- Gold Crosses $1,300 Threshold as Rates Outlook Undermines Dollar – Bloomberg
After three years of being scorned, gold is making a powerful comeback. Prices briefly pushed above $1,300 an ounce on speculation that the U.S. central bank will be slow to tighten policy further, bolstering the metal’s appeal as the dollar sagged. | Bullion for immediate delivery climbed 0.4 percent to $1,296.20 an ounce at 10:17 a.m. in London. On Monday, prices touched $1,303.82, according to Bloomberg generic pricing. The metal has gained 22 percent this year, rising to the highest since January 2015, as a gauge of the dollar lost 6.3 percent. | Investors piled back into bullion in 2016 after prices sank for three straight years as risks to the global economy prompted the Federal Reserve to signal it will take a slower approach to rate increases. While the metal’s appeal has also been boosted by the spread of negative interest rates in Europe and Japan, gold’s latest push higher came after the Bank of Japan refrained from adding stimulus last week, which hurt the dollar. The spike above $1,300 on Monday came as many financial markets in Asia and Europe were closed.
- Apple Takes a $4 Billion Bite Out of ETFs as Smart-Beta Shines – Bloomberg 050216
When Apple has a bad run, it is devastating to many ETF investors. In the past two weeks, Apple has basically erased more than $4 billion in ETF assets during its 16.3 percent decline that was triggered by a disappointing earnings report. It gave the SPDR S&P 500 ETF Trust (SPY) a $1 billion haircut in a matter of days, not to mention wiping out hundreds of millions of dollars out of several other popular ETFs as seen in the table below which sorts ETFs by the size of Apple’s bite.
- Put Buffett’s Advice Into Action With These Two ETFs – Bloomberg 050216
Warren Buffett’s advice may now extend beyond the grave: “My advice to the trustee could not be more simple. Put 10% of the cash in short?term government bonds and 90% in a very low?cost S&P 500 index fund. I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, individuals—who employ high fee managers.”
- Bloomberg: Smart Beta Investing Awaits Its Advocate 050216
Smart beta is going through some growing pains, and Rob Arnott, co-founder of smart beta shop Research Affiliates LLC and one of smart beta’s pioneers, is a natural candidate to help lead it past these early hurdles.
- Bloomberg: The Super Rich Were the First to Bail During the Financial Crisis
When the going gets rough, the 1 percent start selling. | That’s the finding of a new paper that says people with the highest income bailed from stocks disproportionately on the worst days of the financial crisis. The share of selling by the biggest earners rose “sharply” in days following spikes in volatility, according to data on millions of sales reported to the government in 2008 and 2009. | Mapping selling patterns in periods of tumult is of interest to researchers trying to get at the psychological underpinnings of events such as the financial crisis, when more than $10 trillion was erased from U.S. share values. Their main conclusion, that different people react with varying urgency to signs of trouble, could help identify behavioral biases that feed market meltdowns.
- Here’s Your Degree. Now Go Defeat Demagogues. – Bloomberg View 043016
Michael Bloomberg: “As durable as the American system of government has been, democracy is fragile — and demagogues are always lurking. Stopping them starts with placing a premium on open minds, voting, and demanding that politicians offer practical solutions, not scapegoats or pie-in-the-sky promises. | In 1928, Republicans promised a “chicken in every pot and a car in every backyard.” They won control of Congress and the White House, and a year later, instead of a chicken and a car, we got the Great Depression. | Today, when a populist candidate promises free college, free health care and a pony, or another candidate promises to make other countries pay for our needs, remember: Those who promise you a free lunch will invariably eat you for breakfast.
- President Obama Messaging: The Selling of Obama – POLITICO Magazine May-June 2016
- Bloomberg: The Real Hamilton: What’s Not to Love?
The bipartisan Disneyfication of America’s first Treasury secretary began in earnest last fall when President Barack Obama spoke at a fundraising performance of the hit musical Hamilton and said it “happens to be the only thing Dick Cheney and I agree on.” The real Alexander Hamilton made no effort to be loved by all, as Lin-Manuel Miranda’s brilliant, rap-infused musical makes clear. He was vain and opinionated. He was also usually right. No libertarian, he believed the federal government could and should play a central role in economic development. His arguments deserve fresh consideration for today’s problems—even if taking them seriously will make it harder for everyone to agree on his wonderfulness.
- You Can’t Escape Data Surveillance In America – The Atlantic 042916
[Big Brother R Us] Sarah Jeong: In America, surveillance has always played an outsized role in the relationship between creditors and debtors. In the 19th century, credit bureaus pioneered mass-surveillance techniques. Today the American debtor faces remote kill switches in their devices, GPS tracking on their leased cars, and surreptitious webcam recordings from their rent-to-own laptops. And where our buying and borrowing habits were once tracked by shopkeepers, our computers score our creditworthiness without us knowing… We peer into a future where our software spies on us, our data defines us, and our hardware reinforces existing power imbalances. What’s slowing it down are a federal agency whose remedies often feel unsatisfactory, and a cohort of attorneys whose motivations are of course capitalistic. And while it’s tempting to simply call for more federal intervention, paternalistic impulses sometimes harm the most vulnerable among us.
- How Are the Great-Grandkids of the Richest Gilded-Age Americans Faring? – The Atlantic 092015
Ester Bloom: According to Time magazine, 90 percent of all rich families, from the Astors to the Ziffs, lose their fortunes by the third generation. This is remarkable, considering how comparatively easy it is to retain wealth once you have it. A recent analysis suggested that Donald Trump, for example, could be similarly wealthy if he had done nothing but put his eight-figure inheritance into the stock market: “If he’d invested the $200 million that Forbes magazine determined he was worth in 1982 into that index fund, it would have grown to more than $8 billion today.” | Conversely, climbing several rungs on the income ladder takes ingenuity, grit, resilience, opportunity, and a heaping tablespoon of luck. Currently, poor children have only a 7.5 percent chance of making it even to the top 20th percentile as adults. Making money is hard; holding onto money when you’re born with it shouldn’t be.
- Bloomberg: Learning to Love (Tolerate?) Big Government
Justin Fox: In December, Gallup asked 824 U.S. adults this question: “In your opinion, which of the following will be the biggest threat to the country in the future — big business, big labor or big government?”
- Bloomberg: Trump Wins Big in Disability Country 042616
The $150 billion federal disability program is a mess. It almost went broke (Congress had to give it an emergency infusion). It discourages employment and can be gamed. But woe to the office-seeker who tries to fix it.
- One Easy Way to Make Wikipedia Better – The Atlantic 042216
Adrienne LaFrance:: “It turns out it’s pretty difficult to fully access key sources on any given Wikipedia page. That’s according to a study from researchers at Dartmouth’s Neukom Institute who assessed the 5,000 most-trafficked Wikipedia pages, analyzing them for verifiability. In other words, they didn’t check to see if Wikipedia pages were accurate; they investigated how easily someone could make that determination for themselves. | Based on the presence of markers like International Standard Book Number and Digital Object Identifiers, which are unique serial codes assigned to books and papers, about 80 percent of book citations and nearly 90 percent of journal references were technically verifiable—meaning you could track down the source material if you wanted to figure out whether a characterization on Wikipedia was right. But practical verifiability was a different story. It might be possible to track down the source material—as in, that source material actually exists and the link to get you there is working—but it might be really difficult or impossible to get to it. Using Google’s API, the researchers wrote a program to classify the accessibility of Google Books citations, for instance, and found that most books (71 percent) cited on Wikipedia are only partially viewable online; while many others (17 percent) are not viewable online at all. (About 12 percent were fully viewable.)”
- The Rise of Trump Studies – POLITICO Magazine 042216
As Trump’s surprise candidacy disrupts everything it touches, it is now exploding into the academic realm, launching a yuuuuge new wave of what you might call Trump Studies. From philosophy to law to computer science and history, researchers are finding they can’t look away from Donald J. Trump. For some…. the astonishing popularity of the celebrity real estate developer is the perfect tent pole to hang their existing research on. For others, his candidacy is like an experiment on a national scale, blowing up conventional wisdom about how American politics and society work.