The Big Picture

Global Trend Indicators: Week in Review
Macro Economics in Crisis: An Agenda for Rejuvenating the Discipline
5 Biggest Market Caps As % of S&P500
U.S. Equity Sector ETF Weekly Performance (1.18.13)
Tarantula Nebula
10 Sunday Reads
Saving on Lattes Will Not Make You Rich
Financial Contagion through Bank Deleveraging: Stylized Facts and Simulations Applied to the Financial Crisis

Global Trend Indicators: Week in Review

Posted: 20 Jan 2013 01:00 PM PST

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Macro Economics in Crisis: An Agenda for Rejuvenating the Discipline

Posted: 20 Jan 2013 10:45 AM PST

Distinguished Lecture by Nobel Laureate Prof. Joseph E. Stiglitz

Occasion: Investiture ceremony of Prof. Joseph E. Stiglitz
Date: 04, January 2013
Venue: University of Hyderabad, India
Speaker: Prof. Joseph E. Stiglitz, Columbia University

Topic: Macro Economics in crisis: An agenda for Rejuvenating the discipline

About the speaker:

Joseph E. Stiglitz, a Nobel Laureate in Economics (2001) and University Professor at Columbia University, is one of the most eminent economists who has explored and pioneered many pivotal concepts and theories in Economics.

His Works have helped explain several critical market circumstances, globalization and economic crises in several parts of the world.

He has also authored several books in Economics. Some popular ones being, “The Price of Inequality”, “Globalization and its Discontents”.

5 Biggest Market Caps As % of S&P500

Posted: 20 Jan 2013 08:30 AM PST

Why cheap Apple shares can’t gain any traction
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Source: Barron’s

The chart above shows the 5 largest market cap firms as a percentage of the S&P500 index.

Barron’s points out that when companies hit 5% of the S&P500, it often acts as a cap on further valuation growth. The Trader column points out that “General Electric (GE) and ExxonMobil (XOM) neared the 5% level in the third quarter of 2000 and the first quarter of 2009, respectively, before dropping back. IBM (IBM) got as high as 6% at the end of 1985. That preceded a long down period in terms of its percentage of the S&P’s market value.”

Despite a P/E below 15, when “Apple’s price was $700, its market value was almost 5% of the S&P 500′s.” The reason?

“Investors, particularly professionals, diversify their portfolios, and few are willing to commit more than 6%-7% of their portfolios to one stock, Cohen [Aaron Cohen, president of money manager Financial Partners Capital Management] says. Not everyone can own Apple, and at a certain point, “there was nobody left to buy the stock” who didn’t already have a full position, he adds.”

Hence, argues Barron’s, the difficulty in AAPL powering higher . . .

U.S. Equity Sector ETF Weekly Performance (1.18.13)

Posted: 20 Jan 2013 05:30 AM PST

(click here if charts are not observable)

Tarantula Nebula

Posted: 20 Jan 2013 05:15 AM PST

Source: hubblesite.org via Buzzfeed

This composite image of a portion of the Tarantula Nebula’s central cavity illustrates the profound effect new stars can have on their environment. The young stars are acting something like cosmic, decidedly non-eco-friendly light bulbs. Each star cranks out a dazzlingly high wattage in the form of optical and ultraviolet (UV) radiation.

10 Sunday Reads

Posted: 20 Jan 2013 05:00 AM PST

Good Sunday morning — a few reads for the middle of your 3 day weekend:

• Alan Blinder: Financial Collapse: A 10-Step Recovery Plan (NYT)
• Google says Wall Street estimates need adjusting (Reuters) see also Have Mutual Fund Rating Agencies Lost Their Mojo? (Fiduciary News)
• Channeling Marshall McLuhan Markets to Washington: You know nothing of our work (Washington Post)
• How to Cut Megabanks Down to Size (NYT) see also Big Banks' Biggest Foe Says It's Time to Break Up (Fiscal Times)
• Fed Concerned About Overheated Markets Amid Record Bond Buys (Bloomberg)
• How to Owe Capital-Gains Taxes Without Even Trying (WSJ) see also Prepare for zero growth, no recovery, resource wars (Marketwatch)
• The End of Labor: How to Protect Workers From the Rise of Robots (The Atlantic)
• Regionals Outplay Big Banks (WSJ) see also JPMorgan's Jamie Dimon Offers Illusion of Transparency (Bloomberg)
• Americans Similarly Dissatisfied With Corporations, Gov’t (Gallup)
• The 150 Things the World’s Smartest People Are Afraid Of (Motherboard)