Today's Headlines

By , EUbusiness, 08/29/2014

MarketMinder's View: Not because they’re going to cut supply, but because they already cut off Ukraine—and Ukraine has a wee bit of a history of siphoning off gas traveling through its pipelines to the EU. And Ukraine’s government has admitted their reserves aren’t enough to get them through the winter. So they might pilfer. But they might also reach an agreement with the EU to reimport. Or they might find a way to settle this long-running dispute with Gazprom. It’s all too up in the air to predict today! Whatever happens for Ukraine, though, the EU has significantly more reserves this time than when Russia shut off Ukraine’s gas in 2006 and 2009. And if this saga is inspiration for them to build a few more pipelines and make their energy infrastructure more diverse and efficient, that’s a long-term silver lining.

By , The Washington Post, 08/29/2014

MarketMinder's View: So the theory here is that you can’t understand where the labor market is headed unless you  

1) Aggregate all the unrelated, backward-looking jobs data into one super backward-looking number.

2) Back-test it 22 years.

3) Calculate its momentum, which you then project forward. Voila!

You can’t use a super backward-looking thing to predict future employment. Which is, you know, backward-looking and a function of economic growth. We’d ask why they don’t just look at actual leading economic indicators and be done with it? Hey, listen, we agree the unemployment rate is fuzzy and one stat doesn’t perfectly capture labor markets. But the notion this is new and that you get clarity by smashing together 24 fuzzy series into the One Fuzzy, Backward Looking Series to Rule Them All is a bit off.

By , Quartz, 08/29/2014

MarketMinder's View: That really important thing? Businesses are “finally” spending again! Hooray! Except. They. Already. Were. Which the chart here even shows. Anyway. Contrary to the claims here, rising business investment isn’t a telltale sign of an expansion’s end. It doesn’t mean execs are too sunny and confidence has reached a peak. It’s just sort of what happens during an expansion as profitable firms want to grow and be even more profitable. We could show you a dozen charts to prove it, but we don’t have the space in this narrow sidebar.

By , Financial Planning, 08/29/2014

MarketMinder's View: No.

By , Reuters, 08/29/2014

MarketMinder's View: No it doesn’t—confidence surveys aren’t predictive. Those consumers who told the University of Michigan pollsters they’re more optimistic this month might not have gone out and shopped till they dropped. That said, we don’t see any need to fear a big spending slowdown—monthly data always bounce around a bit, and the longer-term trajectory is clearly up. Plus, consumer spending isn’t the be-all, end-all economic driver people think it is. Yah, it’s 70% of GDP, but it isn’t a swing factor.

By , The Motley Fool, 08/29/2014

MarketMinder's View: Here’s one reason why: “How finance and investing is taught is disconnected from how it actually works. Finance is taught overwhelmingly as a math-based field, in which students learn how to calculate beta by hand and dissect a balance sheet in their sleep. In the real world, finance is overwhelmingly a psychology-based field, where the best investors are those who control their emotions. This is rarely taught and never emphasized. And it's why some of the world's best investors have no formal finance training. Other fields, such as medicine and engineering, have done a much better job preparing students for the real world.”

By , Vox, 08/29/2014

MarketMinder's View: Why shouldn’t anyone draw big conclusions from the fact business IT investment has fallen relative to GDP over the past 15 years? Because technology! “Analogies are dangerous, but in this case I’d say thinking about a personal budget has some merit. Ten years ago, I had an aluminum PowerBook G4 that cost $1,799. Today, that’s roughly the combined price I paid for an 11 inch MacBook Air, an iPhone 5S and a Retina iPad Mini. … Matt Yglesias spends a considerably smaller portion of his income on computers in 2014 than he did in 2004 but he has much more computing power at his disposal.” Looking at “computing output per worker” tells a more accurate story—rough calculations show it’s on the rise.

By , China Daily, 08/29/2014

MarketMinder's View: In just about any other developing country with rampant corruption, a shaky legal system and weak property rights, we too would interpret government pledges to strengthen the rule of law as a positive and sign of more reforms to come. But this is China. A one-party state where stronger law means Internet clampdown and less personal and economic freedom. Don’t get us wrong: If they really do decide to modernize their legal system, clarify regulations and strengthen property rights, that would be a positive. But in a country where a business owner could get a death sentence for raising money privately and then going bust, we wouldn’t expect big changes overnight.

By , Bloomberg, 08/29/2014

MarketMinder's View: Old age isn't a cyclical factor. Monetary policy and inflation are. Don't mix the two. By the way, how can this be considered "disinflationary" when older folks tend to spend more on things with prices that rise faster than the average, like health care, pharmaceuticals and so on?

By , Reuters, 08/29/2014

MarketMinder's View: The new rule, which strengthens collective action clauses, is largely window-dressing. It won’t apply to already-issued bonds, and as this piece points out, national governments must opt to write them into their bond covenants—something they’re pretty slow to do. The tweaked rule also isn’t much different from what is already the norm in eurozone debt. This doesn’t wipe away the risk of hold-out creditors causing a commotion in future defaults (which also isn’t a big global economic risk, at least in the case of Argentina). For more, see Elisabeth Dellinger’s 7/31/2014 commentary, “Argentina Defaults. World Still Turns.”

By , EUbusiness, 08/29/2014

MarketMinder's View: Wait, but core prices—which exclude food and energy—rose from 0.8% y/y to 0.9%. Soooo … falling energy prices knock? We thought people liked that? And more to the point, none of this accounts for October’s bank stress tests (the real issue weighing on lending and money supply growth) or the ECB’s pending attempt to boost small-business lending. Things could look quite different—and better than most expect—in several months.


By , Associated Press, 08/28/2014

MarketMinder's View: The survey here shows 71% of Americans (out of 1,153) think the, “recession exerted a permanent drag on the economy,” and only 14% feel like they gained from the current bull market. Which may be true! But it and a different poll, which found that just 7% of respondents knew stocks rose 30% in 2013 suggest there is still time to get on board! Surveys and polls can show what sentiment is like at a particular moment, and these suggest euphoria is far off. For more, see our 08/26/2014 commentary, “The Trouble With Surveys.”

By , The Wall Street Journal, 08/28/2014

MarketMinder's View: If stocks fall, it will have nothing to do with the cyclically adjusted price-to-earnings ratio (CAPE). CAPE is a foolish attempt to predict the impossible—10-year returns—and is woeful at forecasting cyclical turning points (like, it forecast a bear in 1996). And if the bull runs on, it won’t be because of low interest rates. The Fed isn’t driving the bull any more than rates have driven stocks in the past. Heck, rising 10-year rates would be good, because rising long rates means steeper yield curve! Also? There is no rational reason we’re doomed to low returns for the foreseeable future—stocks don’t mean revert.

By , Associated Press, 08/28/2014

MarketMinder's View: Q2 GDP was revised up from 4.0% to 4.2% on higher business investment (yay), higher exports (yay) and lower imports (aww—though an 11% rise isn’t peanuts). This puts the last four quarters’ real US GDP growth at: 4.5%, 3.5%, -2.1% and 4.2%—three of the four exceeding the US’s postwar average growth rate. Which is a nice factoid you don’t hear many places! But backward-looking. Other measurements, like the Conference Board’s Leading Economic Index, suggest US economic growth should continue, and that’s more important for investors.   

By , The Wall Street Journal, 08/28/2014

MarketMinder's View: The negative central bank deposit rates announced in June indeed prompted eurozone banks to move reserves … but not to lend them. If Dutch banks are any indication, euro banks have parked funds at the BoE and Fed or bought high-quality sovereign debt. This underscores our long-held view: Eurozone banks aren’t cutting lending because they lack liquidity. They’re preparing for ECB stress tests, which carry stiff penalties for failure. For more, see our 06/06/2014 commentary, “Super Mario Strikes Again?”    

By , The Wall Street Journal, 08/28/2014

MarketMinder's View: The post-taper loan growth surge continues, in yet another demonstration of the fact the Fed’s quantitative easing was far from stimulative.

By , The Telegraph, 08/28/2014

MarketMinder's View: Banks’ core business is to lend. Small and medium-sized businesses (SMEs) want to borrow. Yet even with explicit government backing—the UK’s “Funding for Lending Scheme”—and a steeper yield curve, UK small business lending continues contracting. What gives? Regulatory uncertainty! British regulators are still nattering on about extra-tough capital requirements, and stress tests lurk nigh. This gives banks a big incentive to keep their balance sheets as clean as possible, which leaves smaller firms (widely assumed to be risky) out in the cold.  

By , The New York Times, 08/28/2014

MarketMinder's View: Well, the credit ratings agencies themselves didn’t (and couldn’t) inflate the housing bubble in the mid-2000s. Bubbles are psychological phenomena, and we doubt Moody’s can really upgrade your mood much. Now, the provisions of this are fine in the sense they seek more disclosure regarding potential conflicts of interest in the raters’ issuer-pays model. In our view, a more appropriate move would be to drop credit ratings agencies’ “nationally recognized statistical ratings organizations” status, abolish the issuer-pays model, remove regulatory reliance on them, letting them sell their “opinions” as analysis investors can value as they wish. Precisely as they did before 1936.

By , CNBC, 08/27/2014

MarketMinder's View: By our count, there is more than one theoretical or factual error per paragraph in this “theory” (and we use that term loosely, as we’ll explain).

1) It incorrectly defines a correction—a decline of 50-60% is a bear by basically anyone’s definition. 

2) Offers absolutely no explanation for the cause.  

3) Bases the prediction near entirely on mean reversion (a behavioral error) and charts of past price movement (not predictive at all, ever). The entire reason for bearishness offered? Stocks are near all-time highs.

4) The charts are greatly distorted (please review the Y-axes), and they start from a wholly arbitrary point.

5) Trend lines are only trend lines after the fact. They aren’t predictive.

6) It attempts to tie the cause to monetary policy (withdrawal of QE), but markets are already well aware of this and have continued rising. Markets move in front of events, and we are a wee bit skeptical investors will, en masse, wake up one day and say, “Hey! Nine months ago the Fed began tapering! Sell!”

7) If you watch the video (which we did for you), you’ll find the analysis claims the Dow is in a 20-year uptrend, glossing over the cyclical changes in between.

8) Any theory containing a big bearish call and statements like, “It’s tough to know what the exact catalyst will be” is not actually a theory. It is an effort to get you to tune in.

By , The Wall Street Journal, 08/27/2014

MarketMinder's View: 2008 was a rough time to be sure, but there are next to no econometrics that actually support this statement. In the Depression, headline unemployment was reportedly over 25%; deflation was rampant and persistent instead of fleeting and shallow as it was in 2008; GDP fell by about a third. Thousands of banks failed in the Depression, and there was no deposit insurance or other program to protect imperiled savers. Now, in this way the two are similar: The Fed’s actions (or inactions) played a key role in exacerbating both downturns. In the Great Depression (1929-1933), the cause of the deflation was the Fed sucking about a third of the money supply out. In 2008, it was the Fed outsourcing crisis management to the Treasury, who countered the impact of FAS 157 with haphazard policy that led to credit markets freezing. As Bernanke said on Milton Friedman’s 90th birthday, “Regarding the Great Depression. You’re right, we (the Federal Reserve) did it. We’re very sorry. But thanks to you, we won’t do it again.” We’ve seen the Fed deliver no mea culpa on 2008 as yet.

By , The Telegraph, 08/27/2014

MarketMinder's View: First, a bit of a disclaimer: none of the words that follow these words should be interpreted as an endorsement or indictment of the Conservative or Labour parties. Or any other party. Investors often figure a pro-business party is better for stocks, but cycles swamp party stripes—and are fully global, which shows the problem with this thesis. After all, US stocks are among the world’s strongest, and the US president is from the party more Americans equate to being less business-friendly—and that fact holds historically in the US. Which shows this for what it is: correlation without causation—no-no time for investors. In our view, if stocks favor anything politically, it’s gridlock, which most of the world’s highly competitive, major economies have.

By , The Wall Street Journal, 08/27/2014

MarketMinder's View: Don’t wait for the regulators to get around to doing something, just start shunning nontraded, unlisted real-estate investment trusts now. They’re costly, illiquid and not at all transparent. Unlisted doesn’t equal price stability, despite how some pitch these. Consider: When one nontraded REIT discussed here listed on the NYSE in 2013, it listed “at a price that worked out to be a 45% discount to the share price at which investors originally bought into it.” Prices are moving even if you can’t see them. Just like, you know, real estate. Ultimately: We have yet to hear a reasonable, logical argument for why nontraded REITs are a thing. In our view, they should probably not be a thing in your portfolio, though.

By , The Washington Post, 08/27/2014

MarketMinder's View: As we’ve written, deficits are sharply down (again) in fiscal 2014, tied to rising federal government tax revenue. The CBO is projecting the year will close with a federal deficit of $506 billion. Now, we’re betting their forecasting might have a chance of being accurate 34 days from the end of the fiscal year, but we’d suggest taking all the 10-year predictions here with a grain of salt. Or multiple grains of salt. But also, we feel compelled to point out that the headline here is a real headscratcher. After all, if you are running a deficit, debt would always rise by definition. If it said “…Debt-to-GDP Continues to Rise” then we’d just quibble with the forecast. But we are sticklers for some factual wordishness stuff, otherwise known as nerds.

By , The Wall Street Journal, 08/27/2014

MarketMinder's View: While we agree the bull market likely continues higher from here, achieving a big, fat round number on the S&P 500 Price Index has nothing to do with our rationale. Looking at what happens after a round number is achieved is a fallacious exercise that sees only correlation with no attempt to explain causation.

By , The New York Times, 08/27/2014

MarketMinder's View: Here is some sound advice for investors about how to approach data and anecdotal evidence: “It’s so important to expand our sample size before making big money decisions. A single event, weighed in the context of everything else that’s happening, does not predict the future. But in the heat of the moment, it can feel like everything hinges on this one thing. If we genuinely feel like a single sample is of some consequence, then it shouldn’t be that difficult to get confirmation of our conclusion from other samples.”

By , The New York Times, 08/27/2014

MarketMinder's View: This is an excellent discussion of the influence of incentives and how a wee bit of economics might make your flight more comfortable—and more peaceful. Folks, if you don’t want someone to recline, throw cash—not water. You’d be surprised how much comfort someone is willing to give up for a bit of dough. For investors, though, consider: If your financial professional works on commission, he or she may be getting compensated to sell products that they aren’t totally comfortable with. Again, folks will give up a lot of comfort in exchange for some dough. For more, see Todd Bliman’s 12/04/2013 column, “Incentives, Interests and Investors.”

By , Bloomberg, 08/27/2014

MarketMinder's View: Ummm. The notion taxing Korean firms’ cash balances—mostly the large conglomerates called chaebol—will cease their hoarding of cash, driving wages higher for Korean workers, is bizarrely backwards, and suggesting this odd policy is right for Japan, too, is equally odd. For one, Korean firms aren’t excessively miserly—investment is already logging new highs. Two, assuming the tax was successful and firms deployed a trillion or so won in boosting salaries, firms could easily wind up hiring unnecessary employees or paying for unneeded work—a productivity drag, akin to the situation existing in Japan today. The notion this is a great strategy worthy of mimicry is just a bit wide of reality. For more, see Elisabeth Dellinger’s 08/18/2014 column, “Can Korea Tax Its Way to Business Investment?

By , Reuters, 08/27/2014

MarketMinder's View: So it seems German consumers are a little less rosy heading into the fall, but you know, what people say is worth a whole lot less than what they actually do. Which means statements like, “The GfK also reported a rise in shoppers' propensity to save in August, which could hint at an increasingly cautious attitude towards spending in future” might be right, but a cautious attitude doesn’t mean cautious behavior. If we care about attitudes a lot, though, we could always organize a squad of cheerleaders to chant, “Spend, Spend, SPEND! Go, Go, GO! Consume!” However, we doubt that would have any real economic effect beyond possibly adding some new jobs for Germany’s youth.

By , The Wall Street Journal, 08/27/2014

MarketMinder's View: There is a significant dose of charged politics in this article, so before you read it, remember: We aren’t endorsing the political bent of this or any article. Our sole point is this article’s central point—that Congress outsourcing rulemaking to the very bodies who enforce the rules is a potential negative—is correct, and a risk for stocks. Yes, it may permit industry figures to exert greater influence over rulemaking, a negative. But also, crucially, it means rulemaking happens in a much quicker, more opaque manner than very visibly debating and passing a law. Now, for the specifics, there is likely no market impact to House Speaker John Boehner’s lawsuit against President Obama, and Senators Brown and Vitter’s legislation seeking to boost capital levels at the nation’s biggest banks presumes “too big to fail” is a thing (we disagree). We’d suggest looking at the small example the Volcker Rule recently dragged up as an example of the potential risk.

By , The Wall Street Journal, 08/26/2014

MarketMinder's View: Why? “Because borrowing costs for European banks are cheaper now than they were immediately following the eurozone crisis, they can lend more. And in some cases, the premium offered by emerging-market Asian borrowers can be higher than in Europe”—or, more simply, it’s more profitable. Now, this is happening already, with the ECB’s stress tests and asset quality review ongoing—the high quality of Emerging Asia’s biggest companies makes the reward worth the risk. If the ECB starts quantitative easing (QE) and flattens eurozone yield curves further, it wouldn’t surprise us if this trend continued as lending outside Europe became even more profitable on a relative basis. Count this as one of several reasons we don’t think QE would do much for the eurozone economy.

By , Slate, 08/26/2014

MarketMinder's View: We don’t agree with every nuance of this article, but the general thrust—that the broad investing public has a bit of an obsession with all things central bank—is sound. Our main criticism is it just doesn’t go far enough: Faith in the Fed as the savior in 2008 is utterly misplaced and backwards; faith in QE, in our view, is wrong on theory and effect. They’re now supposed to employ macroprudential regulation to deflate bubbles, but there is no evidence they’ve ever identified one. The Fed isn’t all bad, mind you, and we’re not calling for a gold standard or something. But the degree of blind faith folks place in this institution vastly exceeds what’s warranted by history.

By , Slate, 08/26/2014

MarketMinder's View: Nothing magical about the S&P 500 surpassing 2,000. We’ve seen handfuls of round-number milestones during this bull market—the S&P reaching 1,600 in May 2013, 1,700 in August 2013, 1,800 in November 2013 and 1,900 in May 2014—and we could see many more. We don’t really know what it means to call a round number an important “psychological marker,” which sounds mostly like searching for meaning in all-time highs. Like this article using the 2,000 milestone as an opportunity to point to valuations—claiming stocks are “too expensive” and that they can’t keep rising forever. Their evidence? The cyclically adjusted price-to-earnings ratio, of course! Which wasn’t designed to forecast cyclical direction and doesn’t do it well, either.

By , The Wall Street Journal, 08/26/2014

MarketMinder's View: So some are predicting the opaque back-and-forth over Dodd-Frank’s living will requirement will prompt banks to shed operations left and right, and there is some evidence this is already happening. Whether it escalates is all very speculative, but we have to wonder: One big reason banks have multiple business lines is to diversify their revenue sources—that way their eggs aren’t all in one basket. If they become less diverse in order to avoid the Fed/FDIC’s wrath when the next round of living wills are judged next year, doesn’t that kind of make the financial system less safe, not more? Especially since the business units they’re selling are—quite logically—the most profitable ones? We aren’t saying this takes down the banking system or anything, but it seems like a bizarre approach.

By , Statista, 08/26/2014

MarketMinder's View: So it seems Russia’s ban on food imports is taking a toll on Russia (probably not what the country intended). The graphic highlighted in this article depicts Russia’s food prices jumping through the roof since the start of the year—potatoes (+72.7%), chicken (+25.8%), Pork (+23.5%), Sugar (+16.5%), Milk (+13.5%) and all food products (+10%). This is one of those points illustrating the folly of protectionism. After all, making goods more expensive for your own consumers just isn’t likely to be all that positive long term or short term, and it certainly isn’t protecting the Russian economy much.

By , The Wall Street Journal, 08/26/2014

MarketMinder's View: That +22.6% jump in July may look super boom-ish, but as with most such volatile data points, we’d suggest two things: First, dig into the details. Second, put the month in context. July’s big uptick was largely driven by surging aircraft purchases. Orders excluding transportation ticked down a tad (-0.8% m/m). But that’s all just one monthly blip in what’s pretty obviously a noisy data series. Overall, the longer-term trend is positive—a year-over-year look (here) shows orders have grown nicely this year.

By , Bloomberg, 08/26/2014

MarketMinder's View: We included this mostly because we found it a fun read, but there is a commonly misunderstood point regarding corporate inversions, too: “So the purpose of an inversion has never been, and never could be, and never will be, ‘ooh, Canada has a 15 percent tax rate, and the U.S. has a 35 percent tax rate, so we can save 20 points of taxes on all our income by moving.’ Instead the main purpose is always: ‘If we're incorporated in the U.S., we'll pay 35 percent taxes on our income in the U.S. and Canada and Mexico and Ireland and Bermuda and the Cayman Islands, but if we're incorporated in Canada, we'll pay 35 percent on our income in the U.S. but 15 percent in Canada and 30 percent in Mexico and 12.5 percent in Ireland and zero percent in Bermuda and zero percent in the Cayman Islands.’” Territoriality is more the driver than the rate.

By , The Telegraph, 08/26/2014

MarketMinder's View: “The developed world is full of clever people elaborating grand theories purporting to explain why we are doomed to failure. It would be a shame if we were transfixed by those stories and ignored the enormous opportunities which are – trust me – right in front of us. We have got a lot more prosperous and a lot healthier in recent decades and there is no reason we cannot maintain that progress.” This article is not a market call and shouldn’t be interpreted that way. Rather, these are just good reasons being a long-term optimist isn’t a Pollyanna point of view. It’s underpinned with, you know, things that actually happened.

By , Associated Press, 08/26/2014

MarketMinder's View: Consumer confidence surveys aren’t actually a great indicator of future consumer behavior. But they can be a marker of sentiment, and in that way they can be one data point helping paint the picture of consumer and investor mood. Presently, it appears folks are becoming more optimistic. Anyways, we advise investors to approach with caution coverage of these that considers them anything other than a measure of what certain selected people felt during a certain selected period of time. For more, see our theoretical discussion here from The Street.

By , MarketWatch, 08/25/2014

MarketMinder's View: While we share this article’s skepticism over the methodology of the highlighted study, the conclusion is hard to argue with (and one we’ve seen plenty other evidence supporting). Whether investors use actively managed or index funds, they tend to trade too often and for the wrong reasons, which can severely impact performance over time. This is something all the many studies measuring whether active or passive funds perform best miss. It isn’t really about the performance of the fund an investor uses. It’s about their ability to actually capture that performance. For more, see Todd Bliman’s 8/12/2014 commentary, “Passive Investing’s Primary Error: It’s (Mostly) Imaginary.”

By , The Wall Street Journal, 08/25/2014

MarketMinder's View: This entire piece operates on the notion that to invest successfully today—a time when US, Argentinian and Indian stocks are at all-time highs, corporate bond yields are ultra-low and US Treasury rates are falling—you have to find something “cheap.” Problem 1) Define cheap? Problem 2) Even “expensive” assets—whether you’re using recent price movement, P/E ratios or some other valuation—are perfectly capable of rising. Today, with earnings up and Leading Economic Indexes pointing to more economic growth ahead, those allegedly pricy stocks should have plenty of room to grow.

By , The Wall Street Journal, 08/25/2014

MarketMinder's View: As US regulators iron out the final details of the liquidity coverage ratio, which requires big banks to hold enough “high quality liquid assets” to fund their operations for 30 days if there is a run on deposits or short-term funding, rumor has it muni bonds might not make the “high quality” cut. While it’s premature to speculate on this before the final rule is released, this piece is a pretty sensible discussion of the potential impact. Some suspect it could raise state and local borrowing costs by removing an incentive for banks to own munis, but as this piece notes, banks tend to own muni debt for interest income, not for regulatory reasons. Even if demand does drop some, the banks impacted own only about 5.5% of the $3.7 trillion muni market.

By , CNBC, 08/25/2014

MarketMinder's View: The warning sign? While the S&P 500 hit a nice round intra-day all-time high of 2000, 10-year Treasury yields are trading lower (cue the ominous music). Which one is right, investors ask? Um, both? Markets are markets. The notion stock investors are ignoring some elephant in the room while bond investors are correctly eyeing slower growth ahead is just plain misplaced. Bond markets do not move on economic expectations alone.

By , The Telegraph, 08/25/2014

MarketMinder's View: While we wouldn’t recommend all the tactics highlighted here, this insightful interview with Irving Kahn (a cohort of Ben Graham) has some good, timeless nuggets of wisdom. Like this one: “I would recommend that private investors tune out the prevailing views they hear on the radio, television and the Internet. They are not helpful. People say ‘buy low, sell high,’ but you cannot do this if you are following the herd.” Other nifty truisms include the importance of resisting your impulses to run from short-term volatility, the power of compound interest and a reminder to look for information where more investors don’t—like in the footnotes of annual reports.

By , Bloomberg, 08/25/2014

MarketMinder's View: Actually, we don’t find this summer “different” from the many that came before it, and that’s true for the three supposed differences highlighted here. 1) Markets have always been resilient. How is this summer’s calm any different than the calm accompanying last summer’s tensions in Syria and Egypt? 2) There is no law saying stocks and bonds must move opposite each other. Any chart of market history will show you they move together sometimes, apart at other times. There is no such thing as “coupling” or “decoupling.” 3) Central bankers have always been confusing. Alan Greenspan turned it into an art-form. Also, we’re pretty sure difficulty in assessing labor market conditions isn’t why there is “greater policy divergence among central banks” (also normal)—that has more to do with conditions on the ground.  

By , The New York Times , 08/25/2014

MarketMinder's View: After (now former) Economy Minister Arnaud Montebourg criticized France’s increasingly pro-market policies in a widely read weekend interview, Prime Minister Manuel Valls evidently told President François Hollande, “it’s him or me.” In a telling sign about his agenda, Hollande picked the pro-business Valls, who should unveil the new cabinet Tuesday. Lesson: Politicians, whether in France, the US or wherever else, frequently moderate when in office, just like the “Socialist” Hollande has moderated over his two-plus year term (which is likely one reason why French stocks have outperformed since he took office). Bias blinds investors to this, which is why bias is deadly.


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Global Market Update

Market Wrap-Up, Thurs Aug 28 2014

Below is a market summary (as of market close Thursday, 08/28/2014):

  • Global Equities: MSCI World (-0.4%)
  • US Equities: S&P 500 (-0.2%)
  • UK Equities: MSCI UK -0.4%)
  • Best Country: Ireland (+0.2%)
  • Worst Country: Austria (-2.5%)
  • Best Sector: Utilities (0.0%)
  • Worst Sector: Materials (-0.7%)
  • Bond Yields: 10-year US Treasurys fell .02 to 2.34%

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.