The Big Picture

97% Consensus (File Under Stuff You Should Know By Now)
10 Wednesday PM Reads
The Middle East Friendship Chart
Largest One Day Increases (30%+) for VIX: 1990-2014
10 Wednesday AM Reads
Free Lunch Over for Money-Market Funds
The Tab for the Financial Crisis

97% Consensus (File Under Stuff You Should Know By Now)

Posted: 23 Jul 2014 05:00 PM PDT

Posted: 23 Jul 2014 01:30 PM PDT

My afternoon train reads:

• Condo builders fuel a land rush in Miami (WSJ) see also The Top Properties in Hong Kong Housing Resist Market Forces (NY Times)
• Financial savvy starts in childhood: Early financial lessons can determine how adults handle money (WSJ)
• Half of Workers Are on Track to Retire Well. Here’s How to Join Them (Time) see also The Best 401(k)s: Retire at 60 From Conoco With $3.8 Million; Facebook Last (Bloomberg)
• Not Everyone Is Addicted to Inflation (The Upshot)
• GMO: “A Farmland Investment Primer” (Climateer Investing) see also How Do You Get a New Generation to Invest? Ask This Harvard Guy (Fiscal Times)
• Senate Literary Critics Don’t Like Fictional Derivatives (Bloomberg View)
• When it comes to housing, maybe millennials aren’t so different after all (Real Time Economics) see also Millennials’ Political Views Don’t Make Any Sense (The Atlantic)
• What whatever happened to the deficit? (In the Loop)
• Codex Seraphinianus: History’s Most Bizarre and Beautiful Encyclopedia (Brain Pickings)
If Apple Products Were Their Own Companies, They’d Be as Big as… (Slate)

What are you reading?

New Lenders Enter Property Market and Think Small

Source: WSJ

The Middle East Friendship Chart

Posted: 23 Jul 2014 11:30 AM PDT

Source: Slate

Largest One Day Increases (30%+) for VIX: 1990-2014

Posted: 23 Jul 2014 09:00 AM PDT

Source: Bespoke Investment Group

10 Wednesday AM Reads

Posted: 23 Jul 2014 07:15 AM PDT

My morning afternoon train reads (continues here):

• Seven Truths Investors Simply Cannot Accept (The Kindergarten)
• 5 reasons why the market won’t crash (The Buzz) but see Threading the Bullish Needle (Sigmund Holmes)
• Homo narratus: Mistrust the Financial Storytellers (PsyFi)
• Wages Rise and – Surprise! – Skilled Workers Are Now Easier to Find (Fiscal Times)

continues here

Free Lunch Over for Money-Market Funds

Posted: 23 Jul 2014 06:15 AM PDT

Of all the outrages endured during the financial crisis, perhaps the most perplexing involved money-market mutual funds. In an example of moral hazard writ large, this uninsured risk instrument — with $2.57 trillion in assets — somehow became too big to fail. Five years later, the Securities and Exchange Commission is finally taking steps to address this.

Money-market funds invest in a variety of short-term securities whose values fluctuate. You know, kinda like everything else that trades on a market. However, the funds’ net asset value, and thus the share price, was always $1, regardless of what the underlying assets were really worth.

This is quite bluntly, a fraud, with a couple of twists. First, the true value of these funds was almost never exactly $1, as credit markets moved up and down.

The second part of the charade is that these fund companies were making an implicit guarantee that they would stand behind an investor’s account — until they couldn’t.

Continues here

The Tab for the Financial Crisis

Posted: 23 Jul 2014 03:00 AM PDT

Click to see an interactive graphic.

Source: WSJ