Fund Architects Commentary
OUT OF BOUNDS
Welcome to the 2016 Dean Foods Tournament of Whatever’s the Opposite of Champions. In what’s hoped to be the first and last of this classless classic, the nation's largest processor of fluid milk features the most loathsome lineup of crooked CEOs, gluttonous gamblers, and avaricious athletes ever assembled for an event. Continue reading »
Somewhat disappointingly, the little nugget about how the hemispheres affect which way water rotates in a toilet is a myth. Fact is, the configuration of drains is responsible for the direction of spin to a degree that overwhelms the slight influence of the earth’s rotation. What is true is that all things flow downhill. Witness, for example, the swirling motion that is Puerto Rico, which we understand can be translated to “Port-O-Let” in any hemisphere.
Puerto Rico, which was ceded to the U.S. in 1898 after a war with Spain, has a special tax status that dates to 1917 Continue reading »
BITS AND PIECES
Did you know that bitcoin was launched in a paper published October 31, 2008 by some form of higher intelligence calling itself Satoshi Nakamoto? We didn’t either. The still mysterious pseudonym’s detailed workings of the new currency, including the brilliant mathematical code that would operate it, were published the following January.
The first money business to deploy the new technology of record-keeping was the Medici bank in Renaissance Italy Continue reading »
BOARD TO TEARS
Remember Yahoo! Inc.? If not, here’s a clue: The struggling company with the exclamation point in its corporate name was an Internet search engine pioneer. It’s true…you can look it up on Google.
In 1994, "Jerry and David's Guide to the World Wide Web" was renamed "Yahoo!" Continue reading »
They say that patriotism is the last refuge to which a scoundrel clings.
If you missed it, Moody’s just agreed to a $130 million settlement with a California pension fund. The agreement resolved one of the industry’s last remaining legal migraines attached to the Financial Crisis of 2008. You’ll probably remember that eight years ago Moody’s and its ilk were loyally awarding sweet evaluations to huge piles of the smelly residential mortgage debt that eventually stuck to the bottom of Wall Street’s figurative shoe. Continue reading »
ILLUSIVE PUBLIC OFFERINGS
Since nothing says “risk-on” like the IPO market, it’s no surprise that current “risk-off” conditions are crushing the market’s newest companies. This hostile environment will doubtlessly have far-reaching effects on Wall Street, which has been hugely profiting from the public offering boom, and Silicon Valley, which has propagated many of the new ventures.
The 10 largest U.S.-listed IPOs of 2015 are down about 25% from their offering price. Continue reading »
Exponentially rising volatility in stocks, bonds, currencies, and commodities has left market pundits around the world scrambling to figure out what’s going on. As analysts search for reasons for the global volatility, what seems plausible one day is quickly disqualified the next when the market veers in a different direction. Scientists have a name for a state of disorder such as this:
Chaos -- When the present determines the future, but the approximate present does not approximately determine the future. Continue reading »
“CANNOT PREDICT NOW”
Believe it or not, fortune telling is a class B misdemeanor in the state of New York. Occasionally, that’s a problem for Madame Ruth and her gold-capped tooth. But predicting the future is hardly a legal issue for Wall Street analysts, especially those of the oil kind. To wit: “We assume that with less of a supply overhang in H2-2015, prices can recover further,” said the energy soothsayers at Credit Suisse in late 2014. “We see an average price of $79 a barrel in that period.” Magic 8-Ball says “Are you kidding?” Continue reading »
RISE OF THE MACHINES
There was a war…
We’ve been hearing that there’s a storm coming. It’s here. Oil prices are tanking. Global equities are evaporating. U.S. economic data seem to be moving backwards in time. The Dow and the S&P 500 look like they’re a couple cans short of a six-pack, surrendering 8% since 2016 arrived, while the faint-hearted NASDAQ has given up more than 10%. What’s wrong with this picture? Continue reading »
U.S. equity indices prices exhibited volatile trading in fourth quarter 2015 (4Q15) as measured by S&P indexes but managed to post positive results largely because of strong returns in October. International stocks and emerging market equities gauged by MSCI EAFE and MSCI Emerging Markets also finished positively for the quarter even though the latter index was up only slightly. Domestic and international bond returns as calculated by Barclays U.S. Aggregate Bond and Barclays Global Aggregate Bond ex U.S. were lower for the quarter as credit spreads widened and the U.S. Fed increased the target of the Fed Funds rate. Commodities continued to struggle mightily partly because of slowing Chinese demand and absent inflation. Intra-day volatility increased as the quarter wore on and left indices mixed as the year drew to a close. Continue reading »