French Roast

By | 2017-07-17T12:21:33+00:00 December 30th, 2016|Global Market Update|

French Roast Who says populist politicians are too serious? Harper’s Weekly cover from 1900. Public Domain. Source: Wikipedia A lot of folks have compared the current economic and political environment to that of the late 19th century. And there are a lot of similarities. Rapid technological change has brought the world closer than ever before. Millions of people fled low-wage, dictatorial regimes for better opportunities in the US and Canada. Free trade swept the world—growing from 5% to 8% of global GDP. These changes [...]

Retirement Dreams

By | 2017-07-17T12:21:33+00:00 December 29th, 2016|Global Market Update|

Why is saving for retirement so hard? Photo: Ahborson. Source: Morguefile We often hear that there is a saving crisis. People don’t save enough today to fund their retirement tomorrow. And with the national savings rate somewhere around 5%, that seems pretty accurate. After all, if you save 5% of your salary for 40 years—and just put it in the bank—by the time you retire you’ll have only two times your salary socked away. If you spend 5% of your savings every year in [...]

Inflation Ahead?

By | 2017-07-17T12:21:33+00:00 December 28th, 2016|Global Market Update|

Is inflation finally headed higher? Core Personal Consumption Inflation. Source: Bureau of Economic Analysis It sure doesn’t look that way. The broadest measure of consumer prices, the deflator for personal consumption expenditures, was flat November. That’s because incomes were flat, and consumption was flat. Most economists believe that a reacceleration in consumption will be the overarching economic theme for 2017. But this isn’t set in stone. If employment growth slows and wages stall, then we’ll still be stuck in the rut we’ve been in [...]

Low Vol – High Vol – Big Vol

By | 2017-07-17T12:21:33+00:00 December 27th, 2016|Global Market Update|

Well that was fast. Performance of Low Vol / High Dividend Strategy vs. S&P 500. Source: Bloomberg For the past year the investment world has been buzzing about the success of “low volatility” strategies. The idea is that less-volatile stocks can give you just as much performance as highly-volatile stocks, without all the heartache. In other words, in the great risk-return tradeoff, there may be a something like a free lunch—more return with less risk. Like the old Bud Lite commercial: great taste and [...]

Christmas Economics

By | 2017-07-17T12:21:33+00:00 December 22nd, 2016|Global Market Update|

What is the economic impact of Christmas? Photo: Andree Autza. Source: Morguefile There are lots of ways that people celebrate Christmas. There’s the religious holiday, which is outside the scope of this blog. There is the secular holiday, where people take time off to be with family and friends. It’s been noted that a lot of homeless shelters are pretty empty at Christmas—it’s the one time of the year many of those folks have someone to take them in. And then there’s the economic [...]

The Dangers of Success

By | 2017-07-17T12:21:33+00:00 December 21st, 2016|Global Market Update|

The Dangers of Success What happened to “The Maestro”? Public Domain. Source: IMF Alan Greenspan chaired the Federal Reserve from 1987 to 2006. He’s a fascinating character: a mostly self-taught economist, a jazz clarinet player, a policy advisor and skilled political operator. He understood how political power ebbs and flows, and used that understanding to direct Fed policy for almost 30 years—an eternity in Washington. His greatest success came when he successfully intuited that productivity was growing much faster in the mid-‘90s than initially [...]

Warmer Weather Ahead?

By | 2017-07-17T12:21:34+00:00 December 20th, 2016|Global Market Update|

Warmer Weather Ahead? What’s the forecast? Source: NOAA The short answer is, no one really knows. There were very few prognosticators that predicted a Trump victory, and even fewer who thought a sweep by the Republicans would lead to a major stock market rally and bond market selloff. But that’s where we find ourselves. Stocks are up in the US in the low teens—almost 10% more than most folks expected a year ago. Interest rates are up modestly. A year ago, many thought the [...]

Scientific Recruitment

By | 2017-07-17T12:21:34+00:00 December 19th, 2016|Global Market Update|

Do we need more science majors? Photo: Analytical Mechanics Association. Source: NASA That’s what a lot of people think. And as a science major myself, the husband of a science major, and the father of four science majors, I certainly believe in the utility and importance of studying science in college. It helps young minds develop rigorous, analytical thinking, along with quantitative skills. But some proposals to provide special encouragement for kids to study science seem misguided, like college-loan forgiveness or different tuition rates [...]

Passion and Performance

By | 2017-07-17T12:21:34+00:00 December 16th, 2016|Global Market Update|

Why is passion so powerful? German Wright Flyer stamp. Source: Wikipedia We all know that 113 years ago the Wright Brothers were first to fly an airplane. But did you know that they had a well-financed, expert administrator as a rival? Samuel Pierpont Langley wanted to build the first airplane. He was Secretary of the Smithsonian and taught at Annapolis. He obtained a grant from the War Department and hired engineers, inventors, and a test pilot. What he didn’t understand—like the internal combustion engine—he [...]

Setting a Higher Standard

By | 2017-07-17T12:21:34+00:00 December 15th, 2016|Global Market Update|

How do we raise the bar for ourselves? Photo: Douglas Tengdin People face ethical issues every day. How meticulous do I need to be with my records? Could accepting a gift affect my objectivity? How responsible are supervisors for the actions of their subordinates? Most people can agree on a basic moral framework —universal rules like don’t lie, don’t steal, respect everyone, be kind, generous, and fair. But how do we work that out in practice? How can we hold ourselves accountable to do [...]