This article from Wolfgang Hammes outlines the risks of an impending inflation crisis. Lot of things have happened over the past two weeks. If you follow me, you probably have read my extensive posts on Silicon Valley Bank and other bank failures. I don’t want to repeat what I wrote in my posts: Just this: Nothing was surprising. It is much more interesting to look into the future and this will be disturbing for those who do not invest into…

Claire de Weerdt shares an article designed to help your company prepare for an economic recession.  How can you prepare for a possible recession? One method is to conservatively shore up reserves to mitigate risk for a worst case scenario, however, this may come at a high opportunity cost in the event of a soft landing, as resources may have been more productive elsewhere. On the other hand, if you take a bullish perspective, you may not be prepared for…

In this article on the current inflation, Tobias Baer offers an overview of all contributing factors. Every time #inflation rears its ugly head, the fight central banks fight is different – as an economist by training, I therefore don’t envy decision-makers at the Fed and ECB the least in their current attempt to fight inflation. At the same time, as a psychologist and risk manager, I pay particular attention to cognitive biases that can impede such fights – such as…

Marc Bachs Castan shares an article he co-wrote with and was published on DataDrivenInvestor.  Disclaimer: We are not investment advisors. All opinions are ours alone. There are risks involved in placing any investment. None of the information presented in our articles is intended to form the basis for any offer or recommendation or have any regard to the investment objectives, financial situation or needs of any specific person, that includes you, dear reader. So everything you’re going to read is…

Bob Armstrong shares a post on Goodhart’s Law and why statistics are not always a solid foundation to count on. Goodhart’s Law is named for Charles Goodhart, a British economist who in 1975 popularized the idea that Any observed statistical regularity will tend to collapse once pressure is placed upon it for control purposes. I think it was meant humorously, but the pungent truth of the statement made it stick. The point is sound. Essentially, any statistic that becomes a…

Tobias Baer shares an article on credit risk and the perils of the buy-now-pay-later trend. A just-published TransUnion study shows that buy-now-pay-later (BNPL) takes the UK (just as other markets) by storm, with 35% of the population having used it in the past 12 months (driven in particular by Gen Z and Millennials with up to 60% usage). There are both obvious and not-so-obvious implications for traditional lenders. BNPL promotes further fragmentation of consumer debt – and therefore will make…

Luiz Zorzella shares an article designed to help improve strategy by understanding your net Interest margin (NIM).  If you are a bank executive and want to manage the bank’s business strategically, you must understand the key drivers of your bank’s profitability and the trade-offs they imply. For example, to some extent, banks can trade the cost of deposits for efficiency ratio by making it more convenient for clients to make deposits. At the same time, the equilibrium of these trade-offs…

  Paul Millerd shares his understanding of hamsternomics: printing money, the future of work, and what we want or need in life. Right now, as citizens of the United States we may become that hamster.  Near term, we don’t really have a choice.  Long term, we might have a choice. A lot of people have asked us what printing money means. Like, what actually happens and why should we care? That simple question turned into a long investigation.  The result…

  Supriya Prakash Sen shares a pertinent reminder on big picture problems that we all face, and offers a solution that could be a small step in financing but a leap towards a sustainable future. In the midst of a pandemic, the past year has been chilling at best, and a nightmare at the worst of times. However, we are lucky to be alive. Now, as vaccines get rolled out, it remains for the survivors to pick up the pieces,…

  Ian Tidswell provides insight into the strange pricing practices fueled by loyalty programs, credit card programs, fees, and customer perception of value.  Utpal Dholakia always has interesting posts on pricing.  This one got me thinking about the strange way that buying a coffee can result in wealth transfer to an airline.   Airlines make a lot of money off of their loyalty programs (often all of their profit). 71% of those miles are purchased, many by banks for their credit…

  As the disruption continues, many businesses struggle to retain their employees. This post from David Burnie’s company provides strategies that can help keep employees on board, engaged, and motivated. Happy, successful employees are critical for a successful company. While companies must consider how to retain employees at the best of times, employee retention is an especially pressing topic during the COVID-19 pandemic. As Ontario continues social distancing indefinitely, maintaining an engaged staff will offer a sense of stability to…

  Amanda Setili shares eight steps you can take to mitigate stress and uncertainty during the current crisis.  I’ve been astounded by the degree and speed of innovation and change these last few weeks. Things that in normal times would have taken months or years to do have been accomplished in days, largely because people are banding together to help each other. In the midst of suffering, stress, and a good bit of fear, there is more kindness than ever….