Race Against the Machines

By |2017-12-11T08:02:53+00:00December 11th, 2017|Global Market Update|

Does automation destroy jobs? Sabots from Brittany. Photo: Thesupermat. Source: Wikipedia The concern that new technology will put people out of work has been around at least since 18th-century French peasants threw their wooden shoes, or “sabots,” into industrial machines to destroy them – thus becoming the first “saboteurs.” In the early days of the industrial revolution the Luddites in England broke weaving equipment out of fear that the new contraptions would destroy their jobs. At one point, the British had more soldiers fighting [...]

Trading Bears and Kitties

By |2017-12-08T07:01:58+00:00December 8th, 2017|Global Market Update|

Remember “Beanie Babies”? Photo: Jonny Connormah. Source: Wikipedia My kids went gaga over Beanie Babies in the ‘90s. The cute plush toys are filled with plastic pellets rather than conventional stuffing, which game them a more flexible feel. People began collecting them, then trading them like financial assets – the way some people treat baseball cards. At one point, Beanie Babies accounted for 10% of Ebay’s sales, and more than half of all American households had at least one at home. This collectible craze [...]

Flying by Instruments

By |2017-12-07T07:15:53+00:00December 7th, 2017|Global Market Update|

How much should we trust our gut? Photo: Adrian Pingstone; Source: Wikipedia Every pilot receives some instrument training. This makes sense. There’s always a chance you can get caught by unexpected weather. Getting tossed around by turbulence when there’s no visibility outside is disorienting. You feel like you’re moving when you’re stable, you think up is down, and vice-versa. The first rule that’s drilled into everyone getting instrument training is to trust the instruments. Our senses can and do deceive us. The fluid in [...]

Flat and Flatter

By |2017-12-06T06:30:34+00:00December 6th, 2017|Global Market Update|

What does a flat yield curve mean? Photo: Billy Hathorn; Source: Wikipedia 130 years ago the English schoolmaster Edwin Abbot wrote the novella “Flatland” about a two-dimensional world inhabited by geometric shapes. There’s no depth in Flatland, only height and width. It seems like investors today are entering a “flatland” of their own. Normally, long-term bonds yield significantly more than short-term bonds. We call this the “yield curve,” because it curves downwards. A year ago, 10-year US Treasury bonds yielded almost 2% more than [...]

The Roots of Innovation

By |2017-12-05T08:21:28+00:00December 5th, 2017|Global Market Update|

The apple doesn’t fall far from the tree. Photo Source: Pixabay That’s the lesson from a new study about innovation, inventions, and incentives. The children of inventors are far more likely to become inventors themselves. Income, education, and geography also matter. But it’s the home environment that has the biggest impact. Some researchers studied 1.7 million patent office applications and 1.2 million tax returns, asking why some people innovate and others don’t. If one of your parents holds a patent, you’re nine times more [...]

Winners and Losers

By |2017-12-04T07:15:08+00:00December 4th, 2017|Global Market Update|

Who wins and loses from tax reform? Photo: Derek Lilly. Source: Morguefile Most of the comments on tax reform center on what happens to individuals – the personal exemption, the mortgage interest or medical expense deduction, and so on. That’s understandable: people want to know how different versions will directly affect them. And the bill’s depends on each taxpayer’s personal situation But the point of the pending legislation is corporate tax reform – to find ways to lower our corporate tax rate. It’s widely [...]

Gifts Around the Tree

By |2017-12-01T05:40:47+00:00December 1st, 2017|Global Market Update|

Why do we give gifts? Photo: Kevin Kay. Source: Wikipedia The Native Americans had “potlatch.” Pacific Islanders had “Aropa.” Techies today have open-source software. And most people exchange gifts around the holidays. But is gift-giving rational? A lot of economists say no. They look at the all the fruit cakes sent-but-never-eaten or the ugly ties or sweaters politely acknowledged and then discarded. Theses economists see nothing but a waste of money. One study estimates that as much as a third of the money spent [...]

Doing the Right Thing

By |2017-11-30T06:05:44+00:00November 30th, 2017|Global Market Update|

Why should business people care about morals? “Avarice” by Jesus Solana. Source: Wikipedia In Hollywood, the amoral business person is a standard trope – the greedy capitalist who only cares about increasing the bottom line, no matter what the cost to workers, communities, or the environment. But markets need to have standards – like trust, honesty, and fairness – in order to work. It’s bad business to deceive people. If I buy a bag of potato chips and find mostly air inside, I won’t [...]

A Parliament of Fed Officials

By |2017-11-29T06:02:57+00:00November 29th, 2017|Global Market Update|

Who makes up the Fed? Burrowing Owls. Photo: Tania Thompson. Source: Shutterstock For most people, the Federal Reserve is a mysterious place that makes mysterious hooting sounds every few months, and they tell banks where to set interest rates. Academics and politicians rail at the Fed for various reasons, but their debates often sound like medieval scholastics debating how many angels can dance on the head of a pin: irrelevant to our everyday lives. But the Fed is an essential part of our financial [...]

Lipstick on What?

By |2017-11-28T08:05:05+00:00November 28th, 2017|Global Market Update|

Remember the PIIGS? Photo: Doug Tengdin Six years ago, the problems with Europe’s common currency were in full flower. Greece had defaulted on its Euro-denominated sovereign debt, and the economic challenges facing Portugal, Ireland, Italy, Greece, and Spain (the PIIGS) were headline news. The Greek economy was facing hard times. Their textile exports to the rest of the EU had been displaced by China, and they found it hard to compete. During their austerity measures, IMF bailouts, and debt renegotiations, focus shifted to other [...]