Slacker Market

By |2017-07-17T12:23:16+00:00October 17th, 2014|Global Market Update|

How much slack is there in the labor market? Source: Wikipedia It depends what you mean by slack. Most people think the unemployment rate is a good measure of slack, and it’s intuitively appealing: divide the number of job-seekers by the number of people in the workforce, and that tells you what percent of people want to work, but can’t find a job. After falling for the last five years, the unemployment rate—currently 5.9%–is almost back to its post-World War II average of 5.8%. [...]

Stormy Weather Ahead?

By |2017-07-17T12:23:16+00:00October 16th, 2014|Global Market Update|

Is a market storm brewing? Source: Wikimedia Commons; Photo credit: Fir0002/Flagstaffotos Instability is increasing. 100 to 300 point swings in the Dow are common. Commentators cite Ebola fears, the end of the Fed’s balance sheet expansion, an economic slowdown in China, a possible recession in Europe—there’s a lot to be worried about. […]

The Last Laugh?

By |2017-07-17T12:23:16+00:00October 15th, 2014|Global Market Update|

“I am a man of the desert; nobody is going to laugh at my beard!” Source: Wikipedia That’s what the Saudi oil minister exclaimed as he stormed out of an OPEC meeting some 30 years ago. The $34 oil price—equal to $100 today—had been supported by massive cuts in Saudi production. They were the “swing producer” that allowed the cartel to maintain its higher price. But OPEC was being torn apart by over-pumping, price discounting, and increased non-OPEC production. So the Saudis decided to [...]

Russian Bear Market?

By |2017-07-17T12:23:17+00:00October 14th, 2014|Global Market Update|

What’s happening with Russia? Source: Wikimedia Commons At the beginning of the year Vladimir Putin had everyone jumpy. His aggressive actions in Crimea and Ukraine had set the world’s teeth on edge. Russian MIGs were testing Finnish and Swedish airspace. How do respond to a great power that insists on a 19th century imperial vision? […]

Go With the Flow?

By |2017-07-17T12:23:17+00:00October 10th, 2014|Global Market Update|

Does momentum investing work? Source: Callen Associates Investors have a tendency to chase returns. That’s why mutual fund companies hype their most recent performance in big, bold letters, just above the fine-print disclaimer: “Past performance does not guarantee future results.” There’s a reason they advertise this way: everyone loves a winner. […]

Budget Busting Battles

By |2017-07-17T12:23:17+00:00October 9th, 2014|Global Market Update|

Can we talk about budgets? Source: St. Louis Federal Reserve It’s October. The time of year when the leaves fall, the woodbin gets filled, and budgets are proposed for next year. Budget season is about as attractive as a trip to the dentist for most people. But budgets are necessary. If you don’t know how much you can spend, you’ll usually spend too much. […]

African Market Contagion?

By |2017-07-17T12:34:13+00:00October 7th, 2014|Global Market Update|

Is Ebola a threat to the economy? Source: It’s certainly a threat to Africa’s economy. The West Africa epidemic has resulted in almost 10,000 cases and over 3500 deaths. Two cases have been reported outside of Africa: one in Texas and one in Spain. Exxon Mobil and other mining operators have suspended many of their West African operations. In Liberia, Guinea, and Sierra Leone it has overwhelmed the health care system. And of course any tourism has ceased. […]

It’s the Process, Stupid

By |2017-07-17T12:34:13+00:00October 6th, 2014|Global Market Update|

The dollar is strengthening. Is it time to sell? Stocks have pulled back. Is it time to buy? Interest rates are rising–wait, no they’ve fallen. And the economy is uncertain. What’s an investor to do? Source: Wikipedia When investors get caught up in the latest economic or political news, their portfolios can begin to look like a “Rube Goldberg” device: over-engineered and underperforming. This became clear last week, […]

Yielding Nothing

By |2017-07-17T12:34:13+00:00October 3rd, 2014|Global Market Update|

What’s up with negative interest rates? Source: Bloomberg The last auction Germany held for their 2-year bunds produced an obligation sold are par with no coupon. The bonds promptly went to a premium, resulting in a negative yield. Around the world, yields for 2-year Government bonds are negative in Germany, Holland, France, and Switzerland. In Switzerland it’s especially bad: you have to pay a 4 ¼% premium to get a 2-year note with a 2% coupon. […]