In Looking at Stocks, Valuation Is Overvalued

Barely a day goes by of late without someone in the financial media announcing that equities are overvalued and primed for a fall. The most popular article on one of the most popular financial websites recently blared "U.S. stocks will be very disappointing for 10 years." The argument? That on multiple gauges, the current valuation of the market is higher than it was during the vast majority of market peaks in the past.

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Punitive Damages

ast week Citigroup finally reached a settlement with the U.S. Department of Justice over shoddy mortgage securities transactions in the years immediately before the 2008–2009 financial crisis. The bank agreed to pay $7 billion. That follows a $13 billion settlement paid last year by JPMorgan Chase & Co., and comes just as Bank of America is negotiating a settlement with the Justice Department sure to top $12 billion.

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Don’t Kill the Export-Import Bank

ashington politics may be considerably calmer than in recent summers (remember the crisis and credit downgrade of 2011?). But there remain simmering tensions looking only for an appropriate outlet. Over the past few weeks, the normally quiet Export-Import Bank, whose existence is likely a mystery to the vast majority of citizens, has become that outlet.

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Don't Fear Risky Assets

We live in a world that emphasizes risk. That is true in general, but is especially so in the financial world. Since the financial crisis of 2008–2009, financial professionals have been acutely attuned to risk—and for good reason. Too many felt they were caught off-guard and unprepared by the near-implosion of five years ago. That in turn followed volatile periods from the Internet bubble of 1999 into early 2000, through the events of 9/11, and then a sharp market contraction until October 2002. After nearly 15 years of drama, it is hardly surprising that the financial world is primed for risk.

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In the Context of No Context

Twenty-five years ago, China made a choice. Rather than embrace the demands for greater political openness emanating from the students and protesters camped in Beijing’s Tiananmen Square, the leadership of the Communist Party decided to crush the protests with lethal force on June 4, 1989, leading to hundreds and perhaps thousands of deaths.

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Junk Bonds Are Back!

Interest rates have been falling once again. The yield on the 10-year U.S. Treasury, which acts as a global benchmark of sorts, dipped as low as 2.44 percent last week, which is well below where rates began the year—and lower than at most points throughout the 20th century and into the first decade of the 21st.* At no point between 1961 and 2011 were rates as low as they are now, and for most of that time, the yield on the 10-year was above 6 percent.

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Deflating Expectations

n a Reuters poll out this week, most economists say they are expecting more robust inflation this year, to the tune of 2 percent. The poll accurately reflects the plethora of emails from research firms in my inbox—a slowly building chorus predicting rising prices along with an uptick in overall economic activity.

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Airbnb Will Hand Over “Anonymized” Records to New York Attorney General

Airbnb and the New York Attorney General's Office announced Wednesday that they had reached an agreement on a months-long conflict over Airbnb hosts in the state. Under the terms of the agreement, Airbnb will hand over "anonymized" data stripped of names, email addresses, apartment numbers, and other personally identifiable information. New York State Attorney General Eric Schneiderman will have a year to weed out hosts in violation of local laws and can require Airbnb to disclose the identities of those with suspicious activity.

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