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Started By
Message
re: "Volatility Is Lowest Since the Great Depression"
Posted on 2/20/13 at 1:37 pm to Poodlebrain
Posted on 2/20/13 at 1:37 pm to Poodlebrain
quote:
Poodlebrain
quote:
My personal opinion is that the global economy is in a period of equalization. The populations of more countries are reaching education levels that were once exclusive to advanced nations, and it has made their populations competitive in the global labor markets. The United States does not have any sort of edge when it comes to specialization of labor for most jobs. Thus our businesses have no advantages when location is not at a premium. Trying to counter this with political solutions is a futile gesture destined to fail. The key to staying at the economic forefront is innovation. And we have no monopoly on innovation. In fact, China is likely to be the leader in innovation due to the huge numbers of scientists and engineers it is training. One only has to look at the graduate students in the physics, chemistry and engineering departments at U.S. universities to see the disparities in the numbers of Chinese v. American grad students.
I don't see China innovating. This increase in the total number of skilled and educated Chinese has dwarfed us for a long time.
In fact, I believe I read on Forbes' Flipboard last night an article that said that the US has a fraction of the global manufacturing output, and yet what output it does have yields the vast majority of profit.
In short, it stated that we easily have the most profitable manufacturing sector in the world, and as such, workers here in manufacturing yield more to companies' profit lines than anywhere else in the world.
China at this point is the world's low-price-labor-leader. Not innovation. The one thing they could and should capitalize on is their rare-earth monopoly. It would seem to give them an edge against Korea & the US in that department in terms of innovation (from a natural resource standpoint).
Even though they've got a massive amount of educated Chinese, they have been unable to harness that collective brainpower to truly innovate in highly-specialized industry.
1
Posted on 2/20/13 at 4:15 pm to Poodlebrain
quote:
Thus our businesses have no advantages when location is not at a premium. Trying to counter this with political solutions is a futile gesture destined to fail. The key to staying at the economic forefront is innovation. And we have no monopoly on innovation. In fact, China is likely to be the leader in innovation due to the huge numbers of scientists and engineers it is training.
Posted on 2/20/13 at 4:23 pm to acgeaux129
Didn't mean to be so ambiguous--I was just got a little laugh out of the "frick me for pimping my shop" part.
B&tIJ and I disagree about why long-term growth in developing economies is dropping off, and also about how sustainable the new normal is going to be beyond the next few years, but we do more or less agree about how the new environment might prove to be remarkably stable for the time being.
B&tIJ and I disagree about why long-term growth in developing economies is dropping off, and also about how sustainable the new normal is going to be beyond the next few years, but we do more or less agree about how the new environment might prove to be remarkably stable for the time being.
Posted on 2/20/13 at 4:31 pm to Jwodie
quote:
But does it all mean, Basil? (Doc)
Given the current volatility and general state of the economy, where should smart money be going investment-wise?
I really don't know. I would say that I think I've shown why betting against current market extremes holding might not work, as the extremes are being priced in for good reasons.
I would think that a low volatility environment might be a good time to invest in Berkshire Hathaway type value stocks, but besides that I really don't have much to say on investing advice.
Posted on 2/20/13 at 4:36 pm to BennyAndTheInkJets
quote:
If you really want to see how the Fed has taken volatility out of the market, if you have access to Bloomberg go to the NSV screen. This is the Normalized Swaption Volatility screen that you can use as a proxy for rate volatility. It's basically been in a primary trend nose dive since the beginning of QE. The stock market on training wheels comment is pretty spot on as well, the Fed has a lot of leeway right now with how they can affect markets by unwinding the current programs but the effectiveness of additional measures will continue to decline.
A big question a lot of investors have is can rates go back up to "historical" levels under the current volatility of rates? Calculating the VIX is really, really damn complicated but rate volatility is more simple, relatively. Basically how much are investors willing to pay for vol in rate instruments (usually using some version of Black-Scholes). Until Fed minutes start getting more and more hawkish I think we will still have gradual movement one way or the other. You're not going to get some 1994 shock with the Fed as big of a current player in the market.
You make my head hurt pretty much every time you post.
Posted on 2/20/13 at 7:25 pm to GFunk
Most of the Chinese with graduate degrees are just entering the most productive years of their lives. If you do not theink they are very intelligent, creative and motivated you must not have spoken with the faculty members at any university. The next generation of inventors and researchers will be dominated by the Chinese simply from a numbers perspective. And I shouldn't have to remind anyone that even among American students, Asians outperform all other ethnic groups.
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