Beyond the Sunset

By | 2017-07-17T12:22:42+00:00 July 17th, 2015|Global Market Update|

Sometimes you have to just sit back and wonder. Image of Pluto’s ice mountains. Photo: NASA/JHU APL/SwRI. Source: NASA On Wednesday the New Horizons space probe flew by the planet Pluto, transmitting pictures from 3 billion miles away that are truly mind-blowing: ice mountains over 11,000 feet high; water, methane, and nitrogen ice interacting to erase all but the most recent craters; light and dark regions of unknown composition. Pluto was only discovered 85 years ago, when Clyde Tombaugh compared two telescopic pictures taken [...]

Predatory Investing?

By | 2017-07-17T12:22:42+00:00 July 16th, 2015|Global Market Update|

What good are activist shareholders? Photo: Britta Reinhartz. Source: Pixabay An active investor is someone who buys a stake in a company to put public pressure on management to make some sort of change. Their goals can be financial, social, or governance-driven. Common objectives might be increasing dividends and share buybacks, reducing excessive management salaries, or disinvestment from particular countries or activities. 25 years ago these folks were called corporate raiders, forcing management to take action or buy them out, often at a fat [...]

The Wages of Stagnation

By | 2017-07-17T12:22:42+00:00 July 15th, 2015|Global Market Update|

Why are wages growing so slowly? Source: Bureau of Labor Statistics A couple of researchers at the Cleveland Fed have been studying this question. Why, at a time when unemployment has fallen from 10% to 5.5%, has wage growth been stagnant? In real terms, wages haven’t risen at all over the past five years—in contrast to how wages rose after previous recessions. Cumulative change in compensation. Data for nonfarm business sector. Source: BLS and Cleveland Fed Part of the answer has been low productivity [...]

Counting on Accounting?

By | 2017-07-17T12:22:42+00:00 July 14th, 2015|Global Market Update|

It always starts small: Photo: Petr Kratochvil. Source: Public Domain Pictures A little “fudging” on the bank statement; Overstating income to obtain a loan; Rounding errors that round the wrong way; Fixed assets that aren’t so fixed, where amortization slows to a crawl—all boosting the bottom line. These are some of the ways accounting can be distorted to serve nefarious ends. In 2007 a 100-year old law firm merged with an 80-year old firm. Former partners included Wall Street scions, Presidential candidates, and counselors [...]

Making Markets Change

By | 2017-07-17T12:22:42+00:00 July 13th, 2015|Global Market Update|

Making Markets Work What if the market stopped and nobody noticed? Photo: Nabeel Syed. Source: Life of Pix That’s what happened last Wednesday. Between 11:30 am and 3:00 pm, no trades were processed through the New York Stock Exchange. But apart from awkward TV images of traders standing around staring at blank screens, almost nothing changed. Shares kept changing hands. There was no trading halt. Anyone who wanted to sell or buy Alcoa leading up to their earnings announcement could do so. This wasn’t [...]

Healthy Together?

By | 2017-07-17T12:22:42+00:00 July 9th, 2015|Global Market Update|

Why are health insurance companies consolidating? Source: Public Domain Pictures Aetna is buying Humana. Anthem wants to buy Cigna. And United Health wants to buy Anthem. The merger-talk among the big health insurers has a lot of people confused and worried. If all these firms combine, will we just be left with one big insurer? That’s what it feels like. Of course, the U.S. Justice Department will weigh in. If one company looks like it will have too big of a market share, they’ll [...]

Under a Chinese Dome

By | 2017-07-17T12:22:42+00:00 July 8th, 2015|Global Market Update|

Under a Chinese Dome Can a market meltdown in China take down the global economy? Photo: Yemeky. Source: Dreamstime Investors are finally waking up to the fact that a stock market crash in the world’s second largest economy—one three quarters the size of the Eurozone—might be more important than a currency crisis in the world’s 44th largest economy—an economy slightly bigger than Pakistan’s. While global headlines have been preoccupied with Greece and the possibility of a “Grexit,” stock markets in China have fallen by [...]

Being There

By | 2017-07-17T12:22:43+00:00 July 7th, 2015|Global Market Update|

Being There Why do business owners work so hard? Photo Credit: Vladimir Kudinov. Source: Unsplash One reason is to prevent fraud. Restaurants or gas stations or convenience stores do a lot of cash business. It can be pretty easy for an employee to skim a little “off-the-top” when ringing up receipts. Modern cash registers make this more difficult—even more significant has been the shift to debit and credit cards for even minor transactions. More common is when employees give merchandise away: waiters and waitresses [...]

Greek Tragedy?

By | 2017-07-17T12:22:43+00:00 July 6th, 2015|Global Market Update|

Greek Tragedy? Now what? Photo: Ryan Maguire. Source: Gratisography Yesterday Greek voters gave the Tsipras government a decisive victory when they rejected the terms of the latest bailout deal offered by creditors in June. Technically, the vote didn’t decide anything, since offer wasn’t really on the table anymore. But politically, it amounts to a vote of confidence in Tsipras’ hard line. It seems likely that Greece will default on €7 billion in T-bill and loan payments coming due in July. They’ve already delayed payment [...]

Yankee Doodle Investor

By | 2017-07-17T12:22:43+00:00 July 2nd, 2015|Global Market Update|

Are our markets fair? “Spirit of ‘76” by A.M. Willard. Source: Wikipedia There has been a good amount of discussion about the structure of the stock market. Some have looked at how stock market trades are executed and concluded that our markets are rigged—that powerful insiders use special access to inside information to game the system and profit at the expense of average investors. It’s true that the stock exchanges are a lot different now than they were 20 years ago, largely in reaction [...]