The Big Picture

Global liquidity regulation – Why did it take so long?
Farewell, Maximus
Grexit is harder than you think
Masters in Business: Cliff Asness, CIO & founder of AQR Capital Management
Attention Fiscal Conservatives: New IRA/401k Fiduciary Rules Will Reduce Future Taxes
10 Tuesday AM Reads
Rap Battle: Yanis Varoufakis vs Dijsselbloem & Merkel

Global liquidity regulation – Why did it take so long?

Posted: 25 Feb 2015 02:00 AM PST

Posted: 24 Feb 2015 04:00 PM PST

Today was a day I knew was inevitable, but dreaded nonetheless. For today we said farewell to Maximus, our delightful, intelligent, charming rescue dog.

Max was going on 16, which for a large dog (~75 pounds) makes him a very old man – about 100 in dog years. A German Shepherd/Bearded Collie mix, he was a unique creature, loved by all who met him.

He lived a long full life, and succumbed to a fate that awaits most of us: Old age. The hip dysplasia, so characteristic of Shepherds his size, began slowing him down; the vision began to fade, then the hearing, and more recently the energy levels. He still wanted to play with the towels when we dried him off from the rain; still loved his treats, the chicken jerky and the Frosty Paws dog ice cream. But he walked more and more like the old man he was, slowly, gingerly. He slept more and more. Even still, he always found his way into whatever room we were in, wanting to be nearby.

Max was born an old soul. He knew things. Unless you have experienced an old soul, it cannot be explained.

He was so incredibly intuitive that we labored for many years under a false impression that we were simply the most wonderful dog trainers ever. I worked with him every morning, teaching him sit, beg, paw, speak, stay, roll over. He went out each morning to fetch the paper from our driveway — the main reason we still get the print edition of the NYT was that it was his chore to fetch it each day. Once he learned to balance a treat on his nose, I ran out of things to teach him.

All of our assumptions were quickly disproven once we got Jackson, a rambunctious Labradoodle. He quickly dispelled our illusions of greatness — it was Max who was brilliant, not us.

I will spare you most of our favorite stories of Max's exploits, for the simple reason that you would call me a liar, and I have no interest in having to drive to your house tonight to punch you in the nose — not over my honor, but his. But I will share with you a story or two that are no less true than the rest, their sole beneficial characteristic being they are believable.

When he was a puppy of about 5 or 6 months old, we were watching TV, sitting on the couch. We were surprised and amused when he pulled the leash off the wall, and walked up to us holding it in his mouth (of course, we took him out). We laughed the first few times he did this, until once I said to Max (pointing to my bare feet) "I need my shoes." To our astonishment, Max ran up to the bedroom, rooted through the closest, came back with a shoe. “What am I going to do with 1 shoe?” I asked him as a goof; "Go get the other shoe" — and again to our amazement, he did.

We showed this to friends, who assumed it was a parlor trick. You planted treats in the shoes they would say. “You choose any shoe on the floor of the closest” was my standard response to the challenge. They would, I'd show it to Max, and he would get the matching shoe.

We have many stories like that, none of which are especially believable, but are all true nonetheless. Our neighbor's dog Ralphie was a border collie who tended to get loose and make a break for it; All we had do to was say to the Max missile "Go get Ralph, bring him back" – and off he would go, to fetch Ralph. He always got his dog.

We bought our first house soon after. Once the closing was complete, the Seller told us about the feral cat that lived in the garage (a barn-like structure detached from the house). They told us they fed it, but couldn't get anywhere near the cat, who was afraid of everything. One fine summer day, I was working in the garden, with Max lounging in the sunshine and enjoying the grass. The feral cat strolled out of the garage, right up to Max, and began rubbing him with his face (as cats do). The cat seemed to recognize that old soul right there.

Walking him — without a leash on our dead end traffic-less street — was never a headache. Once, a squirrel shot out of the bushes in front of us. Max gave chase for a two houses when the squirrel made a leap for a tree – but somehow miscalculated. He skidded off the bark, and Max was on him in a flash. But then he did something uncharacteristic of dogs — he just laid down next to him, leaving the squirrel totally unharmed. By the time I caught up to the two of them, the squirrel was sitting there — dazed, no worse for wear and tear, but completely perplexed as to why he was not a chew toy.

An old soul indeed. He will be greatly missed.

Man, did he love the snow:

Objects in Mirror Are Closer Than They Appear

His Summer haircut made him look like a bit like a Giant Schnauzer:

Did I mention he loved the snow?

Grexit is harder than you think

Posted: 24 Feb 2015 12:00 PM PST

Source: DFL: The House View

Masters in Business: Cliff Asness, CIO & founder of AQR Capital Management

Posted: 24 Feb 2015 09:30 AM PST

This week, the "Masters in Business" radio podcast features Cliff Asness, the founder and chief investment officer of AQR Capital Management.

Asness and his team manage $120 billion at AQR. They are quants, applying mathematics to market data and making evidence-based investments across a range of asset classes.

In a far-ranging, 90-minute conversation, Asness discusses everything from value to momentum to the small-cap effect to the Efficient Market Hypothesis to how and why markets can be irrational. He details what it was like to be part of the Quant Flash Crash of 2007. If you are remotely interested in what financial quants actually do, Asness gives a graduate level seminar on quantitative investing.

Listen to the podcast on Bloomberg, Apple iTunes or SoundCloud. All of our prior podcasts are available on iTunes.

Attention Fiscal Conservatives: New IRA/401k Fiduciary Rules Will Reduce Future Taxes

Posted: 24 Feb 2015 07:15 AM PST

I wanted to spend a bit of time on the Labor Department's proposal to place a fiduciary obligation on those who manage or provide investment advice on retirement plans. These include individual retirement accounts and 401(k)s (including 403(b)s). The new rules require the broker or adviser to "operate in the best interest of the client."

I don't want to rehash all of the reasons why this is a very good idea — I did that last year in an article with the headline “Find a financial adviser who will put your interests first.” Instead, I want to explain why fiscal conservatives should rally around this idea as a way to hold down taxes.

I first discussed the lack of a fiduciary duty in 2013. The context was a proposal in the U.K. that was going to cap retirement-plan fees. Those rules were passed, and starting in April, annual charges on British workplace pension plans with automatic enrollment are capped at 0.75 percent.

The conservative ruling party in the U.K. did this to save future taxes, as you will see below.

The proposed fiduciary rules are not an explicit fee cap, but they would require that "any fees and costs paid by the client be reasonable for the services provided." It is probable that the “best interests of investors” will mean athat fees will be reduced from today’s often-excessive levels. If you doubt this, then perhaps you might explain why Wall Street has spent millions of dollars lobbying against the fiduciary standard. They KNOW just what the net result will be — lower fees to brokers and advisers.

Continues here

10 Tuesday AM Reads

Posted: 24 Feb 2015 04:30 AM PST

My Big Fat Greek ~~Wedding~~ morning train reads:

• Highest Forward 12-Month P/E Ratio for S&P 500 since 2004 (FactSet) but see To Nasdaq 5000 and Beyond (Barron’s)
• Reports of My Death Have Been Greatly Exaggerated: Hedge funds nearly drowned in 2014, beset by bad news and bad returns. Prepare for a comeback. (Chief Investment Officer)
• Four Reasons to Boost Your Foreign-Stock Exposure (WSJ) see also U.S. Money Managers Are Sending Cash Overseas (MoneyBeat)
• Meet the Wall Street Refugees Running Freddie Mac's Bond Trades (Bloomberg)
• Women are leaving the tech industry in droves (LA Times)