The Big Picture

Why the American economy grows faster under Democrats
Real and Financial Vulnerabilities from Crossborder Banking Linkages
10 Wednesday PM Reads
What’s the worst hurricane anyone in your town remembers?
HFT: Jumping the Queue
One Cheer for Fair Isaac
10 Wednesday AM Reads
Firing Managers to Solve an Investment Problem
Vanguard: Quantifying the impact of chasing fund performance

Why the American economy grows faster under Democrats

Posted: 14 Aug 2014 03:30 AM PDT

Another classic correlation versus causation issue:

Autoplay video after the jump

Real and Financial Vulnerabilities from Crossborder Banking Linkages

Posted: 14 Aug 2014 02:30 AM PDT

10 Wednesday PM Reads

Posted: 13 Aug 2014 02:00 PM PDT

My afternoon train reads :

• Yellen resolved to avoid raising rates too soon, fearing downturn (Reuters) see also US Fed’s Fischer warns of poor growth (FT)
• JPMorgan Joins Goldman in Designing Derivatives for a New Generation (Bloomberg)
• Carl Icahn reminds you how awesome he is (Tumblr)
• A Global Financial Guru Who Predicted the Crisis of 2008 Says More Turmoil May Be Coming (eventually) (Time)
• Yield-starved investors are venturing further afield in a search for income (WSJ)
• Monetary Equivalent to Schrödinger’s Cat (Al Hambra Partners)
• How Successful People Stay Calm (LinkedIn)
• As war with Israel shatters lives, more Gazans question Hamas decisions (WaPo)
• 16 and Famous: How Nash Grier Became the Most Popular Kid in the World (HuffPo)
• Robin Williams: 1951 – 2014 (LA Times)

What are you reading?

Monthly deal activity has remained steady the past 12 months

Source: US Technology Deal Insights Q2 2014 Update, PWC

What’s the worst hurricane anyone in your town remembers?

Posted: 13 Aug 2014 11:30 AM PDT

Source: xkcd

HFT: Jumping the Queue

Posted: 13 Aug 2014 09:00 AM PDT

click for full image

Source: WSJ

One Cheer for Fair Isaac

Posted: 13 Aug 2014 07:00 AM PDT

Sometimes we don't know exactly how broken things are until after they get fixed.

Case in point: Fair Isaac Corp., the company that created the model used to calculate the scores underlying millions of consumer loan and credit decisions.

The New York Times described Fair Isaac’s formula as "one of the most widely used and influential credit scores." The information it generates is used in the credit reports generated by Equifax, Experian and TransUnion, the three big companies that gather information on individuals and track their credit ratings. It is hard to understate the influence of FICO, as the company and its namesake scoring system are called.

Like all models, FICO has its flaws. Last week, the bad news was we learned how much more deeply flawed this model was than we previously understood. The good news is that Fair Isaac has been cajoled by the Consumer Financial Protection Bureau, an agency created by the Dodd-Frank Act, into applying more balance and fairness in its metrics.

There were two significant changes: Continues here

10 Wednesday AM Reads

Posted: 13 Aug 2014 06:30 AM PDT

My morning train reads (continues here):

• Crisis stalks Europe again as deflation deepens, Germany stalls (Telegraph) but see Time to Buy Europe (Dragonfly Capital)
• The Power of Shareholder Yield (Yahoo Finance)
• Finding Smart Beta in the Factor Zoo (Research Affiliates) see also Weeding Out False Factors for Smarter Beta (Chief Investment Officer)
• A Big List of Alternative Investment Folks on Twitter (Attain Capital)

Continues here

Firing Managers to Solve an Investment Problem

Posted: 13 Aug 2014 04:15 AM PDT

This industry is skewed towards the interests of asset managers, not asset owners, Stefan Dunatov, CIO of Coal Pension Trustees Ltd., believes

SoDI: Solving the Investment Problem—Fire the Managers

Vanguard: Quantifying the impact of chasing fund performance

Posted: 13 Aug 2014 03:00 AM PDT

Vanguard: Quantifying the impact of chasing fund performance