Something Old, Something New

By |2017-07-17T12:22:26-04:00September 30th, 2015|Global Market Update|

What countries are the most innovative? Source: Morguefile It’s not an easy question. In addition to counting the number of patent applications, you need to examine the number of peer-reviewed articles, how widely that research is disseminated, new business formation, royalty and license fees, export revenues, even video uploads onto the internet. Innovation is important. Not only is it a key driver of economic success, but it also can improve our quality of life. In Africa, for example, access to clean water allows children [...]

Known Unknowns

By |2017-07-17T12:22:26-04:00September 29th, 2015|Global Market Update|

Known Unknowns “I know something you don’t know.” © MGM 1987. Source: IMDB In The Princess Bride one of the characters smiles during an epic sword fight as he is forced back, step-by-step, towards the edge of a cliff. When his assailant asks why, he says that he knows something the other doesn’t: he’s not left-handed. As he changes hands, the tide of the fight turns. As the market struggles with fears of a Chinese economic slowdown, concerns about energy stocks, and questions about [...]

Diversifying Our Lives

By |2017-07-17T12:22:26-04:00September 28th, 2015|Global Market Update|

Diversification works. “Fright of Astyanax” by Benjamin West (1797). Source: Getty Museum. This drawing was owned by Thomas Jefferson and exhibited in his parlor at Monticello. That’s the secret to the success of many major products. Coca-Cola was created when someone accidentally added carbonation to medicinal syrup. Play-Doh was supposed to be a wallpaper cleaner. Toothpaste started as a homemade powder made from salt and burnt bread until someone noticed Parisian painters squeezing their pigments out of lead tubes and applied the lesson. Steve [...]

Cheaters Never Prosper?

By |2017-07-17T12:22:26-04:00September 25th, 2015|Global Market Update|

People cheat. Photo: Gerd Altman. Source: Pixabay That’s the not-so-surprising conclusion from the VW’s “Dieselgate.” But before VW installed adaptive software to sense when their cars were being tested, there was a scam involving heavy trucks. 15 years ago Navistar, Renault, and Volvo paid over $1 billion in fines for installing devices to defeat exhaust tests on their vehicles. Last year Hyundai paid $300 million for overstating mileage claims on its cars. In 1996 GM recalled half a million Cadillacs that had a chip [...]

Portrait of an Innovator

By |2017-07-17T12:22:26-04:00September 24th, 2015|Global Market Update|

How do we innovate? Our economy runs on creativity and innovation. Innovation created light bulbs. It inspired the internet. It allows new ideas to flourish, like transistors, integrated circuits, and laser beams. But where does innovation come from? Inventor Art Fry with Post-It note. Source: Wikipedia Innovators often feel guilty, because they didn’t really do anything. They just connected a couple of ideas and saw something new. It seemed obvious at the time. A specific problem went searching for a solution—and that solution was adapted [...]

Money for Nothing Forever?

By |2017-07-17T12:22:26-04:00September 23rd, 2015|Global Market Update|

Why are interest rates so low? Source: Morguefile It’s easy to see our ultra-low interest rates and blame the Fed. After all, they set short-term rates; they’re the ones managing the money supply; they’re the ones that oversee the banking system. But interest rates are low everywhere—not just in the US. And real interest rates—the difference between interest rates and inflation—have been falling for decades. Well before the financial crisis, long-term bond yields around the world began falling from 4% above inflation to roughly [...]

Topsy-Turvy Turnings

By |2017-07-17T12:22:26-04:00September 22nd, 2015|Global Market Update|

What’s going on? Did someone reverse the polarity? Earth’s magnetic field, normal and reversed. Source: NASA Everything is working backwards. In a normal world, Democrats run a free-for-all donnybrook during primary season, while Republicans are orderly and measured, choosing the next-person-in-line. In a normal world, German engineers build cars to be quietly dependable, instead of programming their autos to deceive US emissions tests. In a normal world, Greek voters change their government every couple years, instead of electing the same government to implement completely [...]

Central Banker to the World

By |2017-07-17T12:22:26-04:00September 18th, 2015|Global Market Update|

What is the Fed’s role? F15s and F16s over Kuwait, 1991. Photo: USAF. Source Wikipedia Yesterday the Fed decided to keep interest rates near zero. It was a tough call. Employment has improved by more than the Fed expected, but inflation has moved away from the Fed’s target. Economists were evenly divided as to whether they would or even should raise rates this meeting. In their statement, they comment that “recent global economic and financial issues may restrain economic activity.” Janet Yellen reinforced this [...]

Endless War?

By |2017-07-17T12:22:26-04:00September 17th, 2015|Global Market Update|

Are we in a clash of civilizations? Clash of Civilizations Map. Artist: Kyle Cronan. Source: Wikipedia It sure feels like it. In 1992 Harvard Professor Samuel Huntington gave a speech where he outlined this thesis. It was a heady time: the Berlin Wall had fallen; East and West Germany were reunifying; Operation Desert Storm had repelled Saddam Hussein’s invasion of Iraq. Some political theorists opined that we had reached the end—or goal—of history, that liberal democracy and free-market capitalism were the only reasonable way [...]

Lehman Lessons

By |2017-07-17T12:22:27-04:00September 16th, 2015|Global Market Update|

Should the Government have let Lehman fail? Photo: David Shankbone. Source: Wikipedia CC BY-SA 3.0 Seven years ago Lehman Brothers filed for protection from creditors under Chapter 11 of the bankruptcy code. A last-minute deal to save the global investment bank had fallen through. In the immediate aftermath, Lehman bonds traded at 60—then 30—cents on the dollar; Barclays and Nomura purchased Lehman’s North American and global franchises, respectively. Thousands of employees packed up their desks and started looking for work. The plummeting value of [...]