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Fisher Investments MarketMinder News Roundup

Fisher Investments MarketMinder News Roundup

Links to third-party news stories the Fisher Investments' editorial staff believes either: 1. Correctly interpret market issues and current events, or 2. Perpetuate investing myths, basic misunderstandings of capitalism, and other common market misperceptions. Learn more about Fisher Investments MarketMinder.

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Sensible Stories

Sensible Stories
Sensible Stories
By , EUbusiness, 05/16/2012

MarketMinder's View: While the efficacy of the regulations outlined in the 600-page agreement remains to be seen, the broader deal perhaps removes some uncertainty over pending changes to European banking oversight. For more, see our 05/04/2012 cover story, “Basel Bickering.”

Sensible Stories
By , The Globe and Mail, 05/16/2012

MarketMinder's View: Minor quibbles aside, this piece presents a key point policymakers sometimes miss: A country’s currency value isn’t the sole determinant of its manufacturers’ ability to compete in global markets. Though, no argument would be complete without mentioning the impacts of regulatory red tape and trade protectionism.

Sensible Stories
By , The Washington Post, 05/16/2012

MarketMinder's View: Merkel’s softening exemplifies the ongoing political will to preserve the euro. And while fiscal stimulus likely isn’t a cure-all for Greece, if it helps curry favor with Greek voters ahead of Election 2.0, the broader political impact could be an incremental positive.

Sensible Stories
By , The Telegraph, 05/16/2012

MarketMinder's View: On balance, this sensibly debunks the myth of peak oil as an economic apocalypse: “Even if we accept the geological conventional wisdom, then there’s still no cause for panic. Prices will rise, yes, so people will go off and do other things. Either use something else instead of oil (that ever cheaper shale gas for example) or simply doing things that require less energy.” For more, see our 05/14/2012 book review on The End of Growth.

Sensible Stories
By , The Wall Street Journal, 05/15/2012

MarketMinder's View: We find a few things to quibble with here, but it shouldn’t surprise many folks the European periphery struggled while the core continued exhibiting strength. That’s been the case for some time now. What’s more important is the degree to which the larger core countries continue pulling the rest of the eurozone along—it’s also illustrative of how economic strength in the rest of the world can pull a weak, proportionally smaller Europe along with it. For more, see our 05/10/2012 cover story, “German(e) Data.”

Sensible Stories
By , Bloomberg, 05/15/2012

MarketMinder's View: Actually, it blew forecasts out of the water—an indication economic growth continues in the US, despite global pockets of weakness and eurozone concerns.

Sensible Stories
By , BBC, 05/15/2012

MarketMinder's View: Yet another milestone in the race toward zero protectionism. For more, revisit our 05/06/2011 cover story, “A Torrent of Free Trade.”

Sensible Stories
By , The Wall Street Journal, 05/15/2012

MarketMinder's View: Though retail sales grew slower than last month, the bigger story is they continued advancing. For more, see our recent commentary on The Street.

Sensible Stories
By , Bloomberg, 05/14/2012

MarketMinder's View: Though domestic resistance may indeed arise, that China, Japan and South Korea will begin free-trade talks is a positive for everyone. It seems South Korean President Lee Myung Bak is really on to something: “In times of crisis, if countries, for their own survival, carry out protectionist ideas, then the recovery of the economy will take a long time.” Open markets are key to an overall healthy global economy.

Sensible Stories
By , The New York Times, 05/14/2012

MarketMinder's View: It seems to us a bit forgotten, but panics do happen and have in the past: before the Fed, before fiat money—heck, before Wall Street was paved. What to take from this? All these earlier financial crises—some far more severe than 2008’s—didn’t bring the end of growth in the long run, so we see little reason to believe this time is so fundamentally different.

Sensible Stories
By , The Economist, 05/14/2012

MarketMinder's View: Thawing trade relations between India and Pakistan are another milestone in the race toward zero protectionism. For more, see our 04/16/2012 cover story, “Another Step on Kashmir’s Silk Road.”

Sensible Stories
By , The Wall Street Journal, 05/11/2012

MarketMinder's View: Here’s an example of how political uncertainty (and lack of political freedom) can drive wealthy folks to seek citizenship elsewhere—and why China’s economic model, despite what some believe, isn’t superior to the US’s or other freer countries’.

Sensible Stories
By , EUbusiness, 05/11/2012

MarketMinder's View: More evidence Italy continues drawing healthy investor demand.

Sensible Stories
By , The Wall Street Journal, 05/11/2012

MarketMinder's View: Nope—we think most folks are smart enough to discern whether to trust their barber, license or no. And as this article points out, regulations surrounding licensing requirements differ greatly from state to state (some border on the ridiculous, requiring more training than an EMT!) and stifle job creation—yet another example of onerous regulations overall hurting rather than helping.

Sensible Stories
By , Der Spiegel, 05/11/2012

MarketMinder's View: Spain’s real estate market woes have been known for some time—and whether its move to nationalize some banks proves beneficial remains to be seen. For more on Spain, see today’s cover story, “Slow and Steady Spain,” and our 05/10/2012 research analysis, “Spanish Trials.

Sensible Stories
By , The Telegraph, 05/10/2012

MarketMinder's View: We largely agree—there just isn’t a solution that magically eliminates the eurozone’s debt woes. As Chancellor Merkel said, “Only one thing is and remains sustainable: accepting that overcoming the crisis will be a long and difficult process that will only be achieved if we attack the origins of the crisis, which are the horrendous debts and a lack of competitiveness in some European countries.” Sounds about right.

Sensible Stories
By , The Wall Street Journal, 05/10/2012

MarketMinder's View: 

More open markets are nearly always beneficial—not just when it comes to trade, but in the financial world, too. While this isn’t yet a done deal, steps toward more open financial interaction between the US and China would likely prove positive for all involved.

Sensible Stories
By , CNN Money, 05/10/2012

MarketMinder's View: We essentially agree—though Greece’s politicians may continue rocking the boat for awhile, it seems to us the reality is too many parties across Europe have too much invested to just walk away at this point. Including Greece, whether they say it or not. Odds are they continue muddling through—uncomfortable though that may prove in the interim. For more, see our 05/08/2012 cover story, “Europe the Morning After.

Sensible Stories
By , NPR, 05/10/2012

MarketMinder's View: An interesting look at the revenue many US companies generate from royalties and licensing—and further evidence even though the US may increasingly shift from a manufacturing to a service-intensive economy, that needn’t imply economic decline.

Sensible Stories
By , Bloomberg, 05/10/2012

MarketMinder's View: It seems Brazil’s learning some common lessons of government regulations’ unintended consequences—namely, that however well-intentioned, government institutions with multiple layers of red tape likely hinder private-sector activity more often than they spur it.

 

Market Misperceptions

Market Misperceptions
Market Misperceptions
By , The Wall Street Journal, 05/16/2012

MarketMinder's View: This piece makes some valid points, but it misses a key one: Greece isn’t in its present predicament because the bailouts or euro architecture have failed, but because decades of socialism left it with a bloated public sector and uncompetitive economy. Whether Greeks accept that socialism doesn’t work will be key to the nation’s fate.

Market Misperceptions
By , CNBC, 05/16/2012

MarketMinder's View: Gold was never a safe haven in the first place—it’s a just a commodity, albeit a shiny one. And like any commodity, it’s inherently volatile. For more, see our 02/12/2010 cover story, “Gold’s Safety Blanket Myth.”

Market Misperceptions
By , Barron’s, 05/16/2012

MarketMinder's View: We recommend taking any chart-based prediction—good or bad—with a huge grain of salt. Technical analysis is inherently backward looking. It ignores forward-looking fundamentals, which typically drive markets over time. For more, see our 12/12/2007 column, “Technical Paralysis.”

Market Misperceptions
By , Reuters, 05/16/2012

MarketMinder's View: Cuba’s seemingly backward progress on foreign investment is disappointing, but overnight free-market change was likely always an unrealistic expectation for the communist nation. If Cuba were serious about attracting foreign firms and capital, leaders would relax the “rigorous controls” on them.

Market Misperceptions
By , Washington Post, 05/15/2012

MarketMinder's View: While Washington’s hemming and hawing no doubt makes some business planning trickier, the likelihood such a widely known and anticipated expiration of tax cuts and other spending measures derails the US economy is exceedingly slim. For more, see our recent commentary on Real Clear Markets.

Market Misperceptions
By , New York Times, 05/15/2012

MarketMinder's View: More than anything, this betrays a fundamental lack of understanding about how capital markets work. Sure, maybe investors have felt timid in the wake of what was a historically deep recession. But that doesn’t mean by any stretch they’re never returning. Far from it, actually. And to presume this time is different than any time in the past is likely to investors’ ultimate detriment.

Market Misperceptions
By , Time, 05/15/2012

MarketMinder's View: Throughout history, there have always been risks and seemingly overwhelming fears for investors to contend with. However, those listed here have been widely known for some time—removing most of their potential surprise power to move markets in the long run, though they could certainly cause some short-term choppiness.

Market Misperceptions
By , Project Syndicate, 05/14/2012

MarketMinder's View: We quibble with many claims here—like citing free trade, free migration and tax competition as principal drivers of the eurozone’s woes. As we’ve written before, the assumption government austerity measures prevent growth overall and indefinitely is a one-sided (demand) point of view. Moreover, we’d suggest the major notion underpinning this piece—that markets need the stability brought by governments—is a bit backwards, which Greece and the eurozone seemingly illustrate rather well.

Market Misperceptions
By , The New York Times, 05/14/2012

MarketMinder's View: Another example of the misperception there’s a strict dichotomy in the division of wealth: rich versus poor. This emotional rhetoric overlooks the fact capitalism works for both corporations and individuals—demonstrated by now commonplace luxury items like smartphones. Additionally, focusing on success of the whole allows corporations to create myriad jobs and widely spread wealth, benefitting people of all categories. As the author even writes, “It’s neither party’s goal (workers or entrepreneurs) to benefit the other, but that’s what happens nonetheless.” Labels and moralistic judgment aside, that’s capitalism at work.

Market Misperceptions
By , The Wall Street Journal, 05/14/2012

MarketMinder's View: We agree with a couple points here—if you tax something, you get less of it, and lower taxes are likely an incremental economic positive. However, we doubt “taxmageddon” plays out as suggested here—politicking, extensions and foot-dragging wouldn’t surprise, but politicians likely ultimately understand substantially higher taxes make voters unhappy.

Market Misperceptions
By , The New York Times, 05/11/2012

MarketMinder's View: While we largely agree today’s unemployment situation isn’t very structural at all, using the term “depression” to describe today is beyond bizarre considering the economy is growing, unemployment is falling and other economic data overall continue to be positive.

Market Misperceptions
By , The New York Times, 05/11/2012

MarketMinder's View: The evidence included in this piece is nearly all anecdotal. But in actuality, much of US manufacturing is doing just fine—and without subsidies at that. In fact, manufacturing has largely led the way during the current economic expansion.

Market Misperceptions
By , The New York Times, 05/11/2012

MarketMinder's View: We already largely have global accounting standards, so adding to them could entail some negative, unintended consequences. Plus, global accounting implies a global accounting enforcement body—who exactly would that be?

Market Misperceptions
By , The Globe and Mail, 05/11/2012

MarketMinder's View: Economies sometimes grow faster, sometimes slower—and that’s normal. Fact is, China’s still growing, the Chinese government recently announced one trillion yuan in new loans and leaders there typically slow growth right before an election (which is likely what’s happening now). For more, see our 04/13/2012 cover story, “China Check-Up.

Market Misperceptions
By , The Telegraph, 05/10/2012

MarketMinder's View: We’ve discussed many times the problems the eurozone overall and Greece specifically still have and need to address—but this reaches overly hyperbolic conclusions at this point. The reality is a disorderly euro breakup and a Greek return to the drachma likely do more harm than good in the short run. Ultimately, politicians seem to grasp this, too. For more, see today’s cover story, “German(e) Data.

Market Misperceptions
By , International Herald Tribune, 05/10/2012

MarketMinder's View: Let’s be clear: Greece’s problem isn’t really the euro, whether it stays on it or not. A credible currency is one of relatively few things it has going for it at the moment. And leaving it at this point could hurt everyone, perhaps Greece worst of all. And even if it went back in time and didn’t join the euro, Greece could easily be more of a mess than it currently is, not less.

Market Misperceptions
By , The Globe and Mail, 05/10/2012

MarketMinder's View: One beauty of markets in which goods and funds flow freely is regardless of “imbalances,” globally, all accounts balance. So to be concerned about shifts between current account surpluses and deficits and trade surpluses and deficits is largely fretting over something that isn’t really much of a problem. After all, countries won’t participate in such transactions if they don’t overall benefit in some way.

Market Misperceptions
By , Los Angeles Times, 05/10/2012

MarketMinder's View: Yes, a wider trade deficit could ding the US’s Q1 GDP number some—but that’s more an anomaly of GDP’s calculation than it is a serious comment about the economy’s overall health. Fact is a wider trade gap (with imports and exports increasing nicely) can indicate a higher level of global economic activity. And those dollars “exported” to pay for our increased imports must be used somehow. That’s what’s typically referred to as our current account surplus—and it’s not a bad thing. For more, see our 09/09/2011 cover story, “Trade Deficit Trifles.