Author: Roger Staiger

27 March 2019

Question: According to MSN: Money, what is the average mortgage debt?

Purdue agrees landmark $270m settlement for role in opioid crisis – Pg. 1

–          Purdue pharma and its owners, the Sackler family, did not admit guilt in the civil settlement

–          …more than 183,000 Americans died from an overdose involving a prescription opioid between 1999 and 2015

–          The company faces more than 1,000 lawsuits over the opioid crisis, including from 35 other states.  The latest wave of litigation over a decade after it was sued by the US justice department over alleged deceptive marketing practice4s, which resulted in a  fine of $634.5m

Investing – Pg. 7

–          …DE Shaw has evolved dramatically from the algorithmic, computer-driven “quantitative” trading it helped pioneer in the 1980s

–          It is now a leader in combining quantitative investing with traditional “fundamental” strategies driven by humans, such as stockpicking.  This symbiosis has been dubbed “quantamental” by asset managers now attempting to do the same

–          …DE Shaw is the fourth-highest grossing hedge fund group of all time, having made over $29bn for tis investors since those early days…..

–          It currently employees about 1,300 people, which includes more than 80 Ph.Ds. and 25 International Math Olympiad medal holders

–          Nearly every traditional investment company is scrambling to hire data scientists, programmers and technologists, and turn themselves into human-machine hybrids

We must stop fighting over scarce educational spoils – Pg. 9

–          ….non-college-educated people in US cities are employed in substantially less skilled jobs than they were 40 years ago

–          …young people (and their parents) worry that a mediocre college degree might just land them with a lot of debt and a low-skilled job … it is not an irrational fear…

–          …15% of UK university students went to an institution that had a negligible or negative impact on their earnings by age 29

–          …scarcity of routes available to young people who want a better future

–          …list of fixes would include better state schools, more affordable higher education that is less variable in quality, a broader range of alternatives to university that still lead to decent jobs, and a revival of broad-based economic growth that lifts all boats, not just the yachts (Prof Note: this “list of fixes” is the issue, in my opinion.  Everything seems to focus on “jobs”.  Why not focus on business creation and ownership?!  That is where the real $$$ is!  Define success as # of employees, as that translates to # employees * 4 (family #) being fed.)

Wall St braced for ‘earnings recession’ – Pg. 12

–          US profit margins are on track to suffer their first fall since 2015, as companies increasingly struggle to pass on the rising costs of labour, transport and raw materials to customers

–          The retreat from the post-crisis peak margins reached in 2018 signals a turn in the profit cycle that has powered the US market’s bull run and undermines an important prop for equity valuations ahead of the upcoming first-quarter reporting season

–          It also marks a reversal from the confidence many executives had expressed last year that customers would continue to absorb rising wage and fright costs in a tight labour market and the impact tariff battles have had on raw material prices

Answer: $201,811

26 March 2019

Question: According to MSN: Money, what is the average credit card debt?

White House pick for Fed board attacked by economists – Pg. 4

–          “Steve is an amiable guy but he does not have the intellectual gravitas for this important job”, wrote Mr Mankiw, a Harvard University professor and former chair of George W Bush’s council of economic advisers, on his blog, “Mr Moore should not be confirmed” (Prof Note: Whoa!)

–          The main concern about the choice of Mr Moore is that it marks a blatant attempt by Mr Trump to place a political ally within the Fed after months of attacks on the institution from the outside

–          Mr Moore’s nomination, which must be approved by the Senate, is likely to reignite concerns about Fed independence which have already ratcheted up a notch in the Trump era

Negative-yielding sovereign debt vaults back over $10tn as growth fears intensify – Pg. 19

–          The amount of government debt with negative yields has vaulted back over the $10tn market after the US Federal Reserve’s unexpectedly downbeat outlook exacerbated concerns over the health of the global economy and sent investors scurrying for the apparent safety of sovereign bonds

–          Bond yields have sagged lower for much of 2019 as fixed income investors have remained skeptical that growth will pick up again

–          The ECB this month restarted a crisis-era bank lending programme and last week the Fed shelved plans to raise interest rates this year – unexpectedly cautious moves that have raised questions whether officials see a downturn coming

–          The total amount of debt trading with nominal yields below zero is now $10.07tn….up from a low of $5.7tn in early 2018.  The last time the total moved through the $10tn mark was September 2017

Answer: $6,814

23 March 2019

Question: According to MSN: Money, what is the average home price?

Jittery investors shed stocks and seek safety in sovereign bonds – Pg. 1

–          Fears of a deepening economic slowdown rattled global financial markets yesterday as stocks fell, German government bond yields turned negative and a widely followed US Treasury market indicator raised fears of a recession

–          In the US, three-month Treasury yields surpassed those on 10-year debt – a kink that has receded every US recession since the second world war and last occurred before the financial crisis in 2007.  The yield on the benchmark 10-year Treasury note fell by 0.09% to 2.45%, down from 3.36% in October

–          …has the central bank returned the American economy to a safe equilibrium or is it beginning to fundamentally deteriorate?

Trump picks Powell critic for Fed board – Pg. 6

–          …nominated Stephen Moore, a visiting fell at the staunchly conservative Heritage Foundation think-tank and former adviser to his 2016 campaign, for a spot on the Federal Reserve Board

–          …Mr Moore has been one of the most prominent supporters of the president’s domestic economic agenda with its focus on tax cuts and deregulation

–          Mr Moore has been a vocal critical of the Fed, particularly as the central bank las year raised interest rates

Beware the health costs of legalizing cannabis – Pg. 8

–          Few investment sectors can match the huge returns achieved by the cannabis business in recent months, propelled by the prospect that the drug will be legalized for recreational use around the world while more medical applications are developed

–          …smoking potent cannabis strongly increases the risk of psychosis

–          This “case-control” study adds weight to the growing evidence that cannabis, particularly in high-potency forms such as skunk, can trigger mental illness in vulnerable consumers

–          There are also potential benefits from a well-regulated market, including diverting revenues from criminal traders to legitimate companies and (through taxation) public authorities.  Nor should we ignore the sheer pleasure that many people derive from smoking dope.  But the risks do suggest the need for great caution by governments considering legalization (Prof Note: More and more of my peers are acknowledging they “vape” and/or smoke pot.  What is of most concern to me is the consistent statement by most, “Pot is not addictive.”  In the same conversation I hear, “I just need pot to relax.”  If one needs pot to relax, does that not make it addictive?  Full disclosure, I have never smoked pot (or anything) but am expressing my concern and fear.)

Lab-grown stones take lustre off natural diamond producers – Pg. 13

–          …$17bn diamond-mining industry

–          Sales of lab-grown diamonds make up only about 2% of the total diamond jewellery market but production is growing by 15 to 20%/year, …

–          The price of smaller diamonds dropped to their lowest level since at least 2011 in January…

–          …Indian polishers and cutters of diamonds have grown cautious about restocking natural diamonds given the rising supply of lab-grown stones

–          The ability to produce small lab-grown diamonds in a consistent quality and colour has made them more desirable for the fashion jewellery market…

–          …a new breed of lab-grown producers is targeting bigger, more valuable diamonds

–          Over 90% of the world’s natural diamonds pass through India and are polished in the city of Surat

–          Lab-grown stones are produced using high pressure, or by depositing layers of carbon on a diamond seed, a process known as Chemical Vapour Deposition

–          Last July, the US FTC expanded its definition of a diamond to include lab-grown stones

–          Such stones could account for 5% of the global diamond jewellery market by 2023…

Answer: $275,000