Chair and Vice Chair: Happy Together?

By |2017-07-17T12:22:27+00:00September 15th, 2015|Global Market Update|

What is the role of the Fed’s Vice Chair? Fed Eccles Building, Washington, DC. Photo: APK. Source: Wikipedia. CC BY-SA 3.0 When the stock market crashed in 1987, the Fed’s Vice Chair Jerry Corrigan called newly confirmed Chair Alan Greenspan and told him, “Alan, there’s a crisis, and you’re it!” They quickly agreed to call an emergency meeting, after which the Committee issued a statement affirming “their readiness to serve as a source of liquidity to support the financial system.” This assured the markets [...]

Equity Values and Valuation

By |2017-07-17T12:22:27+00:00September 14th, 2015|Global Market Update|

How much is a stock worth? Source: Mathworks There’s lots of approaches to question. Perhaps the simplest is to calculate all the cash that an investor expects to receive in the future, discount this to its present value, and add these up. It’s a truism in finance that an investment is worth the discounted sum of its future cash flows. The problem comes in determining how much cash the business will generate, and how willing and able management will be to return that cash [...]

Boxing the Fed

By |2017-07-17T12:22:27+00:00September 11th, 2015|Global Market Update|

Has the Fed run itself into a corner? Source: Morguefile I used to play soccer in high school. I was a backfielder, or sweeper. Whenever the opposing team’s striker had a breakaway, our coach would shout “Box him! Box him” from the sidelines. He wanted me to cut off the other player’s angle to our goal—to “box him” into the corner—to reduce his options. I wonder if the markets have boxed the Fed. Several months ago, Janet Yellen noted that the Fed would be [...]

Emerging To …

By |2017-07-17T12:22:39+00:00September 10th, 2015|Global Market Update|

Emerging From … What’s happening with emerging economies? Country size weighted by projected population in 2050. Source: It wasn’t supposed to be this way. The developing economies were supposed to lead the markets higher. The combination of population growth and development economics should have provided a turbo-shot to older, mature, slow-growing developed economies. Bringing subsistence farmers into cities to work in factories has been a time-honored development formula. Increased productivity raises profits and provides higher wages, lifting the entire economy. Every emerging economy [...]

Flight From Fear

By |2017-07-17T12:22:39+00:00September 9th, 2015|Global Market Update|

What should Europe do about Syrian Refugees? Photo: Rebecca Harms. Source: Flickr CC.2.0 Over 4 million people have fled the Syrian civil war. That’s over a quarter of the country’s population of 14 million. The vast majority of these refugees are living in neighboring countries—Turkey, Lebanon, Jordan, and Iraq. Recently, over 300,000 have crossed into Europe—especially Germany, Sweden, Armenia, and Holland. Everyone wants to help someone fleeing a war. What are some of the issues that taking in refugees brings? Source: City Journal First, [...]

The End of the Exchange

By |2017-07-17T12:22:39+00:00September 8th, 2015|Global Market Update|

Are open-outcry markets over? Source: Wikipedia In Japan, around the year 1700, producers and consumers of rice decided they needed a place where they could exchange promises to buy or sell that year’s harvest. The market was in Osaka. At the time, samurai were paid in rice, and they needed to know what their pay was worth. This became the world’s first futures exchange, and it facilitated the growth of Japan’s economy, as their currency shifted from rice to coins to paper money. Two [...]

Finding Our Way

By |2017-07-17T12:22:39+00:00September 4th, 2015|Global Market Update|

It’s obvious. Photo: George Bosela. Source: Morguefile That’s the way everything looks in hindsight. When we look at a chart of the stock market in the late ‘90s, it’s “obvious” that tech stocks were in a bubble and that everything was overpriced. When we look at early 2009, it’s “obvious” that everything was on sale, and that great companies were on sale. When you look at the past year, it’s “obvious” that the market had lost momentum and was due for a significant correction. [...]

Back to School / Back to Work

By |2017-07-17T12:22:39+00:00September 3rd, 2015|Global Market Update|

Will the start of the school year set monetary policy? Photo: Maria Bavuso. Source: Morguefile When I was growing up, schools opened after Labor Day. My brothers and I loved those last, lazy days of August—playing pickup football, or fishing, or just hanging out. And later, when I worked during the summer, I enjoyed earning one more week of extra spending money. I’m pretty sure our teachers appreciated that time as well. But as the school year has expanded and schools have built more [...]

A Dragon in the Mist?

By |2017-07-17T12:22:39+00:00September 2nd, 2015|Global Market Update|

How fast is China growing? Part of “Nine Dragons" by Chen Rong - Museum of Fine Arts (Boston). Source: Wikipedia That’s what everyone wants to know. Their economy represents 15% of global GDP—the second largest in the world. Officially, they’re growing at 7% per year, down from the double-digit growth they boasted a decade ago, but still more than twice the rate of the developed world. China has been following the same script that every other developing nation has--turning farmers into factory workers, making [...]

T.S. Eliot, Stock Market Guru

By |2017-07-17T12:22:39+00:00September 1st, 2015|Global Market Update|

“This is how the world ends / Not with a bang, but with a whimper.” T.S. Eliot. Photo: Lady Ottoline Morrel. Source: Wikipedia These are the closing lines from T.S. Eliot’s famous poem “The Hollow Men.” The poem is about exhaustion, disillusionment, and ennui in a war-weary post-WW I Europe. It describes the sense of being caught between wanting to do something and doing it; between—in the poet’s words—conception and creation. And its final lines are some of the most quoted in the English [...]