Since officially emerging from the Great Recession in June 2009, the U.S. economy has struggled to make substantial improvements for the general populace. Six years into recovery, the economy moves forward slowly, akin to a donkey laboriously ascending a muddy mountain path.
Progress has been sluggish, with setbacks along the way. Each faltering step raises concerns about the possibility of veering off course and plummeting from significant heights.
Currently, U.S. consumers—the backbone of economic growth—are showing signs of distress. The University of Michigan’s Consumer Sentiment Index recently dropped to 85.7 in early September, down from 91.9 last month, marking its lowest level in a year.
Producer prices are following a similar downward trend. The Labor Department reports that the producer price index has declined for seven consecutive months on a year-over-year basis, suggesting the economy may be stagnating.
Contrastingly, other indicators present a different picture. As of August 2015, the unemployment rate has decreased to a mere 5.1 percent. Continue reading
The meetings of the Federal Open Market Committee (FOMC) are always worth watching. The upcoming meeting on September 16 and 17 promises to be particularly intriguing. Despite the Fed’s assertions of transparency, the forthcoming policy announcement remains shrouded in uncertainty.
The Fed has been hinting at a potential increase in the federal funds rate from its near-zero level throughout the year. However, with each FOMC meeting, the decision has been postponed. Just three weeks ago, the September meeting was anticipated to mark a significant change with a modest rate hike.
That was before the stock market experienced a steep decline, dropping by 12 percent. At the peak of the panic, New York Federal Reserve Bank President William Dudley withdrew his support for a September rate hike, a move met with relief in the markets, as if it were manna from heaven.
However, once the markets stabilized, the uncertainty surrounding a September rate increase lingered, leaving many, including the Fed itself, unsure of what to expect. Continue reading
Twenty years ago this month, we received our first email address as we embarked on our freshman year of college, along with a student identification card and email account.
At that time, the World Wide Web resembled a wild frontier, uncertain of where it might lead. Even today, its ultimate destination remains unclear.
However, one thing is certain: email has evolved into an overwhelming burden, making professional life increasingly challenging. Combined with the rise of smartphones, the pressures of constant availability have become relentless.
Much like the first generation impacted by the invention of the clock, we find ourselves resenting email. We recall a time when there was a clear distinction between work hours and personal time. This is one of the many drawbacks of technological advancement.
In hindsight, the convenience of instant communication has exacted a toll—specifically, on our time, freedom, and privacy. Continue reading
Engaging in high-risk investments can lead to substantial returns when the financial climate is favorable. During times of economic prosperity, the dangers of submerged hazards often remain hidden beneath a tide of liquidity. In such environments, even the most reckless individuals can achieve wealth. But when circumstances shift, it’s essential to tread carefully.
Warren Buffett famously remarked, “You only find out who is swimming naked when the tide goes out,” back in 2001. Since mid-May, the DOW has dropped nearly 2,000 points. At this rate, the receding tide will soon reveal many exposed vulnerabilities.
This could mean that a major hedge fund or pension fund will soon find itself caught off guard. For instance, billionaire David Einhorn’s Greenlight Capital hedge fund has already suffered a nearly 15 percent decline in 2015. While it remains to be seen if Einhorn’s situation is precarious, the water level has certainly dropped.
However, this issue isn’t confined to high-risk hedge funds. Pension funds, eager for higher returns, have often found themselves aligned with hedge funds due to a lack of alternatives.
The Federal Reserve has kept Treasury yields artificially low for over 80 months, forcing many investors into risky waters. Continue reading
