Impossible Dreams

By | 2017-07-17T12:22:58+00:00 April 30th, 2015|Global Market Update|

Are there limits to technology? Photo: NASA. Source: Wikipedia Ever since we began to use simple tools, people have been fascinated with technology. But technology also represents a danger. The same tools that lift us from the mud can destroy our fortunes. A hoe can uproot as well as plant. The Ancient Greeks described this ambivalence in the story of Prometheus, who brings fire to humanity in defiance of Zeus and is punished for his act. […]

Promises, Promises

By | 2017-07-17T12:22:58+00:00 April 29th, 2015|Global Market Update|

Can we please have an adult conversation about Social Security? Source: Wikipedia The US faces a tsunami of retirement obligations. The Federal Government expends about $1.3 trillion per year on Social Security and Medicare, and takes in about $1.2 trillion. This deficit is covered by their trust funds, which on a combined basis will be depleted 2033—17 years from now. Considered separately, Social Security’s trust fund will last until 2035, not much longer. The Disability Insurance trust fund is just about out of money, [...]

Slicing Apples

By | 2017-07-17T12:22:58+00:00 April 28th, 2015|Global Market Update|

What’s behind Apple’s monster first quarter? Source: Pixabay In a word: China. iPhone sales now constitute over 60% of Apple’s revenues, and Apple’s smartphone market share in greater China (Hong Kong and Taiwan included) went from 5% to 12%. That growth contributed to what was by any account a truly gargantuan report: $58 billion in sales; $13.5 billion in profit; 27% annual revenue growth. They plan to distribute $200 billion in cash to shareholders over the next 2 years. If present trends were to [...]

Forever Blowing Bubbles

By | 2017-07-17T12:22:58+00:00 April 27th, 2015|Global Market Update|

Does the economy depend on having bubbles somewhere? Source: Pixabay It seems like the global economy has moved from bubble to bubble to bubble. Over the past twenty years we’ve gone from the Asian Tiger bubble to the tech bubble to the housing bubble to the China bubble to the oil exploration bubble. In all cases we had overly-optimistic growth assumptions which led to overinvestment which led to oversupply and an eventual price collapse. Some have called this, “The Law of the Conservation of [...]

Speedy (and Seedy) Traders

By | 2017-07-17T12:22:58+00:00 April 23rd, 2015|Global Market Update|

Are high-frequency traders cheating? Photo: Gregory Wilson. Source: Wikipedia High-frequency traders use computer programs to buy and sell securities on computerized exchanges. They write algorithms to analyze the microstructure of the markets and then execute trades. They remind me of the “locals” who trade in the Chicago commodity pits, who use systems, street-smarts, and speed to scalp a few pennies here or there from other market participants’ orders. Only these new folks do it with routers and data lines. […]

Greece is the Word

By | 2017-07-17T12:22:58+00:00 April 22nd, 2015|Global Market Update|

Is Greece on the road to default? Photo: © Martina Misar-tummeltshammer Source: Dreamstime Stock Photos When I consider Greece I think of classical literature and ancient ruins. Others picture sparkling beaches and whitewashed architecture. We usually don’t imagine a bustling commercial center. And it’s unlikely that we look at Greece as the key to the Euro-zone’s financial stability. But that’s what’s in the news. […]

Apple, ETFs, and Theseus

By | 2017-07-17T12:22:58+00:00 April 21st, 2015|Global Market Update|

Why do stock indices matter? Temple of Theseus, Athens. Source: Trustees of the British Museum Theseus, the founder-hero of Athens, lived around 1200 BC. In order to keep his memory alive, Athenians are supposed to have preserved his ship, taking out planks and timbers as they rotted, installing new materials in their place. Over time, all of the original wood was replaced. After some centuries, philosophers asked, was Theseus’ ship in any sense the “same” ship? […]

Mountains and Markets

By | 2017-07-17T12:22:59+00:00 April 20th, 2015|Global Market Update|

How much attention should we pay to forecasts? Tuckerman Ravine Image Source: Douglas Tengdin I recently hiked into the mountains for some spring skiing. The forecast wasn’t great: cloudy with showers, then partial clearing, with a front moving in the next day. When we arrived at the trail, expectations had deteriorated—the following day was supposed to bring worse weather—snow, sleet, and freezing rain. But there was a lot of snow right then, and we were prepared. If conditions deteriorated, we could always ski out. [...]

The New Capital

By | 2017-07-17T12:22:59+00:00 April 16th, 2015|Global Market Update|

What’s causing capital income to grow? Source: Pixabay Ever since Thomas Piketty’s Capital in the Twenty First Century came out last year, economists have been discussing the role of capital income in the economy. The debate centered on Piketty’s simple but profound formula, r > g. That is, the rate of return on capital—r—is greater than the growth of the economy: g. […]