or bonds to a short-seller, in exchange for cash which can earn a small spread. The [...]

Trusting the Experts?

By | 2014-09-09T17:25:58+00:00 December 29th, 2011|Global Market Update|

Expert knowledge is at a premium. In colleges, there’s the US News rankings. In investments there’s the credit rating agencies. And in football there’s the USA Today Coaches Poll. During the regular season USA Today polls about 60 coaches each week to determine the ranking of the top 25 college football teams. The polls are closely watched by millions of fans, and the final poll is especially important because it is used to determine the eligibility of teams for the Bowl Championship Series. Because [...]

The 5% Solution?

By | 2014-09-09T17:23:51+00:00 December 27th, 2011|Global Market Update|

Have you seen a good movie lately? According to the latest data, fewer of us have. Ticket sales are down 5% year-over-year between 2011 and 2010. This is in spite of a glut of 3D movies, kicked off by the hit Avatar. 3D movies can cost 20% to 40% more to go see. Clearly, attendance has fallen. Is this an early-warning sign of an economic downturn? Certainly movie-going is a discretionary purchase. When consumers cut back, entertainment is typically one of the first things [...]

Slick Politics

By | 2014-09-09T17:22:55+00:00 December 23rd, 2011|Global Market Update|

Is oil bad for democracy? Looking at the circumstances, you’d be tempted to think so. From Saudi Arabia to Nigeria to Venezuela, the leaders of countries that have great oil wealth seem to be political strongmen with significant state power. It’s known as the resource curse: the tendency of resource-rich countries to have poor economies. They’re tied to a single, volatile commodity and the money from the dominant resource tends to corrupt the political system and distorts the economy. But the counterfactual is Norway: [...]

A Hopeful Story

By | 2014-09-12T10:34:18+00:00 December 17th, 2011|Classical Investing, Global Market Update|

The lights dim, the audience quiets. The notes of the overture begin. As the symphonic introduction winds down, anticipation builds. Soon the words to the first recitation are sung: “Comfort ye, comfort ye my people.  Speak kindly and cry out that her warfare is ended, that her sin is pardoned.” […]

Housing Futures

By | 2014-09-12T10:34:25+00:00 December 16th, 2011|Global Market Update|

When will the economy get back to full employment? During the downturn companies shed some 8.8 million jobs from February 2008 to January 2010. The economy has since created about 3 million. By contrast, state and local government employment peaked in September of 2008 and is still falling. It’s lost some 600 thousand jobs. This makes sense: government employment lags behind private employment. So where have those jobs gone? Why is this recovery so anemic? Usually, by this time, the economy is accelerating and [...]

Global Opportunity

By | 2014-09-12T10:34:33+00:00 December 15th, 2011|Global Market Update|

It’s not just in America. Around the world, business scandals seem to be everywhere. Whether it’s Olympus Corp using overpriced acquisitions to conceal trading losses from the ‘90s; or German financial companies paying high-performing sales staff to visit orgies and brothels in Budapest and Rio; or Siemens executives paying hundreds of millions in bribes to Argentine officials to secure a lucrative business deal—the level of deception and corruption are astounding. In the US we’re livid, and rightly so, when the officials at MF Global [...]

Housing Futures

By | 2011-12-14T00:00:34+00:00 December 14th, 2011|Global Market Update, Recession|

When will the economy get back to full employment? During the downturn companies shed some 8.8 million jobs from February 2008 to January 2010. The economy has since created about 3 million. By contrast, state and local government employment peaked in September of 2008 and is still falling. It’s lost some 600 thousand jobs. This makes […]

Age Appropriate

By | 2017-07-17T12:34:58+00:00 December 13th, 2011|Economics, Global Market Update|

Act your age! With MF Global we had a CEO that needed to be encouraged to act—not his age—but his position. Jon Corzine—former Goldman CEO, former US Senator, former New Jersey Governor—was enamored of trading. He loved the feel of it, the flashing […]