All Articles Finance Modern Money While You Were Working - July 26

While You Were Working – July 26

The Fed's Theory of Relativity, Trump knows that sometimes less is more, Brexit bankers weigh pay packages, and Jose Cuervo falls of his bar stool

3 min read

Modern Money

Janet Yellen

Janet Yellen returns to the wise ways of opaque messaging. (Alex Wong/Getty Images)

Programming note: Part Deux of summer vacation kicks off tomorrow. WYWW will return Tuesday, August 1.

The Fed delved into its own Theory of Relativity

The Fed held interest rates and said it plans to unwind its balance sheet “relatively soon.” So the obvious question becomes: Relative to what? It sure is nice to see the Fed reverting to its old ways of being a bit more opaque with its communication strategy.

Either way, it looks like Mohamed El-Erian approves of the course Yellen et al are charting.


Despite what we can generously refer to as its “lean” approach to staffing various government agencies, the Trump administration has been very deft at making big changes to taxpayer protections that were either already in place or in the implementation pipeline. When it comes to Dodd-Frank, sometimes the most effective move is to do nothing at all.

At least once a day, someone asks me what the deal is with Trump’s tweet de jour. My response is always the same: If you are only paying attention to his tweets, then you aren’t really paying attention at all.

Bankers want to cash in on Brexit

This is a somewhat odd article about how bankers forced by Brexit to re-locate from London to places like Frankfurt and Dublin will be able to ask for raises because there are skills shortages in those new locales. At first glance, that makes sense. But then again, I don’t know too many banks that are going to ask employees to move without an accompanying conversation about revised compensation. And for those bankers who adopt a tough stance in the negotiations, maybe they should remember that the cost of living in those cities is tiny compared to London. Keeping the same compensation is gonna feel like a huge raise!

Saudi Aramco problems

Among the many market conditions set to weigh on the much-anticipated Saudi Aramco IPO is the boom in US shale production. HIS Markit says US petrochemical exports could grow nearly 10-fold over the next 10 years. That is gonna hurt Saudi Aramco’s overall plan to diversity its operations. This is yet another reason that I still remain marginally skeptical that the granddaddy of all IPOs is actually going to happen.

Not enough teenagers to go around?

The economics of the US college system are putting the system itself in peril. There are lots of reasons the days of sky-rocketing college costs might end. This fantastic analysis of all the threats includes this little demographic nugget:

“For two decades, college enrollment grew and grew, bolstered by the coming-of-age of the enormous Millennial generation. But today, the number of young people going to college is in decline. It’s not that today’s teenagers hate higher education; the share of recent high school graduates going on to college has barely budged. Instead, there are simply fewer recent high school grads overall, due to declining birth rates. More than half of colleges and universities say their number of students has declined.”

So there are literally not enough students alive to maintain the boom times. Will the diminishing supply of students lead to lower demand for insanely priced degrees?

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