More Old Than Young: A Demographic Shock Sweeps the Globe (Bloomberg) Gold Demand Rose 15% in the Second Quarter (WSJ) Bill Miller Buys Out Legg Mason’s Interest in His Funds (WSJ) U.S. initial jobless claims below 300,000 for a 75th week; longest streak since 1970s (MarketWatch) Oil steadies as IEA sees balanced market ahead (Reuters) … [Read more...]
Archives for August 2016
Middle Class Left Behind in Current Housing Boom
In The Wall Street Journal, Laura Kusisto reports that prices are now just 2% below their 2006 peak, but those price gains aren't stemming from increased volume demand, but instead from lack of supply. Kusisto writes: Home prices rose in 83% of the nation’s 178 major real-estate markets in the second quarter, according to figures released Wednesday by the National Association of Realtors. Overall prices are now just 2% below the peak reached in July 2006, according to S&P CoreLogic Case-Shiller Indices. But most of the price gains, economists said, stem from a lack of fresh supply … [Read more...]
Worthy Reads: Saudi Oil Output Sets Record Amid Global Glut
Saudi Oil Output Sets Record Amid Global Glut (WSJ) The Signs American Workers Are Gaining Power and Higher Pay (Bloomberg) Spillovers from China’s Growth Slowdown and Rebalancing to the ASEAN-5 Economies (IMF) Small retailers transact $19 trillion in cash annually (WEF) Bank of England’s QE plan hits a peculiar glitch — it can’t find enough bonds to buy (MarketWatch) … [Read more...]
Gold: An Investment in Chaos
I like what Jim Grant, publisher of Grant's Interest Rate Observer, has to say about gold and chaos. BusinessInsider.com reports: According to Matt Borin at the CFA Institute, Grant told the crowd at a recent conference of the New York Society of Security Analysts that the "case for gold is not as a hedge against monetary disorder, because we have monetary disorder, but rather an investment in monetary disorder." Grant noted that the $11.7 trillion in negative-yielding bonds has created an untenable situation in financial markets. This is Grant's monetary disorder. "Radical monetary … [Read more...]
Surprise! Labor Productivity Collapses
Labor productivity fell for the first time in three years in the second quarter. Economists polled by Bloomberg were surprised when their prediction of 0.5% growth in labor productivity turned into a -0.5% drop in productivity. … [Read more...]
Millennials Should be Buyers not Renters
I've written before (here, and here for starters) about the importance of ownership for young people. It's not easy facing massive student loans and the low earnings typical of entry-level jobs, but becoming an owner is a great goal for all Millennials and in fact, every American. But homeownership rates are at the lowest on record. Not for 51 years has ownership been so low. This is a function of the difficulty Millennials are having building family units and buying homes to house them. Bloomberg's Patrick Clark and Suzanne Woolley write that, while Millennials are having trouble … [Read more...]
Gold Market Modernization: WGC Announced LMEprecious
The World Gold Council has announced that with partners including the London Metal Exchange, Goldman Sachs, ICBC Standard Bank, Morgan Stanley, Natixis, OSTC, and Societe Generale, a new, centrally cleared exchange traded product called LMEprecious. The product "will comprise spot, daily and monthly futures, options and calendar spread contracts for gold and silver." Platinum and palladium contracts will be included in future developments. Chief Executive of the LME, Garry Jones said of the project, “We are delighted to be working with the World Gold Council and a group of leading banks, to … [Read more...]
The Monday Melee: Economics of the Olympics
Olympic Costs Explode It's no revelation that the Olympics have become an increasingly extravagant event, with costs and revenues ballooning in tandem to the games' size and importance as a signal for the host country's own wealth and status. But it's less well known how this came to be. James McBride explains the economics of hosting the Olympics. The 1970s marked a turning point, writes Andrew Zimbalist, author of Circus Maximus: The Economic Gamble Behind Hosting the Olympics and the World Cup. The games were growing rapidly, with the number of Summer Olympics participants almost doubling … [Read more...]
Consumer Credit: Slowest Increase in Four Years
Today's consumer credit report showed the slowest increase in four years. You can see on the chart below that the relatively stable levels of consumer credit over the last few years appear to be rolling over. … [Read more...]
Worthy Reads: The Feds Don’t Care If You Dropped Out of College
America’s New Small Towns: Housing Developments That Recreate Village Life (WSJ) U.K., Europe Discover New Divide Over Negative Interest Rates (WSJ) The Feds Don't Care If You Dropped Out of College. They Want Their Money Back (Bloomberg) The German housing boom is starting to look ‘like a bubble’ (MarketWatch) LNG producers' quandary: embrace or rage against new market structure (Reuters) Testing Piketty’s Hypothesis on the Drivers of Income Inequality (IMF) … [Read more...]