Economic and Investment News Bits
- A new internet vulnerability called POODLE potentially allows access to information that is being sent to a website. This information can then be used to exploit systems or sites with which users interact. In general this vulnerability (using SSL3.0) affects only old versions of internet browsers, like Internet Explorer 6. Many website servers have already started disabling SSL3.0. People using older browsers will need to upgrade to a more current browser that uses a new encryption method. The latest versions of Chrome, Internet Explorer, Firefox, and Safari are highly recommended.
- “The boom of the last 60 years roughly correlates with ever-increasing debt. History teaches us that there is an endpoint beyond which debt becomes destabilizing and has to be dealt with. I am sure that (Janet) Yellen and the (Fed) team are not all that pleased with the corner into which they are now painted. The pressure on them to do something will grow if we continue to see the dollar rise and inflation fall,” (Source: John Mauldin).
- “The recent 5-year rate-of-change in S&P earnings growth has exceeded the same 5-year rate-of-change in the S&P. In other words, earnings are leading the market higher, supporting stock prices and providing a cushion on any weakness. And earnings more than a third of the way through the reporting season have been strong, with forward guidance relatively upbeat,” (Source: Federated Investors).
- “Higher interest rates may be delayed indefinitely”, according to David Rolley from Loomis Sayles & Company. Noting the current U.S. economic acceleration versus a slowdown in much of the rest of the world, along with lower prices for oil, coal, and natural gas, Rolley notes there is almost no reason for the Fed to raise short-term rates.
- The world’s fastest-growing populations are found in the following countries: Oman, Qatar, South Sudan, Niger, Kuwait, Jordan, Uganda, Burundi, and Angola. (Source: The Economist)
- The most recent Big Mac Index, which measures whether currencies are over or under-valued relative to the U.S. dollar, suggests that Norway, where a Big Mac costs $7.80, is the most over-valued currency, followed by Venezuela, Switzerland, Sweden, and Brazil.
Thought for the week
“Americans need to face the truth about themselves, no matter how good it is.”
Jean Kirkpatrick, American Diplomat (1926-2006)
Thought for the Week
Cautious, careful money managers John Osterweis and Matt Berler, from Osterweis Capital Management, noted the following in their most recent market outlook. “We have long contended that if you want to know where the next big crisis will erupt, look to see who has been borrowing the most money. For example, look at housing debt during the 2005-2007 period. What followed was the housing debacle of 2008. Since 2008, the biggest borrowers have been central governments. In the U.S., government deficits have been shrinking rapidly. However, central governments elsewhere in the world are still running large deficits. How long this can go on is anybody’s guess.”
Graph of the Week
Global interest rates have not been anything to get excited about lately. “When you look at the high-quality situations in mainstream bond markets, there are not a lot to grab on to, so you have to look at other opportunities.” Germany’s 10-year government bond is only paying 0.9% while the U.S. is currently paying 2.5%. These unattractive rates have forced some bondholders to take added risk by investing in lower-quality countries. (Source: John Hancock Asset Management)
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