Don't Quit Your Day Job…

We haven’t looked at inflation expectations since November 15! Quantitative easing, historically low interest rates, and a rise in consumer spending haven’t been enough to increase inflation past a tame (again, historically low) 0.7% since December of 2009. However, we live in the real world and even if we were spared from inflation’s clutches today, we might not be so lucky in the future. On that note, let’s look at the market’s inflation expectations – which we calculate by subtracting the Treasury’s Daily Real Curve Rates from the Daily Treasury Yield Curve.

You don’t have to watch television for long to discover that the United States has a ‘historical’ balance of trade problem. Plenty of causes are given for the United States’ “decline in competitiveness”, like a skill drain, increased educational opportunities elsewhere, the ratification of NAFTA in 1994, outsourcing, and various other bogeymen that politicians on both sides of the aisle like to trot out. However, the fact remains that there has been a trade deficit between our country and various other countries recently. As Milton Friedman said, a sustained trade deficit is the best possible outcome…. we get physical goods like cars, flash memory, oil, computers, toys, and all sorts of other goods for cheaply produced ‘paper’ known as currency.

Next up: an interesting piece by the Economist which requires a link from DQYDJ! Sick of people from California telling you they would be the eighth (or ninth, depending on the list!) largest economy in the world if they were their own country? Well, now you can have a rebuttal, and tell them which country your state has a close proxy! So…. California can have Italy, and you folks in Texas have Russia as sister economies. Here’s a wikipedia link to GDP by state (actually, technically it’s GSP, Gross State Product).

Sticky wages are more than a disgusting check you receive from your employer – employees are likely to not want to take a job for less money than one they worked previously. Sticky wages are one of the reasons that recessions can last a long time, sort of like the ‘Great Recession’ of the recent past. Even though the recession is officially over, high employment still exists, and a number of economic indicators still are at shaky levels. Anecdotally, there are many examples of people who took lower paying jobs in order to get back to work, however the official data shows that wages stayed flat or even rose, even throughout the recession.

One of my readers shared an interesting chart with me, so here I am to share it with you! Read (follow?) on for…. a visual guide to the midterm elections.

(Updated with information on Facebook’s potential IPO in April 2012). Remember back just a few short years ago when the ultimate goal of a start-up in Silicon Valley was to either get bought out (by a public company) or to go public? The first internet bubble saw companies like Amazon and eBay make their debuts, but it also relegated other companies to the history books: iWon.com, pets.com, and Startups.com. As a result of new regulations and laws (a major piece being the Sarbanes-Oxley Act of 2002), an Initial Public Offering may not be the glamorous exit strategy it once was. A perfect example most of us have experience with? Facebook.