Benefits to Trade

By | 2017-07-17T12:21:23+00:00 April 10th, 2017|Global Market Update|

What’s your favorite business movie? Fair Use. Source: Wikipedia One of the best is “Trading Places,” a modern take on Mark Twain’s Prince and the Pauper starring Dan Ackroyd and Eddie Murphy. It tells the story of a privileged commodities broker and a homeless street hustler who are thrown together when they are made the unwitting subjects of an elaborate bet. Apart from a minor role by now-Senator Al Franken, it also includes a fairly accurate description of the commodities business, with scenes from [...]

Apples, Banks, and Money Management

By | 2017-07-17T12:21:40+00:00 October 14th, 2016|Global Market Update|

Can the market for apples teach us about money management? Photo: Arly Flo. Source: Wikimedia Like many people, I grew up with the saying, “An apple a day keeps the doctor away.” Apples are supposed to have all kinds of health benefits—from helping your digestion to reducing cholesterol to improving your memory. And—unlike a lot of healthy foods—they taste pretty good. But I was never really keen on apples. You see, when I was young, pretty much every apple looked and tasted the same. [...]

The Curse of Plenty

By | 2017-07-17T12:22:12+00:00 January 12th, 2016|Global Market Update|

Why are resource-rich countries so poor? Photo: Walter Siegmund. Source: Wikipedia “All that glitters is not gold,” Shakespeare wrote. And it’s true: countries endowed with abundant natural resources–like gold, oil, or diamonds—grow more slowly than countries that don’t seem to have these natural gifts. There are three reasons. First, a commodity-based economy is tied to a boom-and-bust cycle. We’re seeing that now, with oil. In the flush years, extra cash leads to malinvestment, wasteful spending, and too much debt. In the bust years, financial [...]

Looking Forward, Looking Back (Part 2)

By | 2017-07-17T12:22:18+00:00 January 4th, 2016|Global Market Update|

So what is the lesson of last year? Source: Wikipedia Janus was the god of new beginnings, of transitions and portals. He had two faces: one looking forward, and one looking back. We’ve noted some of the surprises of 2015. What does 2016 have in store? In many ways, 2016 will look like 2015. Oil and other commodity prices should remain weak, held down by global oversupply. But prices can’t stay down here forever. We’re not replacing the oil and iron ore we’re taking [...]

Digging Deeper

By | 2017-07-17T12:22:20+00:00 November 25th, 2015|Global Market Update|

Why do commodity prices keep falling? Photo: Pedro Perez. Source: Morguefile The world is awash in oil right now. And it’s the same story for copper, zinc, and a host of other industrial materials. The price of oil is down 60% from its peak last year; a broad-based index is down almost 30%. What’s going on? Part of the answer has to do with the dollar’s status as a reserve currency. The US is doing better than the rest of the world, so interest [...]