Exchange-Traded Funds (ETFs) have significantly expanded the options available for investment strategies. A notable trend is the emergence of ETFs composed of other ETFs, which is rapidly gaining traction. As the number of specific strategy ETFs increases, so do the opportunities within these fund-of-funds. However, as with any ETF investment, selecting a fund of fund ETF necessitates careful consideration. Numerous such products are already available in the market, with more set to launch. These strategies can range from the highly complex to the straightforward. Unsurprisingly, while some options offer value, others might fall short. The first critical question to address for any of these funds is: Can active management generate added value? If the answer is affirmative, the next inquiry should center on whether the associated fees are justifiable.
Since late August, inflation expectations in the Treasury market have seen a rebound, reversing the earlier summer decline that was driven by concerns over deflation. Given the uncertain nature of the economic recovery, it may be too soon to declare the deflation threat as entirely past. However, the current evidence seems to suggest that the Federal Reserve is now better positioned to manage an evolving economic landscape.
Interest in gold has surged lately, especially in the context of a booming bull market. This prompts important questions about the government’s intentions regarding its gold reserve, which is the largest nationally in the world. The combination of skyrocketing prices and the substantial 8,000 tons of reserves raises numerous inquiries, many of which I delve into in an article featured in the November issue of The Atlantic magazine. You can read the online version of Uncle Sam’s Mysterious Hoard.
It is uncommon for an economist nominated to the Federal Reserve to simultaneously receive the Nobel Prize for Economics. In fact, this has never occurred before. As MIT professor Peter Diamond awaits Senate confirmation, he has also garnered this prestigious award alongside fellow scholars Dale Mortensen (Northwestern University) and Christopher Pissarides (London School of Economics) for their research into the labor market. The implications for his nomination, given this accomplishment, remain to be seen.
A recent New York Times article highlighted a large Ponzi scheme in Minneapolis that involved currency trading, revealing important lessons about investing and how to safeguard oneself against fraud:
● King of Capital: The Remarkable Rise, Fall, and Rise Again of Steve Schwarzman and Blackstone
by David Carey
Review via Basil and Spice
“King of Capital” chronicles how Blackstone evolved from a small firm to one of Wall Street’s leading powerhouses, surpassing its older competitor KKR in growth. It also tells the story of Steve Schwarzman’s staggering financial success, including a single year’s earnings of $398 million and $684 million from the Blackstone IPO in 2007. Throughout this narrative, private equity firms worked to reshape their image from ruthless “grave dancers” into respected financial entities.
Last month, nonfarm payrolls saw a decrease of 95,000, while the unemployment rate held steady at 9.6%, according to a report from the Labor Department released today. Although this drop appears concerning, it is largely attributed to government layoffs, specifically a reduction of 159,000 government positions. This illustrates the limited effectiveness of government employment stimulus. However, the private sector did see a net gain of 64,000 jobs in September, which, while modest, is a positive sign. The overall trajectory of job growth in corporate America remains upward, despite potential challenges ahead.
► Unemployment claims drop, while job openings rise
Christopher Rugaber/AP
Applications for unemployment benefits have decreased for the fourth time in five weeks, indicating a decline in layoffs. The Labor Department reported a drop of 11,000 claims to a seasonally adjusted 445,000, the lowest level since the week ending July 10, representing a decrease from the mid-August high of 504,000 claims this year. While some economists found this encouraging, they cautioned that these numbers are still high, reflecting ongoing weakness in job growth.
► China must fix the global currency crisis
George Soros/Financial Times
Concerns about currency misalignment are on the rise. Brazil’s finance minister suggests a potential currency war, which reflects competing economic policies. The prevailing currency exchange system is imbalanced, with China’s currency pegged to the dollar while many others flow freely. This leads to a chronic undervaluation of the Chinese currency, ensuring a significant trade surplus for the country.
The latest IMF forecast predicts a global economic growth rate of 4.8% for 2010, slightly above earlier estimates. However, the projection for the U.S. economy has been adjusted downward to 2.6%, compared to a previous estimate of 3.3% from the summer.
The initial economic reports for September indicate that growth continued throughout the month. The ISM manufacturing and services indices, released recently, signal ongoing economic expansion. While it’s essential not to overanalyze these figures given the persistent challenges faced by the U.S. economy, the early data from these benchmarks provides a basis for cautious optimism moving forward.
