Today's Headlines

By , Bloomberg, 07/30/2015

MarketMinder's View: No, they won't. These economic reports are those a bunch of private-sector folks with no real insight into what transpires at Fed meetings these days think will determine when the Fed raises rates. But hey, even if they are right—that GDP, inflation, wage gains and employment—are the rate-hike linchpins, none of them have any inkling into how the Fed interprets the data. There are always myriad ways to view a set of economic data. Additionally, how does the Fed forecast a rate hike might impact these numbers? Said differently, how much pride have they accumulated? You can't know, so forecasting is folly. And irrelevant. There is zippo history of Fed initial hikes triggering a bear, and we doubt it is so very different today. Long and short, we'd be muuuuuuuuuch happier if the Fed would just get on with it and hike already. Then we could stop reading speculative stuff like this!

By , The New York Times, 07/30/2015

MarketMinder's View: Talks are continuing on the Trans-Pacific Partnership (TPP) in Hawaii this week, with negotiators trying to drill through the last few remaining barriers to a deal. One such barrier? Pharmaceutical patent protection. In the US, firms’ patents give them exclusive marketing and sale rights for 12 years—allowing them ample time to recoup R&D costs before generic firms get into the fray. But this isn’t the global standard! Australian patents only allow for five years of exclusivity. Some countries want that number to be zero. This may seem like a small matter, but Pharma is an $800 billion industry in the US, which means we have a pretty big interest in getting other TPP nations to see it our way. This is just the latest, and arguably biggest (in dollar terms) headwind confronting a deal. We would gladly be wrong because a free-trade zone spanning 40% of world GDP would be great, but we are still a little skeptical a deal gets sealed, passes all the various legislative bodies, and comes to fruition any time soon.

By , Financial Times, 07/30/2015

MarketMinder's View: If this headline were the whole story, that could jeopardize the third Greek bailout before talks really get down and dirty, because many EU nations would likely not join in the bailout if the IMF wasn’t ponying up some funds, too. However, the title isn’t the whole article. You see, what they need is Greece to implement some reforms and the Troika to pledge some sort of debt relief, and blammo, the IMF board approves their involvement. Maybe that delays things and maybe it doesn’t, but this is not a gamechanger, friends. Actually, nothing in Greece is really a gamechanger, as illustrated by the five-plus years of bailout haggling and Grexit fears. Greece lacks size and surprise to materially impact global stocks.

By , The Wall Street Journal, 07/30/2015

MarketMinder's View: Here is a very interesting article highlighting two critical points for investors in the course of documenting a discrepancy between the US Energy Information Administration's weekly and monthly oil output reports (the weekly data are estimates and have shown falling output in recent reports, monthly data are reported production and show output at a 44-year high). For investors, those two lessons are:

  1. Don't use short-term data to pinpoint the bottom or top of market moves. You can’t pinpoint a peak or trough anyway. Give it up. Instead, wait for a trend to be substantiated, which will reduce your error rate. That would have prevented you buying into a false rally.
  2. Investors are likely still overly optimistic about oil stocks, as demonstrated by the keen interest in output reports—they're looking for an entry point, not capitulating.
By , Bloomberg, 07/30/2015

MarketMinder's View: The lesson is supposedly that the Fed waited too long to hike, allowing inflation to spike. Whatever you think of that history (inflation fell in 1967, so is 1966’s lack of a hike really the problem?), the application to today seems well wide of the mark. While we believe the economy can take a hike or three, there are very few signs problematic inflation looms today.

By , US News & World Report, 07/30/2015

MarketMinder's View: ...can hurt you! This is a good primer on the basic types of annuities and some major issues to consider. Listen, if you are thinking of buying an annuity, read this article. Then go to Fisher Investments’ annuity education portal here. Full disclosure: We are not fans of annuities. You should at least find out why before you lock up your retirement in one.

By , Barron’s, 07/30/2015

MarketMinder's View: The new draft law governing how monetary policy is set in India has some nice upside, but some pretty big downside, too. Namely, this: “To be sure, a consensus-building committee is better than the current system. At the moment, the central bank Governor can make rate cut decisions on his own and is under no obligation to follow the recommendations of his staff. But the problem is that the draft code suggests that out of the seven-member committee, only 3 would be appointed by the central bank and 4 would come from the government. This 3-4 rule takes a lot of power away from the central bank.” This comes after moves made in recent years were trending in the correct direction for India, including installing an inflation target for the Reserve Bank of India. Remains to be seen how this plays out, but having politicians with big sway over monetary policy is not a plus.

By , The Wall Street Journal, 07/30/2015

MarketMinder's View: Here is a slew of anecdotal evidence claiming folks are selling high-yield ETFs ahead of a rate hike, yet the very same article offers up this factoid: “Nearly $26 billion flowed into high-yield bond ETFs from 2008 through 2014, according to Thomson Reuters Corp.’s Lipper unit. Another $1.09 billion has flowed into the funds this year through July 22, bringing their assets to $37.8 billion, Lipper says.” So it would seem these folks are in the minority—which is fine! But also, it seems very odd to us to sell high-yield debt because a rate hike looms. You see, high-yield bonds tend to mimic equities more than short-term Treasurys. Rate hikes tend to impact short-term Treasurys most of all, because they are purely exposed to short-term interest rate risk. If an economic expansion drives up corporate profitability—and hence, creditworthiness—private-sector debt may not be affected nearly as much by a hike. We aren’t suggesting you dive whole hog into high-yield, but understand that there is more going on in corporate bonds than just rates.


By , Bloomberg, 07/29/2015

MarketMinder's View: This is an excellent look at how bond markets work, why liquidity fears are likely overwrought, and how markets are evolving to overcome regulatory hurdles to banks’ playing a big role in primary dealing. We recommend reading the whole thing, but here’s a fun teaser:  “Sometimes people criticize market participants who act as pure middlemen and do no fundamental analysis. You see this mostly in markets with lots of high-frequency traders: Those traders aren't adding to the information content of markets, the argument goes, so they are probably just skimming money from real investors and should be banned or disfavored or spoofed. Here, though, the real-money investors have done the fundamental analysis, but still can't trade. What they need is someone to do the non-fundamental analysis, to figure out how many buyers there are and how many sellers and what the price should be so that all the fundamental investors can trade. The middlemen aren't adding information to markets, but they're allowing the information that's already there to flow freely. And without them, you can't find the information.”

By , CNN Money, 07/29/2015

MarketMinder's View: The Big One being a stock market correction—a short 10%-20% drop—which hasn’t happened in over three years, considerably longer than the average time between I corrections since World War II. This isn’t predictive, however. Markets don’t mean-revert, and averages comprise much shorter and longer periods. There is no way to tell when the next correction will come, whether the last one was 6 months or 36 months ago. Also, while it is largely true corrections can help “cleanse the market” of frothy sentiment by heightening fear, they are neither necessary nor unnecessary. We’ve had three-plus years of correction-free gains, yet sentiment is far from bubbly. (Though, we also see no signs of “extreme fear,” and the components in the “Fear and Greed Index” are simply an odd mix of technical indicators, not actual sentiment gauges.) Finally, while niche industries like semiconductors and transportation have corrected, this isn’t telling for the broader market. These “highly cyclical” industries aren’t leading indicators—stocks don’t predict stocks. These industries just face unique headwinds at the moment.

By , Bloomberg, 07/29/2015

MarketMinder's View: Gold’s near four-year bear market, in which prices have dropped about 40% while stocks are up, has tarnished sentiment for the glittering metal, and many forecast further declines ahead. But regardless of where you think gold might be headed, we think it has no place in diversified portfolios. Contrary to popular belief, it does not protect against inflation or economic or financial calamity, it does not pay a dividend, and it generates no earnings, unlike stocks. An ounce of gold today will not grow into two or three ounces 5, 10, or 20 years out. It will still be an ounce of gold.

By , CNN Money, 07/29/2015

MarketMinder's View: The first eight paragraphs are a mostly great look at timing market peaks and troughs precisely is basically impossible. We do think investors can benefit from trying to navigate market cycles, but it isn’t about nailing a top and bottom. It’s about trying to avoid at least part of a bear market if you can identify one before the bulk of the downside has past—and being able and willing to get back in before stocks start recovering so you don’t miss the rebound. This is why we have several quibbles with the final two paragraphs, which take a hard turn into Buy and Hold land, encouraging investors to pick a static mix of stocks and bonds, based solely on their risk tolerance, and stick with it forever and ever. The trouble here is most people are simply unable to accurately assess their long-term risk tolerance, because the recent past skews their perception. After a long, booming bull market investors are much more likely to believe they are quite comfortable taking risk, and after a brutal bear market they probably want little to do with risk. In our view, it’s better to determine which allocation provides the best chances of meeting your needs over your investment time horizon. Comfort with volatility and ability to withstand short-term declines are important, but needs and goals should come first. You can’t aim without a target.

By , Financial Times, 07/29/2015

MarketMinder's View: While tradition categorizes stocks according to sector, country and size, newfangled factors like momentum, volatility and value are gaining notice. Proponents believe factor investing—weighting stocks according to certain factor characteristics—can generate better returns with less risk. But some researchers have concluded this isn’t the investing holy grail some presume. For starters, some studies show factor investing works best when you’re selling short (trying to profit off a decline)—a tactic near-impossible to execute successfully repeatedly. Plus, stocks rise about 70% of the time, so a tactic geared toward something that happens a minority of the time seems odd and perhaps counterproductive. And that assumes the study in question is statistically rigorous. Most studies on factor investing, as this article notes, aren’t. They rely on carefully controlled back-tests, using tactics nearly impossible to replicate real-time, with real money. We also aren’t sure how you can buy something that isn’t a thing, like momentum. Momentum is an observation, not an asset class. Stocks have “momentum” only until they don’t. Overall, this all just strikes us as ivory-tower fairy tale with little practical use.

By , Bloomberg, 07/28/2015

MarketMinder's View: Well, there they go again: “Greece’s latest cycle of talks with its creditors started with a quarrel, as officials argued over which up-front commitments the government has yet to implement in order to tap emergency loans next month.” They have two or three weeks to settle this if they want to seal the deal in time for Greece’s next big loan repayment (due to the ECB on August 20), otherwise they’ll need to hash out a bridge loan to get Athens over the hump. Meanwhile, the ruling Syriza party’s leadership had its second emergency meeting in two days Tuesday, and they’ve set another one for Thursday. The far-left wing is pushing for a full-party vote on whether to pursue the bailout, which could complicate talks with creditors. PM Alexis Tsipras is trying to keep a lid on dissent until after the deal is sealed, but the more noise the Left Platform makes, the more it raises the specter of early elections, potentially before bailout talks conclude. In short, negotiations are hanging by a thread and could fall through at any moment, bringing “Grexit” dread back to the fore.

By , Financial Times, 07/28/2015

MarketMinder's View: Whee! The UK grew again and accelerated in Q2. Yet reactions were decidedly mixed, as this collection of them shows—a good sign sentiment remains in check. Some are pleased, citing the recovery in per-capita GDP, strong employment and rising wages. Others think the real test looms when the BoE hikes rates, and as ever, some bemoan a “two-speed” economy with strong services but weak manufacturing. We wouldn’t overthink any of it. Overall, the news simply confirms what other indicators already suggested: Economic growth continues underpinning UK stocks. For more, see “Britain’s Boom Can Still Zoom.”

By , CNNMoney, 07/28/2015

MarketMinder's View: Why? Because it might give the impression policymakers are flailing or retreating from market-oriented reforms. And perhaps there is a kernel of truth to that, but this overlooks a broader point: Chinese reforms have moved in fits and starts since Deng Xiaoping first began opening the economy 30-plus years ago. Three steps forward, two steps backward is pretty much the norm for Chinese reform. We wouldn’t expect this to be a smooth-sailing process in any country. Recent events might be a high-profile hiccup, but they probably don’t represent a sea change.  

By , The Yomiuri Shimbun, 07/28/2015

MarketMinder's View: With Japan reportedly agreeing to phase out tariffs on chicken, wine, pork sausage (yum), liquid egg and salt, another Trans-Pacific Partnership (TPP) piece is falling into place. Yay! Though, as this makes clear, Japan still clings to those infamously high rice, auto part and beef tariffs, which could yet throw a wrench into TPP talks or result in a watered-down deal. If TPP gets done, it seems increasingly clear it won’t be an instant jolt for growth. Tariffs and other barriers will likely fall gradually, over several years (like the tariffs discussed here). Free trade is overall a net benefit and great for stocks, but keep your TPP expectations in check.

By , Reuters, 07/28/2015

MarketMinder's View: The buffer in question is the “total loss absorption capacity” surcharge, which would require the world’s 30 or so biggest banks to “hold enough liquid assets to cover between 16 and 20 percent of their liabilities.” This buffer would come on top of normal capital requirements, and it looks like banks will meet it primarily through the issuance of new bonds (likely convertible to equity if things get dicey). This overall seems like a solution in search of a problem—as we wrote here and here, “too big to fail” wasn’t the issue in 2008—but it also probably isn’t the biggest deal in the world. Banks have four years to comply, and many have already begun raising the necessary capital in advance. So this shouldn’t materially hamstring lending.

By , The Telegraph , 07/27/2015

MarketMinder's View: By our unofficial count, the concerns highlighted here comprise roughly 87% of the bricks in the wall of worry bull markets love to climb, from Chinese hard-landing fears and a shaky eurozone recovery to the current bull market’s advanced age and seasonal circumstances ready to roil the market. Now, we’re not saying August is going to be either a good or bad month for stocks—volatility can always knock markets in the short-term—but we don’t see the bull dying in the near future, especially for any of the reasons listed here. In short, China’s domestic stock market bumpiness doesn’t equal a hard landing, the eurozone has grown despite Greece and the ECB’s quantitative easing, bull markets don’t die of old age and no one month is automatically good or bad for stocks. Also, picking out several random historical events out of context isn’t evidence that one month may be more volatile than another (though it may be a fun and educational summertime activity for the kids). Do you know what the end of World War II, the 1971 “Nixon Shock” and Russian Ruble Crisis of 1998 have in common? None of those events immediately triggered global bear market.  

By , EUbusiness, 07/27/2015

MarketMinder's View: Over the weekend, news broke that now-former Finance Minister Yanis Varoufakis had a secret “Plan B” to set up a parallel payment system, which would create euro liquidity if Greece lost ECB emergency funding and could switch to a new drachma at the push of a button—a currency transformer of sorts. To do this, Varoufakis hired an IT expert from Columbia University and had him hack into the tax revenue systems, copy the source code, and finagle a new system that would attach a new reserve account to every Greek tax ID number. Supposedly it was all ready to go in May, but when they took it to PM Alexis Tsipras for approval he quashed it. Amazingly, this story broke because Varoufakis told it to 84 financial industry bigwigs during a recorded conference call, someone squealed, and the organizers released the whole shebang online Monday. And it is a doozy, if only for sheer entertainment value, it is a must-listen. We’re personally fond of the Godfatheresque tale of brotherly love that starts at 19:51. It all sounds like a scene from a bad Hollywood thriller, and there is plenty more where those spoilers came from. For investors, it highlights Tsipras’ increasing struggle to control rebel members of his Syriza party (though Varoufakis is only loosely affiliated, not a full-fledged party member), which underscores just how difficult it will be to pass legislation to comply with bailout terms, much less implement them over the next several years (assuming he even remains in power). So we probably haven’t heard the last of “Grexit” fears. But we do know this: The likelihood Greece knocks global markets still remains close to nil.

By , The Wall Street Journal, 07/27/2015

MarketMinder's View: For as much progress as the US has made towards the Trans-Pacific Partnership, it isn’t a done deal yet. Even though it’s now in the “final round,” many variables and what ifs still persist. New Zealand is trying to milk out more favorable terms for dairy exports while Canada—and its domestic dairy industry—is sour towards that idea. Australia wants a sweet deal for its sugar exports, which US domestic interests are bristling against. The US also has beef with Japan over some agricultural products, like cattle and rice. As we’ve said before, the completion of the TPP would be a big positive for the global economy (although a huge negative for punnery), but until it actually gets finalized and completed, we wouldn’t count the chickens before they hatch.   

By , CNN Money, 07/27/2015

MarketMinder's View: China’s domestic stock market isn’t a leading indicator for the economy. While China’s domestic (A-shares) stock market is on a wild ride—like Monday’s -8.5% drop—contagion fears are overwrought. For one, foreign participation in the A-share market is extremely limited, as individual investors make up less than 1% of market capitalization. A-share bear markets in 2009-2010 and 2011-2012 didn’t presage Chinese economic hard landings or a global bear market. Plus, slowing Chinese economic data aren’t surprising or particularly alarming—and in some cases, results are better than anticipated. As long as China keeps making its still sizable contribution to the global economy, that’s likely good enough to exceed dour expectations—a bullish scenario for global markets. For more, see our 7/9/2015 commentary, “About China …

By , Project Syndicate, 07/27/2015

MarketMinder's View: If you thought the only two choices in investing were passive (owning an index) and active (making investment decisions in an effort to beat an index), there is an alleged third way: “smart beta.” “Smart beta” investing means you adhere to certain quantitative rules that allow you to target specific parts of the market, combining components from both passive and active investing. That might mean owning an equal-weighted index instead of a capitalization-weighted one, or an index weighted by book value. If you’re a wee bit confused, you aren’t alone—it all sounds like “active” investing to us. Beyond that, we just question the value any of this adds. Most smart beta strategies are back-tested to show how they would have done if they existed in the past. That isn’t an actual performance history. Tread with caution and know what you’re buying.

By , The Guardian, 07/24/2015

MarketMinder's View: So Greece has some islands, companies, stadiums and other things to sell, and creditors gave them a €50 billion target. Most attention focuses on the government, as the ruling Syriza party has not exactly been keen on this whole privatization thing. PM Alexis Tsipras cancelled some sales after he took over, and as far as we can tell, the only thing he privatized was Emmanuel Kondylis, former chief of the privatization fund. But setting aside the government’s questionable willingness to privatize Greece’s many unproductive state-owned assets, we are just darned skeptical that they reach €50 billion if their deadline is any time within the foreseeable future, which is one of many reasons we’d suggest tempering enthusiasm about this bailout deal. One, market values are depressed right now. Two, fire sales don’t tend to fetch market prices. Spain just tried to sell one of its “ghost airports” for €40 million, a bona fide bargain compared to the hundreds of millions it cost to build. But the final selling price was €10,000. No, we didn’t accidentally leave off three zeroes. There was only one bidder, and bidding wars raise prices. We struggle to see things going much differently for Greece. Not when everyone in the world knows they have to sell.

By , InvestmentNews, 07/24/2015

MarketMinder's View: Welp, the Department of Labor (DOL) received 775 comment letters on its proposed fiduciary standard for all investment professionals working with retirement accounts, and it now has 18 months to shepherd a final rule through. 18 months sounds like a long time, but Labor Secretary Thomas Perez has suggested several changes are forthcoming, and if they modify the rule heavily, it will likely have to face another round of public comments. So wait and see, but the likelihood this rule becomes reality appears to be slimming. If it dies, we think it might be to investors’ benefit. The rule’s aims are noble, but rules can’t ensure anyone acts in your best interests, and the execution has a lot of holes. Literally—escape clauses and loopholes are rampant. Though, the door remains open for the SEC to introduce its own uniform fiduciary standard, so there is a lot up in the air right now. Anyway, regardless of what shakes out, investors should always do thorough due-diligence on any investment adviser or broker they’re considering so they can determine whether that firm has the values, resources and drive necessary to truly put clients first. For more, see Todd Bliman’s commentary, “The Compass.”

By , Bloomberg, 07/24/2015

MarketMinder's View: Though incremental and anecdotal, this is nonetheless a handy counterpoint to long-running fears about Chinese “ghost cities” being evidence that China’s recent growth is an unsupported construction boom that will soon tank the whole country. For all the talk of market-oriented reforms, China remains a command economy in many ways, and officials plan rural-to-urban migration years in advance. Their urban planning follows what we like to call the “Field of Dreams” method: “If you build it, they will come.” Build city, relocate farmers, lather, rinse, repeat. One of these pre-built cities, a replica of Manhattan located in Tianjin, is about to become home to Tianjin’s free-trade zone (FTZ). It sat vacant for about five years, but since gaining FTZ status, 6,000 firms have registered for business, leased office space and planned to move in. Soon it will be bustling! Whether this quadruples Tianjin’s GDP is another matter, but it is still evidence China’s growth is no mirage.

By , The Wall Street Journal, 07/24/2015

MarketMinder's View: So there is a lot of sociology here, and we ask you to tune that out and turn off your ideological/partisan biases and opinions, because this reflection on Dodd-Frank is a great illustration of a risk we call “government creep.”  Whatever you think of the law, its intent and its aims, it transferred power to regulatory agencies with little to no Congressional oversight, giving them carte blanche to define and enforce the rules in ways that might violate decades of precedent. The more government creeps like this, the greater the potential for some sweeping regulatory change decided in smoke-filled rooms away from public scrutiny—a big surprise that stocks don’t get the chance to slowly discount before it takes effect. That’s risk one. Risk two? Government creep drives uncertainty, which could discourage risk-taking among businesses and investors. We don’t say any of this to creep you out—risks appear minimal for now, and we’re still bullish—but this is a trend worth paying close attention to.

By , The Wall Street Journal, 07/24/2015

MarketMinder's View: Though not a complete analysis, this is a nifty look at the ins and outs of calculating and forecasting GDP. What goes into it? Which reports does the Bureau of Economic Analysis use? Which data are delayed and what do they use to fill in the gaps? How do analysts forecast GDP? And most importantly, what the heck are we supposed to make of all these numbers, revisions and statistical noise? “Even the best and most thorough forecasts are subject to noise in the data. Estimates substitute for missing source data until that information becomes available, but source data also may be revised after its initial release. These constantly shifting factors lead some analysts to question the usefulness of quarterly GDP reports and even wonder whether a tool conceived in the 1930s can adequately account for today’s digital goods and services. ‘There is a very simple rule,’ said Louis Crandall, chief economist at Wrightson ICAP. ‘When GDP numbers surprise you in light of everything else you know about the economy, you should always ignore them. And if they don’t surprise you, they haven’t told you anything. … The quarterly values can move sharply,’ he said. ‘They swing up. Then they swing back down. It’s not like they follow some monotonic path to a reasonable conclusion.’” And sometimes they are revised decades after the fact. GDP has its uses, but it is simply a late confirmation/aggregation of data released days, weeks and months earlier. So we wouldn’t spend much energy searching for meaning in bouncy GDP.

By , Bloomberg, 07/24/2015

MarketMinder's View: Aaaaaaaaaaaaand here is a fun piece inspired by the prior article. We highlight it mostly for the fun look at how various markets work—and how pricing can be efficient even without short-sellers. Here is one such fun nugget: “But short selling is not the norm for normal markets; it's a weird way to introduce competition into weird markets. Here are Dan Davies and Tess Read explaining short selling through the example of borrowing overpriced shoes and selling them on eBay, and just reading it should make clear how weird short selling is. No one but a sociopath would actually borrow a friend's shoes and sell them on eBay. If you think shoes are overpriced, you open a shoe factory. Short selling is just a way to open a stock factory.” Also, make sure you don’t skip the ninth footnote.

By , The New York Times, 07/24/2015

MarketMinder's View: Well, of course it isn’t as efficient as the stock market, because a) stocks are totally fungible and b) they are extremely liquid. Hence, you get lots and lots of bids for what amount to the same thing (shares of company XYZ). A house may have one bidder. Or two. Or none. Hence, price discovery is largely done by two people, not many. There is a wisdom in crowds—to an extent!—but there is no wisdom in a pair, and no one claims there is. All that said, short sellers are not a cure all for this, as stocks show. Even with more liquidity, short sellers and fungibility, bubbles and irrationalities happen because people are people. Efficiency is relative, not absolute.

By , Financial Times, 07/24/2015

MarketMinder's View: That dilemma, apparently, is to let rates stay low and inflate asset bubbles—leaving the Fed powerless if things crash while rates are at zero—or hike rates now and risk choking so they have something to cut later. This is a false choice, folks. Near-zero overnight rates in the US and UK haven’t blown bubbles. Both countries are enjoying perfectly normal, fundamentally supported bull markets. Despite both countries enduring flattish yield curves for years. And neither country really needs rock-bottom interest rates at this point. There is a reason the Fed calls their next move “normalizing” monetary policy, to the extent there is even such a thing as normal. Folks, if your country is growing fine six years into an expansion, you probably don’t need rates near zero. Even if the Fed hiked half a point, rates would be at 0.5%, exactly where the UK has been for years. Worked fine for them. Besides, the first hike in a tightening cycle has never killed a bull market. The real risk comes later on, when the central bank inevitably overshoots and inverts the yield curve. US and UK yield curves are steeper these days (with spreads over 200 bps), so that risk is likely a few hikes away at least.

By , The Telegraph, 07/24/2015

MarketMinder's View: Well, gold’s price doesn’t really have any foundations for these metaphorical termites to eat. It has never been an inflation hedge, safety blanket or stable store of value. It hasn’t been a currency-ish thing since we went off the gold standard in 1971. It is just a commodity with little industrial use and a lot of sentimental attachment. And like other metals, it is dropping like lead (ha) right now. To do well with gold you must be an extraordinary market timer, and we think gold just has little place in a diversified long-term portfolio. For more, see our 7/22/2015 commentary, “Gold: The Pyrrhic Hedge.”

By , Financial Times, 07/24/2015

MarketMinder's View: Speaking of Greece’s third bailout, here is your update, which is just full of fun and weirdness. Negotiations between Greek and IMF/EU/ECB (“troika”) officials were supposed to start today in Athens. But they haven’t, because they’re too busy arguing over whether the troika people can stay at the Athens Hilton, which is apparently too close to government offices for Greek officials’ tastes. Not to be overly myopic or anything, but an inability to sort out basic lodgings doesn’t exactly bode well for sorting out pension cuts, tax hikes and streamlining the public sector. (What’s next, haggling over the shape of the negotiating table?) Meanwhile, there is some chatter about the IMF cancelling its extant Greek aid program, due to wrap next March, and starting a new one that would include massive debt relief. Which Germany remains mostly opposed to. So, lots of ground to cover these next few weeks. Whatever the outcome, though, there are no signs of contagion, and absent contagion, Greece is too small (0.3% of the world economy) to wallop a bull market.

By , EUbusiness, 07/24/2015

MarketMinder's View: Apparently eurozone growth did not grind to a halt this month, despite all those all-night summits and Greek Parliamentary votes. People did not, as it happens, shirk work to follow live-blogging or sit around discussing Game Theory and whether negotiations would go better if Greek PM Alexis Tsipras wore a tie. Instead, it was “business as usual,” as Markit’s chief economist noted, and the eurozone composite purchasing managers’ index stayed well above 50, the line between growth and contraction. Once again, Greek chaos proves too insignificant to disrupt the bigger picture.


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Global Market Update

Market Wrap-Up, Wednesday July 29, 2015

Below is a market summary as of market close Wednesday, 7/29/2015:

  • Global Equities: MSCI World (+0.8%)
  • US Equities: S&P 500 (+0.7%)
  • UK Equities: MSCI UK (+1.6%)
  • Best Country: Norway (+2.9%)
  • Worst Country: Italy (-0.5%)
  • Best Sector: Energy (+1.6%)
  • Worst Sector: Utilities (-0.4%)

Bond Yields: 10-year US Treasury yields rose 0.04 percentage point to 2.29%.

Editors' Note: Tracking Stock and Bond Indexes

Source: Factset. Unless otherwise specified, all country returns are based on the MSCI index in US dollars for the country or region and include net dividends. Sector returns are the MSCI World constituent sectors in USD including net dividends.