Like a half-full
bottle of champagne that was left uncorked overnight, stock markets were
anything but effervescent during the first few days of 2014.
On Tuesday, December 31, the Standard & Poor's 500 Index (S&P 500) bubbled upwards, finishing 2013 at an all-time high. On Wednesday, markets were closed as Americans celebrated the New Year. On Thursday, despite relatively positive economic news, the S&P 500 suffered its worst first-day-of-the-new-year performance since 2008. Is it a hangover? Is it lethargy? Are people still on holiday?
Some folks think
a key issue is concern about the Fed’s changing monetary policy. MarketWatch suggested investors are wary
about the timing of and reasoning behind the Federal Reserve’s decision to
taper quantitative easing (QE) this month, as well as conflicting comments made
by Fed officials. Last Friday, Philly Fed President Charles Plosser suggested
the U.S. central bank may need to become aggressive about raising rates. His
comments don’t square with those of outgoing Chairman Ben Bernanke who has said
rates will remain near-zero for some time to come.
Plosser’s
comments raise red flags because tapering QE is not the same as tightening
monetary policy. Tapering is simply providing less economic stimulus. If the
Fed raises rates, it will be tightening monetary policy. Generally, tighter
monetary policy is used to constrict too-fast economic growth or curb rising inflation.
Barron’s may have provided some
insight into Plosser’s statement when it declared:
“…We also suspect
U.S. and global economic growth will quicken more than most anticipate…Stronger
economic growth combined with a further tightening in the resource markets
(i.e., expect the unemployment rate to decline toward 6% by year-end and for
the factory utilization rate to rise above 80% during the year) may lead to a
modest rise in the U.S. inflation rate and produce the first "inflation
scare/overheat/can the Fed exit fast enough" panic of the recovery.”
Hold onto your
hats! The minutes of the Fed’s Open Market Committee meeting will be available this
Wednesday and the way in which they’re interpreted could buffet markets.
what makes a
great invention? It
probably depends on who you ask. The angel investors (a.k.a. sharks) on the
television reality show Shark Tank
share their opinions on air, and Time
Magazine recently revealed its thoughts in print when it published, “The 25
Best Inventions of the Year 2013.” The article suggested a great invention
solves either a problem people thought couldn’t be solved (such as helping
quadriplegics walk) or a problem they didn’t realize needed to be solved (who
knew we needed a cronut – the offspring of a croissant and a donut – or an
invisible skyscraper). Among Time’s top
inventions for 2013 were:
- The Smart Lens: (slide 5) Ever
been frustrated by the low resolution of photos snapped with your mobile
phone? Now, you can attach a smart lens and your smart phone will take
pictures like a high performance camera and save them online automatically.
- The edible password pill: (slide 10) Nope.
It’s not on the market yet but, sometime in the future, you’ll be able to
swallow a pill with breakfast. The chip inside will be powered by stomach
acid and make your body into its own unique personal password every single
day. The FDA has already approved it.
- The 3Doodler: (slide 12) If
you think 3D printing is neat, check out the 3Doodler. It’s a pen that
melts and cools colored plastic so you can sketch and scribble actual
structures. It’s the more sophisticated brethren of Popsicle sticks and
pipe cleaners.
- Artificial memories: (slide 14) It’s likely to be just as controversial as cloning and the human genome, but scientists at MIT have managed to implant false memories in mice. They hope human applications will help treat depression and post-traumatic stress.
Weekly Focus – Think
About It
“Creativity requires the courage
to let go of certainties.”
--Erich Fromm, German
psychologist and philosopher
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