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What We Read Today 31 March 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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Americans Defy Warnings, Still Retiring Early (David Weldon, ThinkAdvisor)  Over the past decade the average retirement age has remained virtually unchanged, 64 for men and 62 for women, far short of the 70 that many recommend.  In fact, even though longevity has increased and social security retirement age has increased, retirement ages gave changed very little over the past five decades.  For research detail, see The Average Retirement Age - An Update (Alicia H. Munnell, Center for Retirement Research at Boston College).


Articles about events, conflicts and disease around the world

Global

U.S.

UK

Libya

Nigeria

Israel

  • Does Israel Really Have a Thermonuclear Weapon? (Foreign Policy)  It's well know that Israel has atomic bombs, but do they have the much more powerful hydrogen bomb?  Analysis of a supposedly classified government document (it never was according to this article) reveals no information about nuclear weapons, according to Foreign Policy.

Iraq

Iran


All of the bullish stuff economists said about the oil crash has been wrong (Sam Ro, Business Insider)  Some economists predicted the steep decline in petroleum energy costs would increase consumer spending in other consumption areas.  That hasn't happened (see second graph below).  Instead personal savings has risen.

personal.savings.rate.1Q2015

Another view of this was seen in February 2015 Personal Income and Expenditures Near Expectations (Steven Hansen, GEI Economic Feature).  After spending more than disposable income earlier in 2014, after petroleum energy costs declined, personal consumption expenditures fell below disposable income.  No surprise that personal savings increased because savings is what you have left after you've paid all your bills.

Income.expend.personal
 


Welcome Back, Volatility (BlackRock, The Blog) Experts explain why volatility is making a comeback and how to get your portfolio ready for more ups and downs.  So far this year the number of days that were either +/-1% change totaled 15 which extrapolates to  79 days for the full year.  But that would not be all bad because the number of up 1% days is almost 50% greater than the number of down 1% days.  That is far more upside bias than any other year since the Financial Crash.  The previous best upside bias was for 2012 with less than 40% more up than down days with changes 1% or greater.  In 2012 the S&P 500 gained 13.4% and the NASDAQ Composite was up nearly 16%.  Dividends not included in either number.  Of course, extrapolating volatility from 12 weeks out to 52 is problematic because volatility is, well, volatile.

volatility.2009.2015


Macau: Six Times Bigger than Vegas, with Six Times the Opportunity (Tony Sagami, Mauldin Economics, Connecting the Dots)  If you want to play the inequality game for a profit, invest where the wealthiest spend their money.  But be aware, even the 1% (or the top 0.1%) pull back when the economy goes into a tailspin, as evidenced by the outsized loss for the S&P Global Luxury Index from 2007 to 2009.

luxury.index.2006.2015


Other Economics and Business Items of Note and Miscellanea

Momentum Stocks: Caution Ahead (BlackRock, The Blog)  In a discussion above the higher volatility so far this year was discussed.  One problem with higher volatility is that the trends for momentum stocks can be disrupted and stop loss orders can be counterproductive (getting stopped out on a temporary pullback) and not using stop losses leaves the risk of going down with more permanent decline.

Growth or Value, Which Is Better? (Morningstar, Financial Planning)  Five top value and five top growth funds (based on 1-year returns) are compared.

Picking Piketty Apart (The Freeman)  This article says that the "superstar French economist tortures the data to fit his narrative".  See also next article. 

Piketty responds to his critics (the interpreter)  This article from last week gives another view of criticism of Piketty's work and his responses to those crticisms.

Intelligent Robots Must Uphold Human Rights (Scientific American)  The common fear is that intelligent machines will turn against humans. But who will save the robots from one another, and from us.

Can Floating Rate Funds Rise to the Interest Rate Challenge? (Financial Planning)  The high yield of these funds are particularly attractive in a rising interest rate environment when they can suffer less loss of principle than traditional bond mutial funds.  But that doesn't mean they don't have volatility exposure.

Poverty Shrinks Brains from Birth (Scientific American)  Actually the title should read "starting in the womb".  Studies show that children from low-income families have smaller brains and lower cognitive abilities.  Even small differences in income can have major effects on the brain. 

Supercomputer Calculates Mass Difference between Neutron and Proton, confirms Theory of Strong Interaction (Scientific Computing)  Part of the problem of the standard model of elementary particle physics is that many of the elements of the model cannot be measured directly.  The model is continually tested by things that can be measured.  A well publicized measurement was the detection of the Higgs boson in 2012.  But many measurements are actually simulations which is what is involved in the experiment reported in this article.  Rather than a proof of existence these types of analytical "experiments" are findings that a proof something did not exist failed.



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