Michelangelo's iconic image of God giving life to Adam is reimagined for the robotic age. Here, God gives life to a robot, a new kind of futuristic Adam.

This Time Is Different (Duh)

Secular stagnation largely rests on two different stories: First, that we will be making fewer babies forever.  Second, that those babies will be crazy un-productive and never raise a cybernetic finger: “Output per worker grew last year at its slowest rate since the millennium, with a slowdown evident in all regions, underscoring how the problem of lower productivity growth is now taking on global proportions…Globally, the rate of growth decelerated to 2.1 per cent in 2014, compared with an annual average of 2.6 per cent between 1996 and 2006…The fact that companies have become less efficient at converting labour, buildings and machines into goods and services is beginning to trouble policy makers around the world.”  Also, you should know that number 2 on the Financial Times’ list of five drags on productivity is “The big innovations have already happened.”  Which, of course, is always true at all times…the big innovations have already happened.  But this will change — will it?!  We have just summarized the “debate” on secular stagnation.  Meanwhile, George Magnus is connecting the speculative euphoria exhibited by German bunds and Chinese equities: “Rationalised in macroeconomics, this is essentially about ‘secular stagnation’…We should beware this narrative, even if the secular stagnation hypothesis turns out to be right…Any euphoric returns today will be counterbalanced as night follows day…Institutions are still buying European debt on negative yields.  Investors who have missed the doubling of the Chinese stock market since mid-2014 wonder if they can afford to stay out.  Emerging market currencies are down but asset returns have barely moved despite a steady deterioration in currency reserves, capital flows and growth.”  Meanwhile, cheap is like, so 2013: “investors are being dragged kicking and screaming into the stock market because, while valuations are not cheap, there really aren’t any better options,” says money manager.  “Higher P/E stocks don’t frighten me…this tends to be the most exciting and rewarding stage of the market anyway,” says fund manager.  Meanwhile, Bond Traders Uncover Secret To Rates That Fed Doesn’t Get.


Speaking Of Rewarding Stages Of The Market

How Can I Invest In China? is probably the question you’ll be getting this week (if not already).  “A year ago, analysts who cover the 50 largest companies trading in Shanghai and Shenzhen said equities were set to rally 28 percent.  Turns out they weren’t anywhere near optimistic enough, as monetary easing and a buying frenzy among Chinese retail investors sent shares surging 111 percent through last week…While regulators have taken steps to weed out speculators, they’ve also sought to expand the role of equity markets in helping companies raise funds as the government reins in credit expansion.  Beijing has accelerated reviewing companies’ applications for initial public offerings since April.”  Meanwhile, as “the dollar has soared against the currencies of most of its biggest trading partners in the last year, Beijing has largely refused to let the renminbi depreciate against it.  At 6.20 to the dollar, it’s less than 1.5% off the record high it posted at the start of last year.  As you might expect, tying the renminbi to the dollar has led China’s exporters to lose competitiveness on regional and world markets, particularly against local rivals Korea and Japan.”


EU: This Time Greece Is Down To The Wire For Real You Guys


candy crush mascot on NYSE floor

Enamored With Easy Money The Bull

There is a strange amount of taunting going on in financial media right now.  Exhibit A: We Dare You To Try Raising Rates This Year.  “The market is essentially calling the Fed’s bluff.  Traders are betting that policy makers won’t be able to raise rates this year…’In the end, the Fed is more likely to ‘cave’ to the market as opposed to ‘fight it’ by hiking when the market does not have it priced in.’”  Exhibit B: Fed Rate Move Will Make Doves Cry.  “There are some investors…who don’t think any increase will happen this year.  It is this last group — who are likely enamored of sectors paying big dividends, such as utilities and master limited partnerships — the Fed has to worry about…If the Fed does raise rates in September, these folks are going to be surprised — and inflict a few shocks of their own on vulnerable sectors.”  But wait…what if it’s all going to be fine you guys?  “Think about it: bond yields have spiked over the past two weeks…The stock market, however, hasn’t really been hurt that much as this has been going on.”  And “the more people see examples of rising yields and a fairly stable stock market, the more this ‘it’s going to be OK’ idea slips into daily conversations at steakhouses, by water coolers, and at lunches with clients.”  Meanwhile, Jesse Livermore (of blogging/Twitter fame, not, like, real life Jesse Livermore fame…that would be weird because real life JL is really dead) has significantly changed his tone on profit margins and I highly recommend reading this entire post but here’s the key point: “dramatic technological changes of the last 20 years have made credible competition in certain key sectors of our economy more difficult, and have allowed dominant [companies] to command sustainably higher profit margins.”  He argues that barriers to competition are most pronounced “where the dominant players have pricing power,” e.g. finance, technology and health care.  In conclusion, the undead Livermore thinks “bearishly inclined investors should seriously consider the possibility that the ‘mean-reversion’ that they’ve been patiently waiting for is not going to happen, at least not to the extent expected.”  Meanwhile CHECK OUT THE GROWTH.


WM: More On VaR-Shocks


EU: Tom’s New Strategy Is Just Let Jerry Self-Destruct


USA: Chicago, Let Me Downgrade Ya!


ICYMI: Atlanta Fed’s GDPNow Is Definitely Worth Following

ps. doesn’t really jive with “CHECK OUT THE GROWTH”


Fed: Some Fed Economists Think Your Polar Vortex Is A Sh*** Excuse


WM: Algorithms Have Really Made The Markets Unsafe For Comedy


What: Shares Of Printing Company Rise On Rumors Of New Greek Currency


pigs diving

Just Some Pre-Slaughter Fun

“In the land of negative yields, even the most conservative firms…are planning to invest in sub-investment grade debt for the first time.  One of the bond market’s brightest luminaries, Jeffrey Gundlach, says you’re better off in front of one steamroller than another in junk because the only money to be made on German bunds is from betting against them.”  Speaking of which, the Gross short appears to be working: “European government bond yields, which have been on a steady downward trend for years, are suddenly trading at their highest levels in more than two months…The yield on Germany’s 10-year Bund, the benchmark in Europe, was trading at 0.43 percent on Monday (currently 0.53%).  It has soared from a record low of 0.05 percent just last month, as investors reassess bullish bets on government bonds in Europe and the U.S., where debt yields have also risen sharply.”  Indeed, “one key reason for the recent increase in US long term interest rates has been surging German rates — basically unwinding a big source of downward pressure on US yields…Unfortunately, a lot of people may soon find out the harsh truth about overpaying for the perceived safety of US Treasurys and German Bunds.”  Meanwhile, something I’ve been curious about recently has been the bond market’s idiosyncratic pricing of Greek debt vs the rest of the piggies.  Greek 10 year debt is currently yielding roughly 900bps more than Italian 10 year debt, and over 800bps above Portuguese debt.  Here’s why that may be the case: “First of all, it’s a lot smaller.  Around €34 billion of Greek government bonds trade on the open market…the Italian government bond market is around 54 times bigger, clocking in at over €1.8 trillion..Traders reckon Greek bonds change hands 20 to 30 times a day across the whole market versus thousands of trades per day in Italian debt.”  Fair enough; but if Greek yields are higher because the market believes the risk of default is higher, than what is the probability of a nice, neat implosion along the Mediterranean with little impact rippling through the debt markets of other highly indebted suinae?  Meanwhile, “a proliferation of images on the Internet and reports in newspapers suggests that creating a leaping, amphibious pig is another realm where China can claim global preeminence.”  


USA: The Curious Incident Of Current Account Deficits And Weaker Net Investment Position

“The U.S. net international investment position — the difference between US assets abroad and foreign claims on the US — has moved substantially deeper into the red in recent years.  But why?  You might be tempted to say that it’s obvious: we’ve been running big budget deficits, borrowing the money from foreigners…But that story implicitly requires a surge in the trade deficit (or more precisely the current account deficit, which includes investment income), which hasn’t happened…The answer, I believe, is that we’re looking at the differential performance of stock markets…The value of foreign holdings of US equities…has surged along with the Obama stock market, while US holdings abroad have seen no comparable boost.”  Meanwhile, here’s the investment thesis behind European equities that no one really wants to admit (it isn’t, y’know, fundamental).


Oil: The Cap Is Now $70, And That Is FINAL


ICYMI: Rapid Communication Is Changing The World: Short Tweets Edition


What: Cryptocurrency Backed By Gold

facebook-likeClick Farms And Facebook’s TV-Like Audience

Facebook announced earnings yesterday and they were kinda meh; revenues fell a little short of estimates, Zuck blamed it on the euro etc.  Mark was cheerful about one thing though: “the social media giant announced strong user growth that showed its monthly user base was now larger than the population of China.”  Not only that, but mobile advertising revenue is taking over (“this thing is a rocket ship, it’s almost at 70 percent mobile!” said Shark Tank shark Kevin O’Leary).  And even though “the mobile monthly growth rate slipped a bit from 6.1% last quarter, the more important daily mobile user growth rate grew from 5.97% last quarter.  That means Facebook might not be signing up casual users quite as quickly, but its turning more people into non-stop social networkers.”  Non-stop social networkers means non-stop advertising revenues: “more than $16 billion was spent worldwide on social media advertising in 2014.”  Furthermore, “in 2014, more than 90 percent of Facebook’s $12.5 billion in revenue and about 90 percent of Twitter’s $1.4 billion in revenue came from advertising.”  Which makes this kind of a problem: “Google ‘buy Facebook likes’ and you’ll see how easy it is to purchase black-market influence on the Internet…click farms employ manual labor, a dozen or so people who manipulate Facebook accounts individually to create the likes that they sell…researchers ran ten Facebook advertising campaigns, and when they analyzed the likes resulting from those campaigns, they found that 1,867 of the 2,767 likes — or about 67 percent — appeared to be illegitimate…If researchers are correct that advertising on social media leads to a high percentage of fake likes and fans and followers, the entire business model could be called into question by advertisers.  What incentive do companies have to buy ads that target digital ghosts?”  Meanwhile, “video views on Facebook are growing exponentially.  Some 4 billion videos are watched on the platform every day, up from 3 billion in January.”  Which is more great news for Facebook, considering the fact that more than half of Americans prefer digital streaming over their television set.  “Moreover, younger viewers now more commonly watch TV shows on mobile devices or PCs — rather than on a TV set.”  So Facebook is all like ”pretty cool, huh?  Advertisers that can’t afford TV can create TV-like ads, for a fraction of the price, and still reach a huge TV-like audience…Facebook has made it clear that it is building out the tools for businesses not only to buy more advertising on its platform versus TV, but also to measure Facebook ads’ effectiveness versus TV.”  


Antitrust Shmantitrust

“Google is already an Internet Service Provider and a pay-TV operator.  Now it’s expanding to become a wireless carrier as well…Google’s service will switch between different highspeed wireless networks operated by Sprint and T-Mobile…phones on Project Fi will switch to Wi-Fi networks when available to place calls and access the Internet.”


EU: The Bond Market Isn’t Pricing A Fallout From Grexit


USA: Kinda Feels Like We’ve Been Here For Awhile, Doesn’t It?


Stories, Markets, Luck And You

“China’s central bank reduced the amount of reserves commercial banks are required to hold, freeing up about $200 billion for lending in the latest easing measure.”  The “larger-than usual reduction…is the second cut in banks’ reserve requirement in less than three months and comes after the economy decelerated to 7%…’The question is whether the PBOC is a little slow on easing.  They’re fighting the last battle, like generals do.’”  Speaking of generals, “perhaps Mr. Tsipris will step back from the brink, ditch his party’s hard-line left-wing and recast his coalition with moderate pro-Europeans willing to back reforms, thereby securing a last-gasp deal to avert disaster…The more likely scenario is that Greece defaults.”  “News from Greece and China disrupted U.S. markets on Friday, but the deeper problem was closer to home.  First-quarter U.S. corporate revenue, now beginning to be reported, is coming in even lower than analysts’ sharply reduced forecasts had indicated…’It is making investors cautious, maybe a little bit confused.’”  Meanwhile, “we like stories, we like to summarize, and we like to simplify, i.e., to reduce the dimension of matters…the [narrative fallacy] is associated with our vulnerability to overinterpretation and our predilection for compact stories over raw truths.”  Also, “the biggest threat to your portfolio is you.  China is not threatening your portfolio, nor is the price of oil or the level of the Fed Funds rate.  What’s threatening your portfolio is the way in which you may react to any of these items, plain and simple…No one will see the thing coming that derails the economy or the market next time around.  It certainly won’t be something that’s on the front page of the newspaper like Greece or interest rates…If we cannot even identify the reason for why a market tops or crashes on a given day with the benefit of looking back, what makes any of us think we can do so in real-time or in advance?  More importantly, doesn’t it make more sense to recognize the durability of the capital markets in the face of all these threats rather than try to play hopscotch with our retirement assets each time a new one arises?”  “In the financial markets, where so many investors are highly skilled (…), their actions cancel each other out as they quickly bid up the prices of any bargains — paradoxically making luck the main factor that distinguishes one investor from another.  And a streak of being right can make anyone forget how important luck is in determining the outcome…Guarding against the illusion of control takes constant vigilance.  The longer you’ve been right, the harder it gets.”


USA: Dr. Ed Lays Out The Evidence For Wage Pressure


USA: Deutsche Bank Says Defaults Are Very Low Compared To Historical Standards


China: $46 Billion Rail/Road To Wealthy Consumers In Europe


USA: Financial Situation “Getting Better” For Over Half Of Americans Surveyed By Gallup

Meanwhile, half are in, half are out, and half of those “because they simply don’t have the money.”


What: Jon Corzine Is “Gratified That Others Might Want To Invest With Him”

Nothing Changes Until Everything Changes

The percentage of U.S. women in their 30s and 40s who are childless is rising, new data from the U.S. Census Bureau show…47.6% of U.S. women aged 15 to 44 were without children last year, up from 46.5% in 2012…The number of women aged 40 to 44 who had only one child roughly doubled between 1976 and 2014…These trends have helped push America’s fertility rate to record lows, though it should be noted that U.S. fertility still ranks relatively high compared with Europe and Japan.”  Meanwhile, the IMF says the financial crisis has done lasting, significant damage to global growth: “lower potential growth in advanced economies has been driven in roughly equal measure by slower capital accumulation and labor growth — due primarily to adverse demographics…demographic factors are likely to act as a brake on growth in many advanced and emerging market economies, as populations age and workers retire.”  However, “there is still room for optimism — the future trajectory of potential output is not set in stone.”  Meanwhile, global investment in renewable energy “rebounded in 2014 to a near all-time high of $270 billion.”  And thanks to the rapidly decreasing costs of solar and battery technology, “renewable energy capacity added in 2014 was easily an all-time high…Renewables went from 8.5 percent to 9.1 percent of global electricity generation just in 2014…The takeoff of solar-plus-batteries has only begun to ramp up the exponential curve, and market shares are still small.  But it has begun, and it doesn’t look like we’re going back.”  Meanwhile, a team of engineers at Caltech have “developed a very tiny, very powerful 3D imager that can easily fit in a mobile device…the imager may soon allow consumers to snap a photo of just about anything, and then, with a good enough 3D printer, use it to create a real-life replica ‘accurate to within microns of the original object.’”


100 Year 4.5% Euro-Denominated Mexican Sovereign Debt

Europe’s plunging borrowing costs marked two new milestones on Wednesday, with Switzerland becoming the first country ever to issue 10-year debt that gives investors a yield under 0%, and Mexico lining up a rare deal to borrow euros that it will repay a century from now…Mexico’s deal, which is set to wrap up later Wednesday, is expected to give investors a yield of about 4.5%.”  Meanwhile, “about 65 percent of the record 60 billion euros of investment-grade bonds sold in March came from overseas companies…and a lot of those sellers are based in the U.S….Debt is so cheap in Europe that U.S. companies are saving money even if they buy currency hedges that have gotten expensive as the dollar’s soared versus the euro…even if the Fed does hike interest rates this year, it may not matter too much to U.S. corporate borrowers.  They’ve found, courtesy of Draghi, a new source of financing that is plenty cheap.”


Snapping Up Bargains

A huge jump in equities purchases by Chinese investors (alt) has produced record trading volumes in Hong Kong, a signal that the prolonged stock rally on the mainland is finally spilling into global markets…On Wednesday, southbound turnover — purchases and sales — through the Stock Connect leapt to HK$21bn ($2.7bn), more than three times the previous daily record set on April 2…Wednesday’s moves took the average premium of domestic listing, known as A shares, over Hong Kong-listed H shares down from 35 per cent to 28 per cent…’We think retail investors from across the border will soon be snapping up bargains on the Hong Kong stock market.  With the A share market still rising in spite of weak economic data and poor corporate earnings in China, we believe Hong Kong H shares are becoming an increasingly attractive alternative.’”  Meanwhile, Chinese tech stocks are now trading at “an average 220 times reported profits…higher than those in the U.S. at the height of the dot-com bubble.”


Oil: Shell To Buy BG Group For About $70 Billion (Alt)

“The deal, if approved by shareholders and regulators, would make Shell the world’s largest producer of liquefied natural gas…would enable the two European energy giants to eliminate overlapping costs to help offset the impact of weaker prices.”  Meanwhile, here’s the U.S. oil story in seven charts.


EU: Should You Invest In A Currency-Hedged International-Equity ETF?


Fed: Bernanke Says Central Banks Shouldn’t Set Policy To Mitigate Financial Stability Risk


EU: Greek Banks Are Linking Arms


What: JPMorgan Is Blowing The Whistle On Its Future Criminals Employees

insider tweeting

Thinking Outside Of The Box Border

Russ Koesterich thinks “the good news/bad news dynamics will get worse as the Fed rate hike draws closer.  Watch out for greater amplification of this volatility…markets will probably see more peaks and valleys this year, but for investors with a long time horizon, remaining invested pays off.”  Meanwhile, “the US, the UK and Japan all witnessed sharp equity market rallies when they launched quantitative easing (QE) programs.  The exact same thing has happened in the euro area…equities may no longer be cheap.  But we believe they still look relatively attractive when compared with regional sovereign bonds, which increasingly offer zero or negative yields.”  Also, “the ECB’s elephantine sovereign bond-buying scheme is happening at a time when the big euro area countries have negligible borrowing needs.  But euro area investors that need to own a lot of bonds — banks, insurers, and pension funds, to name a few — have to park their money somewhere.  Nowadays, ‘somewhere’ increasingly means America, in the form of US corporates taking advantage of European desperation for yield…Whether any of this will actually boost investment in the single currency bloc is anyone’s guess, but at least US companies hurting from the stronger dollar can console themselves with the easier financing conditions.”  Meanwhile, Ben Bernanke thinks “the availability of profitable capital investments anywhere in the world should help defeat secular stagnation at home.  The foreign exchange value of the dollar is one channel through which this could work: if US households and firms invest abroad, the resulting outflows of financial capital would be expected to weaken the dollar, which in turn would promote US exports…Increased exports would raise production and employment at home, helping the economy reach full employment.  In short, in an open economy, secular stagnation requires that the returns to capital investment be permanently low everywhere, not just in the home economy.”  Meanwhile, “as developing countries grow more quickly, they will also have to grow more sustainably, [so] leaders in Portland are targeting rapidly expanding cities for exports of sustainable services.  This brought them to Changsha…mayors of the two cities signed a trade partnership that will provide access to ‘green’ services for Changsha, while giving Portland firms a foothold in the challenging Chinese market.”


USA: Larry Summers On Ben Bernanke On Larry Summers

Also, John Hussman on eating our seed corn.

Also, Bill Gross on layups and fed funds.


USA: Inside Traders Are Using Inside Tweeters As Cover


WM: Vanguard’s New DIY Service Targets “Investors Who Don’t Need Or Want” An Adviser


USA: Poor Households Spend More On Prom Than Wealthy Households


Greece: “Q: Does The Government Have Any Rainy-Day Funds Left?  A: Not A Lot.”


What: HFT Firms Are Trading With Themselves To Spoof Markets

banksy ones zeros

Oh The Humanity

The new cyborg participant in the marketplace is less human than the traditional investor, and capable of being faster, better informed, and more rational…complex algorithms are not subject to the cognitive flaws, emotional sways, and mental strains that plague the human participants of the marketplace.”  Meanwhile, Financial Advisers Seek To Inject A More Human Element: “Your ideal self and your financial self are often at war…Understanding priorities, setting up goals and then tracking both to make sure they’re in alignment…people are not better off if they do slightly better than the S&P 500 and make stupid life choices.”  Meanwhile, asking for financial advice help is the first step to recovery.



“From 2011 until 2013, dense counties at the center of large metropolitan areas in the U.S. saw faster population growth than the exurbs (“paved subdivisions on what was once rural land”), a fact cheered by city-lovers as a sign that urban living was on the rise again.  The updated Census county population estimates released Thursday, though, show that the exurbs are now again growing faster than urban places.”  That being said, “Americans are still moving at much lower rates than usual.”  Meanwhile, “the number of jobs within typical commuting distance to residents of major metro areas fell by 7 percent between 2002 and 2012…jobs both moved to the suburbs and spread out more.”  Furthermore, “between 2000 and 2010, the share of jobs located within three miles of downtown cities declined in 91 out of the 100 largest metro areas.  Meanwhile, the share of jobs located 10 or more miles away from those city centers grew in 85 out of 100 metro areas.”


Marks: Re: Liquidity


China: Lure Of Large Container Ships Fuels Canal Boom In Central America (Alt)


USA: The Economist Still Thinks The Manufacturing Renaissance Is A No Go

They are doubling down on this news: nondefense orders fell 1.4% in February.


Global: Morgan Housel’s 8 Stories Worth Paying Attention To


EM: How Might The Fragile Five Do In Another Tantrum?

EU: Greek Banks Have Lost Roughly 15% In Deposits Since November

shadow gymnastics

You Gotta Fight For Your Right To Parity

“Over the last eight months the USD has appreciated faster on a trade-weighted basis than at any time in the last 40 years and probably over a [longer] duration…We have now matched about 2/3rds of the 1995-2002 USD rally but it took three years to get to that point in the previous rally…and now it has taken eight months.”  That being said, there are some reasons to think that maybe EURUSD parity is still a ways off: 1) “We may have moved close to the levels that some ECB Governing Council members had in mind (but could not speak publicly about), in terms of implicit Euro targets, when QE was initiated,” 2) “Our narrative around the Euro (with a focus on fixed income outflows) is starting to become very consensus,” and 3) Fed = dove.  Speaking of euro targets, Nomura has hit theirs: “The bank, which was short the euro against the dollar, is closing the trade after making a profit of 5.9% as the euro kept falling.”  Also, here’s something to consider: “At first flush, this all seems odd in the context of climbing stocks.  So far this year, the Stoxx 600 European equity index is up by about 17%…Some analysts explain this away with hedging.  ‘When euro-denominated assets rise, more euro selling is required to compensate for the higher share of euro assets in the portfolio, which in turn will drive more euro weakness’…The obvious question is when that might snap.”  Meanwhile, “US yields are torn between the gravitational pull of near zero (plus or minus) European and Japanese yields and the prospect of Fed rate hikes.”  Mohamed El-Erian expects “another round of ‘linguistic gymnastics’” from the Fed this week (press conference on Wednesday y’all), although he’d be pretty satisfied with a tumble removing the word “patient” from the statement.  Meanwhile, Can Asia Survive (Insert Thing Here)? is being used for the dollar story.


EU: Gazprom

“In the past year, Gazprom has begun a more drastic reassessment of its relations with Europe: in May it signed a $400bn contract to deliver gas to China and turned its focus to building new Asian markets for its gas…Nonetheless, Gazprom remains highly dependent on Europe, which accounts for more than 60 per cent of its revenues from gas sales.”


China: Stiffer Bank-Technology Rules Loom In China

“As China seeks to wean itself off foreign technologies, global tech companies are weighing a number of limited options: hand over proprietary information in return for market access, form joint ventures with Chinese firms, create products or services only for the Chinese market that meet Beijing’s requirements, or leave.”


WM: The Essence Of Smart Beta ETFs: “Once A Quarter, We Press A Button”

I wonder if their investors would say the same thing…


EU: Apparently Tom Is Done With Jerry


USA: Micro Apartments And The “Growing Population Of Singles”


Global: VoxEU Researchers Say Consumer Spending/Psychology At The Core Of The Business Cycle


ICYMI: Putin Was Missing For About 10 Days, Now He’s Back, Zero Hedge Is Totally Fine With It

real steel

By “Real” They Mean Non-Emotional, Logical, Made Of Titanium Etc.

“Two of the largest computer-driven ‘robo-advisors,’ programmed to operate in a non-emotional, logical environment, are in fact engaging in a somewhat emotional, illogical catfight, ushering in a new era of the fighting robot stock broker.”  Read on to see Adam Nash, CEO of Wealthfront, accuse Charles Schwab of misallocating portfolios towards cash (i.e. “Schwab will sweep the cash allocation of client managed accounts into Schwab Bank and earn a net interest margin on this cash”) and smart beta ETFs with higher fees in order to benefit Schwab-bot’s bottom line.  Then!  Make sure you don’t miss out on the Charles Schwab blog’s response to blog!  Meanwhile…some perspective: “all of these robo-firms have grown up in a bull market.  Now, I know they’re all rolling their collective robo-eyes right now and anticipating what I’m about to say next — but when the next crash or correction happens…this will be the first real test on their service model, which is completely a different thing than actually investing.  Buying & selling is one thing — proactively servicing that client base is something completely different…A real adviser is a useful anchor to bring people back from the echo-chamber of their minds, and probably prevent them from biting off more than they can chew.”  Meanwhile, Brian Portnoy thinks that “for financial advisers as much as anyone, diversification almost always means having to say you’re sorry…Two things are clear.  One, a diversified portfolio will often have outright losers in it.  Two, the gap between the top dog and the mutt is often very wide.  The opportunity to feel regret is frequent.  Alas, diversification usually doesn’t feel very good.”  Meanwhile, here are the answers to 10 pressing investor questions, programmed to operate in a non-emotional, logical environment (good luck with that).


Dollar Noise Is Turnt Up

It had a great, big day yesterday!  But “unfortunately for investors with foreign-currency exposure, predicting the dollar’s direction is no easy feat…However, there is strong evidence that suggests currency markets exhibit certain tendencies that could help predict the direction of the dollar.”  “On the euro side of things, we knew that QE was going to happen, so the euro move is starting to be baked in.  On the dollar side however, there are still a lot of unanswered questions around the likely timing of a rate hike, meaning that there is still plenty of potential for the buck to rise.”  Jeffrey Gundlach, of “he KNEW what was going to happen with interest rates” fame, says “‘the consensus is right’ and a contrarian positioning could hurt a portfolio.”


WM: High-Yield Bonds Hit New Low In Covenant Quality


EU: Greece Isn’t Done Hogging Your Attention