The Big Picture

QE: When and How Should the Fed Exit?
10 Thursday PM Reads
States with the Most Negative Equity in Residential Real Estate
Searching for water on Ganymede
Tales of the Death of Hedge Funds Have Been Greatly Exaggerated
10 Thursday AM Reads
What If Apple Products Were Their Own Companies?
The Stability of Prime Money Market Mutual Funds: Sponsor Support from 2007 to 2011

Posted: 25 Jul 2014 02:00 AM PDT

Posted: 24 Jul 2014 01:30 PM PDT

My afternoon train reads:

• Eddie’s deep dive into explaining gold prices. (Crossing Wall Street)
• Hot ETF sellers give distribution its due (FT)
• Boring Is Good (Millennial Invest)
• How to Build Expertise: Lessons From Peyton Manning (James Clear) see also Why Trying to Be Perfect Won’t Help You Achieve Your Goals (And What Will) (James Clear)
• Lawmakers look to end corporate tax dodge (Aljazeera America)
• A new right-wing claim: The White House is lying about inflation! (LA Times)
• The strange relationship between global warming denial…and speaking English. (The Guardian) see also Climate Change Skeptics Could ReachCatastrophic Levels by 2020 (The Onion)
• An epic battle in streaming music is about to begin, and only a few will survive (Quartz)
• With the Blessing of Bill Gates, an Unlikely Summertime Best Seller (Bits)
• Five Retail Rules Flagrantly Violated by the Apple Store (Businessweek)

What are you reading?

ECB Moves to Spur Inflation Jump Started Bonds, Deals

Source: WSJ

States with the Most Negative Equity in Residential Real Estate

Posted: 24 Jul 2014 11:30 AM PDT

Source: RealtyTrac

Each quarter, RealtyTrac releases its "Home Equity and Underwater Report."

According to RealtyTrac’s data, "9.1 million U.S. residential properties were seriously underwater.” Mortgages that are “seriously underwater” exceed a property’s value by at least 25 percent. They also account for 17.2 percent of all properties with a mortgage.

That number decreased slightly (0.2 percent) in the second quarter. In the second quarter of 2012, there were 12.8 million properties that were "seriously underwater” — 29 percent of all homes with a mortgage

Continues here

Searching for water on Ganymede

Posted: 24 Jul 2014 09:30 AM PDT

Source: Know More

Tales of the Death of Hedge Funds Have Been Greatly Exaggerated

Posted: 24 Jul 2014 07:00 AM PDT

During the past few months, we have posted a few words here on the quandary that is hedge funds. One such effort was titled "The Hedge-Fund Manager Dilemma," and it explored the public's fascination with the hedge-fund crowd. The next, "Why Investors Love Hedge Funds," looked at why, despite stunning underperformance during the past decade, so much money was still flowing to the hedge funds.

Now, we are seeing early signs that some institutional investors are losing patience. Case in point: California Public Employees’ Retirement System. The Wall Street Journal noted that the pension fund is looking to reduce hedge-fund holdings by as much as 40 percent. "Public pensions from California to Ohio are backing away from hedge funds because of concerns about high fees and lackluster returns."

Although this might be a rational response to issues of costs and performance, I would hasten to add that this is only anecdotal evidence. When we look at data such as money flows, it suggests hedge funds are continuing to pull in cash at an astounding pace. The hedge-fund-industrial complex now commands more than $3 trillion in assets. That is up from $2.04 trillion in 2012, and a mere $118 billion in 1997.

Calpers has a reputation for being a thought leader in the institutional-investment world. I have spoken with various pension funds and foundations over the past few years, and while the issue of hedge funds is under discussion, there is no consensus. Based on what various folks in the U.S. and Europe say, there still is great interest in hedge funds. Many investors are more than willing to forsake beta (returns that match the market) in the mad pursuit of alpha (above-market returns).

Still, this looks like it might be the start of something interesting. Continues here

10 Thursday AM Reads

Posted: 24 Jul 2014 06:00 AM PDT

My morning train reads (continues here):

• The Gringo’s Guide to the Argentine Holdout Crisis (No Se Mancha)
• Cash Crops With Dividends: Financiers Transforming Strawberries Into Securities (DealBook)
• Mapping the Stock Market’s Four Primary Metrics (Minyanville) see also Hot ETF sellers give distribution its due (FT)
• Seven charts that leave you no choice but to feel optimistic about the U.S. economy (Quartz)

continues here

What If Apple Products Were Their Own Companies?

Posted: 24 Jul 2014 03:30 AM PDT

Slate‘s Jordan Weissmann puts Apple’s product lines into perspective versus other large companies (Tech or not).

iPhone revenues alone eclipse that of either software behemoth Microsoft or online retail giant Amazon. Businessweek (September 2013):

“If the iPhone were its own company in the Standard & Poor's 500-stock index, iPhone Inc. would outsell 474 of 500 companies; iPhone's $88.4 billion in annualized revenue tops 21 of the 30 component companies in the Dow Jones industrial average—it would be the ninth-biggest stock in the Dow 30.”

Consider these two product lines: