• Thanksgiving Spending Continues

    The season to spend money is here, and it gets bigger each year. This infographic from Statista shows that spending has grown consistently each year. Even Thanksgiving Day has become a hot shopping day, and retailers are happy to see the dollars flow their way

    You will find more statistics at Statista

  • What Makes a Great Job Candidate in Finance

    It's not enough to have a university diploma. These recruiters talk about what it takes to be noticed in a job interview in financial services:

    For discussion:

    What can you describe about yourself that makes you interesting? What differentiates you from other candidates?

    What do you know about the company you're seeking to join? Can the interviewer tell that you're interested in working for/with them?

    What examples can you describe where you demonstrated creativity, teamwork, leadership?

  • Wells Fargo: A Great Bank That Made a Terrible Mistake

    Wells Fargo made a mistake when it created incentives for employees to behave badly. On September 8, 2016, the CEO announced that the bank had reached settlements with the regulators regarding the unethical sales practices and would be taking corrective actions:

    Today we are announcing settlements with the Consumer Financial Protection Bureau, the Office of the Comptroller of the Currency, and the Office of the Los Angeles City Attorney over alleged sales practices. The news will be widely reported, and I want to be sure you hear from me on where we stand and why we are taking these steps.

    Specifically with today’s settlements, we have agreed to pay penalties and agreed to an independent review of our sales practices.

    ...Prior to these settlements, we completed an extensive review by a third-party consulting firm going back into 2011. The review included consumer and small business retail banking deposit accounts and unsecured credit cards opened during the period reviewed. Based on this review, we have refunded $2.6 million of fees associated with products customers may not have requested, averaging about $25 per account. If we learn of any additional customers who require refunds, we will make those refunds promptly.

    We also have made improvements to our sales practices, enhanced our training, and made significant investments in monitoring and controls to further ensure customers receive only the products they want.

    In this video interview, Warren Buffett discusses Berkshire Hathaway's holdings of Wells Fargo shares and the reputational damage done to this large financial services institution.

    For discussion:

    What are the ethical violations of the case? Who are the stakeholders damaged by the bad choices of Wells Fargo employees? What can the bank do to recover from the reputational damage caused by this incident?

  • Cyber Monday Spending

    The American shopping phenomenon that started as Black Friday has gone global. With reports of sales in Japan and the UK, the start of the holiday shopping season is now officially launched at the U.S. Thanksgiving holiday.

    Though many shoppers still prefer brick and mortar stores where they can handle merchandise, online sales continue to become more and more popular. The ease of shopping from the couch is hard to beat. The infographic below shows that the trend in Cyber Monday in the U.S. from 2005 to 2015:

    You will find more statistics at Statista

  • Drivers in the Oil Industry

    This video from CFA Institute discusses drivers in the oil industry that matter to investors. According to Jens Zimmerman, CFA (2016), "Energy demand spikes are coming from developing regions in Asia, and by 2035, the region will account for 65% of global demand." Additionally, the U.S. is expected to become a net natural gas exporter by 2017. To learn more, see this infographic here.

    For discussion:

    What should an investor do to prepare for the trends described in the video and infographic above? Are there other investing ideas that you can suggest related to this industry?

  • The Big Mac Index 30 Years Later

    The Economist began publishing the Big Mac index in 1986 as an informal way of showing purchasing power parity or PPP. The idea is that an item should cost the same in different countries once we adjust for the differences in currencies.

    From The Economist:

    THE Big Mac index was invented by The Economist in 1986 as a lighthearted guide to whether currencies are at their “correct” level. It is based on the theory of purchasing-power parity (PPP), the notion that in the long run exchange rates should move towards the rate that would equalise the prices of an identical basket of goods and services (in this case, a burger) in any two countries. For example, the average price of a Big Mac in America in July 2016 was $5.04; in China it was only $2.79 at market exchange rates. So the "raw" Big Mac index says that the yuan was undervalued by 45% at that time.
    Burgernomics was never intended as a precise gauge of currency misalignment, merely a tool to make exchange-rate theory more digestible. Yet the Big Mac index has become a global standard, included in several economic textbooks and the subject of at least 20 academic studies.

    You will find more statistics at Statista

    For discussion:

    1. What is the theory of purchasing power parity? What is interest rate parity?

    2. Do these theories typically hold? Why or why not?

  • What is the Fed?

    Based on this video from the Federal Reserve:

    1. What is the Fed and who runs it? 

    2. What does the Fed do and how does it do it?

    3. Who does the Fed interact with?

  • Forex Trading

  • Higher Ed: What Would You Do Differently?

    The Federal Reserve's 2015 Survey of Household Economic Decisions revealed that those who did not finish a degree or finished a degree at a for-profit school would do higher education differently.

  • Cyber-Security at the CME

    An exchange like the CME must take cyber-security very seriously. With millions of dollars worth of contracts changing hands daily, cyber threats must be dealt with quickly and efficiently.

    In July 2016, the CME Group announced that it was assembling a cyber security team. This came on the heels of some high profile security breaches. From Business Insider (Wadhwa, Jul 8 2016):

    Last year alone, over 480 million records were leaked and over $1 billion was stolen globally due to cyber attacks, according to IT Governance. Cyber attacks took place across industries, as banks, e-brokers, exchanges, law firms, and music companies were vulnerable.

    On July 8 of last year, NYSE, United Airlines and the Wall Street Journal experienced "technical difficulties." The unconfirmed cyber breach halted stock trading at the exchange for over three hours. JP Morgan was also the victim of a cyberattack that saw a data breach of 76 million households and seven million small businesses.

    For discussion:

    What impact could a cyber breach have on financial markets if hackers were to break into an exchange like the CME?

  • Value of Chipotle

    Restaurants are facing a recession as consumers eat out less and eat at home more. From MarketWatch (Garcia and Linnane, 8 Nov 2016):

    Restaurant companies should brace for a challenging period as consumers grapple with the rising costs of rent, prescriptions and car loans and take advantage of cheaper groceries to eat at home more.

    That’s the verdict of Moody’s Investors Service, which on Tuesday slashed its operating-profit growth forecast for the restaurant sector and revised its outlook to stable from positive. The ratings agency is now expecting operating profit to grow 2% to 4% in the next 12 to 18 months, down from a previous forecast of growth of 5% to 6%.

    “Consumers are wrestling with higher nondiscretionary spending needs, while restaurant companies face higher operating costs, predominantly labor and challenged traffic trends,” Moody’s analyst Bill Fahy wrote in a note.

    For discussion:

    What factors affect the value of Chipotle? What do you think is the future of the restaurant industry?

  • Working at the CME Group

    From the CME Website:

    CME Group is the world's leading and most diverse derivatives marketplace, handling 3 billion contracts worth approximately $1 quadrillion annually (on average). The company provides a marketplace for buyers and sellers, bringing together individuals, companies and institutions that need to manage risk or that want to profit by accepting risk.

    Our exchanges - CME, CBOT, NYMEX and COMEX - offer the widest range of global benchmark products across all major asset classes, including futures and options based on interest rates, equity indexes, foreign exchange, energy, agricultural commodities, metals, weather and real estate. As part of our commitment to providing innovative risk-management solutions to the marketplace, CME Group also offers a growing slate of cleared OTC products and services.

    For discussion:

    What are derivatives?

    What is the "over-the-counter" market versus the exchange-traded market?

  • Benefit of Financial Literacy

    Infographic showing American spending habits. With nearly 20 percent of Americans living beyond their means, education about personal finance is critical. Research indicates that teaching finance to students yields greater money-management skills that car

    Source: edutopia.org

  • How Warren Buffett Got His Start

    In this video interview with Warren Buffett, he describes how he get started and what it was like in the 60s and 70s for his businesses.

    For discussion:

    What lessons can you take away from Warren Buffett's story?

  • Money Management Mistakes Businesses Make

    source: Daily Infographic

  • What the Paris Climate Deal Means to Investors

    The Paris agreement on climate change went into effect this week, and governments around the world have agreed to limit global warming.

    From the Washington Post (Bayer and Urpelainen, 14 Mar 2016):

    The most important reason for optimism is that nations around the world have been investing heavily in technologies that offer renewable energy — wind turbines, solar panels, biomass and so on. In 2014, those global investments reached $270 billion. China led the pack, investing $83 billion in wind turbines and solar panels. The United States was the distant second, investing $38 billion, especially in wind energy. Indonesia, Chile, Mexico and Kenya invested more than a billion dollars each.

    The investment boom comes in large part because the cost of renewable electricity generation has decreased rapidly. However, companies will keep investing in these technologies only in nations with government policies that support the growth of renewables. Because polluting fossil fuels are still mostly cheaper than renewables, clean energy requires subsidies or similar policies.

    For discussion:

    What types of firms are likely to benefit from this deal? How can an investor take advantage of potential profits?