Seymour Zises, President and co-founder of Family Management, writes bi-monthly opinions on issues and observations of relevance to clients and investors.
Sixty-six years after the U.S. dropped the atomic bombs on Hiroshima and Nagasaki, nature, rather than man, caused the nuclear reactors in Japan to explode and leave an uncertain wake of destruction and potential disease in the Nippon lap. Our deepest condolences to the families in Japan who have suffered. The Four Billion Dollar Problem
This is the net interest rate on the 10-year U.S. Treasury Note as of mid-day on the first business day of 2011. Where this rate goes is really indicative of almost everything that happens in the financial world and is reflective of so many factors. If interest rates move higher, it will either portend an economic recovery or a dollar crisis. Obviously, we prefer the former.
The problems that were with us in 2010 have not gone away. Neither has the enormous stimulus and tax relief that is being extended to all of us.
“On the one hand… and on the other hand…” Well, as applied to “one hand” the housing market and economic crisis has caused deflation. And “on the other hand” the U.S. continues to print money to inflate the economy. We say BOTH deflation and inflation are happening at the same time. Let us explain. If you buy a home today, odds are that it will cost less than it would have three years ago. If you go to Wal-Mart or Target, the values are incredible and you will pay less for much of their merchandise.
The world has just experienced the hottest decade since weather records have been kept. As such, the world economy must adjust; weather patterns affect the economies of all nations… some for the better and some for the worse. Weather will be an increasingly important theme in investing in the coming years. As a result of the rising cost of healthcare in the U.S., medical tourism is becoming big business outside of the United States. More than 500,000 Americans traveled abroad to receive medical care in 2006.
“Ex Nihilo” means “out of nothing” in Latin… It is just what the Federal Reserve will have to do — create money out of nothing. They do this through quantitative easing, a phrase you may have heard but may not understand. In practical terms, the central bank purchases financial assets (mostly short term), including government paper and corporate bonds, from financial institutions (such as banks) using money it has created “ex nihilo.”
