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Noteworthy News – December 22, 2014

Economy:

Middle class woe – HarvardGazette

Global debt: How worried should we be? – BBC

Report: Billionaires are hoarding mountains of cash - UPI

Santa’s real workshop: the town in China that makes the world’s Christmas decorations – Guardian

Modern Moms Aren’t as Busy as 1960s Moms Were – Atlantic

Markets:

The Markets Are Predicting a Venezuelan Default – Bloomberg

Here’s why oil companies should be a lot more profitable than they are – Reuters

Bankers See $1 Trillion of Zombie Investments Stranded in the Oil Fields – Bloomberg

Politics:

Surprise! The Rich Are Now Richer Than Everyone Else By the Widest Margin Since We Started Keeping Track – Atlantic

That’s rich! Why so many wealthy Americans think they’re middle class - Salon

The week the dam broke in Russia and ended Putin’s dreams -Telegraph

Of Kiwis and Currencies: How a 2% Inflation Target Became Global Economic Gospel – New York Times

Banks:

A black hole for our best and brightest: Wall Street is expanding, and the economy is worse off for it – Washington Post

Big banks need to embrace digital era - Financial Times

How Wall Street is chipping away at reform – The Week

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Posted in Economics, Markets, Media, Politics.


Noteworthy News – December 15, 2014

Economy:

Employers Will Have to Raise Wages. They Just Don’t Know It Yet. – New York Times

The Vanishing Male Worker: How America Fell Behind – New York Times

Many Feel the American Dream Is Out of Reach – DealBook, NY Times

Global financial crisis patches are leaking - CBC News

Solid U.S. retail sales point to firming economic recovery - Reuters

Markets:

How Countries Around The World Are Coping With Falling Oil Prices - Huffington Post

A Greek island – yours for the price of a London flat - The Independent

Asian shares mixed on Chinese data – BBC

Politics:

The Case Against Eurozone QE - Forbes

Oil Prices Go Down, Russia’s Gold Buying Goes Up – NPR

Banks:

Eurozone bank integration: EU versus non-EU banks - VOX

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Posted in Economics, Markets, Media, Politics.


Three Charts to Challenge Investment Strategies

The rather amusing broadly cited economic fact is that US growth has become more robust and we should only expect a “tailwind” from lower gas prices that will put more dollars in the US consumers’ pockets.  I will not pontificate on how indications of job growth are impossible to explain, but instead point to three market facts that everyone seems to ignore.

1) Breakeven inflation rates have fallen dramatically since midsummer.  Economists still expect US inflation to come in near 2% in the coming years, but the market has quickly repriced and suggested that the 2 year inflation (deflationary) rate will be .45%!

Inflation

 

2) US Interest Rates actually look attractive versus alternatives.  Despite the Economists’ beliefs that the US 10 year will hit over 3% by the end of 2015, the market forward rate says that the 10 year will not reach 3% in 10 years!  More importantly, every German is thinking that US Bonds look incredibly attractive compared to their own securities:

Diverging Yields

 

3) Despite equity markets being extremely happy, the US High Yield market has been slaughtered over the last few months.  I guess you just need to believe that all fixed income markets are wrong and equities are right:

High Yield vs S&P 500

I believe the most realistic explanation is that US markets broadly believe that the Federal Reserve is planning on tightening when the economy will not be able to take the stress.  It is also telling you that the rising dollar and falling crude point towards the US importing deflationary conditions from struggling economies around the world.

Posted in Economics, Markets, Media.


Noteworthy News – Dec 8, 2014

Economy:

The Incredible Shrinking Incomes of Young Americans - The Atlantic

The poor used to have the most opportunity in America. Now the rich do - Washington Post

Child poverty in the U.S. is among the worst in the developed world – Washington Post

Japan’s third quarter recession deeper than forecasted – BBC

Markets:

Dollar rally to hit emerging markets, warns bank - Irish Times

How the Rising Dollar Could Trigger the Next Global Financial Crisis – Wall Street Journal

Sudden swings expose fragility of financial markets – BIS(Reuters)

Politics:

The Myth of Low-Tax America: Why Americans Aren’t Getting Their Money’s Worth - Atlantic

The case for opportunistic inflation- Economist

Bank on ‘Super Mario’ to give Europe a monetary jolt – Reuters

Banks:

Australian Banks Seen Needing $25 Billion in Capital - Bloomberg

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Posted in Economics, Markets, Media, Politics.


Noteworthy News – December 1, 2014

Economy:

Are We Reliving The 1930s? - Forbes

Even Among Harvard Graduates, Women Fall Short of Their Work Expectations - New York Times

Falling oil prices offer the west a great chance to refashion itself. Let’s seize it – Guardian

China has ‘wasted’ $6.8tn in investment, warn Beijing researchers - Financial Times

Markets:

Risk of price bubbles won’t stop ECB trying to revive inflation: Draghi - Reuters

Bond Secrets Decoded 9,539 Miles From Wall Street in Parking Lot – Bloomberg

OPEC Gusher to Hit Weakest Players, From Wildcatters to Iran – Bloomberg

Whatever Happened to Inflation? – Reason.com

Could oil collapse cause next credit crisis? – CNBC

Oil drop is big boon for global stock markets, if it lasts - Telegraph

Politics:

State capitalism in the dock - Economist

Inequality is bad for income growth of the poor (but not for that of the rich) – VOX

Fed’s latest invention holds promise for controlled rate rise – Reuters

Banks:

China Drafts Bank Deposit Insurance in Move to Free Rates – Bloomberg

Banks may need to set aside rainy-day capital - The Age

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Posted in Economics, Markets, Media, Politics.




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