|By Ezra Klein, The Washington Post, 01/31/2013|
MarketMinder's View: Yes, falling government spending contributed heavily to Q4’s 0.1% GDP contraction. But this isn’t necessarily a bad thing for the broader economy longer term. When the government pulls back, there’s more room for the private sector to invest—and the private sector tends to allocate capital much more efficiently. Robust private sectors, not government spending, are key to long-term economic growth. And right now, corporate America is strong and growing.
|By Chris Arnade, Scientific American, 01/31/2013|
MarketMinder's View: If the Gaussian Copula Function couldn’t have caused 2008’s recession (it didn’t) because it’s too simple, then, too, the argument leveraged returns alone did makes the same mistake, in our view. In reality, many factors contributed to the recession—like poor regulation, euphoric investing behavior, new accounting methods and more.
|By Charles Goodhart, Financial Times, 01/31/2013|
MarketMinder's View: Endlessly increasing money supply is inflationary. But that’s not what central bankers are doing—they are increasing reserves. Not until they engage in real easing—which is, by definition, providing incentives for more lending—will money supply increase along with inflation risks.
|By Adam Shell, USA Today, 01/31/2013|
MarketMinder's View: An up January is no more predictive than a down January—i.e., not at all.
|By Jon Hilsenrath and Victoria McGrane, The Wall Street Journal, 01/31/2013|
MarketMinder's View: Nor do we expect the Fed to shift much in the coming months, keeping rates low and maintaining their QE-infinity policy.
|By Victoria Jen, Channel News Asia, 01/31/2013|
MarketMinder's View: Another step forward in the global race toward zero protectionism.
|By Shobhana Chandra, BloombergBusinessWeek, 01/31/2013|
MarketMinder's View: More evidence the private sector remains resilient.
|By Peter Orzag, Bloomberg, 01/30/2013|
MarketMinder's View: We’d urge you to take any long-term predictions with a grain of salt and to instead look at current economic reality—like the US private sector’s continued strength and employment’s overall rising—which is a much better indicator of likely economic conditions in the short-term.
|By Staff, The New York Sun, 01/30/2013|
MarketMinder's View: In our view, the US economic health can’t truly be determined by the Dow’s (a largely faulty index selectively representing 30 US businesses) value in gold (a commodity with fluctuating value)—regardless of how QE-infinity impacts either.
|By Lori Montgomery, The Washington Post, 01/30/2013|
MarketMinder's View: With about a full month of politicking to go before the automatic spending cuts kick in, it’s largely unsurprising a bi-partisan compromise isn’t yet on the horizon. Yet, even if a deal isn’t reached, total government spending is only slated to fall slightly in 2013.
|By Jonathan House, The Wall Street Journal, 01/30/2013|
MarketMinder's View: Spain’s economy contracted in the fourth quarter, but in our view, raising taxes and reversing budget cuts (and other much-needed reforms) don’t help with their bigger problem—needing long-term economic vibrancy and competitiveness. It seems likely EU officials continue to be flexible and roll back deficit targets again, so Spain can continue working toward fundamental reform and funding it with (more) successful bond auctions.
|By Staff, MarketWatch, 01/30/2013|
MarketMinder's View: Headline GDP did fall, but, as this article points out, the contraction likely doesn’t spell disaster for the US economy—especially considering it was the first contraction in over three years and the private sector continues chugging along nicely.
|By Elisabeth Dellinger, Investor’s Business Daily, 01/30/2013|
MarketMinder's View: MarketMinder editorial staff member Elisabeth Dellinger explains the dangers of poor investment behavior as shown in the popular show, Downton Abbey.
|By Steve Hargreaves, CNN Money, 01/30/2013|
MarketMinder's View: And beat expectations in January—a sign the private sector is in fact healthy and growing. And though such monthly data can be volatile, job growth has been fairly stable for the past six months—more evidence of an ongoing expansion.
|By Mark J. Perry, AEIdeas, 01/30/2013|
MarketMinder's View: “Free wireless Internet at McDonald’s and Starbucks is another example of how consumption inequality has decreased over time.” Hear, hear!
|By Alex Barker, Financial Times, 01/29/2013|
MarketMinder's View: We continue to question the purpose of the Tobin tax and other such levies on financial institutions. While politicians say these taxes were designed to make the financial industry pay a fairer share of the burden brought on by the financial crisis, in reality, firms will just pass costs onto consumers—very likely not the goal politicians had in mind. Additionally, there’s scant detail as to where or what purposes funds raised via the Tobin tax will be used for. Food for thought.
|By Staff, Der Spiegel, 01/29/2013|
MarketMinder's View: A far better plan would be to eliminate such market-distorting incentives altogether.
|By Kathleen Madigan, The Wall Street Journal, 01/29/2013|
MarketMinder's View: Consumer confidence and other sentiment-based indexes are often backward-looking indicators (at best, coincident) that presage little about the future direction of the economy or markets.
|By Josh Mitchell, The Wall Street Journal, 01/29/2013|
MarketMinder's View: Businesses increased investment for the third straight month. To us, this belies fears businesses are loath to spend and reflects the underappreciated strength in the economy today.
|By Josh Mitchell, The Wall Street Journal, 01/29/2013|
MarketMinder's View: Businesses increased investment for the third straight month. To us, this belies fears businesses are loath to spend and reflects the underappreciated strength in the economy today.
|By Chris Isidore, CNN Money, 01/29/2013|
MarketMinder's View: Although the housing index quoted likely isn’t a perfect reflection of the overall US housing market, to us, it’s at least indicative of the recent improving trend in housing data. Looking forward, should the trend continue, housing likely provides an incremental tailwind to the already growing US economy.
|By Mark J. Perry, AEI Ideas, 01/29/2013|
MarketMinder's View: “Today’s energy report from the EIA provides additional evidence of America’s booming energy revolution: US oil production reached a 15-year high in 2012 with a yearly increase that was the largest in history, net oil imports fell to a 21-year low, and US energy self-sufficiency rose to a 22-year high last year. Welcome to America’s shale revolution, it’s one of the best reasons to be optimistic about America’s energy and economic futures.”
|By Staff, EUbusiness, 01/29/2013|
MarketMinder's View: EU officials continue to be incredibly accommodating with the European periphery—tailoring plans and requirements as appropriate to each country’s unique situation. In Spain’s case, borrowing costs have fallen dramatically from mid-2012’s highs, but there’s still much work to be done to resolve the country’s economic competitiveness issues. Some leeway on austerity requirements from here will likely buy Spain still more time--which is needed.
|By Jon Hilsenrath, The Wall Street Journal, 01/28/2013|
MarketMinder's View: Little here is actually surprising, with the possible exception of the fact the Fed’s continued belief pumping up bank reserves while reducing banks’ incentive to lend (flattening the yield curve) will stimulate lending. For more, see our discussions here or here.
|By Robin Harding, Financial Times , 01/28/2013|
MarketMinder's View: The mandated spending cuts drawn up under 2011’s debt ceiling deal (aka, sequestration) have been widely discussed for a long time—including as part of “fiscal cliff” handwringing—and are commonly overstated. Sequestration is overwhelmingly comprised of budget cuts, most of which are accomplished by a slowing rate of spending growth, not an actual cut in government outlays. And that is if it comes to pass in full (unlikely).
|By Robert J. Shiller, The New York Times, 01/28/2013|
MarketMinder's View: From our standpoint, the housing market’s bounce back in terms of prices seems pretty clear: Supply of homes for sale is way, way down from the past few years (Seattle, for example, has a shockingly low 1.7 months of supply), and demand is up—thanks to remarkably affordable housing. Now, keep it in perspective: Housing is a tiny slice (~2.2%) of US GDP, and its impact on markets and the economy is probably mostly sentiment-related. But the improvements, in our view, are apparent.
|By Staff, Reuters, 01/28/2013|
MarketMinder's View: “Orders for durable goods jumped 4.6 percent in December, while a gauge of future business spending also rose, a sign that corporate worries over tighter fiscal policy at the end of 2012 may not have held back investment plans as much as feared.”
|By John Waggoner, USA Today, 01/28/2013|
MarketMinder's View: We’d suggest sentiment is still far removed from exuberance—rational or irrational—and the fact “stock prices compared to earnings are cheaper now than they were at the market’s previous high in October 2007” is one piece of evidence. Now, P/Es have a very imperfect record of predicting future returns, but they can help illustrate the current state of sentiment. Low valuations imply less than euphoric sentiment.
|By Jana Randow and Jim Brunsden, Bloomberg, 01/28/2013|
MarketMinder's View: While the regulatory winds that continue buffeting the Financials sector are perhaps dampening activity and profitability in the industry, the slow-go approach discussed here is preferable to rapid, potentially dislocating change. For more, see our 12/11/2012 cover story, “Regulation Deliberation.”
|By Hiroko Tabuchi, The New York Times, 01/28/2013|
MarketMinder's View: The restrictions referred to here were as much about Japanese protectionism as they were protecting Japanese beef eaters from mad cow disease. In our view, the rollback of Japanese restrictions on beef imported from many parts of the developed world is a sensible step increasing Japanese consumers’ choices and trade.
|By Paul Krugman, The New York Times, 01/25/2013|
MarketMinder's View: We don’t entirely disagree there are appropriate times for deficit spending. Nor do we believe deficit spending is always a recipe for imminent disaster. In our view, the primary issues with deficit spending are the belief it’s somehow the principal means of achieving economic growth and that politicians are essentially empowered to decide when and where to apply it. But in our view, much more often than not overall less government spending combined with a government willing to largely let the private sector run is far likelier to lead to more robust economic growth. For more, see our 08/07/2012 column, “Government Chicken or Private-Sector Egg?”
|By Kenneth Rogoff, Financial Times, 01/25/2013|
MarketMinder's View: This is effectively a version of the “this time is different” argument—words against which Sir John Templeton cautioned. We’d tend to side with the latter.
|By Alen Mattich, The Wall Street Journal, 01/25/2013|
MarketMinder's View: As bewitching as the notion that “income and wealth need to be redistributed” is, history is rife with examples of failed experiments to do just that (Stalin, Mao, etc.). For more, see the Drs. Boudreaux and Perry’s erudite piece from Thursday’s The Wall Street Journal, “The Myth of a Stagnant Middle Class.”
|By Stefan Riecher, Bloomberg, 01/25/2013|
MarketMinder's View: “The European Central Bank said banks will next week repay more of its emergency three-year loans than economists forecast in another sign the euro region’s debt crisis is abating.”
|By Tobias Buck, Financial Times, 01/25/2013|
MarketMinder's View: Should this actually come to pass, it would likely be another step in the right direction for Spain and help improve its competitiveness relative to other eurozone nations.
|By R. James Breiding, The Wall Street Journal, 01/25/2013|
MarketMinder's View: An interesting peek behind Davos’ curtain—and perhaps instructive on why relatively few true pearls of wisdom seem to emanate from that particular source.
|By Damian Reece, The Telegraph, 01/25/2013|
MarketMinder's View: We agree frequently shifting government attempts to goose economic activity have actually posed something of a headwind. We’d be in favor of governments standing aside and letting businesses take the lead—particularly given our general belief it’s the private sector that originates most of economic activity.
|By Paul Wiseman, Associated Press, 01/24/2013|
MarketMinder's View: It’s true technology has replaced some jobs, and there’s no doubt that’s been hard on those displaced. However, technological advances aren’t a harbinger of economic and social doom. In fact, they’ve overall been the reverse. Technology is a powerful contributor to increasing efficiency and ongoing innovation that broadly improves quality of life and life expectancy.
|By Christopher Matthews, Time, 01/24/2013|
MarketMinder's View: It seems to us Uncle Sam already receives a good chunk of his tax revenue from American corporations, and further complicating the tax code largely creates more incentive for firms to find creative (and legal) ways to avoid a higher tax bill. When you tax something, you tend to get less of it—an issue a lower, flatter tax likely prevents.
|By James Saft, Reuters, 01/24/2013|
MarketMinder's View: We’d like to point out the fact if everyone weakens their currency, then there’s virtually no net change in currency exchanges. And while many central banks are implementing easing, that doesn’t amount to a currency war, in our view—nor is it a guaranteed an economic stimulant. We’d actually argue the opposite when it’s done in excess.
|By Mark J. Perry, AEIdeas, 01/24/2013|
MarketMinder's View: More understated strength for the US economy: The US housing market continues to improve across the nation and won’t likely stop soon.
|By Jason Lange, MSN Money, 01/24/2013|
MarketMinder's View: Though weekly or monthly data aren’t necessarily the most reliable figures for determining overall trends, factory activity and unemployment suggest the US economy is chugging along just fine, despite ongoing negative sentiment.
|By Janet Hook, Corey Boles and Patrick O’Connor, The Wall Street Journal, 01/24/2013|
MarketMinder's View: As expected, Congress is close to passing a debt-ceiling “suspension.” Also as expected, it’s a short-term solution, setting up a political battle for down the road. Interestingly, the House wants to suspend pay if a budget (which the government hasn’t passed in, now, four years) isn’t passed by April.
|By Donald J. Boudreaux and Mark J. Perry, The Wall Street Journal, 01/24/2013|
MarketMinder's View: Many argue America’s middle class has stagnated. Here’s another view, pointing out how much quality of life has actually overall risen instead.
|By Ambrose Evans-Pritchard, The Telegraph, 01/23/2013|
MarketMinder's View: In our view, giving politicians control of central banks doesn’t decrease the likelihood of politicized monetary policy, it increases it. Consider Hungary, where Prime Minister Viktor Orban is doing his darnedest to force the central bank to cut rates and stoke growth—and stoke his own popularity—even though inflation’s high and the currency’s near all-time lows. Do we really want a world where that’s the norm?
|By Staff, The Telegraph, 01/23/2013|
MarketMinder's View: Full UK secession from the EU seems highly unlikely considering neither UK nor EU leaders want it. More likely, the UK keeps its place in the single market, but with a bit less bureaucracy—and in that case, London would likely end up the one rolling out the red carpet for Europeans looking for an easier place to do business.
|By David J. Lynch, Bloomberg, 01/23/2013|
MarketMinder's View: Global markets are never risk-free, but widely discussed issues like this typically have little (if any power) to materially impact stocks. The risks no one talks about—like, for example, the unintended consequences of global regulatory changes or US monetary policy—typically have a greater potential impact. At the moment though, the market’s many positive fundamentals seem more than enough to overcome current risks.
|By Staff, The Telegraph, 01/23/2013|
MarketMinder's View: And over time, the cartel plans to use supply controls to boost prices—not the most consumer- or market-friendly strategy. We’d much rather have a good, old fashioned cuppa free market tea.
|By Neil Irwin, The Washington Post, 01/23/2013|
MarketMinder's View: “What we’re seeing now is a stock market boom that is simultaneously driving Americans’ wealth higher, supporting economic growth, and is well supported by the fundamentals of what companies are earning.” And, we’d add, a market that continues growing despite contractionary monetary policy in the US, where QE is sapping bank appetite for lending.
|By Angeline Benoit and Max Julius, Bloomberg, 01/23/2013|
MarketMinder's View: By taking advantage of lower yields and higher foreign demand now, Spain can buy some breathing room in the event yields tick higher later this year—just one reason Spain can likely continue financing itself on primary markets. For more, see our 01/17/2013 cover story, “Checking in on Spain.”
|By Staff, The Asahi Shimbun, 01/23/2013|
MarketMinder's View: A look at the politicking behind the scenes of the BOJ’s acquiescence to Prime Minister Shinzo Abe’s demands for a 2% inflation target and open-ended asset purchases. The BOJ’s struggle to keep its independence is a story to watch—especially as bank chief Masaaki Shirikawa and two deputies’ terms expire in the coming months.
|By Ezra Klein, The Washington Post, 01/23/2013|
MarketMinder's View: While we view the economic impact of not raising the debt ceiling as minor (and short-lived, since the debt ceiling will most certainly get raised), it nicely captures why the ceiling’s a silly machination: “The debt ceiling isn’t adjusted for inflation or economic growth. It’s just raw dollars. So even when our finances are in order and the national debt is holding steady or declining as a percentage of our economy, we typically still have to raise the debt ceiling.”
|By Staff, EUbusiness, 01/22/2013|
MarketMinder's View: Although politicians enacted this move in the name of their “citizens,” ultimately it’s those very citizens— pensioners, depositors and investors—that are likely to bear the brunt of this ill-advised tax. For more, revisit our 10/10/2012 cover story, “This One Goes to 11.”
|By Nouriel Roubini, Project Syndicate, 01/22/2013|
|By Staff, The Economist, 01/22/2013|
MarketMinder's View: Although there may be perceived interim benefits for select segments of the economy, history is rife with examples showing nationalizations almost always end poorly.
|By Staff, The Economist, 01/22/2013|
MarketMinder's View: Overall borrowing costs for the European periphery have fallen markedly from mid-2012’s highs, but as this piece sensibly points out, there’s still much work to be done to resolve the periphery’s myriad economic competitiveness and growth issues.
|By Tom Fowler, The Wall Street Journal, 01/22/2013|
MarketMinder's View: Continuation of the trend certainly isn’t a given, but US energy production seems likely to continue having bright days ahead. For our detailed thoughts on US energy, here’s an archive of our earlier work.
|By Staff, Bloomberg , 01/22/2013|
MarketMinder's View: This piece sheds light on the fact trade metrics fail to account for the many complexities of an increasingly global economy. Although the solution proposed here seems like it could be a more accurate means of accounting for the global supply chain’s complexity, we’re a bit skeptical it will actually mark a fundamental shift in the debate over trade. And no matter how it’s accounted for, the fact is imports and/or a trade deficit are not economic negatives.
|By Christopher S. Rugaber, MSN Money, 01/22/2013|
MarketMinder's View: Housing data continue reflecting broad-based improvement—likely providing an incremental boost for US economic growth moving forward. For more, see our 01/18/2013 cover story, “Catching Housing Tailwinds.”
|By Elisabeth Dellinger, Equities.com, 01/22/2013|
MarketMinder's View: MarketMinder editorial staff member Elisabeth Dellinger’s latest contribution to Equities.com.
|By Duncan Mavin, The Wall Street Journal, 01/22/2013|
MarketMinder's View: We’re wary of Abe’s government infringing on the Bank of Japan’s independence, but this line seems to capture our other thoughts on the matter: “Fundamental issues, though, still need to be addressed, by strengthening competitiveness, easing immigration and helping women into the workplace, easing trade and introducing more efficient and responsible social-welfare services.” Fiscal and monetary policies do nothing to address matters like these longstanding issues.
|By Paul R. La Monica, CNN Money, 01/18/2013|
MarketMinder's View: The fact there’s no real panic isn’t all that unusual at this, mostly skeptical, stage of a bull market. As factors like strong corporate balance sheets, healthy manufacturing and our slow-but-steady expansion become more widely appreciated, moods thaw. As Sir John Templeton famously said, “Bull markets are born in pessimism, grow on skepticism, mature on optimism and die of euphoria.” We see few, if any, signs of euphoria today.
|By Karen Brettell, Reuters, 01/18/2013|
MarketMinder's View: Setting aside the low likelihood politicians don’t increase the debt ceiling, there are a few problems with this theory: For one, the debt ceiling doesn’t preclude bond issuance to refinance maturing debt. So at issue are interest payments, which our tax revenue easily covers.
|By Richard Barley, The Wall Street Journal, 01/18/2013|
MarketMinder's View: Ratings upgrades are unlikely to materially impact Ireland’s, or the eurozone’s, economies. Rather, rating agencies’ changes tend to be “late to the game”—reactionary, not forward-looking.
|By Staff, The Wall Street Journal, 01/18/2013|
MarketMinder's View: In our view, largely removing regulatory reference to ratings agencies is likely a boon, but taking that step likely renders unnecessarily opening agencies up to liability for offering an opinion. For more on credit ratings see our 1/16/2013 cover story, “Pitching a Fit(ch).”
|By Jane Wells, NBC News, 01/18/2013|
MarketMinder's View: A lesson in supply and demand, thanks to a fall freeze affecting West Coast produce. While prices may rise, the higher prices likely give farmers something of a financial boost, while consumers may look elsewhere for alternative food options (substitutes).
|By Staff, BBC, 01/18/2013|
MarketMinder's View: In another sign of China continuing to buck widespread speculation of a hard landing, Q4 2012 GDP accelerated to 7.9% y/y.
|By Mark J. Perry, AEIdeas, 01/18/2013|
MarketMinder's View: Here’s an interesting example of well-intended, but ill-crafted laws’ unfortunate unintended economic consequences.
|By Matthew Yglesias, Slate, 01/17/2013|
MarketMinder's View: Be ever cautious of projections of the direct impact X event is supposed to have on GDP—whether X is the debt ceiling or the fiscal cliff or something else. Plus, when considering potential events’ likely impacts on markets, it’s critical to also consider the likelihood of those events—and in this case, we think it rather unlikely the debt ceiling isn’t raised, given nearly a hundred years of history that prove otherwise.
|By William Reyerson, The New York Times, 01/17/2013|
MarketMinder's View: That could be one conclusion. But in our view, it’s inconsistent with history. Greater wealth has enabled innovation—innovation increasing at an exponential pace (a la Moore’s law)—which has allowed humanity to do things like create vaccines and medical devices, get increasingly higher yields from agriculture, purify water, live in less pleasant climates, build better buildings and bounce back ever faster from natural disasters, etc. Thomas Malthus thought the world would be doomed at a billion inhabitants, and 6 billion more later, we are still thriving.
|By Danielle Douglas, The Washington Post, 01/17/2013|
MarketMinder's View: “‘Anytime you create a better system it means more costs, and consumers are going to bear that,’ said Jaret Seiberg, senior policy analyst at Guggenheim Securities. ‘It will get passed on to them in the form of higher interest rates and less credit availability.’” Precisely.
|By Frank Dohmen and Gerald Traufetter, Der Spiegel, 01/17/2013|
MarketMinder's View: There may be cases in which having certain services government-provided makes the most sense because they can achieve the greatest economies of scale—and that may very well be the case here. However, we’re skeptical the government’s able to make much more progress on Germany’s goals of moving to “green” energy. For more, see our 03/05/2012 column on Real Clear Markets.
|By Emese Bartha, The Wall Street Journal, 01/17/2013|
MarketMinder's View: “Spain sold its maximum targeted 4.5 billion euros ($5.98 billion) worth of bonds Thursday, as growing confidence in its ability to finance itself for now without international help continued to chip away at funding costs.” For more, see today’s cover story, “Checking in on Spain.”
|By William Boston, The Wall Street Journal, 01/17/2013|
MarketMinder's View: Whether it’s specifically due to the Social Democrats’ candidate’s appeal or another factor, Angela Merkel’s CDU has a commanding lead in the polls before September’s German elections. It seems to us yet another sign of support for pro-euro politicians.
|By Emese Bartha, The Wall Street Journal, 01/17/2013|
MarketMinder's View: Ireland has made significant progress since its late-2010 bailout—and likely continues taking slow, steady steps toward a full return to credit markets. For more, see our 01/10/2013 cover story, “The Other Fightin’ Irish.”
|By Lucia Mutikani, Reuters, 01/17/2013|
MarketMinder's View: The housing market’s recovery continued in December, with housing starts rising 12.1% in the month. Now, the housing market isn’t a huge cog in US GDP, but the improvements could buoy investor sentiment generally.
|By Amanda Williams, Investor’s Business Daily, 01/17/2013|
MarketMinder's View: The latest from editorial staff member Amanda Williams on the Consumer Financial Protection Bureau.
|By Sudeep Reddy, The Wall Street Journal, 01/16/2013|
MarketMinder's View: Seeing as how the US’s “kick the can” approach to the budget hasn’t much weighed on global growth for the past several years, we rather doubt it starts doing so now. Ditto for its impact on US economic growth, which remains resilient thanks to our robust private sector. That private sector is a far more important piece of the global economy than our dithering government.
|By John Plender, Financial Times, 01/16/2013|
MarketMinder's View: With most of the developed world’s QE money sitting at central banks as excess bank reserves, it’s tough to argue today’s stock mark is “driven by central bank liquidity” that “triumphs over fundamentals.” Rather, in our view, strong fundamentals are why the market’s risen and global economy’s grown despite the unintended consequences of recent monetary policy moves, like slower-growing bank lending.
|By Philip Aldrick, The Telegraph, 01/16/2013|
MarketMinder's View: In our view, falling deposit rates are likely an unintended consequence of the BOE’s monetary policy. Because QE flattened the yield curve—thereby reducing banks’ potential profit on the next loan made—cutting deposit rates was likely necessary for banks to protect their margins and, by extension, have incentive to lend.
|By Staff, EUbusiness, 01/16/2013|
MarketMinder's View: We’re no fans of ratings agencies (see today’s cover story), but we rather disagree the raters “exacerbated the eurozone debt crisis” by downgrading weaker member states. Rating agency decisions are notoriously backward-looking, and these downgrades largely confirmed the long-known risks that had already caused yields to spike. Plus, the ECB’s repeated relaxing of collateral requirements helped ensure the raters’ decisions wouldn’t significantly impact banks’ ability to access liquidity. That said, reforms reducing regulation-mandated reliance on the raters would be a sensible step.
|By Howard Schneider, The Washington Post, 01/16/2013|
MarketMinder's View: Measuring the value different nations add to a good at each stage of its production underscores the benefits of free trade. A finished good’s cost doesn’t just include production costs, but the tariffs applied to each component imported along the way. If Korea, Japan and China can complete their free-trade agreement, removing tariffs from the high-tech components Korea and Japan export to China, consumers globally would likely benefit from cheaper finished products.
|By Howard Schneider, The Washington Post, 01/16/2013|
MarketMinder's View: While this piece perhaps overstates the risks in France, it is a fair snapshot of the country’s dilemma: With Spain and other European states becoming more competitive, France risks losing foreign capital if it pursues more socialist policies. President François Hollande’s recent corporate tax breaks and labor market reforms suggest he understands this, but will he continue to enact needed reforms?
|By Staff, Associated Press, 01/16/2013|
MarketMinder's View: Myanmar’s rapid emergence from nearly 50 years of repression continues with the privatization of the telecom sector. Over time, private investment in telecom should help modernize Myanmar’s communication structure and improve the populace’s phone and internet access.
|By Staff, EUbusiness, 01/16/2013|
The Irish Prime Minister’s address to the European Parliament highlights all the progress Ireland’s made since the 2010 bailout: It’s met all the troika’s terms and targets, economic growth has resumed, exports are at all-time highs and yields have fallen markedly. All seems on track for Ireland’s full return to primary debt markets. For more, see our 01/10/2013 cover story, “The Other Fightin’ Irish.”
|By Ambrose Evans-Pritchard, The Telegraph, 01/15/2013|
MarketMinder's View: Following Standard & Poor’s 2011 US downgrade, Treasury yields fell across the board—probably not what most expected. To us, that highlights what investors think of downgrades predicated largely on political issues. That US politicians politick and often drag their feet until the last minute shouldn’t be a surprise. Nevertheless, US debt continues to be historically affordable and US (and global) economic indicators have been largely expansionary—and likely continues this year too.
|By Philip Aldrick, The Telegraph, 01/15/2013|
MarketMinder's View: In our view, the Bank of England (BoE) should carefully consider where it chooses to act. Trying to prevent risky mortgage loans is a fine goal on the surface, but no new legislation or regulation comes without unintended results—often negative. Lending is already sluggish in Britain and new proposals could chill it further—likely not the outcome the BoE had in mind.
|By Joshua Chaffin, Financial Times, 01/15/2013|
MarketMinder's View: Recent tensions between the EU and China on steel, solar panels and other traded goods highlight the folly of protectionism-targeting subsidies. They often devolve into a zero-sum, tit-for-tat game that does more harm than good for consumers, producers and most everyone.
|By Shobhana Chandra, Bloomberg, 01/15/2013|
MarketMinder's View: Retail sales continue to reflect consumers (and businesses) are more resilient than widely believed.
|By J.D. Harrison, The Washington Post, 01/15/2013|
MarketMinder's View: Innovation is alive and well across the United States.
|By Staff, BBC, 01/15/2013|
MarketMinder's View: Good for Greenland for not bowing to the sirens of protectionism. (At least, so far). Greenland likely has a long way to go before it is able to mine rare earths in significant quantities; however, it should continue avoiding hamstringing itself with unproductive policies.
|By Emese Bartha, Dow Jones Newswires, 01/15/2013|
MarketMinder's View: This is just one (modestly sized) auction, but Spain’s borrowing costs continue falling, which bodes well for the country as it slogs through its myriad fiscal and economic-competitiveness issues.
|By Nina Koeppen and Brian Blackstone, The Wall Street Journal, 01/15/2013|
MarketMinder's View: That Germany’s economy slowed shouldn’t be a surprise to many. However, growth overall continued in 2012 and remains a pocket of resilience in the eurozone.
|By Richard N. Haass, Project Syndicate, 01/14/2013|
MarketMinder's View: Fears are a constant in the world. But last year’s fears didn’t slow stocks or the economy much, and we expect more of that general trend in 2013. For more, see our 01/04/2013 cover story, “Seven Things That Didn’t Happen in 2012.”
|By Jill Schlesinger, CBS Moneywatch, 01/14/2013|
MarketMinder's View: Yes, stocks have risen to a five-year high and are up more than 100% since the March 9, 2009 low. In fact, by some measures—like the S&P 500 total return—we’re already at all-time highs. But bull markets are normally much stronger and longer-lasting than bears, so achieving an all-new record level isn’t alarming—it’s just a marker bull markets typically pass and continue on. Also, the VIX isn’t a good forward looking indicator.
|By Spencer Jakab, The Wall Street Journal, 01/14/2013|
The Fed’s QE-infinity policy and interest paid on excess reserves actually reduce incentives to lend (money velocity) through flattening the yield curve and paying banks to hold cash on deposit. The policy aim is therefore dis- or deflationary, not inflationary.
|By Maya MacGuineas, The New York Times, 01/14/2013|
MarketMinder's View: The presumptions the US government is overindebted and the debt ceiling serves a purpose in limiting the debt’s growth seem overwrought to us. As discussed here, the US doesn’t seem to have an actual debt crisis. Take the debt ceiling for what it is: a purely political invention.
|By Amol Sharma and Biman Mukherji, WSJ, 01/14/2013|
MarketMinder's View: Hunger is a major issue in India, despite the fact the nation produces more than enough to sufficiently feed its populace. Why does this dichotomy exist? Poor infrastructure, lack of modernization and regulations preventing the development of a more streamlined distribution network are three key reasons, illustrated well in this video.
|By Mark J. Perry, AEIdeas, 01/14/2013|
MarketMinder's View: “…World population in 1934 was about 2 billion people, and we now live in a world with almost 7 billion people. [T]herefore, over a period that includes several generations or more, we see an overall significant downward trend in real commodity prices, despite an increase of more than 5 billion people in the world.”
|By Steve Holland, Reuters, 01/14/2013|
MarketMinder's View: The crisis referred to here is actually just the normal last-minute-deal politicking that has occurred many times in the debt ceiling’s history. That we’re not implementing a different arbitrary limit via a platinum coin is just as well, in our view.
|By Unni Krishnan and Siddhartha Singh, Bloomberg, 01/14/2013|
MarketMinder's View: If you tax something, you tend to get less of it—and it seems India wants more foreign investment. That is, at least until 2016, as they’ve delayed implementation of their tax on foreign capital.
|By Carl Richards, The New York Times, 01/14/2013|
MarketMinder's View: In investing, risk and reward are joined at the hip. Investors need to be educated and informed about the types and degree of risk they’ll need to take to have a high likelihood of achieving their financial goals.
|By Editorial Staff, Bloomberg, 01/11/2013|
MarketMinder's View: We’re fairly skeptical of the CFPB’s qualifications to reliably opine on appropriate, “fair” (however you define that) and reasonable mortgage-lending standards. Which isn’t to say some ground rules aren’t appropriate. But in our view, those are likely best adjudicated by those taking the risk and making the loans—provided, of course, they’re allowed to fail in the event they’re wrong. That’s what a truly free, self-regulating market would look like—and it would probably be more efficient and “safer,” too.
|By Floyd Norris, The New York Times, 01/11/2013|
MarketMinder's View: We agree regulators’ ability to foresee risks is far from perfect, but we’d add it’s never been all that good and likely never will be, no matter what form of modeling is employed. Moreover, we’re highly unconvinced regulators are equipped to successfully enact rules mitigating risks—in our view, misguided rules that regulators didn’t see the unintended consequences of were big contributors to 2007-2009’s downturn. We just doubt the world post-Dodd-Frank is materially different.
|By Paul Krugman, The New York Times, 01/11/2013|
MarketMinder's View: We’re all for creative solutions, but to us, the coin debate is a solution in search of a problem. In our view, there’s no need to come up with solutions to purely political and arbitrary markers.
|By Robert Schroeder, MarketWatch, 01/11/2013|
MarketMinder's View: The sequester would cut spending. However, a few things to keep in perspective: There’s debate yet to come on this and likely further compromise on shifting spending or delaying cuts. Second, the cuts to total government spending are minimal and smaller than 2012 cuts. Expect a lot of rhetoric on this, but not much actual market or economic impact.
|By David B. Rivkin and Lee A. Casey, The Wall Street Journal, 01/11/2013|
MarketMinder's View: Required reading for anyone fearful of the debt ceiling (an arbitrary marker that’s pure political machination and doesn’t serve as a cap on government spending, at all).
|By Michelle Jamrisko, Bloomberg, 01/11/2013|
MarketMinder's View: As we’ve discussed before, what matters far more than the trade deficit—an odd way to think about trade, in our view—is the overall level of trade. Which in the US’s case increased nicely—imports by 3.8% and exports 1%, led by car sales and telecom equipment.
|By Ben Casselman, The Wall Street Journal, 01/11/2013|
MarketMinder's View: Everyone would prefer faster employment gains, but the employment picture has been and continues improving. As painful as being unemployed is, that doesn’t change the fact employment gains and losses are a symptom of past (sometimes long past) economic conditions—not a harbinger of the future.
|By Mark J. Perry, AEIdeas, 01/11/2013|
MarketMinder's View: “Peak what?” Exactly. Thanks to new and ever-advancing technology, like hydraulic fracturing, we haven't experienced “peak oil” yet, and it—or anything somewhat resembling crisis-like oil shortage—doesn’t seem likely any time soon.
|By Edward Wyatt, The New York Times, 01/10/2013|
MarketMinder's View: Even if you believe too-risky lending was at fault for the 2008 credit crisis (in our view, the key driver was an ill-considered accounting rule that was misapplied—the mortgage melt-down wasn’t a core causal factor), it’s unclear to us why creating a new set of regulations to layer on old regulations makes things any more transparent and clear. This situation is ripe for unintended consequences.
|By James Saft, Reuters, 01/10/2013|
MarketMinder's View: Over the course of a bull market, it’s not unusual to see earnings growth occasionally slow or even contract some, only to reaccelerate. Corporate profits and cash balances are high, but so is capital investment—indicating to us an overall healthy, growing US private sector.
|By George Melloan, The Wall Street Journal, 01/10/2013|
MarketMinder's View: Here are a few of our issues with this article: First, it extrapolates a very short-term move in Treasury rates to something much broader, despite the fact rates currently sit near generational lows. Second, even if rates do rise incrementally, debt doesn’t necessarily immediately become unaffordable—our interest payments are still quite affordable by historical standards. Finally, the Fed’s QE-infinity isn’t really inflationary policy—in fact, in our view, QE is deflationary at this juncture. For more, see our 12/13/2012 cover story, “The Fed's Unstimulus.”
|By Edward D. Kleinbard, The New York Times, 01/10/2013|
MarketMinder's View: We have a better suggestion. Just abolish the debt ceiling, which is a meaningless, arbitrary marker that doesn’t serve its (alleged) purpose of reining in spending. For more, see our 01/09/2013 cover story, “The Fed’s Commemorative Coin Collection.”
|By Aaron Back, The Wall Street Journal, 01/10/2013|
MarketMinder's View: The headlines are touting the trade surplus, but that isn’t what matters most to us. Rather, it’s that Chinese total trade sharply accelerated in December, with exports and imports rising 14% y/y and 6% y/y, respectively. Another sign the world’s second biggest economy seems to be turning a corner.
|By Mark J. Perry, AEIdeas, 01/10/2013|
MarketMinder's View: Overall affordable housing prices and all-time-low interest rates on loans seem promising signs for a continued housing recovery in 2013.
|By Michelle Jamrisko, Bloomberg, 01/10/2013|
MarketMinder's View: Yet more evidence the US economy is in better shape than generally believed.
|By Geoffrey T. Smith, The Wall Street Journal, 01/10/2013|
MarketMinder's View: And we agree with him. But what matters most to stocks is the risk of a sudden, disorderly eurozone breakup seems greatly diminished now.
|By Dani Rodrik, Project Syndicate, 01/09/2013|
MarketMinder's View: Two questions: If mercantilism were truly the best economic system, why is China—historically its strongest adherent—slowly liberalizing its economy? And if a purported rise in inequality “tarnishes” liberalism, what does the far worse, almost feudalistic inequality in mercantilist nations say about that system? Liberalism, which promotes social mobility, creativity and innovation, fosters far more dynamic societies than mercantilism can ever hope to.
|By Jeff Black and Stefan Riecher, Bloomberg, 01/09/2013|
MarketMinder's View: This piece seems long on fear and opinion and short on factual underpinning. For example, here’s the purported evidence showing Angela Merkel needs to tweak Germany’s economy: It’s projected to grow 0.4% in 2013. Perhaps Germany does face a labor shortage, but thanks to the free movement of labor within the EU’s Shengen area, immigration can easily fill the shortfall (as it’s perhaps starting to, judging from the amount of workers migrating to Germany recently).
|By Staff, Bloomberg News, 01/09/2013|
MarketMinder's View: Though the economic fallout from Japan and China’s island dispute is lasting longer than that of previous spats, that doesn’t necessarily portend a paradigm shift. The strong nationalist rhetoric accompanying both nations’ recent political transitions might have helped prolong the dispute’s impact, but as cooler heads and economic sense prevail, bilateral trade likely recovers. Especially with both nations quietly negotiating a three-way free-trade agreement with South Korea.
|By Staff, Agence France Presse, 01/09/2013|
MarketMinder's View: Even if this research study weren’t grounded in nationalism, we’d suggest taking it with a huge grain of salt. Long-term predictions like this don’t and can’t account for all the unknowns that will likely occur between now and the end date. Any number of things could boost US growth or hinder Chinese growth over the next several years.
|By Mark J. Perry, AEIdeas, 01/09/2013|
MarketMinder's View: As this analysis shows, household demographics—average number of earners per household, marital status, age and education—highly correlate with average household income. And individuals and households move up and down the income spectrum over their lifetimes as these variables change.
|By Tommy Stubbington and Jonathan House, The Wall Street Journal, 01/09/2013|
MarketMinder's View: But the headline figure includes €23 billion for regional governments, which is a new obligation. More important is that Spain has less debt maturing in 2013 than 2012 and its total financing needs are lower. With Italy, too, facing a far lower financing burden this year and yields currently manageable, the two largest PIIGS appear in better shape than they were a year ago.
|By Joe Brennan, BloombergBusinessweek, 01/09/2013|
MarketMinder's View: And, notably, the government likely won’t take a haircut on its holdings in the bailed-out bank. This is another incremental step forward in Ireland’s journey back from its 2010 rescue.
|By Stefan Kaiser, Der Spiegel, 01/09/2013|
MarketMinder's View: Though fewer Target2 imbalances and rising deposits in Spanish and Greek banks aren’t all-clears for the eurozone, they should give policymakers a bit more breathing room, reducing the pressure to find a quick-fix (which doesn’t exist).
|By Eric Morath, The Wall Street Journal, 01/08/2013|
MarketMinder's View: The debt ceiling debate has spawned its fair share of potential solutions, but most (this one included) are entirely unnecessary and likely come with unintended costs of their own. For more, see our 12/10/2012 commentary on The Street.com, “Debt Ceiling Worries Are Overblown.”
|By Zachary A. Goldfarb, The Washington Post, 01/08/2013|
MarketMinder's View: We have many quibbles with this piece—not least its apparent misunderstanding of the meaning of “default.” Likewise, it overstates the impact of hitting the debt ceiling. While some non-essential government services would most likely be shuttered, the mass closures noted here aren’t likely (and in either case don’t equal default). Recall, the government has shut down before without many negative consequences. For more, see our 12/07/2012 cover story, “Falling Off a Cliff and Hitting a Ceiling.”
|By Staff, Australian Associated Press, 01/08/2013|
MarketMinder's View: What matters more than trade deficits (or iron ore prices’ potential impact on future export levels) is Australian total trade grew nicely, illustrating one of many underappreciated pockets of strength in the global economy.
|By Paul Hannon and Alex Brittain, The Wall Street Journal, 01/08/2013|
MarketMinder's View: The eurozone’s high and rising unemployment borders on tragic in nations like Spain and Greece, but it’s a function of three-plus years of well-documented economic troubles—not a forward-looking indicator. For global investors, what matters is that the world has continued growing despite eurozone weakness, and reacceleration in the US and Emerging Markets suggests it can keep doing so.
|By Ding Qingfen, China Daily, 01/08/2013|
MarketMinder's View: Here’s an excellent example highlighting how economic strength (in this example, Latin America) can help weakness elsewhere (Europe), pulling the global economy forward.
|By Andrew Ross Sorkin, The New York Times, 01/08/2013|
MarketMinder's View: The title pretty much says it all, and we agree. The moves taken to prolong implementation of and change some guidelines for Basel III’s Liquidity Coverage Rule remove a potential source of uncertainty and a headwind for banks and credit availability. For more, see today’s cover story, “A Break in the Regulatory Clouds.”
|By Robin Wigglesworth and Jamie Smyth, Financial Times, 01/08/2013|
MarketMinder's View: Here’s another positive step toward Ireland’s full return to primary debt markets and overall recovery.
|By Neil Shah and Ben Casselman, The Wall Street Journal, 01/07/2013|
MarketMinder's View: There’s a lot we quibble with in this. Among our major critiques are the assumption GDP growth rates are directly indicative of economic health and that World War II spending created the latter half of the 20th century’s growth—a concept debunked by French philosopher Frederic Bastiat more than a hundred years earlier (the Broken Windows fallacy). In short, though, beware long-range forecasts and secular explanations of a past half-century of growth.
|By Bob Davis, The Wall Street Journal, 01/07/2013|
MarketMinder's View: This smacks of old-fashioned protectionism and, frankly, is a leap from existing evidence. For example, the issue of productivity growth is ignored here. The fact China’s meteoric economic growth was ongoing in 2001 seems mostly a coincidence that’s presumed causal. Would we have more manufacturing jobs if we barred or restricted imports of Chinese goods? We’d suggest the answer is no—and today’s sensible story helps explain why.
|By RA, The Economist, 01/07/2013|
MarketMinder's View: Expansions don’t end simply because they reach a terminal age that’s loosely contingent on the average age of past expansions. Yet even if an expansion ends before we reach what many economists suggest is “full employment,” that wouldn’t necessarily drive “quasi-permanent” economic damage (in fact, we’re puzzled by what term means).
|By Patrick McGee, The Wall Street Journal, 01/07/2013|
MarketMinder's View: We’re in an era of super-low yielding fixed income of virtually all types—Treasurys, municipals, corporates and even high-yield bonds. By contrast, equity valuations remain very attractive—all in all, a factor we feel favors equities moving forward.
|By Kevin L. Kliesen and John A. Tatom, Federal Reserve Bank of St. Louis Review, 01/07/2013|
MarketMinder's View: A very interesting and thorough analysis of factors influencing the US manufacturing sector in recent decades. A couple of the many subtopics we found notable were the discussions of how imports boost US manufacturing and the very rapid growth of US manufactured goods exports to China in recent years.
|By Staff, Reuters, 01/07/2013|
MarketMinder's View: These multinational firms could choose to locate production and employment just about anywhere—yet they chose Ireland. In our view, that’s likely in no small way influenced by Ireland’s very competitive corporate and labor laws exemplified by its 12.5% corporate tax rate.
|By Hannah Karp, The Wall Street Journal, 01/07/2013|
MarketMinder's View: While the subsidies alluded to in this article—free Los Angeles airport parking for plug-in cars—are tiny and carry little market or economic impact, the discussion is an interesting case study in how subsidies can (greatly) distort markets.
|By Jim Brunsden, Giles Broom & Ben Moshinsky, Bloomberg, 01/07/2013|
MarketMinder's View: The gradual implementation and loosening of Basel III’s much-debated Liquidity Coverage Ratio seems a sensible step to us—radical implementation of even the best intended rules can lead to tight credit markets as banks attempt to raise capital. Such conditions can carry negative economic effects that are highly undesirable.
|By Staff, MarketWatch, 01/04/2013|
MarketMinder's View: The conclusion drawn from the Fed minutes here seems a stretch to us. It’s hardly surprising some Fed members think its QE programs aren’t as effective as expected and that, at some point, it will need to tighten. As we’ve said, the Fed’s programs to pay banks interest on reserves and flatten the yield curve (Operation Twist) are outright contractionary. And that the economy continues to grow despite those policies speaks to the strength of the private sector.
|By David Roman, The Wall Street Journal, 01/04/2013|
MarketMinder's View: The pension-fund shifting described here is an accounting entry—such methods are common and not, on their own, reason for alarm. Nor is the pension fund’s purchases of Spanish debt last year, necessarily. What’s more important is Spain managed to raise the full amount it needed on open debt markets in 2012 (albeit with varying degrees of success), and foreign inflows to Spanish debt rose toward year-end. Absent unforeseen and material negative changes, that trend may very well continue this year.
|By Howard Schneider, The Washington Post, 01/04/2013|
MarketMinder's View: While it’s encouraging to see the IMF admit the tax hikes it and the rest of the troika mandated are counterproductive, this paper demonstrates the fallacies of relying on numbers alone to estimate the effects of spending cuts and tax hikes. By taking a holistic approach, the troika would have much more quickly realized hiking taxes on one of the world’s most uncompetitive economies would make recovery exceedingly difficult.
|By Emma Rowley, The Telegraph, 01/04/2013|
MarketMinder's View: Yes, it’s true UK inflation remains higher than policymakers would like even as QE hasn’t stoked growth, and the UK does have some productivity issues. But in their examination of this apparent conundrum, BOE staff seemingly rush to conclusions without asking and answering two key questions: Why isn’t QE boosting the amount of money in circulation? And what government policies might be promoting productivity stagnation by preventing firms from getting lean and mean?
|By Jeremy Warner, The Telegraph, 01/04/2013|
MarketMinder's View: As this piece highlights, we’ve barely scratched the surface of potential technological development and the innovation and productivity gains it will unleash—not to mention, over time, economic and job growth.
|By Sudeep Reddy, The Wall Street Journal, 01/04/2013|
MarketMinder's View: Another sign the private sector continues to work off still-high unemployment.
|By Ding Qingfen, China Daily, 01/04/2013|
MarketMinder's View: Behold the benefits of having one of the world’s most open economies. The UK’s ability to attract significant foreign investment should pay dividends over time.
|By Simon Johnson, The New York Times, 01/03/2013|
MarketMinder's View: In our view the Supreme Court isn’t at all likely to play much of a role (if any) in the debt ceiling’s fate. In reality, politicking to the last minute isn’t historically unusual, particularly on the debt ceiling.
|By Anthony Mirhaydari, MSN Money, 01/03/2013|
MarketMinder's View: To us, it seems unlikely a bear market arrives in the next 12-18 months, given data rather contradictory to those presented here. For example, data like strong private sector fundamentals, healthy earnings and revenues, still-strong consumers, business investment nearing its all-time highs (and more) would argue against a bear market’s being terribly imminent.
|By Jim Tankersley, The Washington Post, 01/03/2013|
MarketMinder's View: Given overall positive (and in some cases, accelerating) economic fundamentals in the US, we’re skeptical of how much political wrangling is truly holding the private sector back. For more, see today’s Sensible Story from The Wall Street Journal.
|By David Weidner, The Wall Street Journal, 01/03/2013|
MarketMinder's View: Those arguing the private sector’s been waiting to spend until political decisions are made have seemingly missed what’s actually a rather robust, healthy economy. As is said here, “The facts undermine the claims of the fear mongers who argued that American commerce was holding its breath. Perhaps those CEOs and investors weren’t so terrified of ballooning debt, the nation’s credit rating or the future of Social Security and Medicare after all.”
|By Anant Vijay Kala, The Wall Street Journal, 01/03/2013|
MarketMinder's View: “The data add to optimism that India’s industrial sector may well be on a strong recovery path.”
|By Staff, The Telegraph, 01/03/2013|
MarketMinder's View: That UK banks are more willing to lend to households and businesses is a positive sign for the likelihood of continued and potentially accelerated growth ahead.
|By Danielle Douglas, The Washington Post, 01/03/2013|
MarketMinder's View: What (if anything) politicians decide to “do” about Dodd-Frank will be worth watching over the next year. We wouldn’t mind seeing some parts of it unwound—but as with any of politicians’ attempts at “fixing” things, the risk is harmful unintended consequences.
|By Rebecca Clancy, The Telegraph, 01/02/2013|
MarketMinder's View: Public service announcement: January returns aren’t predictive of full-year returns, and January’s first trading day doesn’t determine the month’s direction. Market fundamentals, not alleged seasonal patterns, determine equity returns.
|By Spencer Jakab, The Wall Street Journal, 01/02/2013|
MarketMinder's View: Stock returns aren’t uniformly bad in first years of presidents’ terms—they’re just more variable as legislative risk tends to be more concentrated in a term’s first half. But with Congress split and gridlock reigning in 2013, legislative risk appears very low, which supports an overall fine year for stocks.
|By Shefali Anand and Sudeep Jain, The Wall Street Journal, 01/02/2013|
MarketMinder's View: We’re all for transparency in equity markets, but India’s proposed reforms, which involve heavy government intervention, don’t seem the best way to achieve this. Forcing companies’ founders to reimburse some shareholder losses could make firms liable for normal market volatility—a solution in search of a problem, in our view.
|By Paul Wiseman and Christopher S. Rugaber, Associated Press, 01/02/2013|
MarketMinder's View: Of course it does—since spending and debt reduction are such powerful campaign issues, Congress has incentive to kick the can whenever they come up. We wouldn’t be surprised if the upcoming debt ceiling debate yielded another can-kick. But given the private sector’s underlying strength, the US economy can likely keep growing amid Washington’s dithering.
|By Lori Montgomery and Rosalind S. Helderman, The Washington Post, 01/02/2013|
MarketMinder's View: As expected, Congress compromised to extend most of the 2001/2003 tax cuts and kicked the can on budget cuts and the debt ceiling until February. So the US won’t fall off the fiscal cliff, but there’s plenty more politicking ahead.
|By Staff, BBC News, 01/02/2013|
MarketMinder's View: Rising manufacturing is the latest sign of reacceleration in China—one of many global positive fundamentals at work as 2013 begins.
|By Bill Tomson, The Wall Street Journal, 01/02/2013|
MarketMinder's View: As also expected, Congress managed to temporarily extend the 2008 farm bill in order to avoid reverting to 1949’s flawed dairy pricing system. For more, see our 12/31/2012 cover story, “The Milkman Cometh.”
|By Naj Srinivas, Investor’s Business Daily, 01/02/2013|
MarketMinder's View: The latest from Editorial Staff member Naj Srinivas on one particularly provocative plan to “fix” the US’s alleged debt issues.
|By Elisabeth Dellinger, Equities.com, 01/02/2013|
MarketMinder's View: The latest from Editorial Staff member Elisabeth Dellinger on the latest troubling developments in Russia and Hungary.