Behind the Numbers

While it is important for economists and investment analysts to evaluate economic data, sometimes the surface data are not sufficient to tell the whole story. For example, check out this article (Yahooe! Finance) that examines some underlying elements of the unemployment rate.

Option Trading Activity Increases

Option activity has increased as online brokers have targeted ads and information toward new investors. Check out the article here, WSJ.

Biggest IPO Ever

The state-controlled Saudi Arabian Oil Co. (or, Saudi Aramco) just went public, raising $25.6 billion. Based on the 1.5% stake that was sold, the price puts the full company valuation at $1.7 trillion. This issue is now the biggest IPO of all time. See article here, WSJ.

The New Whiskey Dividend

When companies provide dividends in the form of products as opposed to actual cash, it is often referred to as a "whiskey dividend," since a distillery was one of the first companies to follow this approach. More recently, BrewDog (a Scottish craft brewer) floated the idea of a bond that pays coupons half in cash and half in beer. This may create a very loyal investor base. See article here, Yahoo! Finance.

Broker Price War

In a "race to the bottom," Schwab has rattled the industry with its latest decision to eliminate trading commissions on online stock trades. In response, other online brokers followed suit. See article here, WSJ.

Yields: Stocks vs. Bonds

Dividend yields on stocks are typically lower than the yields on bonds. This relationship reflects the added upside associated with stock prices. However, for only the second time in the past 40 years, the dividend yields exceeded bond yields. This relationship suggests that stocks are cheap RELATIVE to bonds. It doesn't necessarily mean that stock prices are cheap in absolute terms. See article here, AAII.

German Yields Below Zero

In an unusual event, German bond yields across the entire yield curve are below zero. So, the government could borrow for ten years (or more) and pay back less than the original principal. Typically this is a sign of a "flight to quality." See article here, Marginal Revolution.