Cold Steel Blues

By | 2017-10-16T07:38:52+00:00 October 16th, 2017|Global Market Update|

Cold Steel Blues What’s happening to Kobe Steel? Inside arc furnace. Photo: Payton Chung. Source: Wikipedia Kobe Steel is a metals refiner based in Japan. They have almost 40,000 employees, and they produce aluminum, copper, and titanium as well as steel wire, rod, and rolled products. Most of their sales are to Japanese customers, but they have been expanding globally, especially in China. But that expansion may be over for a while. Last week the company disclosed that they have been falsifying data about [...]

A Gathering of Eagles

By | 2017-10-13T07:08:05+00:00 October 13th, 2017|Global Market Update|

What happens when there are too many predators? Photo: Jessica Weinberg. Source: National Park Service Predatory investors, or shareholder activists, get mixed reviews. On one hand, these investors are exercising their rights as company owners to have management unlock some of the value inherent in a company’s franchise. On the other hand, they often look for short-term gains that can come at the expense of a company’s long-term prospects. For most of them, holding a position for over a year is rare. They want [...]

Healthy Innovation?

By | 2017-10-12T06:56:24+00:00 October 12th, 2017|Global Market Update|

Why should we worry about health care? Source: Vox Public health analysts often bemoan the fact that the US spends a lot on healthcare. Health spending accounts for 18% of GDP, while the rest of the developed world spends about 10%. But we get a lot of innovation for that spending. The US has more clinical trials than any other country. We have more patents. The US has the most Nobel laureates in physiology and medicine. Our research universities are the envy of the [...]

Your Brain On Devices

By | 2017-10-11T06:05:07+00:00 October 11th, 2017|Global Market Update|

Are we frying out brains? Photo: Cyclonebill. Source: Wikipedia A recent study indicated that multitasking with email, messaging, Facebook, and various other ways to communicate is changing the way we think and behave. We are undermining our ability to focus, and the immediate gratification that a constant feed provides is highly addictive. Other research shows that our brains get a little dopamine jolt when we get messages. It’s pleasurable and we want to do it again. It’s becoming increasingly dangerous. Distracted driving is now [...]

Nudges Towards the Prize

By | 2017-10-10T07:07:51+00:00 October 10th, 2017|Global Market Update|

Who is Richard Thaler? Source: Chicago-Booth School Richard Thaler is the Chicago-Booth economist who helped popularized the notion of “nudging” us to make better choices. He’s best known for his work on behavioral economics, the area of study that looks at anomalies in our decision making. For example, if someone gives us tickets to an event worth $500, we tend to keep the tickets. We don’t sell them, but we’re unlikely to spend money on additional tickets. This is called the “endowment” effect: we [...]

95 Lessons

By | 2017-10-06T07:51:44+00:00 October 6th, 2017|Global Market Update|

We don’t live in unprecedented times. But they are unusual. Martin Luther posting his 95 Theses. Source: British Museum It’s popular to say that we live in unprecedented times. Things like mobile computing and global social networks are totally new. And from a technological perspective, that’s absolutely correct: we’ve never had so much power in our pockets. Apple’s new A11 Bionic chip on their iPhone X can execute more operations per second than a MacBook Pro, which in turn was way more powerful than [...]

Piglet’s Investment Advice

By | 2017-10-05T11:27:35+00:00 October 5th, 2017|Global Market Update|

It can be hard to sit still. Photo: Victor Hancek. Source: Pixabay. Every few years, someone compiles some of Winnie-the-Pooh’s life lessons into a small book. In one of these, Pooh’s Little Instruction Book, Piglet remarks, "Don’t underestimate the value of Doing Nothing." Investors should heed this advice. Of the many temptations in investing, the temptation to act too soon is among the worst. If something unexpected happens, people want to know what you are doing about it – as if doing something will [...]

Pulling Away the Football

By | 2017-10-05T10:59:31+00:00 October 4th, 2017|Global Market Update|

Poor Charlie Brown.     Source: Wikipedia That’s what I thought when I read that hedge funds have gotten massively short the 30-year US Treasury bond. When traders “short” a security, they expect the price to go down. When they short bonds, they think interest rates will rise. At her September press conference, Janet Yellen signaled that the Fed will continue to raise rates, despite stubbornly low inflation. Higher rates equal lower bond prices. So what’s the problem? The problem is that the market [...]

Of Butterflies and Hurricanes

By | 2017-10-03T07:46:24+00:00 October 3rd, 2017|Global Market Update|

What is the butterfly effect? Photo: © 2016 Jee & Rani Nature Photography. Source: Wikipedia The Butterfly Effect is the notion from chaos theory where small changes in initial conditions can result in large differences in the outcome. The term was coined when a mathematician and weather scientist was describing a tornado, and noted that the flapping of a butterfly’s wings a week before might seem to change the path of the storm. In deterministic computer simulations, rounding some of the initial conditions can [...]

Growth at an Educational Price

By | 2017-10-02T08:33:38+00:00 October 2nd, 2017|Global Market Update|

Why is labor’s share of income going down? Source: Bureau of Labor Statistics For the past 50 years, labor’s share of our national income has been declining. This has had profound effects on inequality, taxes, and the structure of our economy. Labor’s share is the percentage of national income that goes to workers as compensation. It’s a pretty simple calculation: employee compensation (wages and benefits) divided by economic output. It’s been falling since the ‘50s, and quite steeply for the last 15 years. It’s [...]