House Speaker John Boehner is questioning when the government will seriously address spending cuts. Today could be pivotal, as the White House is set to unveil its 2012 budget plan later this morning, which reportedly includes over $1 trillion in cuts.
The Independent Investor, an educational site focused on personal finance, has recently reviewed my book, Dynamic Asset Allocation: Modern Portfolio Theory Updated for the Smart Investor
● Central Banking in the Twentieth Century
By John Singleton
Summary via publisher, Cambridge University Press
Central banks wield significant influence but are often poorly understood. By 1900, the Bank of Japan was the only central bank outside of Europe, yet over the last century, the landscape of central banking has vastly expanded. John Singleton explores how central banking has evolved and diversified globally. He highlights two major revolutions in thought and practice: one post the Great Depression of the 1930s, and another in response to the high inflation of the 1970s and 1980s. Additionally, the profession of central banking has transformed radically. In 1900, the central banker was primarily a specialized banker, whereas today, they must also be adept economists and public officials. Understanding these shifts is crucial to analyzing the role of central banks during the recent global financial crisis.
With China’s economic growth, the likelihood of its currency becoming a global currency increases, as noted by The New York Times. However, the article points out that this change is not expected to happen overnight. “The RMB is likely to attain reserve currency status in the future, even if the Chinese government takes no active steps,” predicts economist Robert Mundell. Nevertheless, the political risks associated with China’s economy remain a concern.
Recent reports show improvement as new jobless claims fell by 36,000 last week, driving the total below the 400,000 mark on a seasonally adjusted basis for the second time since the recession was declared over in June 2009. Is this a sign of lasting improvement?
Rebalancing is an age-old concept—buy low and sell high. However, it remains relevant for two significant reasons. Firstly, it’s proven to be effective, with a historical tendency to enhance returns while managing risk. Yet, defining what constitutes “optimal” rebalancing is complex, leading analysts to continuously search for better strategies.
A recent research study has raised questions regarding the viability of using volatility as an asset class. While this caution isn’t new, the findings of the paper emphasize the complexities involved in directly investing in (or shorting) volatility. Titled “The Hazards of Volatility Diversification Volatility” (by Carol Alexander and Dimitris Korovilas at the University of Reading), the study serves as a timely reminder of these challenges.
Recent articles are highlighting potential inflation concerns. The Wall Street Journal notes that the “Bond Market Flashes Inflation Warning,” advising investors to remain vigilant. Meanwhile, CNBC reports that “Investors Starting to Believe That Inflation Threat is Real.” Is there an impending inflation surge? While opinions vary, this topic remains open for discussion.
Despite soaring profits, companies are showing reluctance to hire, as reported in the Wall Street Journal on February 7. With 73% of the Standard & Poor’s 500 companies having reported fourth-quarter results, earnings have risen by 28% compared to last year, with sales seeing a 7.7% increase. However, the disparity between profit growth and job creation continues to pose obstacles for companies aiming to expand.
Corporate profits surge
Deloitte/February 3
Analysis from Deloitte reveals a significant rise in corporate profits for 2010, with 69% of reported results surpassing market expectations. This indicates a strong outlook as the 187 U.S. companies reporting fourth-quarter results showcased an average profit growth of 45% over the past year. Meanwhile, 34 European companies in the study experienced an average profit increase of 25% within the same timeframe.
According to Imad al-Atiqi, a member of Kuwait’s Supreme Petroleum Council, oil prices could soar to $110 in the first half of 2011 due to ongoing instability in Egypt. In an interview with Reuters, he emphasized the critical nature of Egypt’s stability, as a significant amount of oil moves through the Suez Canal, making the country’s political situation essential for the entire region, especially Israel.
