Below is a chart of the price of oil denominated in rubles. In Russia, a cratering currency has resulted in higher, not lower, oil prices for consumers and producers. … [Read more...]
Archives for December 2014
Risk Off
As you can see here the tide has turned against junk bond investors. From The Wall Street Journal: The oil bust is exposing cracks in the $1.3 trillion junk-bond market, putting pressure on a key source of corporate financing and potentially crimping economic growth. U.S. junk-bond prices have fallen 8% since late June, according to data from BarclaysPLC. One-third of that drop has come this month alone, putting the market on track for its worst annual performance since the financial crisis. While much of the stress has been in the energy sector on the heels of the sharp decline in … [Read more...]
The Monday Melee: MAP: Student Loan Debt
Industry Roars: Industrial production recorded the largest monthly uptick since May 2010 in November. The acceleration in growth surprised the 81 analysts surveyed by Bloomberg, who had predicted an increase of only 0.7%, and instead witnessed growth of 1.3% recorded for the month. When combined with recent strong growth in employment, upticks in industrial production and other economic measures make it harder to understand the Fed's continued defense of its low-rates-forever policy. What We're Reading: A Monthly Check for Life? Don’t Forget Inflation (The Wall Street Journal) Energy’s … [Read more...]
The Most Powerful Fiscal Stimulus
The mainstream press and their liberal Keynesian allies in academia (that means you Princeton & Berkeley) have made a sport out of roasting the Republican led Congress for reining in government spending. Lower government spending, we are told, kills growth at best and crashes the economy at worst. It is a remarkable feat to argue that bigger government leads to stronger growth when centuries of evidence prove otherwise. Those economies where the share of government is smallest most often are the fastest growing. Viewed through the lens of Washington insiders, the gridlock and … [Read more...]
Retirement Profile #2: “Expect Nothing; Want One Thing”
The NFL’s Baltimore Ravens may be the most underrated team in the NFL right now. Part of their success is due to senior leadership from quarterback Joe Flacco. Not to be forgotten though are linebacker Terrell Suggs and his new locker neighbor Steve Smith—yup, that Steve Smith. “How does an undersized, overly confrontational wideout survive 14 years in the NFL? He starts by following a plan that also describes his personal ethos,” writes SI’s Peter King. Well, number nine on that list is: Expect nothing; want one thing writes King: Ever since he’d watched Jerry Rice, when he was a kid in … [Read more...]
Higher Pay Coming down the Pike
The Labor Department’s JOLTs survey came out yesterday and it showed continued improvement in the outlook for the labor market. The ratio of job openings to the number of unemployed workers rose to a post recovery high. When the number of job openings to the number of unemployed workers rises, it signals that labor demand is outpacing labor supply. When demand outpaces supply, higher prices are often the result. The historical lead time for the ratio of job openings to the number of unemployed is about six months. It looks like higher wages are coming down the pike. … [Read more...]
Retirement Profile: $110 Million Down the Drain
Former Boston Celtics star Antoine Walker spent/lost $110 million. What a shame. “Get the word ‘No’ in your vocabulary. You’re going to have to say no to a lot of people that are very important to you. Stick to your financial plan and don’t invest until you’re done with your career when you’re able to be hands-on,” said Walker. My first piece of financial advice to pro athletes (and you) is to spend only 3% of your portfolio. Low interest rates are forcing all retirees to take less and less each year. Walker’s new book Gone In An Instant will be released early next year. Don’t take it from … [Read more...]
The Monday Melee: The Value of a Dollar
Strongest Dollar in Years The dollar is the strongest it’s been since July 2010, but still isn't at its strongest historically. Returning to a Stable Dollar Quotable: "The appreciation of the dollar against the backdrop of divergent monetary policies may, if persistent, have a profound impact on the global economy, in particular on EMEs. For example, it may expose financial vulnerabilities as many firms in emerging markets have large US dollar-denominated liabilities continued depreciation of the domestic currency against the dollar could reduce the creditworthiness of many firms, … [Read more...]
Payrolls Surge
The monthly jobs report was released this morning and payroll employment soared past expectations. Total job growth was 321,000 with private payrolls up 314,000. Economists were looking for total job growth of 230,000. More meaningfully, the six month moving average of private payroll employment reached the highest point of the recovery. The Fed needs to explain why it is still running and promising to run emergency monetary policy that inflicts undue pain on retired investors and savers while the economic growth is humming along just fine. … [Read more...]
A Better Way to Earn 10%
You don’t have to pile into stocks to have a good year. One of my favorite balanced funds, Vanguard Wellington, has had a great year—it’s up over 10%. As you can see in this chart it beat the S&P in five out of twelve months. It’s worth remembering that successful investing isn't just about how much you make it’s also about how much you keep. … [Read more...]