If you’re European and Catch a Cold on Vacation, Please Take Another

If you’re European and Catch a Cold on Vacation, Please Take Another

  • Posted on: 8 December 2015
  • By: admin

If you’re European and Catch a Cold on Vacation, Please Take Another

Europe’s highest court ruled that getting sick on one’s vacation legally entitled the individual to a “do-over”. This suit was brought by a department store workers union in Spain, a country that currently has an unemployment rate of roughly 24%. Read the whole story at http://www.nytimes.com/2012/06/22/world/europe/europe-court-says-sick-workers-can-retake-vacations.html

Why You Should Care

We all love vacation. Nothing is more frustrating then when you head on your vacation and you get hit with a bug. Maybe you caught a cold on the plane heading to your island destination. Maybe you ate a bad street taco in a rugged Central American town that didn’t agree with your sensitive stomach. But very few of us in the United States would claim that our employers should give us more vacation time to make up for our misfortune.

This story about the Spanish union lawsuit is a stark reminder of the inefficiency of the European employment system and the difficulties facing European leaders trying to cut costs and save the European Union through, among other cost cutting, the rationalization of public worker benefit costs. If we are going to get through these difficult times, we have to have honest discussions, and since most European workers are given 4-6 weeks of vacation every year, it is utterly ridiculous that a “do-over” is now the law of the land.

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Don’t Blame the Fed, Point your Finger at Congress

Don’t Blame the Fed, Point your Finger at Congress

  • Posted on: 8 December 2015
  • By: admin

Don’t Blame the Fed, Point your Finger at Congress

 

The Federal Reserve’s decision to order another round of monetary stimulus (albeit a modest one) plays into the hands of critics who accuse Chairman Ben S. Bernanke of enabling Washington’s deficit-spending addiction. The good news for Senator Jim DeMint, the South Carolina Republican, and other lawmakers who share this view is that they have the power to stop the debt binge by agreeing on a long-term deficit-reduction plan…

 

http://www.bloomberg.com/news/2012-06-20/if-congress-worked-it-wouldn-t-be-dependent-on-bernanke.html

 

Why You Should Care

The Fed can only do so much and monetary policy can be only so effective. We can have near zero interest rates into perpetuity; however, that won’t create sustainable job growth, economic growth, or prevent European contagion. Until Congress, gets involved in the fray and seeks to address fiscal issues the Fed is the only game in town. Many do not like intervention from the Fed and worry that their balance sheet is getting too large, but in this world where the can gets kicked and hope is the main strategy, be sure to point your finger in the direction of Congress. They won’t address taxes, deficits, or regulation all which effect economic growth.

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Just Because You Can Get the Money, Doesn’t Mean You Should Spend It – A Lesson for All

Just Because You Can Get the Money, Doesn’t Mean You Should Spend It – A Lesson for All

  • Posted on: 8 December 2015
  • By: admin

Just Because You Can Get the Money, Doesn’t Mean You Should Spend It – A Lesson for All

In searching for something compelling to write about, we stumbled upon this story of a Detroit man who was able to withdraw over $1.5 million from ATM’s, even though he only had $300 in his checking account, due to a technical glitch caused by the merger of Bank of America and Lasalle Bank. You can read the story at http://news.yahoo.com/blogs/sideshow/detroit-man-gambles-away-1-5-million-accidentally-191619543.html

Why You Should Care

This is really a great metaphor for what we face in today’s world of easy credit and sovereign debt. At the end of the day, human beings always want more, and the system of easy credit that we have created feeds this desire while at the same time removing much of the responsibility that should accompany the use of debt. We see it in individuals filing for bankruptcy to get out from under their large personal debt loads, and we see it in governments that keep interest rates artificially low in order to make debt service more palatable. Until we change our attitudes toward debt and leverage, we are likely to continue to repeat the mistakes and problems of the last decade.

The story of Ronald Page (from the article above) has great parallels to our current debt issues in the United States. Mr. Page knowingly stole $1.5 million, putting his family at risk, to feed his gambling addiction. The United States, and many of its citizens, is stealing from future generations to feed their own addictions, putting those generations at risk of having lifestyles that are below that of their parents. We risk too much of the future for the immediate gratification of today.

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Microsoft Unveils New Tablet Device

Microsoft Unveils New Tablet Device

  • Posted on: 8 December 2015
  • By: admin

Microsoft Unveils New Tablet Device

Microsoft startled everyone yesterday by announcing that it is going to make and sell its own version of the iPad, which is called the "Surface." This new tablet, which Microsoft CEO Steve Ballmer demo-ed in Los Angeles yesterday, will be made entirely by Microsoft--hardware and software. This strategy, selling an integrated device, is a 180-degree turn from the strategy that Microsoft has employed with PCs and smartphones for the past three decades. The decision will certainly startle and possibly anger the hardware vendors that buy Microsoft's operating systems--Hewlett Packard, Dell etc.--all of which will likely have their own tablets. Now, instead of being a partner and supplier, Microsoft will be a direct competitor. See more in the video link below:
 

http://finance.yahoo.com/blogs/daily-ticker/microsoft-launches-own-tablet-admits-apple-145645909.html

Why You Should Care

 

We do not publicly comment on the investment merits of individual companies, but this announcement is further indication that the transformation of mobile computing has a long way to go. Seeing a company like Microsoft chose to change courses and directly compete with some of its partners by developing both the hardware and software indicates how important the mobile computing space is going forward. Furthermore, the attempt to bridge the gap between the lap top and the tablet may be something that encourages further adoption of tablets. You will hear media pundits talking about Microsoft’s attempt at creating an iPad ‘killer’.  This is a ridiculous notion as tablet computing, over time, will not be a zero-sum game. However, it would be good for consumers, particularly those used to using Windows within their enterprise environment to have a viable mobile computing option. We think it will be fascinating to see if Microsoft’s new launch will be a success like X-box or a failure like several other hardware offerings they have tried. Either way, one thing is for sure, mobile computing is the future.

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Pro-Bailout Victory in Greek Elections – So What Happens Now?

Pro-Bailout Victory in Greek Elections – So What Happens Now?

  • Posted on: 8 December 2015
  • By: admin

Pro-Bailout Victory in Greek Elections – So What Happens Now?

Over the weekend, the pro-bailout factions in Greece won a majority of seats in Parliament, defeating the anti-bailout Syriza party, which had alluded to a Greek exit from the Eurozone. You can read the whole story at http://www.cnn.com/2012/06/18/world/europe/greece-election/index.html?hpt=wo_c1

Why You Should Care

So the latest threat to the Eurozone came and went and now European officials can take a moment and breathe a deep sigh of relief…OK, moment’s over. While we agree that the Greek election results are a “positive”, and markets reacted to these expectations last week with solid gains, we ARE NOT out of the woods in Europe by any stretch of the imagination. In fact, instead of calming debt markets, yields on Spanish 10-year debt have risen this morning to 7.1% from 6.09% on June 7th. Without a comprehensive integration of the political and financial systems in Europe, we will continue to treat the symptoms rather than dealing with the root cause of the problems.

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Natural Gas Prices Rise on Surprise Inventory Numbers

Natural Gas Prices Rise on Surprise Inventory Numbers

  • Posted on: 8 December 2015
  • By: admin

Natural Gas Prices Rise on Surprise Inventory Numbers

 

Natural gas futures surged over 12 percent on Thursday, topping $2.46 per million British Thermal Units (BTUs), after an unexpectedly bullish storage report helped prices rally above key technical levels. This price spike — to the highest level in more than a week — has now erased nearly half of the decline in natural gas prices over the past six weeks.

 

http://www.cnbc.com/id/47816037

 

Why You Should Care

Natural gas is fast becoming one of North America’s most precious resources. Despite its low price, the abundance of gas found in the U.S. has the ability to be a powerful driver of economic growth. One only needs to look at the economy of North Dakota to see how powerful a gas boom can be. A shift to using liquefied natural gas (LNG) in long-haul trucking, gas in lieu of coal at power plants, and eventually personal cars and trucks running on LNG could provide a significant catalyst for long-term economic growth. The ancillary benefits to growth in this industry have a multiplier effect that helps manufacturing, infrastructure, housing, etc. Hopefully industry, politicians, and environmentalists can come together (wishful thinking I know) and truly unlock this domestic resource for our benefit.

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New 401K Fee Disclosure Rules Coming Soon...How Much are You Paying?

New 401K Fee Disclosure Rules Coming Soon...How Much are You Paying?

  • Posted on: 8 December 2015
  • By: admin

New 401k Fee Disclosure Rules Coming Soon: How Much are You Paying?

Next month, more than 30 years after the 401k began to appear, employers will finally receive standardized and detailed information from plan administrators about how much they pay in fees. Within the following 60 days, and no later than the end of August, plan investors will get their own reports showing these costs. How much is this new rule needed? Many 401(k) investors have said in polls that they believe the investment programs are free. Even the people at their employers who oversee the plans are often clueless about fees and other 401(k) matters, according to a recent study by the U.S. Government Accounting Office.

 

http://money.usnews.com/money/blogs/the-best-life/2012/06/13/how-to-use-new-401k-fee-reports

 

Why You Should Care

Many individuals hold the majority of their investment assets in 401k plans. However, despite the dependence on 401k assets for retirement, most plan participants have no idea what it costs them. There are several layers of fees, of which many were not previously disclosed. These include investment costs, administrative costs, reporting costs, and advisory costs to name a few. Often these costs can add to up to 2-3% per year and may come directly from YOUR retirement assets. Hopefully, the new disclosure rules will help identify plans that are overly expensive and not beneficial to participants. You may wonder if your plan seems too expensive what your options are. One would be to not participate, but the tax deferral and company match benefits likely do not make that a good idea. However, there are two options to discuss with your HR specialist that could reduce your fees: 1) Ask them to alter the plan to include a self-directed brokerage option. This would allow you to utilize investments outside of the captive mutual funds or 2) Ask them to include exchange traded funds (ETFs) in the investment options. Most ETFs are significantly cheaper than mutual funds with comparable performance. Hidden costs have long been an issue for 401k plans, mutual funds, and large broker-dealers. We are glad that the 401k industry is finally providing greater transparency to plan participants and hope others will follow.

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Who is Buying U.S. Government Debt?

Who is Buying U.S. Government Debt?

  • Posted on: 8 December 2015
  • By: admin

Who is Buying U.S. Government Debt?

Mom-and-pop investors, and not the Federal Reserve, have been the ones most responsible for driving the mad dash to government debt, according to newly released data. The Fed's ambitious Treasury-buying program has pushed the central bank's balance sheet to $2.83 trillion and, by many accounts, the benchmark 10-year Treasury yields to record lows.  Check out the link below for the complete article.
 

http://www.cnbc.com/id/47738555

 

Why You Should Care

 

The common perception is that foreign nations are the main buyers of our debt, fueling concern that low bond rates and poor fiscal management will weaken demand and soon force rates to rise. Unfortunately, or fortunately depending who you ask, due to demand for safety investors of all sorts are buying U.S. debt. Despite the low rates, people are piling into U.S. Tresuries because they are more concerned about return of capital than return on capital. While this willingness to accept rates below that of inflation (thus a negative real return) will not likely last forever, those that are planning on rising rates in the near future may be sorely disappointed.

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Spain Requests €105 billion bank bailout…Is Italy Next?

Spain Requests €105 billion bank bailout…Is Italy Next?

  • Posted on: 8 December 2015
  • By: admin

Spain Requests €105 billion bank bailout…Is Italy Next?

This past weekend Spain officially requested help to support its beleaguered banking sector. While initially the response was positive, it now appears the focus is on the technical aspects of the help from the EU. In particular, where is the money coming from? And, what are the terms to be paid back?  Many are asking the question-Greece, Ireland, Portugal, now Spain, who’s next?

http://finance.yahoo.com/news/monti-struggles-keep-italy-being-154602848.html

 

Why You Should Care

Although we are exhausted from writing about Europe, it is important. The challenges of a monetary union under one currency that isn’t growing are well known. However, the fight against austerity and the political challenges each nation faces to implement change makes one thing clear: Growth is necessary to fix the problems. If Europe can’t grow then it will have to print massive amounts of money, restructure, have some sort of break up, or combination of the above. We think the final chapter of the Euro story could take years to play out, so we caution against expecting a quick resolution. Rather, be prepared for periods of positive surprises, the sense of an improving situation, and likely disappointment. This does not mean that failure is inevitable, simply that a fix will be fraught with obstacles and detours. Stay tuned…

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U.S. Trade Deficit Narrows in April

U.S. Trade Deficit Narrows in April

  • Posted on: 8 December 2015
  • By: admin

U.S. Trade Deficit Narrows in April

The U.S. trade deficit narrowed in April, as both imports and exports fell from record high levels set in March, in a sign of slowing global demand, a government report showed on Friday. The gap shrank 4.9 percent to $50.1 billion, as imports of goods and services dropped 1.7 percent to $233.0 billion, the U.S. Commerce Department said.
 

http://www.foxbusiness.com/economy/2012/06/08/us-trade-deficit-narrows-in-april/?test=latestnews

 

Why You Should Care

The shrinking of a trade deficit would often be cheered, especially if it was driven by the U.S. exporting more and importing less. However, April’s data saw a decline in both imports and exports. In particular, exports to Europe fell by 11% indicative of slowing demand from the 27-country European Union.  We are less concerned about the current trade deficit and more focused on real demand. With demand globally slowing, particularly in Europe and China, economic growth is likely to remain modest.

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