Tom Simonite, MIT Technology Review, Moore’s Law is Dead. Now What? here. Intel is tapping the breaks on Moore’s Law seemingly for economic reasons. For Wall Street FinQuant, since it is overwhelmingly simple expression evaluation inside Monte Carlo simulators, the Moore’s Law slowing is a big deal. All the Street’s FinQuant stuff increasingly simply runs at peak core throughput and parallelizes nicely if you stay away from the obvious goofy stuff.
The chip industry has kept Moore’s prediction alive, with Intel leading the charge. And computing companies have found plenty to do with the continual supply of extra transistors. But Intel pushed back its next transistor technology, with features as small as 10 nanometers, from 2016 to late 2017. The company has also decided to increase the time between future generations (see “Intel Puts the Brakes on Moore’s Law”). And a technology roadmap for Moore’s Law maintained by an industry group, including the world’s largest chip makers, is being scrapped. Intel has suggested silicon transistors can only keep shrinking for another five years.
David Wheelock, Federal Reserve Bank of St. Louis, Are Banks More Profitable When Interest Rates Are High Or Low, here.
The period since 2010 has been somewhat unusual in that net interest margins have continued to fall while the yield on one-year Treasury securities (and other market rates) has been relatively stable at historically low levels. Over this period, bank funding costs have been exceptionally low, but the average rates of return on bank assets have continued to fall. Loans made in the past at relatively high interest rates have been replaced by new loans with lower interest rates as well as by low-yielding reserves and securities.
For more information and analysis about the recent behavior of net interest margins, see the articles “Why Are Net Interest Margins of Large Banks So Compressed?”1 and “Do Net Interest Margins and Interest Rates Move Together?”
Covas, Rezende, Vojech, FEDS Notes, Why Are Net Interest Rate Margins of Large Banks So Compressed? here. Bullish for Finding NIMo.
The extraordinarily low interest rate environment that has prevailed in the wake of the financial crisis has put downward pressure on the NIMs of all banks, but especially the largest ones.3 As shown in Figure 1, over roughly the past five years, NIMs of large banks have fallen 70 basis points, while NIMs of small banks have decreased approximately 20 basis points. The more pronounced decline in NIMs at large banks is driven by two main factors related to the low interest rate environment. The first factor arises from the liability side of banks’ balance sheets, namely from a more pronounced decline in funding costs at small banks, and accounts for the majority of the difference in the behavior of NIMs between large and small banks. The second factor stems from the asset side of the balance sheet. Specifically, in recent years large banks have experienced a somewhat bigger decline in the interest income that they earn on “other” assets, which includes assets held for trading purposes.