That Little Piece of Glass

If someone time traveled from 1990 (let alone from 1900) to 2015 and was asked to describe the difference between then and now, they might report back:

"Well, people don't use light bulbs any more; they use these things called LED lights, which I guess saves energy, but the light they cast is cold. What else? Teenagers seem to no longer have acne or cavities, cars are much quieter, but the weirdest thing is that everyone everywhere is looking at little pieces of glass they're holding in their hands, and people everywhere have tiny earphones in their ears. And if you do find someone without a piece of glass or earphones, their faces have this pained expression as if to say, 'Where is my little piece of glass?' What could possibly be in or on that piece of glass that could so completely dominate a species in one generation?"

Excerpted from an article appearing in the Financial Times on June 20, 2015, p. 20, Life & Arts section. The article was entitled 'The Prozac Principle' and written by Douglas Coupland, artist in residence at the Google Cultural Institute in Paris. Twitter @dougcoupland

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US Fed Interest Rate Policy Update

Three months ago, I had written about the US Fed's interest rate policy. (See articles dated March 22, March 27, and April 23.)

Here's an update.

Janet Yellen spoke last week at her quarterly press conference. She advised listeners not to spend time wondering whether the first rate hike will come in "September or December or March".  Instead she advised her audience to concentrate on the pace of the rise in rates and said that the pace would be "gradual".

Her words hint at the possibility that the first rate hike may not occur this year. Prior expectations were for this to occur in September. Prior to that, expectations were for this to occur in June (this very month).

The Fed Funds futures market -- used for hedging purposes -- is implying with virtual certainty that there won't be a rate rise in September. In contrast, at the beginning of this year the futures market was signaling with virtual certainty that there would be a rate rise by then.

The futures market is now signaling a 50-50 chance of a rate rise by the end of the year.

Expectations about the timing of first rate rise continue to get postponed.


Excerpted from a Financial Times article printed on 20 June/21 June, p. 16.


Afterthought:  Bond expert Jeff Gundlach, who is CEO and chief investment officer of Doubleline, doesn't think that the Fed will raise interest rates this year. He shared his mind on June 3. See article here.

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