The Financial Riddler 10-16-23
Have no fear. You can do this.
Has the United States ever defaulted on its official debt?
a. Yes
b. No
And the answer is …
The answer is yes. For several days in late April 2019, the Treasury was unable to make interest payments on its Treasury bills. The reason was technical. Nonetheless, the default instantly raised T-Bill yields by 60 basis points.
Does Singapore have a higher or lower per capita GDP today than the U.S.?
a. Higher
b. Lower
And the answer is …
The answer is higher. Singapore’s per capita GDP is actually 45 percent higher than ours! In 1960, Singapore’s per capita GDP was only one tenth of that of the U.S. Hong Kong’s was one seventh of the U.S. level. On a per capita basis, Singapore has grown at a meteoric rate. It’s left its next door neighbor, Malaysia, far behind.
Does Hong Kong have a higher or lower per capita GDP today than the U.S.?
a. Higher
b. Lower
c. The same
And the answer is …
The answer is the same. Hong Kong’s living standard, like that of Singapore, has grown dramatically since 1960. But Singapore has done far better in recent years. Indeed, Hong Kong’s real per capita GDP is lower now than in 2023. Singapore’s is higher — by ten percent!
What is the current real yield on long-term inflation indexed Treasury bonds called TIPS (Treasury Inflation Protected Securities).
a. 2.4 percent
b. 1.8 percent
c. 0.6 percent
d. -1.2 percent
And the answer is …
The answer is 2.4 percent. This is the highest real yield on long-term TIPS observed in over two decades. Retirees wishing to lock in a steady stream of inflation-protected income should strongly consider this unique buying opportunity. Purchasing long-term TIPS should be done through Treasurydirect.gov or a major investment company’s brokerage window, not through a smaller brokerage that may fail due to fraud. As we saw with the Madoff fraud, counting on SIPC to insure your assets is a fool’s errand.
The S&P 500 is up 14 percent on the year. How much of this is due to increases in the prices of the seven largest companies — Apple Inc., Alphabet Inc., Meta Platforms Inc. Microsoft Corp., NVIDIA Corp., Amazon.com Inc. and Tesla Inc.?
a. 25 percent
b. 50 percent
c. 75 percent
d. 100 percent
And the answer is …
The answer is 100 percent. The price of the rest of the S&P, comprising 493 companies, has hardly budged. Indeed, in real terms, its declined.
Inflation over the past 12 months was
a. 6.2 percent
b. 5.3 percent
c. 4.9 percent
d. 3.7 percent
e. 3.1 percent
And the answer is …
The answer is 3.7 percent. That’s good news. June, a year back, 12-month inflation clocked in at 9.1 percent. Unfortunately, the news on real wages is awful. Median real weekly earnings are down 7 percent from their pre-COVID level. Nominal wage will need to rise faster than prices for some time to restore workers’ real compensation levels.
How many House Republicans need to join House Democrats to elect a moderate Republican Speaker of the House?
a. 21
b. 14
c. 11
d. 8
e. 5
And the answer is …
The answer is five. That’s all it takes to get our government back to work. A total of 147 House Republicans voted to overturn the election. That leaves 74 who upheld the Constitution. Surely five of this group of 74 will once again put country over party.