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Archives for October 2016

Worthy Reads: Resolving China’s Corporate Debt Problem

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Why the Economy Doesn’t Roar Anymore (WSJ) Forget OPEC: We’re Getting Close to Peak Oil Demand (Bloomberg) Big Central Bank Assets Jump Fastest in 5 Years to $21 Trillion (Bloomberg) Resolving China’s Corporate Debt Problem (IMF) Expanding the boundaries of monetary policy in Asia and the Pacific (BIS) … [Read more...]

Is Your Bank Vulnerable to ATM Cyberattacks?

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Your investment success/survival is a series of smart decisions. For example, using a chip-enabled ATM and/or credit card bolsters your line of defense against cyber attacks. On our recent trip to Paris I was reminded how far ahead Europe is when it comes to chip readers. They are the norm—as you insert your card into the portable reader that they bring to your table. But that’s not the case here in the U.S. where waiters take your card from you (possibly copying it) and it’s swiped without you being present. Chip tech in the U.S. is becoming more prevalent, but can still be a slow process. … [Read more...]

Income Investing: These Bonds Can Help Reduce Interest Rate Risk

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Many individual investors shy away from bonds that trade at a premium to par value because they don’t see the point in paying, say $11,000 for a bond that returns $10,000 at maturity. Here Fidelity offers a primer on premium bonds, why investors need not fear premium bonds, and how premium bonds can be used to reduce interest rate risk in a fixed-income portfolio. You can read the full post here. Some investors today would rather hold cash than buy bonds because they’re concerned that interest rates may rise and depress bond values. Premium bonds are not immune to rising rates—premium bond … [Read more...]

Is Over Regulation the Death Knell for U.S. Banking?

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The Wall Street Journal details the potential death spiral for the over regulated U.S banking industry. The Institute of International Finance, which represents global banks, finds that since 2010, European, Japanese and U.S. banks have on average been earning less than their cost of capital. Regulation is part of the reason. To better buffer loan losses, banks must now hold more capital such as shareholders’ equity, which spreads profits across more shares. To deal with sudden outflows of funds, they must hold more highly liquid short-term assets, such as Treasury bills, which earn less … [Read more...]

Worthy Reads: You Can Eat Gluten Again, America

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Fed’s Yellen sees some possible benefits from running economy with tight labor market (MarketWatch) Fed may have to hike interest rates faster, Rosengren says (MarketWatch) You Can Eat Gluten Again, America (Bloomberg) U.S. Producer Prices Rose 0.3% in September (WSJ) Investors regain appetite for US oil (FT) … [Read more...]

Your Retirement Life: Sage Advice on How to Get Ahead

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You don’t have to start your own business to be an entrepreneur. That was some key advice I recall from the late Tom Stemberg, founder of Staples, when he spoke at Babson College—known for its entrepreneurship programs. Stemberg felt that the best way to continue a business education was by working for a company that was already established—a leader in their field. His idea was to absorb as much as possible, and then, after seeing how the sausage was made, determine if you had the stomach to really do something on your own. I was reminded of this sage advice from Stemberg during a recent … [Read more...]

How much more Downside does the British Pound have?

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According to Goldman Sachs, much more. Here's Goldman's take via Zerohedge: How Much More Sterling Downside? (via Goldman Sachs) 1. With the prospect of a 'hard Brexit' becoming a reality, investors who were previously expecting a 'soft' Brexit, or no Brexit at all, have updated their priors, and Sterling has depreciated about 5 percent over the space of a week against G10 currencies. GBP/$ is about 1.5 percent above 1.20, which is our 3-months forecast published on 5 July 2016. In a recent Global Markets Daily ("How Much Sterling Downside?, 6 Oct 2016), we highlighted that risks to our … [Read more...]

Worthy Reads: Detroit residents are drowning in debt

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The 'gig economy' is growing — and now we know by how much (CNBC) Economists Believe a Recession Is Likely Within Next Four Years (WSJ) Social Security Recipients May Get a (Very Small) Raise in 2017 (WSJ) This Financial-Stability Metric Has the Fed’s Attention (Bloomberg) Detroit residents are drowning in debt (Money) … [Read more...]

Can Cheap Money Continue to Fuel the Stock Market?

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Low and negative interest rates have been a big factor in the magnitude and duration of the current bull market. As central banks yanked risk-free interest income from the world’s responsible savers and retired investors, many have been pushed (kicking and screaming if they are smart) into riskier assets. After years of getting bludgeoned by zero percent interest rates, the accepted wisdom on Wall Street now seems to be that as long as interest rates are held in the tank, the stock market will continue to float higher and higher. Stocks may be at one of their most expensive levels on … [Read more...]