Here’s what I’ve been reading lately


“Experience tells me that when everyone in the market is pointing in the same direction, that trade is done, and it’s time to turn around and look the other way.”

“There is little question that lower interest rates are required to keep companies investing and people employed. But when low rates spur investment in technology that replaces labour, rates have to drop even further. Central banks find themselves caught between a rock and a hard place. So rates may indeed stay very low but it’s dangerous to assume they will.”

“Global bond yields have indeed tracked the direction of global growth and, while the global economy does appear to be fragile, financial conditions have eased significantly, some indicators are moving off their lows, US household spending has demonstrated resilience and China is stimulating its domestic economy to offset the Trump-induced challenges for its external economy.”

“Importantly, with global financial conditions having been relaxed significantly, it suggests that global growth could indeed bounce and take everyone by surprise. Of course, if that happens you can expect bond yields to rise. It would also be positive for equities. When everyone is zigging, it may be worth zagging.”

Global Slowdown Spreads Across U.S. Economy (Wall Street Journal)

Negative Rates Are Rewriting the Rules of Modern Finance (Bloomberg)

The issues are most apparent in the market for interest-rate swaps. (This market allows professional investors to lock in interest rates and lets speculators bet on whether rates on bonds or loans will rise or fall.) That’s because the Black 76 model, the main tool to price options for interest-rate derivatives, and its variants are so-called log-normal forward models.

“For those who aren’t math nerds, it can essentially be boiled down to this: the formula breaks because it requires users to calculate a logarithm, and a logarithm of a negative number is undefined, or meaningless.”

Why “The Economy” is Still Relatively New (A Wealth of Common Sense)

Are Wealth Taxes A Good Idea? (Of Dollars and Data)

“First Congress creates taxes, then ultra-wealthy try to avoid them.  It’s a financial arms race that will never end.”


“There are over 3,500 publicly-listed companies in the U.S. alone. Within this group some companies will cease to exist within that 50-year time-frame, many will muddle along, and some will perform well. Only a very select number of companies will be able to compound capital at attractive rates of return for a multi-decade period.” 

Investors Scramble for Yield as Growth Outlook Darkens (Wall Street Journal)

Track the Markets: Winners and Losers (Interactive Graph from WSJ)



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