Designer Genes?

By |2013-06-14T10:38:20-04:00June 14th, 2013|Global Market Update|

Can we patent life? Yesterday the Supreme Court handed down a big, bold ruling that companies can patent synthetic DNA but not DNA that occurs in nature. So your own genes are yours, but “synthetic” genes—sets of base-pairs assembled in a lab—are patentable. The ruling was unanimous, so it’s unlikely to be overturned. It draws on the principle that nature can’t be patented, irrespective of how much work may have been done. Normally, economists discuss trade-offs: weaker intellectual property rights could impede innovation. But [...]

Foreign Manipulation

By |2017-07-17T12:34:39-04:00June 13th, 2013|Global Market Update|

FX traders are gaming the system. Who knew? A Bloomberg story reports that traders in the $4.7 trillion-a-day foreign-exchange market are manipulating their transactions in order to maximize their personal profits. Sometimes they’re front-running client orders; sometimes they’re breaking trades up in order to alter the daily “closing” price. In many cases they’re chatting online with their buddies at other banks so they can all profit. This latest episode of market manipulation comes on the heels of the LIBOR scandal. Ironically, it’s unclear if [...]

Data Feudalism

By |2013-06-12T10:06:14-04:00June 12th, 2013|Global Market Update|

Are we technological serfs? In the Middle Ages, the nobility had a lot of privileges but very few responsibilities, especially towards their serfs. If they wanted to change crops, the serfs had to plant them. If they wanted to go to war, the serfs had to take shelter—they couldn’t just leave. The serfs weren’t slaves, but they were tied to the land. In exchange, the serfs got security, so raiders wouldn’t make off with all the food just after the harvest. In the tech [...]

Live Long and Prosper?

By |2013-06-11T11:18:07-04:00June 11th, 2013|Global Market Update|

Can we ever retire? It used to be that a million dollars was a lot of money. Save a million before you retire, use the interest to supplement Social Security, and you were set. But that was before ultra-low interest rates, extended lifespans, and aggressive healthcare inflation. Now a 65-year old couple with a million dollar nest egg that spends 4% per year has a three-quarter chance of outliving their funds. But that’s not the real problem. The real problem is that most people [...]

Big Data, Big Government, Big Brother

By |2017-07-17T12:34:39-04:00June 10th, 2013|Global Market Update|

What is the Federal Government trying to do? On its face, the same thing it has always done: law enforcement and foreign intelligence. But now it has a lot more tools. Gathering reams and reams of “meta-data” about phone calls, emails, social-media postings, credit-card purchases, and other digital activity sounds pretty creepy. We know that companies want to predict and manage what we do—it’s called marketing. But when the government does it, what do we call it? It’s not like this is something new. [...]

Recovery Programs

By |2013-06-07T09:03:02-04:00June 7th, 2013|Global Market Update|

Does austerity work? On its face, it should. When you overspend your household budget, you need to cut back for a while to get out from under your bills. That’s what the IMF thought would work with Greece, when they first proposed a package of spending cuts and tax increases—after a short time, things would get better. Only they didn’t. Greece went into an economic tailspin that hasn’t ended. The IMF has admitted it erred. Unemployment has grown from 9% to 27%. Industrial production [...]

Searching for Safety (Part 4)

By |2013-06-06T10:04:20-04:00June 6th, 2013|Global Market Update|

So is anything safe? It’s not an easy question. Most people look at financial safety as security of principal—of being certain that the main body of your investment won’t go down. Bank deposits are safe; stock prices are not. With inflation running at 2% and short rates at zero, though, the real value of investors’ principal is being worn away, little by little. What used to be safe isn’t so any more. Safety isn’t an on/off switch--it’s a continuum. By keeping rates so low [...]

Searching for Safety (Part 3)

By |2013-06-05T09:44:46-04:00June 5th, 2013|Global Market Update|

How can investors figure out what’s safe and what’s not? The process of investing in safe assets, seeing them appreciate, and moving out of these (formerly safe) assets can seem like a kind of dance—a two-step—where investors pile into a safe asset, watch it appreciate and start to come down, then pile into the next new thing, only to see the process continue: lather, rinse, repeat. It started with the internet boom. Investors had no illusions that these were safe stocks, but when the [...]

Searching for Safety (Part 2)

By |2013-06-04T09:38:06-04:00June 4th, 2013|Global Market Update|

Where can investors find safety? Traditionally, safety was found in the bond market. Treasury Notes and Bills offered the highest possible credit protection, and their short maturities protected against inflation. The more conservative investors wanted to be, the shorter the maturity they would choose. But short doesn’t equal safe anymore. Inflation is running between one and two percent, based on what measure you use. And the Fed has kept short-term rates at zero for four-and-a-half years now. Through the magic of financial repression, the [...]

Searching for Safety (Part 1)

By |2017-07-17T12:34:39-04:00June 3rd, 2013|Global Market Update|

“I just want my money to be safe.” That’s what countless investors have said. But with the Fed buying half of all new Treasury and Mortgage issues, corporate and personal deleveraging, and excess savings coming from the developing world, there seems to be a safety shortage. Indeed, one market analyst has estimated that the global economy is facing a shortage of $1.5 trillion in safe assets, and that this shortage is likely to grow in years ahead. Increasingly, investors have turned to annuity-like cashflows [...]