EconoMonitor

Economics Blog Aggregator

    Finance & Markets

  • Real Time Economics

    Big Banks Still Seen as Too Big to Fail, Fed’s Lacker Says

    The Federal Reserve and other financial regulators have yet to adequately deal with the problem of banks that are viewed as too big to fail—and many of their interventions only heighten the perception, Richmond Fed President Jeffrey Lacker said Tuesday. “Perceived guarantees thus encourage fragility, which induces interventions, which encourages further fragility,” Mr. Lacker said in prepared remarks to the Louisiana State University Graduate School of Banking. “The ultimate result of this cycle is taxpayer-funded subsidies to financial firms that are widely viewed as deeply unfair.” Mr. Lacker a frequent critic of the Fed’s interventions during the financial crisis, including some of its less conventional monetary policy actions, said new regulations stoppe...more

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  • FinanceProfessor.com

    What's Really Driving Income Inequality - Bloomberg View

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  • AllAboutAlpha: Hedge Fund Trends & Alternative Investment Analysis

    Copper Prices: Why the Downslope?

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  • The Big Picture

    Dark Horse Candidate for 2016

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  • Dealbreaker

    Write-Offs: 5.26.15

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  • Real Time Economics

    Housing Bubble? Despite Rising Prices, Most Economists Still Say No

    The S&P/Case-Shiller Home Price Index released on Tuesday was the latest report to show a relentless rise in housing prices, causing some economists to ask: Is another bubble forming? According to Tuesday’s data housing prices have been climbing for 35 consecutive months, but economists pointed to several reasons why that isn’t a concern, namely that while prices keep rising the rate of growth has slowed. In the first three months of this year home prices gained 0.8%, according to the S&P Case-Shiller national index. That’s down from 2.8% in the first three months of 2013 and 1.2% during the same period of last year. “There is no bubble to be anxious about,” said David Blitzer, managing director and chairman of the Index Committee for S&P Dow Jones Indices. P...more

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  • Real Time Economics

    Fed’s Yellen Plans to Skip This Year’s Jackson Hole Conference

    Federal Reserve Chairwoman Janet Yellen plans to skip the central bank’s high-profile conference in Jackson Hole, Wyo., this year. Ms. Yellen “does not plan to attend the Federal Reserve Bank of Kansas City’s Jackson Hole Economic Policy Symposium in August,” a Fed spokesperson said Tuesday. “However, she looks forward to participating in the symposium from time to time in future years as part of a public speaking schedule that includes a wide variety of venues and events.” The Jackson Hole conference, hosted by the Kansas City Fed, typically is attended by the Fed chief and other top central bankers. Last year’s conference featured Ms. Yellen as well as European Central Bank President Mario Draghi  and Bank of Japan Gov. Haruhiko Kuroda. This is the seco...more

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  • Dealbreaker

    Let’s Remember The Real Reason We Just Had A Long Weekend

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  • Calculated Risk

    Regional Fed Manufacturing Surveys for May and the ISM Index

    Earlier today the last two regional Fed surveys for May were released. As expected, the Dallas Fed was especially weak due primarily to weakness in the oil sector.From the Dallas Fed: Texas Manufacturing Activity Contracts FurtherTexas factory activity declined again in May, according to business executives responding to the Texas Manufacturing Outlook Survey. ... The general business activity index fell to -20.8 in May, its lowest reading since June 2009.Labor market indicators reflected employment declines and shorter workweeks. The May employment index declined 10 points to -8.2, after rebounding slightly above zero last month. Twelve percent of firms reported net hiring, compared with 21 percent reporting net layoffs. The hours worked index fell from -5 to -11.6.em...more

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  • Dr. Housing Bubble Blog

    Shopping with $1 million in Culver City: gentrifying out the baby boomers and those unable to keep up with the Joneses.

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  • Dealbreaker

    Deutsche Bank Paid Another Fine But It Was Only $55 Million

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  • FT Alphaville

    The mysterious decline in the number of US public companies

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  • Calculated Risk

    Real Prices and Price-to-Rent Ratio in March

    The expected slowdown in year-over-year price increases has occurred. In October 2013, the National index was up 10.9% year-over-year (YoY). In March 2015, the index was up 4.1% YoY.  However the YoY change has only declined slightly over the last six months.As I've noted before, I think most of the slowdown on a YoY basis is now behind us (I don't expect price to go negative this year). This slowdown in price increases was expected by several key analysts, and I think it was good news for housing and the economy.In the earlier post, I graphed nominal house prices, but it is also important to look at prices in real terms (inflation adjusted).  Case-Shiller, CoreLogic and others report nominal house prices.  As an example, if a house price was $200,000 ...more

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  • naked capitalism

    2:00PM Water Cooler 5/26/15

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  • FT Alphaville

    Central banking: just when you understand it, it changes

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  • Paper Economy - A US Real Estate Bubble Blog

    New Home Sales: April 2015

    Today, the U.S. Census Department released its monthly New Residential Home Sales Report for April showing sales jumped a notable 6.8% from March rising 26.1% above the level seen in April 2014 but still remaining near an historically low level with 517K SAAR units. The monthly supply declined to 4.8 months while the median selling price increased 8.31% and the average selling price increased 5.04% from the year ago level. The following chart show the extent of sales decline to date (click for full-larger version). ...more

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  • Paper Economy - A US Real Estate Bubble Blog

    FHFA Monthly Home Prices: March 2015

    Today, the Federal Housing Finance Agency (FHFA) released the latest results of their monthly house price index (HPI) showing that in March, nationally, home prices increased 0.34% from February rising 5.16% above the level seen in March 2014.The FHFA monthly HPI are formulated from home purchase information collected from mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac. ...more

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  • Paper Economy - A US Real Estate Bubble Blog

    S&P/Case-Shiller: March 2015

    Today's release of the S&P/Case-Shiller (CSI) home price indices for March reported that the non-seasonally adjusted National index increased from February with prices rising 0.80% while the non-seasonally adjusted Composite-10 city index increased 0.80% and the Composite-20 city index increased 0.92% over the same period.On an annual basis, the National index increased 4.14% above the level seen in March 2014 while the Composite-10 city index increased 4.75% and the Composite-20 city index increased 5.04% over the same period.On a peak basis, all three indices still show significant peak declines slumping 8.99% for the National index, -16.02% for the Composite-10 city index and -15.17% for the Composite-20 city index on a peak comparison basis. ...more

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  • Abnormal Returns

    Tuesday links: mobile connected

    MarketsMany valuation metrics are veiled earnings forecasts. (bloombergview.com)A Chinese stock market rally was not all that difficult to see. (thereformedbroker.com)Small cap volatility is plumbing historic lows. (jlfmi.tumblr.com)Notes from the 2015 London Value Investor Conference. (marketfolly.com)StrategyThe only way to face rising interest rates is with a globally diversified portfolio. (fortune.com)Why people make outrageous (market) predictions. (ivanhoff.com)Avoid offers from investment types for stuff that is "free." (alephblog.com)CompaniesCharter ($CHTR) to acquire Time Warner Cable ($TWC). (nytimes.com)Symbols: $CHTR $TWC Why the Jony Ive news from Apple ($AAPL) matters. (stratechery.com)Symbols: $AAPL FinanceWhy everyone wants newly issued corporate bonds...more

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  • The Big Picture

    Inflation vs. P/E Model (1965 to Present)

      Relative to this morning’s column, consider this discussion about inflation and valuation: From Savita Subramanian: Inflation: The level of inflation also matters, and historically has had a strong relationship with PE multiples. Chart 2 below indicates that the relationship may not be linear, but many have simplified this relationship to the “Rule of 21” which suggests that the sum of the PE multiple and CPI inflation should equal 21. Given that the latest inflation data are slightly negative (-0.2%) and the trailing PE ratio of 17.6x, the Rule suggests valuations should jump 3-4 points, or that inflation should be 3-4% (or some meeting in the middle). And the chart below indicates that P/E multiples could be far higher than they are today without bre...more

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  • Calculated Risk

    Comments on New Home Sales

    The new home sales report for April was above expectations at 517 thousand on a seasonally adjusted annual rate basis (SAAR). Earlier: New Home Sales increased to 517,000 Annual Rate in AprilThe Census Bureau reported that new home sales this year, through April, were 179,000, Not seasonally adjusted (NSA). That is up 23.7% from 145,000 during the same period of 2014 (NSA). That is a solid first four months!Sales were up 26.1% year-over-year in April, but that was an easy comparison.Click on graph for larger image.This graph shows new home sales for 2014 and 2015 by month (Seasonally Adjusted Annual Rate).The year-over-year gain will probably be strong through July (the first seven months were especially weak in 2014), however I expect the year-over-year increases to s...more

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  • Abnormal Returns

    Startup links: too much of a good thing

    Startup linksYou aren't a true VC until you've been through a down cycle. (feld.com)Why a struggling company would take on venture debt. (ftalphaville.ft.com)Is the tech boom too focused on the needs of the 1%? (nytimes.com)7 myths about Silicon Valley. (gq.com)The competition for deals in China is now too heated. (bloomberg.com)Too much money can kill a company. (nytimes.com)7 lessons learned from an investment postmortem. (informationarbitrage.com)CompaniesHow Evan Spiegel plans to turn SnapChat into a real business. (bloomberg.com)Dropbox is on the clock. (businessinsider.com)Medium wants to be more like Twitter ($TWTR). (fortune.com)Symbols: $TWTR The last frontier for Uber: airports. (nytimes.com)...more

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  • naked capitalism

    Corruptionomics in Italy

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  • FT Alphaville

    Wirecard Gibraltar and an asset rich wind-up

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  • The Big Picture

    Embedded Predictions and the Valuation Debate

        Traders returning to their desks after the long holiday weekend will be greeted by the continuing Greek saga, a guessing game about when the Federal Reserve will raise rates and a megamerger in the cable industry. But the debate I am much more interested in is the one taking place about U.S. stock valuations. It is more significant, and not as well understood as those other discussions. The bears have been saying for some time now that stocks are at best fully valued, meaning there isn’t much room for gains after equities more than tripled from their March 2009 lows. The ursine argument is that low future returns are a given, and an ugly crash is the worst-case scenario. The bulls argue that ultralow inflation allows for higher valuation metri...more

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  • naked capitalism

    Links 5/26/15

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  • The Capital Spectator

    Q2:2015 US GDP Estimate: +1.3% | 26 May 2015

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  • The Housing Bubble Blog

    Because It Has Been Good, It Must Be Good Forever

    The Torstar News Service reports from Canada. “A group of midtown Toronto residents has banded together to fight what it’s dubbed ‘density creep,’ amid a push for midrise development citywide that shows no signs of abating. The group of about 50 neighbours claims the project will ruin their stretch of million-dollar homes set on deep, private lots. ‘I’m really concerned about my property value going down,’ says Lisa Goodwin, 49, a stay-at-home mother of two who has lived in a four-bedroom dwelling for 19 years. ‘Right now all the houses are $1.1 to, say, $2.2 (million) but they’re looking at putting in places that are only $500,000.’” The Guardian on New Zealand. “Economists in New Zealand have expressed alarm ...more

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  • The Capital Spectator

    Initial Guidance | 26 May 2015

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  • My voice and noise on subprime bank regulations

    The Basel Committee’s credit-risk weighted capital requirements for banks, is a leading cause of falling productivity

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  • The Housing Bubble Blog

    Bits Bucket for May 26, 2015

    Post off-topic ideas, links, and Craigslist finds here.

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  • The Aleph Blog

    Decline Free Food

    Photo Credit: Nic TaylorThere is no getting something for nothing.  There is always a cost involved, even if it is feeling vaguely obligated to listen to the person giving you a gift.  We are social creatures, and we want to favor people who are kind to us.I get a lot a pitches in the mail because I profile well to wealth managers and those like them.  The age, assets, income add up to a likely client, except that I am in a related business, and am not interested in making my assets less flexible, at least right now.My advice to you is that you do not respond to free gifts, whether it is good food, baubles, etc.  It’s not worth it, and if you have a need, it would be far better to draw up your own story, and send it to five wealth managers, putting them in...more

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  • AllAboutAlpha: Hedge Fund Trends & Alternative Investment Analysis

    What’s in a Copyright? Java API Case Before U.S. Supreme Court

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  • Abnormal Returns

    Monday links: nickel-and-dime bickering

    MarketsIt's been three and half years since a real correction. (thereformedbroker.com)The bull market is tired. (humblestudentofthemarkets.blogspot.com)Japanese stocks are trading at 15x earnings. (ft.com)StrategyDividend paying stocks are no shelter from an overvalued market. (etf.com)Why you should make your portfolio more 'dynamic.' (blogs.cfainstitute.org)FinanceThe curse of the IPO pop. (pando.com)Expect more health care-related IPOs. (online.barrons.com)The post office could start looking more like a bank. (blogs.wsj.com)InfrastructureIndia is still facing an infrastructure deficit. (knowledge.wharton.upenn.edu)Infrastructure investment is not risk-free. (ft.com)ETFsSome ETFs have some significant single stock exposure. (online.barrons.com)The ETF Deathwatch for M...more

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  • The Housing Bubble Blog

    Buying At The Top Of What They Can Afford

    The Mercury News reports from California. “How high does this ladder stretch? With spring buyers vying for a limited number of properties, the median price for Santa Clara County homes reached yet another all-time high in April. Sticker shock spread throughout the region, with prices for single-family homes jumping from a year ago in all nine counties, according to CoreLogic. ‘Prices are jumping,’ said Kristine Kim-Suh, a Palo Alto-based agen. ‘Some properties are selling for $30,000, $40,000 or $50,000 beyond last month’s comparables, and it’s making buyers that much more aggressive. For example, they know that the comparable is $825,000 and they’re bidding $885,000, they’re so anxious. It’s even surprising the list...more

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  • Dr. Housing Bubble Blog

    Fed and CPI missing housing inflation yet again: The CPI is completely missing the increase in housing prices.

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  • My voice and noise on subprime bank regulations

    When are we going to fine or shame the regulators, The Great Distorters, The Great Manipulators of bank-credit markets?

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  • The Capital Spectator

    A Pre-Summer Summer Holiday…

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  • The Baseline Scenario

    Over at Medium: Organized Crime on Wall Street

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  • DRS » Blog

    EMIR- how was it for you?

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  • DRS » Blog

    EMIR- how was it for you?

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  • AllAboutAlpha: Hedge Fund Trends & Alternative Investment Analysis

    Lies, Damned Lies and Alpha

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  • The Baseline Scenario

    Why Is The White House Threatening To Veto An Imaginary Trade Promotion Authority (TPA)?

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  • The Baseline Scenario

    Over at Medium: “Payout Baby!!!”

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  • Macro Man

    Number-crunching the FX fixing fines

    Behind the numbers in the FX fixing scandal, which represented a "brazen 'heads I win, tails you lose' scheme", according to New York State superintendent of financial services Benjamin Lawsky.0   Transaction costs paid by users (e.g., customers) of the fix to ensure getting filled at a rate unknowable in advance on potentially unlimited size0   Allegations of wrong-doing levied against some senior FX traders at banks not involved in the recent settlement, who have nevertheless been suspended from their jobs for more than a year 0   Charges of currency manipulation against sovereign authorities who, in the not-too-distant past, used to execute orders aggressively in pairs not involving their home currency, in order to move the price0   Amou...more

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  • My voice and noise on subprime bank regulations

    When are we going to get regulators concerned with banks allocating credit efficiently to the real economy?

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  • Piggington's Econo-Almanac

    March -- April 2015 Housing Data Rodeo

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  • Macro Man

    A multiple choice question

    So the ECB's recent revelation that they will frontload QE purchases ahead of the illiquid summer period represents:a) A sensible precaution  given the European proclivity to head to the beach en masse in August;b) A push-back against recent weakness in European govvies;c) A sign of concern that the euro has recouped a fair slug of this year's lossesd) An easy windfall for anyone fortunate enough to have been present when Benoit Coeure let the cat out of the bag to a private audience on Monday night;e) An opportunity for regulators to demonstrate that concepts like "privileged information" and "market manipulation" apply equally to policy-makers as they do private participants...more

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  • Ticker Sense

    Chief Strategist's S&P 500 Year End Targets

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  • The Skeptical Speculator

    Roche and Hussman on Tobin's Q

    In response to a Bloomberg article which claimed that the S&P 500 is “unhinged from reality” based on the Tobin's Q ratio, Cullen Roche at Pragmatic Capitalism opined on Monday that the ratio is actually useless. “But how useful is this ratio in reality?” he asked. “In my view, not very.” “For instance, the Q ratio has been well above its historical average for most of the last 25 years. If you sold stocks when the ratio was above its historical average you’ve missed out on some huge gains.” Roche is probably interested in timing the short-term direction of the market, and for that purpose, valuation metrics like the Tobin's Q ratio is, indeed, very probably useless, especially on their own. Over the long term, though, valuation metrics like the Tobin'...more

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  • Dr. Housing Bubble Blog

    The economics of new home sales: New home prices near record highs but builders are reluctant to build on low sales volume.

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  • Ticker Sense

    May 18th Blogger Sentiment Poll

    24/7 Wall St (N) The Aleph Blog (-) Biiwii (-) BullBear Trading Carl Futia (+) Dash of Insight (N) Dividend Growth Investor (+) Elliot Wave Lives On (N) Fallond Stock Picks (N) Global Economic Intersection (-) GEI – Investing Blog... ...more

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  • The Skeptical Speculator

    Greek financial crisis may be near endgame

    The euro has been rising in recent weeks, wreaking havoc on carry trades. Still, Greece's financial problems may create more stress on the currency as the endgame to the crisis looks to be near. From Bloomberg: Greek banks are running short on the collateral they need to stay alive, a crisis that could help force Prime Minister Alexis Tsipras’s hand after weeks of brinkmanship with creditors. As deposits flee the financial system, lenders use collateral parked at the Greek central bank to tap more and more emergency liquidity every week. In a worst-case scenario, that lifeline will be maxed out within three weeks, pushing banks toward insolvency, some economists say... “We are in an endgame,” ECB Executive Board member Yves Mersch said in an interview with Luxemb...more

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  • A Fistful Of Euros

    Are The IMF and the EU at Loggerheads Over Greece?

    Everything has a cost, or so the story goes, especially time. In the Greek case we now know an additional item on the mounting bill: the country is back in recession. The issue is who – apart of course from the long-suffering Greeks themselves – will pay the extra costs of  the latest imbroglio. The Cost Of Not Finding A Solution It is now clear that Greece’s economy has been going backwards over the last 6 months, and that it has once more fallen back into recession. Greek GDP fell by 0.4% in the last three month of 2014, and by a further 0.2% in the Jan – March 2015 period. As a result at the end of March Greek GDP was only 0.3% above the year-earlier level. This is a lot lower than expected in IMF forecasts, and – perhaps more impo...more

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  • A Fistful Of Euros

    Occupational shifts in the UK

    Following up on the ideas in this post, here’s an interesting chart from the Bank of England Inflation Report. In our model, people advance along at least locally optimal career paths in expansions, and then have to find a new one in recessions. So you’d expect job tenure, marked in green, to reflect the business cycle – people accumulate it during expansions and lose it in recessions – and that’s precisely what we see. In 1996-2000, when unemployment dropped sharply, it was a strongly negative contributor to wage growth. After that, it began to be a positive contribution as the new hires progressively accumulated tenure and advanced along their career paths. We also see a bit of this after the .com crash. However, it didn’t become a...more

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  • The Skeptical Speculator

    S&P 500 hits new record but Transports lag

    The S&P 500 rose 1.1 percent on Thursday to a new record high. However, Mark Hulbert warned of an important Dow divergence that is ominous for stocks. The Dow Jones Transportation Average is seriously lagging behind the broader stock market, and that’s potentially quite bearish.... The divergence began late last November, when the Dow Transports rose to a record high. They are now 6.7% below their all-time closing high (and 7.6% below the intra-day high). Over the same period, the Dow Industrials have risen more than 2%. Citing research by Jack Schannep, the editor of a market-timing advisory service called TheDowTheory.com, Hulbert said that in the last 25 years, there have been 14 instances of big divergences between the Dow Transports and Dow Industrials. On averag...more

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  • Emerging markets

    IB revenue in Asia slumps by nearly 20% in Q1

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  • Macro Man

    Which of these things is not like the others?

    1) The quarterly annualized run-rate of retail sales has been at its worst level since the crisis:2) Forward earnings estimates have stagnated for the last year3)  The SPX makes a new all-time closing high.Yeah, yeah, the Fed's on hold, ECB QE, blah blah blah.  But unless one literally believes that a zero discount rate renders the equilibrium price of financial assets to be infinity, it is reasonable to ask at what point will equity investors quit letting Janet Yellen do all their thinking for them?...more

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  • DRS » Blog

    MiFID 2 RTS delayed

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  • DRS » Blog

    MiFID 2 RTS delayed

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  • Ticker Sense

    Equity ETFs vs. Equity Mutual Funds Flows

    Here's an updated look at this months' chart of cumulative flow of funds for equity ETFs vs. equity mutual funds. Our graph stretches back to 2008.

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  • The Aleph Blog

    Possible Investment Contest

    Photo Credit: Maryland GovPicsToday I saw an article about a high school investing contest, and like most contests of that type, it does not teach investing, but speculation.I̵7;ve wanted to try this for about ten years or so.  I’d like to try running a stock picking contest, but only if I can offer decent prizes, and get enough participants.  I’ve written about this before, these would be the rules:No leverage and no shortingNo trading — buy & holdNo Exchange Traded Products, and only common stocksMinimum market capitalization of $100 millionOnly stocks traded on US exchangesForced diversification — a portfolio of ten stocks equally weightedOne stock from each of ten volatility buckets, to reduce speculationHighest geometric mean retu...more

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  • DRS » Blog

    ESMA to widen clearing net

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  • DRS » Blog

    ESMA to widen clearing net

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  • Emerging markets

    M&A: Who is big in Japan?

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  • Steve Keen's Debtwatch

    What Is Neoclassical Economics & an Alternative Monetary Macroeconomics

    This is a talk I gave in Tel Aviv, Israel at the invitation of the Rethinking Economics Student Forum there (which is a member of the International Student Initiative for Pluralism in Economics), and at the Palestine Economic Policy Research Institute in Ramallah, Palestine. I cover the defining features of Neoclassical Economics, contrast these with Post Keynesian Economics, and simulate a debt deflation using the Open Source modelling program Minsky. ...more

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  • FinanceProfessor.com

    An iconic chief executive vs. his company’s internal watchdogs

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  • FinanceProfessor.com

    At long last, corporate boards step up - Fortune

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  • The Aleph Blog

    On Risk-Based Liquidity and Systemic Risk

    image credit: trialsanderrorsI can’t help but think after the financial crisis that we have drawn some wrong conclusions about systemic risk. Systemic risk is when the financial system as a whole threatens to fail, such that short-term obligations can’t be paid out in full.  It is not a situation where only big entities fail — the critical factor is whether it creates a run on liquidity across the system as a whole.Why does a bank fail?  It can’t pay in full when there was a demand for liquidity in the short run.  Typically, there is an asset-liability mismatch, with a lot of payments payable now, and assets that cannot be easily liquidated for what their stated value reported to the regulators.Imagine the largest bank failing, and no one el...more

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  • Emerging markets

    Asia: Taxing times for Indonesia’s new finance minister

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  • footnoted*

    Herbalife v. Ackman: Who’s manipulating whom?

    It’s been nearly 2 1/2 years since Pershing Square’s Bill Ackman made a 300-page presentation outlining his short position in Herbalife. Since then, countless pixels (not to mention video footage and actual ink) has been devoted to the seemingly never-ending battle, complete with dueling websites (see this company site and this anti-Herbalife site). Here at footnoted, we haven’t really spent too much time on the back-and-forth volleying. Still, a disclosure in the 10-Q that Herbalife filed yesterday afternoon — the same day it reported better-than-expected results that are causing the stock to surge today — caught our attention. Although the disclosure didn’t mention Ackman by name, it’s hard to imagine who else the company coul...more

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  • Steve Keen's Debtwatch

    The naivety of the UK economic debate

    I was interviewed by Chris Menon from Every Investor last week and asked to comment on the economic policies of the two major parties in the UK election. Chris’s introduction to the interview is below; click here to see the interview itself. In an exclusive interview with Every Investor, Professor Steve Keen from Kingston University has warned that politicians who promote austerity economics are naïve. The economist, who was one of the few who predicted the Great Recession, warned last year that the US and UK economies wouldn’t make a sustainable recovery due to the problem of high levels of private debt – public debt being more a symptom than a cause of this economic malaise. In this interview he gives a detailed explanation as to why the austerity-heavy econo...more

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  • A Fistful Of Euros

    If Greece Had Not Existed, Europe’s Leaders Would Have Had to Invent It

    He must be chosen from among you as a scapegoat. Hipponax One of the more intriguing aspects of the whole modern Greek drama is the tragicomic way the country seems to be constantly condemned to live out well known themes which come from its own mythology. The latest example is the way what was once the cradle of European civilization has allowed itself to be converted into the role model for everything its fellow Europeans are not. Or at least, this is the story we are supposed to believe. Greek culture and historiography is replete with references to a figure – the pharmakos, or scapegoat – who needed to die that others might live. In fact, the pharmakos ritual is probably as old as human experience itself. In classical Greece it was the custom in times of cr...more

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  • Jeff Matthews Is Not Making This Up

    Sgt. Pepper! Joe Cocker! Jimmy Page! Oh, and Warren and Charlie...

                      The best part of this year’s Berkshire meeting—except seeing Charlie Munger in good form, which we’ll get to in a bit—was the movie.            Not the movie itself, but the end of the movie, when the sing-along tribute to Berkshire’s managers, which always used to be set to the tune of “My Favorite Things,” turned out to use “Sgt. Pepper” instead.            That’s some good taste there.    But, actually, the best part of the Beatles-themed piece of the movie came as it died out and, miraculously, the “Sgt. Pepper Reprise”—the best two minutes of The Bea...more

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  • footnoted*

    Warning signals in Yelp’s 10-K

    Back on March 2, we published a report on Yelp that looked at some of the tough new language that we found in their 10-K. Given Yelp’s earnings release on Wednesday and the sharp decline in the stock price yesterday, we wanted to make the report available to all of our footnoted readers. You can read the report here for free. Just a reminder that there are no accidents in SEC filings. Everything is there for a reason. ...more

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  • footnoted*

    Pier 1’s Not-So Confidential Agreement

    Hardly a day goes by when we don’t notice a “Confidential Agreement” attached as an Exhibit to an SEC filing. The irony, of course, is that once it hits the EDGAR database, it’s not exactly confidential any longer. Take this “Confidential Retirement Agreement” that was attached to the 10-K that Pier One filed on Tuesday. The agreement was with former CFO Charles “Cary H.” Turner, who suddenly “retired” on Feb. 10, the very same day that the company “revised” its financial guidance for fiscal 2014. Just to be clear, by revised, we mean sharply lowered. The stock dropped 30% on the news. And much of the news coverage pinned the blame on Turner for not getting those all-important projections correct. T...more

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  • Richard's Real Estate and Urban Economics Blog

    Is Free Trade Good for Everyone?

    Greg Mankiw implies that it is, and that all economists agree that it is.  But it actually isn't.  Who says so?  Economists.In particular, the workhorse theory of International Trade, the Hecksher-Ohlin Theorem, leads to the Stolper-Samuleson Theorem, which shows that when countries start trading with each other, the relatively abundant factor of production in each country becomes better off, while the relatively scarce factor becomes worse off.   In the US context, this implies that opening up trade will leave capital better off relative to labor, and skilled labor better off relative to unskilled labor.Does trade increase the total size of economies?  Yes--this is something that economists do agree on. But in the absence of redistribution--som...more

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  • Steve Keen's Debtwatch

    Keep It Simple And Complex, Stupid

    My last post supporting the use of nonlinear models (“You Do Need A Weatherman”) generated some thoughtful responses, mainly along the lines of this post by Ari Andricopoulos entitled “A View on the Economic Model Debate from a Non-economist (but someone who builds models for a living)”. The basic argument is that a full nonlinear model of any significant economic process would be too complicated, and that it was better therefore to stick with tractable linear models, while keeping in mind that the real world is nonlinear: I build models with data for a living, and I am acutely aware of the problems with using non-linear models to make any sort of accurate predictions – even with huge volumes of data to calibrate it with. It is not that the systems are linear....more

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  • Jeff Matthews Is Not Making This Up

    Messi Announces Retirement, Reporter Asks About Half-Time Score

     Tom Prescott announced his retirement last night.   You may not have heard of him, but as CEO of Align Technologies (the inventors of Invisalign “invisible braces”) Prescott helped turn a $70 million revenue company with 35% gross margins, negative operating margins and a $127 million market value into a near-$800 million revenue company with near-80% gross margins and 25% operating margins. Oh, yeah, and a $4.5 billion market value, last we checked. More than that, Tom Prescott helped Invisalign develop from a niche product not much liked by the orthodontists who were supposed to use it (it’s far more expensive to them than the old-fashioned wires and brackets, plus, in the early days, before Prescott, the Invisalign treatment was far mo...more

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  • Piggington's Econo-Almanac

    February 2015 Housing Data Rodeo

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  • Mises Institute

    The Next Generation of Austrian Economics: Essays in Honor of Joseph T. Salerno

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  • Richard's Real Estate and Urban Economics Blog

    LA has zoned itself out of the ability to house its residents (h/t Matthew Glesne)

    Once upon a time, the zoning in Los Angeles would have allowed for 10 million residents to live within its municipal boundaries.  Greg Morrow, in his UCLA dissertation, "Homeowner Revolution: Democracy, Land Use and the Los Angeles Slow Growth Movement 1965-1992," documents how this was eroded over time:So LA really did create a moat around itself and pulled up the drawbridge.  For those of us who think the blessings of cities should be shared widely, this is a shame....more

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  • Mises Institute

    A Short History of Man: Progress and Decline

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  • Jeff Matthews Is Not Making This Up

    Charlie Named Name

    Ned Isakoff: “You got me blacklisted from Hop Sing’s?”Delivery Man:  “She named name!”—Seinfeld, “The Race”  Like Elaine Benes in that Seinfeld episode, Charlie Munger named name. Two names, in fact: Greg Abel and Ajit Jain. Unlike Elaine Benes’s name-naming, however, the two named by Munger have nothing to do with Communist agitation and the destruction of capitalism as we know it—far from it.   Rather, they have everything to do with Capitalist orthodoxy in its purest, most meritocratic form: who might succeed Warren Buffett as CEO of Berkshire Hathaway under the scenario, as Munger puts it, “Buffett left tomorrow.” Here’s the direct quote from Munger’s comments written for the 2014 Chairman’s Lette...more

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  • Richard's Real Estate and Urban Economics Blog

    It is hard to feel urban form sometimes.

    I have spent a fair amount of time in Sao Paulo over the past 3-4 years, and always thought it sprawled more than LA, because it takes forever to get from one side of the place to the other.  So was I surprised when I went to Google Earth and looked at both of them from the same elevation. Here is LA:Now here is SP:It is far more compact.  Metro LA has about 18 million people; SP has about 20 million. But it takes about 2 hours to get from Santa Clarita in the west to San Bernardino in the east--the distance between the two is 85 miles; it can take four hours to go just 30 kilometers in SP.  Sao Paulo feels much larger to me....more

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  • Piggington's Econo-Almanac

    January 2015 Housing Data Rodeo

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  • VIX and More

    Average Annual Normalized VIX Futures Term Structure, 2004-2014

    One graphic I post periodically that never fails to generate a great deal of interest among traders, strategists and other volatility aficionados is my normalized VIX futures term structure graph. From 2008 – 2013, the annual normalized term structure was notable in that almost every year was an outlier in one way or another. For instance, 2012 and 2013 were the two years with the steepest contango in history, while 2008, 2009 and 2011 represent three of the four years (2007 being the fourth) with the flattest term structure. And 2014? It could not have been more average. If one combines all the years from 2004 to 2014 and creates an “average year” (i.e., the wide gray line on the chart) then 2014 (double blue line) comes closest to that average. [source(s): ...more

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  • VIX and More

    The Year in VIX and Volatility (2014)

    This is the seventh year in a row I have offered a retrospective look at the year in VIX and Volatility, which is my attempt to cram some of the highlights of the year in volatility onto one eye chart graphic with a (somewhat) manageable number of annotations. In aggregate, 2014 was a very quiet year for the VIX, with a mean close of just 14.19 for the year, which is the lowest the VIX has been since 2006 and third lowest since 1995. On the other hand, as I recently documented, VIX spikes were common last year, with 2014 registering the third highest number of 20% VIX spikes since the beginning of VIX data, in 1990. In short, the VIX was susceptible to large spikes, but these were typically followed by strong mean-reverting declines. For example, the peak VIX of 31.06 ...more

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  • VIX and More

    Top Posts of 2014

    Since I launched VIX and More some eight plus years ago, I have devoted one post to highlighting the top 25 most-read posts of each year. I do this in part for archival purposes: to see what is important to readers and how their interest in various issues changes over time. I also hope that these aggregations of most-read posts will serve as relatively easily accessible repositories of high-quality material for the benefit of new readers and long-term readers alike. During 2014, the blog saw an extended hiatus for the first time in its history, largely due to events arising from the passing of my father. For this reason, I am limiting the number of top posts for the year to thirteen, largely because Song for My Father* ended the year in the #13 slot. Looking ahead, vo...more

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  • Mises Institute

    Secession, State, and Liberty

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  • Institutional Economics

    Capital Gains Tax Reform in Canada: Lessons from Abroad

    The Fraser Institute has released a new volume on international experience with capital gains taxes. I wrote the chapter on New Zealand, with some reference to Australia. Australia was deemed too similar to Canada to warrant a chapter in its own right....more

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  • The Street Light

    Transfer Pricing Economics

    I'd like to announce that after a long hiatus from blogging, I'm taking it up again in a new forum.  The new blog, Transfer Pricing Economics, is primarily devoted to exploring my particular area of professional specialty, namely "transfer pricing".  If that term doesn't mean anything to you, then feel free to check out my brief explanation of transfer pricing. My aim is to expose and analyze the connections between the arcane world of transfer pricing and broader developments in the economic and financial world. And the connections are significant: the rules and economic logic of transfer pricing have a direct impact on trillions of dollars of international trade every year. So please feel free to check in on and contribute to the discussions about these...more

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  • Institutional Economics

    I am leaving CIS and returning to financial markets

    This is my last week at CIS. I will be returning to financial markets from whence I came back in 2008. Thanks to Greg Lindsay for giving me a platform to participate in the public policy debate over the last few years. Thanks also to those who contributed to Policy while I was editor over the last 18 months. Policy will continue under a new editor. My new employer won’t be paying me to blog or tweet during business hours, so you will be hearing even less from me on what is already a very low frequency blog. I will still post material here from time to time and link to what I am doing when appropriate. Needless to say, nothing on this web site should be attributed to current or previous employers. This blog has followed me around in various roles since 2003, back whe...more

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  • Institutional Economics

    Wayne Swan on Monetary Offset and the GFC

    Former Treasurer Wayne Swan is releasing some of his briefing notes from the GFC ahead of the launch of his upcoming memoir, The Good Fight. The first instalment from a meeting at the Prime Minister’s residence with the Prime Minister, Treasury Secretary and other senior officials on 4 August 2008 is remarkable for its acknowledgement of monetary offset. Indeed, the notes could just as easily have been written by Scott Sumner: There are three broad considerations the Government would need to keep in mind in taking a decision to engage in discretionary [fiscal] action: • The Reserve Bank through its control over interest rates, determines the overall level of aggregate demand in the economy, and the Bank would likely take account of any fiscal stimulus in its monet...more

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  • The Prudent Investor

    The Coming Silver Shortage

    Click here to go to the The Prudent Investor homepage for more interesting posts.

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  • A Dash of Insight

    Weighing the Week Ahead: More Clarity from the Market Message?

    Do you have an opinion about stocks or bonds or foreign exchange? If so, it is easy to find a market message that will support (or contradict) your viewpoint. The "message" of the market has rarely been this confused. With plenty of important news and data this week, the theme will be: Can we find clarity in the market message? Prior Theme RecapLast week I expected a focus on housing. The short trading week would start with Prof. Shiller (that was right) and end with discussion of pending home sales (also right). In between, there was plenty of filler because nothing much seemed to be happening. I lost count of the number of stories about the driverless Google car – interesting, but not very relevant for the markets. Forecasting the theme is an exercise in plann...more

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  • A Dash of Insight

    Weighing the Week Ahead: Will a Sluggish Housing Sector Derail the Economy?

    In a holiday-shortened week, there is plenty of data. The Case-Shiller home-price index will set the tone on Tuesday morning. After last week's soft housing reports, many will be asking, Will housing weakness undermine economic growth? Prior Theme RecapLast week I expected a focus on bonds versus stocks. It was a light week for data and the bond market rally was an ongoing mystery. That theme was as good as any, but nothing really stood out. The appetite for content created many "fluff" pieces and trading was very quiet. As long as you did not take small moves seriously, there was an opportunity to do some buying at mid-week. Forecasting the theme is an exercise in planning and being prepared. Readers are invited to play along with the "theme forecast." I spend a l...more

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  • A Dash of Insight

    The Sound of Silence

    The insightful investor develops solid indicators and then follows the data. This may seem obvious, but instead…. Many pundits start with the conclusion and then search for evidence.  [For complete appreciation of today's post, follow the links for the relevant music.] There are a number of interesting current examples. In various prior posts I have suggested that these were not really important leading indicators, so I am not flip-flopping by drawing inferences from improved conditions. Others will do that via their silence. I suggest that you recall the scary recent warnings on these themes – now all showing improvement – and note the sound of silence:  Margin debt. Remember how you were supposed to be scared witless (TM OldProf) by this event? It appea...more

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  • Felix Salmon

    Post Felix

    By Shane Ferro Today is Felix’s last day at Reuters. Here's the link to his mega-million word blog archive (start from the beginning, in March 2009, if you like). Because we’re source-agnostic, you can also find some of his best stuff from the Reuters era at Wired, Slate, the Atlantic, News Genius, CJR, the NYT, and NY Mag. There’s also Felix TV, his personal site, his Tumblr, his Medium archive, and, of course, the Twitter feed we all aspire to. Counterparties may have been the brainchild of Felix and the recently departed Ryan McCarthy, but the blog, site, newsletter, and Twitter feed will continue to exist in their absence. It will be run by Ben Walsh and Shane Ferro, with some non-trivial amount of snark. Today we focus on the reason Felix started Counterparti...more

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  • Felix Salmon

    The Piketty pessimist

    By Felix Salmon This chart comes from the World Economic Forum’s 2014 Global Risks Report, which came out just before Thomas Piketty’s book started becoming the topic of discussion in economic and plutocratic circles.* You can clearly see what you might call the rise of inequality-as-an issue: before 2012 it’s nowhere to be found, but since then it’s been consistently in the top spot. My prediction is that in 2015, thanks to Piketty, the WEF will start talking less about income inequality, and more about wealth inequality. The big question, though, is whether inequality is really much of a risk at all. After all, from the point of view of the average billionaire WEF delegate, inequality would seem to look much more like a reward. Chrystia Freeland has a hopeful...more

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  • Economix

    Economix Meets the Gales of Change

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  • Economix

    Economix Meets the Gales of Change

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  • Felix Salmon

    The most expensive lottery ticket in the world

    By Felix Salmon No Exit, the new book from Gideon Lewis-Kraus, should be required reading for anybody who thinks it might be a good idea to found a startup in Silicon Valley. It shows just how miserable the startup founder’s life is, and raises the question of why anybody would voluntarily subject themselves to such a thing. A large part of the answer is that Silicon Valley is gripped by a mass delusion, compounded by a deep “fake it til you make it” attitude toward success. Why do so many people in Silicon Valley want to be founders? Because every founder they meet is always killing it, crushing it, having massive success, just about to close a huge round, etc etc. At some level, they must know this is impossible: if 90% of startups fail, it simply can’t be the...more

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  • Economix

    Mortgage Reform Is Worth the Small Extra Cost to Borrowers

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  • Economix

    Mortgage Reform Is Worth the Small Extra Cost to Borrowers

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  • Economix

    In Europe, Auto Sales Are Still Low, But They Are Rising

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  • Economix

    In Europe, Auto Sales Are Still Low, But They Are Rising

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  • Accrued Interest

    Getting Involved in Bitcoin

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  • Stan Collender's Capital Gains and Games

    Capital Gains And Games Now Being Published By Forbes

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  • Stan Collender's Capital Gains and Games

    Big Changes Are Coming To Capital Gains And Games

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  • Stan Collender's Capital Gains and Games

    Camp Plan Puts Nail In Tax Reform Coffin For This Year, And Next, And...

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  • The Prudent Investor

    30,000 Protesters Take To The Streets in Nantes, France

    While the world is glued to Youtube live feeds in HD quality to the bonfires in Kiev where one corrupt regime is about to be replaced by another, the economic crisis erupts into fire in the heartland of the Eurozone.30,000 protesters took to the streets in Nantes, France on Saturday, in an ongoing struggle to prevent the building of a new airport.Due to the language barrier and a blackout in EU media this report for the BBC from 2012 shows that fronts are pretty hardened. Protesters claim that the Notre-Dame-des-Landes airport in the west of the country is unnecessary and would damage the enviroment while the local government just wants to press on with an agenda obviously abhorred in this town of 900,000.We miss the uproar in the EU about the deployment of pepper spray...more

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  • The Prudent Investor

    You Have No Deposits at the Bank but Only an IOU in Your Hands

    A nice reminder that once you deposit mony at the bank it is not yours anymore. Simply said your deposit is a – currently no interest paying – loan to the bank with little paperwork. Better get it before the bank runs begin. Click here to go to the The Prudent Investor homepage for more interesting posts. ...more

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  • Accrued Interest

    Why You Should Dump Those Shares of Tesla Now

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  • The Oil Drum - Discussions about Energy and Our Future

    The Oil Drum writers: Where are they now?

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  • Accrued Interest

    HOW CAN THE MARKET REACTION TO THE GOVERNMENT SHUTDOWN AND DEBT CEILING DEBATE BE A GOOD THING FOR INVESTORS?

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  • The Oil Drum - Discussions about Energy and Our Future

    The Last Post

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  • The Oil Drum - Discussions about Energy and Our Future

    The House That Randy Built

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  • The Street Light

    Cyprus and Eurozone Bank Deposits

    To me, the central issue raised by this week's Cyprus debacle is how it has affected confidence across the eurozone.  To what degree has the possibility of insured depositors at a eurozone bank losing a portion of their deposits affected the mindset of depositors?  To what degree has ECB acquiescence to this possibility undermined the notion that deposit insurance in the eurozone means the same thing in all countries?  And to what degree has the ECB's direct threat to end support for Cyprus's banking system in the event that the government of Cyprus can not arrange sufficient funds to meet its conditions made a farce of its earlier promise to "do whatever it takes to preserve the euro"?These, to me, are the interesting questions prompted by this week's ev...more

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  • London Banker

    Chop Off Their Hands . . .

    President Truman famously called for a one handed economist. The Carolingian kings of France would have accommodated him. They realised that a kingdom required a common currency under the control of the king and well regulated markets to sustain the confidence of the people. At first mints were established widely, spread across the kingdom. Local barons began to profit from debasing the coinage, undermining confidence in the monetary system. So Charles the Bald established mints under his direct control and regulated the issue of coins: C.12. Following the custom of our predecessors, just as it is found in their capitularies, we decree that in no other place in all our kingdom shall money be made except in our palace, and in St. Josse and Rouen, which right in th...more

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  • The Street Light

    When the Fed Chair is an Academic

    The big economic news of the week was, in fact, big economic news: the Fed's announcement of significant changes from past practice in the the quantity of its next round of large scale asset purchases ("unlimited"), and in the timing of any future reversal of this expansionary policy ("a considerable time after the economic recovery strengthens").I view this as a pretty fundamental shift in how the Fed hopes to affect the economy.  Rather than trying to push economic activity one way or the other through its management of interest rates (which can alter economic activity through its portfolio-rebalancing and wealth effects, for example), the Fed is now quite explicitly trying to affect economic activity by altering interest rate and inflation expectations.  As...more

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  • London Banker

    For Want of a Nail, the Ship Was Lost

    Imagine a great ship dominating the skyline on a distant sea. Imagine the complexity of that ship: keel, ribs, planks, masts, spars, and an infinite number of less readily named components. Each component was hand-crafted by a craftsman skilled in his trade, to precise requirements, and secured in position to take the stress and strain of a life at sea.Now imagine a crew. They didn't build the ship. The crew are told that the one and only purpose of the ship is to realise a profit for every man jack aboard. Any hand not contributing a profit will be turned ashore. Down below in the ship are nails. Thousands and thousands of nails. Nails are useful. Nails are much sought after in every port the ship enters. Nails can be readily sold and never traced. The crew h...more

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  • London Banker

    Lies, Damn Lies and LIBOR

    I've been hesitant to write about the LIBOR scandal because what I want to say goes so much further. We now know that Barclays and other major global banks have been manipulating the calculation of LIBOR through the quotation data they provided to the British Bankers Association. What I suspect is that this is not a flaw but a feature of modern financial markets. And if it was happening in LIBOR for between 5 and 15 years, then the business model has been profitably replicated to many other quotation-based reference prices.Price discovery is not a sexy function of markets, but it is critical to the efficient allocation of scarce capital and resources, and to the preservation of the long term wealth of investors and the economy as a whole. If price discovery is compr...more

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Aaron Menenberg Policies of Scale

Aaron Menenberg is Foreign Policy and Energy analyst, and a Future Leader with Foreign Policy Initiative. He also co-hosts Podlitical Risk (@podliticalrisk). He is a graduate student in international relations at The Maxwell School of Syracuse University. Previously he has worked at Praescient Analytics, The Hudson Institute, for the Israeli Ministry of Defense, and at the IBM Corporation. The views expressed are his own, and you can follow him on Twitter @AaronMenenberg. He welcomes questions and comments at menenbergaaron@gmail.com.