The Economist reports on more yield reaching in the bond market. We’ve written about the 100-year Argentina bond that was issued without a hitch, but Argentina isn’t the only country where we are seeing historic yield reaching behavior. With rates on high yield bonds offering little more than 5%, some investors apparently see no harm in loading up on Iraqi bonds. Yup, Iraq recently issued a $1 billion bond with an expected yield of 7%, but demand that was six times the available supply ultimately drove the yield on those Iraqi bonds down to 6.75%. Today they yield about 6.3%. Such eagerness … [Read more...]
Archives for August 2017
What Can We Learn from Denmark?
Under the heading of "even a blind squirrel finds a nut," Denmark targets deep tax cuts. What are we waiting for? Peter Levring writes at Bloomberg: By encouraging more people to work, the government expects to generate more revenue via sources such as value-added tax, Jensen said during a press conference in Copenhagen. "There’s still room for growth in public spending, and room to prioritize, as this government does, welfare for Danes," Jensen said. He said critics of the government’s plan were guilty of a "simplification" of economic principles. "This is not a zero-sum game" between … [Read more...]
Can Macron Start Unwinding France’s Arcane Labor Laws?
Today France's president, Emmanuel Macron, proposed new labor laws for his country. The French have traditionally protected labor with strict laws about hiring, firing, hours worked and remuneration. Those laws have worked to hold back France's productivity, and part of Macron's election platform was to reform them. Reuters reports that Macron has a plan to do just that. Here's an outline of what Macron proposes for various problems facing France's labor market. RULES IN SMALL COMPANIES Employers of less than 20 people will be able to negotiate directly with employees on workplace … [Read more...]
Automakers are Gaining on Tech Titans in the Race for Robot Cars
Self driving cars are usually considered the realm of tech titans like Google, Uber and more secretly, Apple. But traditional automakers have not been sitting idly on their hands waiting for Silicon Valley upstarts to eat their lunch. No, Detroit, Munich, Yokohama, Gothenburg and other centers of automobile innovation have been working rapidly to develop their own self-driving vehicles. In WIRED, Jack Stewart writes about how Ford is using real world tests like delivering pizza with its self-driving research vehicles to better understand the future of autonomous driving. “Society is, in … [Read more...]
Pet Care is a Business You Want to Be invested In
Pet care is a lucrative business. Historically much of the spending on pets has come from developed world economies like the U.S. and U.K., but as the FT reports here, pet ownership has risen dramatically in developing countries. A growing middle class in emerging markets is driving worldwide pet ownership higher. Since 2003, the number of pet dogs in emerging market countries has jumped 51% compared to a 5% rise in the developed world. “In poor countries people are more focused on a chicken that will lay eggs or a pig that might eat their waste. It’s only as they get a little bit richer … [Read more...]
Are the Euro’s Days Numbered?
In less than a year, Italy could have a government that is committed to either dropping out of the euro altogether, or to some other scheme such as creating a so-called 'parallel currency.' Either of these are obviously bad for the euro-zone as a whole. Italy is one of Europe's largest economies, and unhinging it from the euro would be a catastrophe for the currency bloc. But political momentum points toward a more euro-skeptic party winning in Italy's coming elections. The FT's Tony Barber explains how that could happen: Neither the left, nor the right nor Five Star has much hope of outright … [Read more...]
America Can Fix This Lousy Deal for Workers
Writing at International Liberty, Dan Mitchell a senior fellow at the Cato Institute, says that Social Security isn't only basically bankrupt, it's also a "lousy deal for workers." He writes: The part of the crisis that generally is overlooked is that the program is a lousy deal for workers. They pay record amounts of tax into the system in exchange for a shaky promise of a modest monthly check. For all intents and purposes, they are being charged for a steak, but they’re getting a hamburger (with Medicare, by contrast, people are charged for a hamburger and they receive a hamburger … [Read more...]
Wal-Mart Closes in on Amazon Behind the Scenes
Back in April I wrote about Amazon's efforts to secure forklift technology that would require less downtime than battery powered machines. To that end, Amazon purchased fuel cell technology from Plug Power. Fuel cell driven forklifts are perfect for warehouse environments because they have none of the emissions of gasoline powered machines, but no long charging times either. To refuel, they simply fill up with hydrogen, and drive back out on the floor for more work. At the same time Amazon was negotiating its supply deal with Plug Power, Wal-Mart was making its own. Sarah Nassauer reports … [Read more...]
Can the Trump Administration Keep its Tax Cut Promises After All?
After getting embroiled in scandals that involve Russians and white supremacists, and after the failure of the GOP's Obamacare reform package, Americans are asking if the President can keep his promise to pass tax reform this year. Despite the distractions Gary Cohn, the head of the White House national economic council, has told the Financial Times that a speech by President Trump coming on Wednesday will outline the case for tax cuts. The speech will be the first in a series to present the plan to the American people. The FT reports: “Starting next week, the president’s agenda and calendar … [Read more...]
The Quiet Gold Rally
For all the talk of the FAANG-led stock market rally, one asset class that isn’t getting enough respect is gold. The S&P 500 may be up 20% since year-end 2015, but gold prices are up 21%. If inflation is subdued as many proclaim, and the outlook for stocks remains bullish, why are gold prices so strong? … [Read more...]
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