|By Harry Wilson, The Telegraph, 02/29/2012|
MarketMinder's View: We wouldn’t call LTRO a “full body plaster cast hiding the cadaver” of massive future writedowns. In our view, giving banks more balance sheet flexibility to continue holding distressed debt allows the private sector more time to derive solutions—and, potentially, the assets’ market values time to recover.
|By Susan Tompor, The Detroit Free Press, 02/29/2012|
MarketMinder's View: We’d argue it’s neither. The Dow’s a broken index, and 13,000—though round—is an arbitrary marker. As ever, we’d suggest keeping a long-term perspective and focusing on the fundamentals likely to drive stocks over the year ahead. For more, see our 02/22/2012 cover story, “How Now, Dow.”
|By Robert Reich, The Christian Science Monitor, 02/29/2012|
MarketMinder's View: There’s no question the US housing market still has several hurdles to overcome, but the idea US consumers won’t spend much until home prices recover isn’t consistent with economic data. Spending is typically driven by income growth, not home values—and both spending and incomes are trending upward.
|By Markos Kaminis, Seeking Alpha, 02/29/2012|
MarketMinder's View: We find much to quibble with here, not least the dour forecast. But to us, the most misguided aspect is the focus on very short-term data points. Monthly readings are always volatile, and the odd contraction isn’t unusual during a longer-term trend.
|By Carsten Volkery, Der Spiegel, 02/29/2012|
MarketMinder's View: Because the new fiscal compact can take effect once 12 eurozone countries ratify it, a “no” vote at the Irish referendum won’t kill the deal. But it still bears watching—only nations that ratify the agreement can access ESM funding. Thus, if Ireland votes no but still needs external aid once EFSF funding ends in 2013, we might see an interesting game of chicken between Irish and EU officials.
|By Philip Cross, The Globe and Mail, 02/29/2012|
MarketMinder's View: Though we’d quibble with the long-term forecasting aspect of this piece, it’s a largely sensible take on why business investment, though not a perfect economic gauge, is one of the more important metrics to watch. When firms cut outlays, it often means they’re getting lean and mean to accommodate weaker demand, while more spending on equipment, software, staff, etc., typically promotes economic growth.
|By Staff, Associated Press, 02/29/2012|
MarketMinder's View: Though this revised GDP report is backward-looking and GDP isn’t a perfect measure of the US economy, this is nevertheless another confirmation of the US’s continuing economic strength. Especially telling: Incomes, personal spending and business investment were revised up.
|By Eliza J. Diaz, Business World, 02/29/2012|
MarketMinder's View: The Philippines hasn’t yet joined Trans-Pacific Partnership talks, but it’s taking steps to become eligible—and US trade officials seem eager to help where they can. Another TPP member would mean more progress in the global race toward zero protectionism. For more, see our 10/17/2011 cover story, “Racing Towards Zero.”
|By Staff, EUbusiness, 02/29/2012|
MarketMinder's View: The ECB’s second three-year LTRO injected a record €529.5 billion into the European banking system. Though not a fix-all for the eurozone, the central bank’s liquidity ballast should help ease some funding strains while the region continues muddling through. For more, see our 02/03/2012 commentary on iStockAnalyst, “Central Bank Accommodations.”
|By Patrick Smith, The Fiscal Times, 02/28/2012|
MarketMinder's View: In addition to our many quibbles with this article’s supporting evidence, we differ with the notion a weak European economy could drag the US and the rest of the world down with it. Europe’s problems appear largely contained within the region, and continued growth in the US and Emerging Markets should prove strong enough to offset European weakness. For more, see our 12/02/2011 research analysis, “If Europe Faces Recession, Can the US Economy Still Continue to Grow?”
|By Thomas L. Friedman, The New York Times, 02/28/2012|
MarketMinder's View: The notion of the US joining OPEC is an entertaining thought. But we question the efficacy of setting a floor price on any oil imported into the US and taxing anything below that price. Artificial price restraints pervert the free functioning of supply and demand determinants—resulting in market inefficiencies that, on a net basis, could make us worse off altogether.
|By Staff, The New York Times, 02/28/2012|
MarketMinder's View: This piece suggests ways to give the Volcker rule more teeth to clamp down on banks’ proprietary trading—but in our view, that’s a solution in search of a problem. Profiting through proprietary trading isn’t a societal evil—it allows banks more flexibility to lend and serve their primary purpose of efficiently allocating capital.
|By Jason Lange, Reuters, 02/28/2012|
MarketMinder's View: We’d suggest not reading much into January’s factory data--durable goods orders tend to fluctuate sharply from one month to the next. And January’s drop was likely attributed to the expiration of a tax credit in December. Longer-term trends suggest firms are lean, healthy and growing. For more, see today’s cover story, “Earning Their Keep.”
|By Brett Arends, SmartMoney, 02/28/2012|
MarketMinder's View: This piece is a sensible look at the opportunity cost many individual investors incur by selling stocks at the wrong time.
|By Jack Ewing, The New York Times, 02/28/2012|
MarketMinder's View: Though the International Swaps and Derivatives Association’s pending verdict on whether Greece’s private-sector debt restructuring constitutes a credit event bears watching, it appears the ECB is already taking steps to mitigate the impact of triggered credit default swaps. For more on the bank’s efforts to provide liquidity, see our 02/03/2012 commentary on iStockAnalyst, “Central Bank Accommodations.”
|By Emese Bartha, The Wall Street Journal, 02/28/2012|
MarketMinder's View: Yields dropped across the board and coverage was strong at Italy’s latest successful long-term debt offering—more evidence, in our view, that Italy can meet early 2012 funding hurdles just fine. For more, see our 02/03/2012 cover story, “These PIIGS Went to Market.”
|By Josh Mitchell, The Wall Street Journal, 02/28/2012|
MarketMinder's View: More evidence businesses are lean, healthy and growing—and many are now taking expansionary steps to upgrade equipment and improve infrastructure.
|By AP, The Economist, 02/27/2012|
MarketMinder's View: Maybe Greece does eventually exit the eurozone. Maybe not. But in reading this, we found two critical points went unaddressed: when and how. In our view, assessing the impact of a Greek exit from the euro without addressing those two points isn’t likely to lead to an analysis of much forward-looking value.
|By Jill Schlesinger, CBS Moneywatch, 02/27/2012|
MarketMinder's View: Correlation does not equal causation. Oil is economically sensitive, so it tends to fall during recession—which makes the prior price point look high on a chart. Yet that doesn’t necessarily mean oil had anything to do with causing the recession, which is a separate question altogether. For more, see today’s cover story, “As Oil Prices Rise, So Do Theories.”
|By Michael Sivy, Time, 02/27/2012|
MarketMinder's View: This article seems mostly a facet of current investor sentiment—skeptical, dour and fixated on longstanding negatives. None of the risk factors listed are particularly new or surprising—and big surprises tend to move markets most. Yes, stocks have posted impressive returns since March 9, 2009, but that’s not very relevant to formulating an outlook ahead—nor is a flawed index (the Dow) reaching a round number (13,000). For more, see our 02/22/2012 cover story, “How Now, Dow.”
|By Robert J. Shiller, The New York Times, 02/27/2012|
MarketMinder's View: The idea government should be tasked with boosting folks’ confidence in markets isn’t new and hasn’t worked well before—see Sarbanes-Oxley, for one example. We are highly skeptical of government’s ability to accomplish the goal without unintended consequences.
|By Jason Zweig, The Wall Street Journal, 02/27/2012|
MarketMinder's View: We’re not convinced there’s mass “derisking” ongoing at present, but we agree the concept itself is questionable. All investments carry the risk the investor will lose purchasing power over time—either through a loss of money, inflation or other means. Put simply, to assume volatility is the only risk is a behavioral investing error.
|By Kathleen Madigan, The Wall Street Journal, 02/27/2012|
MarketMinder's View: The Dallas Fed’s manufacturing survey showed business activity increased in February for the second consecutive month—another sign of continued economic growth.
|By James Wilson, Financial Times, 02/27/2012|
MarketMinder's View: Highly accommodative policies from the ECB—including December’s initial three-year LTRO—seem to have helped banks move beyond refinancing fears. The degree to which this results in increased lending ahead remains to be seen, but by this measure, their programs seem to have been successful thus far.
|By Mark J Perry, Carpe Diem, 02/27/2012|
MarketMinder's View: Despite its brevity, this article actually has a lot to say regarding economic conditions globally.
|By Chiara Vassari, Bloomberg, 02/27/2012|
MarketMinder's View: “The Rome-based Treasury sold 8.75 billion euros of 184-day bills at 1.202 percent, the lowest since September 2010, and down from 1.969 percent at the last auction of similar-maturity securities on Jan. 27.” Another in a series of better-than-expected peripheral bond auctions to start 2012. For more, see our 02/03/2012 cover story, “These PIIGS Went to Market.”
|By Emese Bartha, The Wall Street Journal, 02/24/2012|
MarketMinder's View: Yields fell and demand remained firm at Italy’s latest bond auction, suggesting Greece’s debt haircut hasn’t scared investors from buying debt elsewhere in Europe’s periphery. As auctions continue to go better than most expect, it seems increasingly likely Italy clears upcoming funding hurdles. For more, see our 02/03/2012 cover story, “These PIIGS Went to Market.”
|By Brad Plumer, The Washington Post, 02/24/2012|
MarketMinder's View: Well, we wouldn’t get so discouraged by America’s pace of oil efficiency gains—these things don’t happen overnight, but at the pace the market deems necessary. And there’s no evidence high oil leads to less economic activity—in fact, the US economy has grown more productive, more competitive and stronger even as oil prices have risen over time.
|By Dennis Cauchon, USA Today, 02/24/2012|
MarketMinder's View: We’d argue the best way for states to prepare for a shale gas production boom isn’t to figure out how to highly tax and regulate it, but to find ways to provide firms a competitive environment and foster productivity and profitability.
|By Cynthia Koons, The Wall Street Journal, 02/24/2012|
MarketMinder's View: Sure, political turnover can create “uncertainty”—but that’s not true political risk. In our view, political risk is shifting sand in laws affecting business activity, private property rights and the like. But the political squabbling in Australia probably decreases the likelihood of sweeping regulatory/legislative changes, which is something markets typically like.
|By Staff, EUbusiness, 02/24/2012|
MarketMinder's View: As the EU’s market commissioner points out, US regulators would do well to consider the potential unintended consequences of the Volcker Rule—not just domestically, but globally.
|By Frank Dohmen and Alexander Neubacher, Der Spiegel, 02/24/2012|
MarketMinder's View: Here’s a good lesson in the law of unintended consequences: Due to the German government’s well-intentioned but premature phase-out of nuclear energy, electricity is becoming too expensive for German businesses—forcing some to shut down operations. For more, see our 02/17/2012 column, “A (Nuclear) Winter’s Tale.”
|By John Carney, CNBC, 02/24/2012|
MarketMinder's View: In short, America isn’t Greece. And that will likely stay true as long as we preserve our key differences—“zealously guard our productivity, protect our culture of competition and enshrine market processes.”
|By Annalyn Censky, CNN Money, 02/23/2012|
MarketMinder's View: Extrapolating this year’s likely outcome from last year’s events is a common cognitive error—and potentially harmful to investors’ long-term returns. Could we see another market correction this year? Possibly. But we’d argue it’s far more likely headlines that have been media fodder for going on three years finally lose steam and provide a nice tailwind to markets.
|By Howard Wial, CNN Money, 02/23/2012|
MarketMinder's View: The problem with arguments like these is they’re based on the false assumption the US manufacturing industry is dying and in need of resuscitation. However, as we’ve expounded on before, manufacturing is, in many respects, alive and well in the US. For more, see our 07/18/2011 cover story, “Breaking News–US Manufacturing Isn’t Dead.”
|By Karen Weise, Bloomberg Businessweek, 02/23/2012|
MarketMinder's View: The misperception here isn’t in the reporting itself, but in the idea banks are up to something insidious in charging overdraft fees. Just last year, the Fed moved to reform this practice—and mandated banks allow consumers to opt out. They did. And yet bank revenues from overdraft protection remained fairly robust. That seems to speak to the fact many customers see value in overdraft practices. So we’re frankly a bit puzzled as to why yet another government study on the subject is underway.
|By Clive Crook, Bloomberg, 02/23/2012|
MarketMinder's View: Is the latest Greek bailout plan the last we’ve heard of its debt woes? Likely not. But that doesn’t mean it spells automatic doom for the eurozone as a whole, either. And the likelihood some silver bullet that fixes everything overnight exists seems quite small—if it did, wouldn’t European officials have employed it by now? After all, we’d be willing to bet they’re as eager as anyone to end the continual Greek shuffle.
|By Staff, The Wall Street Journal, 02/23/2012|
MarketMinder's View: A very interesting interview with current ECB President Mario Draghi—and enlightening about his views on Europe’s best way forward for returning to growth (with which we’d mostly agree).
|By Matt Yglesias, Slate, 02/23/2012|
MarketMinder's View: This is a highly sensible look at the ridiculous lengths to which government regulations can go—and why that’s typically harmful to consumers, who are often left with fewer choices as a result. This sums it up well: “If new competition can bring prices down, we’ll all be better off in the long run…. Municipal authorities need to learn to welcome the explosion of innovation happening around them and stop trying to choke it off.”
|By Donald Boudreaux, Pittsburgh Tribune-Review, 02/23/2012|
MarketMinder's View: An interesting economic explanation of why “cutting out the middleman” isn’t necessarily the best idea, despite common advertising claims to the contrary. An important rule of thumb to keep in mind: If businesses can find a (legally) more efficient way to operate, they nearly always will—so if they’re widely using “middlemen,” it’s likely because it’s cheaper than other alternatives. By and large, businesses act economically rationally.
|By Robert Winnett and James Kirkup, The Telegraph, 02/23/2012|
MarketMinder's View: This highlights well how increasing tax rates doesn’t necessarily mean increasing tax revenue—remember, folks can relocate or arrange their finances to avoid paying the higher rate. For more, see our 11/03/2011 column, “The Trouble With Taxes.”
|By Staff, RTT News, 02/22/2012|
MarketMinder's View: That Greek default is “highly likely” isn’t really news. The pending private-sector debt-swap deal—technically a partial, but orderly, default since it means Greece doesn’t pay back all it owes—has long been in the works. Once again, a ratings agency is merely confirming what’s already widely known.
|By Moran Zhang, International Business Times, 02/22/2012|
MarketMinder's View: More telling than the manufacturing contraction, in our view, is the fact Chinese officials cut banks’ reserve requirements again last week. This suggests the government is already using available throttles to goad economic growth during this “election” year—likely through looser loan quotas—making the risk of a hard landing unlikely. For more, see our 02/15/2012 cover story, “Reasons to Be Bullish on China.”
|By Jonathan Cable, MSN , 02/22/2012|
MarketMinder's View: It’s certainly possible the aggregate eurozone economy recedes, and January’s service sector contraction seemingly supports that outcome. However, history shows global growth can continue—and stock markets can perform just fine—during a continental European recession. For more, see our 02/16/2012 commentary on The Street, “Stock Returns Strong Despite Eurozone Weakness.”
|By Staff, EUbusiness, 02/22/2012|
MarketMinder's View: Ireland has already privatized several billion euros’ worth of state assets in recent years, but another €3 billion in asset sales would still be an encouraging sign of progress. Not only will it give the government more fiscal flexibility, but it likely allows the impacted companies to function more efficiently over time.
|By Alkman Granitsas and Nektaria Stamouli, The Wall Street Journal, 02/22/2012|
MarketMinder's View: Here’s an interesting look at one aspect of the Greek debt swap’s inner workings. The new bonds issued as replacements for existing debt are to be governed according to English law—not Greek. Why? “If the bonds were governed by Greek law, it would be easier for the Greek legislature to pass a law that simply amends the bonds.”
|By Staff, Associated Press, 02/22/2012|
MarketMinder's View: A firming US housing market is an incremental positive, though the sector still has quite a ways to go. Given housing’s relatively teensy share of the broader economy though, a slow housing recovery likely shouldn’t be much of a headwind to continued growth.
|By Morgan Housel, The Motley Fool, 02/22/2012|
MarketMinder's View: Financial knowledge is an important ingredient to investment success—and applying emotional understanding and control to that knowledge increases the chances of making sound decisions over time. So read up and sharpen your math skills, but also take the time to learn about behavioral traps.
|By Staff, Associated Press, 02/22/2012|
MarketMinder's View: A good example of what happens when firms can compete globally—quality improves, consumer choice increases and prices fall. When markets are more open, everyone benefits.
|By Derek Thomson, The Atlantic, 02/21/2012|
MarketMinder's View: The premise here seemingly is the economy started off growing at a faster pace yet decelerated mid-year, only to reaccelerate at year end. Yet that’s not a false recovery—that’s just normal growth rate volatility. In fact, expecting an economy to sequentially accelerate throughout expansion is expecting something that’s highly unlikely. And that the factors cited here are virtually the same as last year should tell you they don’t have much power to move markets or the economy—remember, surprises move markets most.
|By Chris Markowski, The Street, 02/21/2012|
MarketMinder's View: Truth is there’s probably not much to fear from the latest US budget proposal—given it’s been over 1,000 days since Congress passed one, the likelihood it’s much different this time seems small. Not only that, but budget projections are notoriously hard to calculate—and are likely particularly unreliable coming from a government agency.
|By Terry Savage, Chicago Sun-Times, 02/21/2012|
MarketMinder's View: We’d argue the congressional agreement last week to extend the payroll tax cut actually represents a small positive in that it provides taxpayers with more useable income. We believe this piece likely overstates the long-term ramifications of this short-term and minor accounting move. For more, see today’s cover story, “All Over the Map on Taxes.”
|By Don Lee and Matt Stevens, The Los Angeles Times, 02/21/2012|
MarketMinder's View: Long term, data show oil prices and stocks just aren’t correlated. In fact, it’s quite possible higher oil is more a product of an expanding global economy than a factor likely to derail it.
|By Staff, The Associated Press, 02/21/2012|
MarketMinder's View: A bailout agreement for Greece is a clear positive and a testament to officials’ resolve to prevent a disorderly breakup of the eurozone. However, key hurdles remain—additional consternation and European volatility in the weeks and months ahead wouldn’t be terribly surprising. For more, see our 02/14/2012 cover story, “Running the Greek Marathon.”
|By Josh Wright, Truth on the Market, 02/21/2012|
MarketMinder's View: An enlightening look at regulations’ frequently deleterious (if unintended) effects. And we suspect along with the author “the pernicious economic effects of local barriers to entry, rather than those at the state or federal level, are significantly greater than commonly thought.”
|By Tom Orlik, The Wall Street Journal, 02/21/2012|
MarketMinder's View: Though many have fretted bad local government debts in China, it seems the chances they turn into a full-blown crisis are fairly small—possibly an incremental plus for China in what we’d expect to be an overall positive year.
|By Russ Roberts, Café Hayek, 02/21/2012|
MarketMinder's View: This is a fairly sensible take analyzing and refuting the argument that the last 10, 20 or even 40 years have been economically stagnant for the average American.
|By Nouriel Roubini, Project Syndicate, 02/17/2012|
MarketMinder's View: The trouble here isn’t so much the cited issues—it’s mostly the fact these issues have been well-known for awhile now. Remember: Surprises tend to move markets most, not well-known concerns.
|By Jeff Cox, CNBC, 02/17/2012|
MarketMinder's View: As we’ve cautioned before, investors should beware the risks of giving such technical indicators too much credence—particularly ones based on a flawed, price-weighted index like the Dow. For more, see our 01/09/2012 cover story, “The Golden Cross.”
|By Simon English, The Independent, 02/17/2012|
MarketMinder's View: We’re not quite sure what to make of the argument overall, but we’re confident of one thing: Instituting a financial transaction tax would no doubt engender myriad unintended consequences and hurt banks more than it would help. Adding congestion to the financial system hardly seems a logical way to improve its overall operation.
|By Paul Krugman, The New York Times, 02/17/2012|
MarketMinder's View: As we’ve said before, we don’t really think the US has much of a demand problem. So we’re dubious of the efficacy of greatly increasing state and local government payrolls as a means to encouraging faster economic growth. Rather, we’d urge a greater focus on making it easier for the private sector to continue its already rather impressive growth.
|By Mark J. Perry , Carpe Diem , 02/17/2012|
MarketMinder's View: “The Conference Board reported today that its Leading Economic Index (LEI) increased in January for the fourth consecutive month, reaching an index level of 94.9, the highest level since July of 2008, three and-a-half years ago.” More evidence of continued economic growth.
|By Bob Willis , Bloomberg, 02/17/2012|
MarketMinder's View: Despite all the fears about increased inflation, CPI (the most widely accepted gauge of inflation) remained overall relatively flat.
|By Staff, MarketMinder Editorial Staff, 02/17/2012|
MarketMinder's View: Our latest contribution to The Street.
|By Andrew Ackerman, The Wall Street Journal, 02/17/2012|
MarketMinder's View: Make no mistake—Sarbanes-Oxley’s ills far exceed just this small aspect. Nevertheless, this is an incremental and intermediate step in the right direction.
|By Terry McCrann, The Australian, 02/17/2012|
MarketMinder's View: Many seem to want less profitable banks, but remember: Less profitable banks are more dangerous and less likely to lend—which is what happened in 2008-2009.
|By Ambrose Evans-Pritchard, The Telegraph, 02/16/2012|
MarketMinder's View: While rhetoric’s undoubtedly heated, we’re inclined to see that more as the traditional two steps forward, one step back dance the eurozone’s been dancing for over a year now. After all, politicians are facing dual motivations of, on the one hand, maintaining the eurozone while on the other ensuring constituents they’re being sufficiently tough on “troublemakers” and defending their home nation.
|By Ylan Q. Mui, The Washington Post, 02/16/2012|
MarketMinder's View: We’re perpetually cautious when it comes to increasing government oversight—while the motivation may be reasonable enough, the unintended consequences are nearly always pernicious.
|By Ian Chua and Soyoung Kim, The Telegraph, 02/16/2012|
MarketMinder's View: While we’re mindful a single story is rarely solely responsible for market action, we got a chuckle out of this: “It was reviewing the long-term ratings and standalone credit assessments of a range of banks, Moody’s added. Markets were unaffected by the announcement.” Makes sense—after all, the much-maligned ratings agencies have hardly been timely messengers.
|By George Nishiyama, The Wall Street Journal, 02/16/2012|
MarketMinder's View: While tax increases are frequently framed as well-intentioned efforts at funding other government programs, the reality is the unintended consequences and costs typically offset any potential benefit. Not to mention funding social welfare spending through increased sales taxes seems a bit odd—particularly given sales taxes are by definition more regressive than other taxes, meaning they hit those at the lower end of the income spectrum harder.
|By Nicholas Kulish and Stephen Castle, The New York Times, 02/16/2012|
MarketMinder's View: The majority of the hold-up is (not surprisingly) political, not financial, wrangling—and is mostly the same predictable second movement of the Greek debt sonata we’ve witnessed over the last year-plus.
|By Ben Edwards and Art Patnaude, The Wall Street Journal, 02/16/2012|
MarketMinder's View: Increased demand for European corporate debt ultimately means cheaper financing for European businesses—a positive that potentially helps spur European private sectors.
|By Morgan Housel, The Motley Fool, 02/16/2012|
MarketMinder's View: While we’d quibble with very minor aspects of this, the overall point is pretty spot-on: “If you are worried about current budget forecasts that predict massive deficits as far as the eye can see, remind yourself that no long-term budget forecast has ever been accurate. … What happens in the future might be better or worse than currently envisioned, but it almost certainly won’t be what is envisioned.”
|By Kathleen Madigan, The Wall Street Journal, 02/16/2012|
MarketMinder's View: The US private sector continues logging positive data points—which, combined, paint a picture of a stronger US economy than most presume.
|By Raphael Minder, The New York Times, 02/16/2012|
MarketMinder's View: Though borrowing costs went up slightly, demand increased sharply from Spain’s last auction. This year, Spain’s already raised €42 billion in short- and long-term debt—roughly a third of what it plans to auction for the full year.
|By Staff, The Economist, 02/16/2012|
MarketMinder's View: This epitaph for China’s market rally seems premature—yes, January loan growth missed expectations, but it still accelerated. Remember, Chinese officials have every incentive to boost economic growth during the coming political transition, and their efforts will likely become even more apparent in the months ahead. For more, see today’s cover story, “Reasons to Be Bullish on China.”
|By Landon Thomas Jr., The New York Times, 02/15/2012|
MarketMinder's View: This argument seems a bit backwards—Greece’s ability to meet obligations isn’t in question because its economy is contracting. Rather, it’s because officials aren’t sure Greece has implemented enough reform to warrant more aid. Portugal has met its austerity benchmarks though, and the political willingness to continue providing funding seems alive and well.
|By Michael Schuman, Time, 02/15/2012|
MarketMinder's View: We find much to quibble with here, but the largest is the idea that state ownership somehow gives Chinese companies undue advantage. Decades of historical evidence suggest the opposite is true—private-sector firms tend to operate far more efficiently and profitably, especially on a global scale. State firms may have the advantage within China’s borders, but probably not in the rest of the world.
|By Staff, EUbusiness, 02/15/2012|
MarketMinder's View: We’re rather puzzled over how the UK and France can be cited for “declining export performance”—both nations saw healthy increases in exports and total trade in 2011. For more, see our 02/13/2012 cover story, “A Surplus of Deficient Thinking.”
|By Staff, Reuters, 02/15/2012|
MarketMinder's View: Politicking over Greece’s second bailout continues, and further delays wouldn’t be at all shocking. But as this piece shows, officials are apparently taking steps to ensure Greece gets the short-term funding it needs in the meantime, continuing the gradual “kicking cans down the road” approach.
|By Brian Bremner, BloombergBusinessweek, 02/15/2012|
MarketMinder's View: Though the yuan is increasingly used in international trade, it likely won’t supplant the dollar as the world’s major reserve currency in the future—the government’s grip on the currency is too tight, and China’s capital markets are too shallow.
|By Naftali Bendavid and Kristina Peterson, The Wall Street Journal, 02/15/2012|
MarketMinder's View: Though the economic benefits of the payroll tax holiday are likely miniscule, the deal to extend it nevertheless removes one of the uncertainties on Americans’ minds this year—an incremental positive.
|By Jack Ewing and David Jolly, The New York Times, 02/15/2012|
MarketMinder's View: Though aggregate eurozone GDP fell a bit, the region isn’t uniformly weak—France grew, and Germany held up better than expected. Plus, a shallow eurozone contraction—or recession, if it comes to that—likely won’t derail global growth, considering the US and Emerging Markets remain strong. For more, see our 12/02/2011 research analysis, “If Europe Faces Recession, Can the US Economy Still Continue to Grow?”
|By Staff, EUbusiness, 02/15/2012|
MarketMinder's View: Streamlining organic food regulations on both sides of the Atlantic will likely increase trade and lower exporters’ compliance costs (and headaches!)—bringing consumers in the US and Europe more choices and lower prices. An incremental step forward in the global race toward zero protectionism.
|By Staff, EUbusiness, 02/14/2012|
MarketMinder's View: As ever, we wonder why anyone lends much credence to ratings agencies’ ratings—at best, they merely confirm what the rest of the world has long known. For more, see our 01/13/2012 cover story “S&P’s Shifting Opinion.”
|By Michael Schuman, Time, 02/14/2012|
MarketMinder's View: There’s no denying Greece has a very tough road ahead, but EU officials’ strategy of “kicking cans” down the road—pushing out problems until a solution presents itself or the eurozone manages to muddle through—seems far more sensible than suggested here. Another Greek debt flare-up wouldn’t surprise, but EU officials and Greek leaders continue to show they remain committed to keeping the eurozone intact and avoiding a disorderly sovereign default. For more, see today’s cover story, “Running the Greek Marathon.”
|By Eric Morath and Tom Barkley, The Wall Street Journal, 02/14/2012|
MarketMinder's View: We quibble with the notion smaller-than-expected retail sales indicate a “shaky economy.” That retail sales continued to climb, despite a drop in auto sales (which can be attributed to a number of factors), seems like a positive indicator of economic strength to us. In fact, excluding autos, retail sales grew 0.7% in January, beating expectations.
|By Staff, Chicago Tribune, 02/14/2012|
MarketMinder's View: The situations of Greece and the US are simply not comparable in any meaningful way. We could list the reasons here, but it would be almost too lengthy. Instead, please read this article to better understand why the US does not have the debt crisis alluded to in this article.
|By Staff, Associated Press, 02/14/2012|
MarketMinder's View: As we’ve noted in the past, Italy is the issue of primacy in the eurozone. Of the PIIGS, it has the most debt maturing in 2012 and rolls over nearly half of it in February, March and April. Today’s auction, like others thus far, saw ample coverage and falling yields, making it increasingly likely Italy clears key funding hurdles. For more, see our 02/03/2012 cover story, “These PIIGS Went to Market.”
|By Staff, BBC News, 02/14/2012|
MarketMinder's View: The Valentine’s Day announcement of more quantitative easing from the BOJ continues a trend of accommodative monetary policy by global central banks—one of the many positives underpinning our positive market outlook.
|By Morgan Housel, The Motley Fool, 02/14/2012|
MarketMinder's View: A helpful, data-driven debunking of three popular economic misperceptions. In fact, Americans don’t spend most of their money on Chinese-made goods, China doesn’t own most of our debt and the Middle East doesn’t supply most of our oil.
|By Staff, Associated Press, 02/14/2012|
MarketMinder's View: Moderating inflation in the UK likely gives the BOE increased headroom to take accommodative measures, like last week’s £50 billion increase to its quantitative easing program—just another sign of continued accommodative policies from the world’s central banks. For more, see our 02/03/2012 commentary on iStockAnalyst.com, “Central Bank Accommodations.”
|By Tom Barkley and Eric Morath, Dow Jones Newswires, 02/14/2012|
MarketMinder's View: Strong consumer demand has forced many businesses to ramp up currently lean inventories—another sign of the US economy’s underappreciated strength.
|By Ben Casselman and Phil Izzo, The Wall Street Journal, 02/13/2012|
MarketMinder's View: Growth rate volatility is just normal, which means it’s nearly universally a mistake to extrapolate a current trend forward—or pencil in a repeat of what just happened. What’s most important is growth. And we had that in 2011, so frankly, we aren’t totally sure we understand all the handwringing. And for all those who claim the US recovery is super susceptible to shocks, consider: A massive Japanese quake, the eurozone’s issues, Thai floods, Middle East tensions and US political gridlock did not trigger a recession last year.
|By Tom Randall and Eric Roston, Bloomberg, 02/13/2012|
MarketMinder's View: Most discussions of “peak (insert resource here)” fall prey to a similar problem: extrapolating today’s knowledge and consumption trends far into the future. And that seems hard at work in this slide show. For more, see our 05/05/2011 column, “A Common Thread Between Horse Manure and Peak Oil.”
|By Jill Schlesinger, CBS News, 02/13/2012|
MarketMinder's View: Yes, it’s an election year. And yup, debt rhetoric will likely play a part in the campaigning. But the data presented here paint a skewed picture of US national debt. And that’s the primary debt problem we have in the US: Most discussion of US national debt is fear-based. After reading this article, we suggest reading this also.
|By Tyler Cowen, The New York Times, 02/13/2012|
MarketMinder's View: Assuming the problem of “too big to fail” actually exists (it may—but 2008 doesn’t prove the point, considering the outsized role regulatory moves played in generating the financial panic), the idea of making banks’ stockowners share in losses doesn’t seem like a great one. Shareholders are already punished when banks fail—their holdings drop in value (see Lehman). What’s more, the implementation of such a plan would be very problematic. Consider index funds, which are required to own shares of banks. How these passive instruments, designed as pass-throughs, would be able to pony up for bank losses is no small problem with the plan.
|By Mari Iwata and Peter Landers, The Wall Street Journal, 02/13/2012|
MarketMinder's View: A very interesting look at the global natural gas market and developments following Japan’s 2011 earthquake. Granted, US companies would have to significantly ramp up efforts to bolster their ability to export LNG, but the opportunity for greater export of this abundant energy source seems to be in place.
|By Staff, BBC, 02/13/2012|
MarketMinder's View: Despite protests and political wrangling, Greek politicians showed their pragmatic side and passed the recently agreed-to austerity plan in a vote Sunday. With this, Greece has taken another step toward securing its restructured bailout and enacting voluntary private-sector haircuts. Of course, this doesn’t mean the Greek saga is done—but it seems another chapter is reaching its conclusion.
|By Emese Bartha, The Wall Street Journal, 02/13/2012|
MarketMinder's View: At auction Monday, Italy successfully sold the full allotment of €12 billion in Treasury bills. Twelve-month bond yields fell around 50 basis points from the prior auction January 12—another example of improved conditions. All in all, a good result from Italy’s first February’s auction.
|By Mark J. Perry, Carpe Diem, 02/13/2012|
MarketMinder's View: “A record monthly gain to a new all-time record high for total US freight activity in December that includes shipments by truck, rail, waterways, pipelines and air provides additional evidence that the US economy is recovering and was gaining momentum at year end.”
|By Jeremy Warner, The Telegraph, 02/10/2012|
MarketMinder's View: While EU officials are no doubt frustrated with Greece’s slow progress, we rather doubt expelling Greece is truly their aim. More likely, they’re trying to goad Greek leaders into further reforms, as they have every time Greece needed bailout money. European leaders have consistently and repeatedly shown they’re willing to do what’s necessary to keep the eurozone intact. For more, see today’s cover story, “Same Greek Dance, Different Italian Song.”
|By Moran Zhang, International Business Times, 02/10/2012|
MarketMinder's View: Whether the trade deficit widened or narrowed, we’d argue the attention paid is overwrought. More important is that total trade—exports and imports—rose nicely, reflecting higher demand. For more, see our 09/09/2011 cover story, “Trade Deficit Trifles.”
|By Eleazar David Melendez, International Business Times, 02/10/2012|
MarketMinder's View: Consumer sentiment gauges tell us mostly only how people feel about the recent past, which says very little about future economic or stock market movement. An analysis of overall economic data—what people actually do, not what they say—tells more, and recent readings indicate continued economic growth.
|By Staff, Associated Press, 02/10/2012|
MarketMinder's View: Seeing as how this is just January’s data—and that month has historically shown sharp slowing in trade associated with week-long Lunar New Year celebrations—we doubt this is as telling as the article posits. What’s more, China has historically allowed economic growth to slow prior to an “election” year, giving itself the flexibility to speed growth during the planned transition (mitigating the likelihood of civil unrest). Should China follow this precedent—which we think is likely—then this data would increasingly seem likely to be a blip. For more, see our 01/11/2012 cover story, “China’s Confounding Trade Data.”
|By Peter Matheson, The Wall Street Journal, 02/10/2012|
MarketMinder's View: Here’s a good Valentine’s Day way of analyzing the economy and available data: Look past the initial data missive, don’t let sentiment get out of hand and think long term!
|By Katy Daigle, Associated Press, 02/10/2012|
MarketMinder's View: Freer trade globally is always a good thing in our opinion—and more and more countries seemingly agree. While there are still a few details to be ironed out here, it’s encouraging to see both sides want to reach a trade agreement as soon as possible.
|By Floyd Norris, The New York Times, 02/10/2012|
MarketMinder's View: While government statistics are often imperfect and should be taken with a grain of salt, last week’s unemployment report was indeed more transparent than some have posited. Though the labor force participation rate fell a bit, due to population increases, the total number of workers did, in fact, rise.
|By Szu Ping Chan, The Telegraph, 02/10/2012|
MarketMinder's View: Some of these measures may be a bit unpleasant for those affected in the short term, but overall, they seem a sensible way for Spain to improve productivity, competitiveness and growth—encouraging steps toward a more sustainable long-term path.
|By Staff, The New York Times, 02/09/2012|
MarketMinder's View: Yes, Greece still has an extremely challenging road ahead. But in our view, the measures discussed thus far have seemed largely appropriate in facing such significant obstacles to freely operating markets as Greece’s. In our view, taking steps aimed at future competitiveness, though undoubtedly painful now, are Greece’s best chance at ultimately solving its fiscal woes.
|By Anthony Mirhaydari, MSN Money, 02/09/2012|
MarketMinder's View: This ignores several important points—like the fact what matters far more than our absolute debt level is the amount of interest we pay on that debt. But aside from that, it ignores the astounding entrepreneurial ability of markets to avert disaster—doubting capitalism this time around seems short-sighted to us.
|By Steven Rattner, Financial Times, 02/09/2012|
MarketMinder's View: The title of this seemed promising—but the content proved less so. It simply glosses over the significant role new rules, regulations, laws and government actions played in generating 2008’s financial crisis. And the analogy here—that capitalist businesses are like “toddlers” and governments the “parents,” and thus, businesses should “get behind better government oversight”—is quite a stretch. We’re highly skeptical of governments’ abilities to effectively build “global government structures” that don’t set us up for vast future unintended consequences.
|By Jesse Eisinger, The New York Times, 02/09/2012|
MarketMinder's View: We quibble with many aspects of this. Much of Dodd-Frank’s key rules are still being designed—how can we envision the future of rules that don’t exist? What’s more, the predecessor referenced here isn’t at all inspirational to us. The reality is Sarbanes-Oxley’s unintended consequences have seemingly far outweighed any potential benefits.
|By Michael Derby, The Wall Street Journal, 02/09/2012|
MarketMinder's View: There are myriad theories about why unemployment remains elevated—but the reality is it isn’t all that historically unusual for it to do so following such a significant recession. Which means you don’t really need much of a theory to explain the current level.
|By Rachel Donadio and Niki Kitsantonis, The New York Times, 02/09/2012|
MarketMinder's View: Though details are still a bit sketchy and the deal needs parliamentary approval, it seems Greece continues taking steps in the right direction. For more, see today’s cover story, “Tick Tock Goes the Clock.”
|By Joseph B. White and Ryan Tracy, The Wall Street Journal, 02/09/2012|
MarketMinder's View: The problem here isn’t so much the motivation—which many no doubt find noble enough—but the method. As we’ve said before, subsidies just aren’t the economically efficient way to achieve any goal—green energy’s no different. For more, see our 09/21/2011 column, “Government’s Very Un-Invisible Hand.”
|By Eswar Prasad, The Wall Street Journal, 02/09/2012|
MarketMinder's View: Despite prevalent fears to the contrary, the chances China’s yuan replaces the dollar as the international reserve currency of choice are low—primarily because (as is pointed out), the crucial ingredient in creating a global reserve currency is financial market development. And in that arena, the US is simply unchallenged—now and for the foreseeable future.
|By Shobhana Chandra and Bob Willis, Bloomberg, 02/09/2012|
MarketMinder's View: Increasing inventories seemingly indicate companies are anticipating continued demand growth—which likely helps sustain economic and market momentum as 2012 progresses.
|By Katie Allen, The Guardian, 02/09/2012|
MarketMinder's View: The Bank of England is incrementally expanding its quantitative easing program—another sign of continued accommodative policies from central banks around the world. For more, see our 02/03/2012 commentary on iStockAnalyst, “Central Bank Accommodations.”
|By Matthew Yglesias, Slate, 02/08/2012|
MarketMinder's View: The notion there’s a lack of demand holding back the US economy is something of a fallacy, in our view. As we’ve said before, employment recovery has always lagged economic growth—thus far, this time hasn’t proven all that different.
|By Peter Morici, The Street, 02/08/2012|
|By Peter Orszag, Bloomberg, 02/08/2012|
MarketMinder's View: Automatic economic stabilizers might work in concept, but they’re rife with potential unforeseen and unintended consequences. Moreover, given they would deprive politicians of opportunities to appease their constituencies come election day, the chances they’re ever implemented seem slim to none.
|By Stephen Fidler, Matthew Dalton and Alkman Granitsas, The Wall Street Journal, 02/08/2012|
MarketMinder's View: Eurozone politicians’ “can-kicking” continues as both sides concede to demands near the last minute. Expect that to continue as the eurozone keeps muddling through its fiscal woes. For more, see our 01/31/2012 cover story, “A European Spectacle.”
|By Russell Gold, The Wall Street Journal, 02/08/2012|
MarketMinder's View: A sensible piece outlining the economic prosperity brought about by the fracking boom—and a classic example of how supply creates demand. For more, see our 07/29/2011 cover story, “The American Energy Revolution.”
|By Alessandra Galloni, Christopher Emsden and Stacy Meichtry, The Wall Street Journal, 02/08/2012|
MarketMinder's View: While this is likely far from implementation, it’s a development is worth watching. Certainly, policies aimed at ensuring more open markets would benefit the eurozone as a whole, but we’re slightly wary of potential unintended consequences.
|By Scott Grannis, Calafia Beach Pundit, 02/08/2012|
MarketMinder's View: Two interesting charts showing business and consumer re-leveraging activity. As this post lays out, credit expansion doesn’t necessarily directly translate into growth, but it “can facilitate growth by more efficiently distributing the economy’s resources from savers to investors” and is another indication of growing confidence in the US economy.
|By Randall W. Forsyth, Barron’s, 02/07/2012|
MarketMinder's View: Using stocks’ dividend yields as a measure of their relative cheapness seems suspect to us—the methodology appears to ignore equities’ total return, which is what determines investors’ long-term success. In our view, the market’s aggregate earnings yield—inverse of the P/E—is a better gauge, and today’s ratio suggests stocks are indeed plenty cheap.
|By Gabriele Parussini, The Wall Street Journal, 02/07/2012|
MarketMinder's View: We’re rather puzzled over how France’s record trade deficit signals “loss of competitiveness.” As the article even points out, France’s total trade—exports and imports—grew in 2011, telling us demand rose in France and other countries bought more French goods. Those seem like healthy signs of competitiveness, in our view.
|By Ambrose Evans-Pritchard, The Telegraph, 02/07/2012|
MarketMinder's View: Lower shipping volumes over the past few months don’t tell us much about how China’s economy will fare in 2012. Chinese officials have already begun using available throttles to boost growth, and we still expect a nice reacceleration in this “election” year.
|By Niki Kitsantonis and David Jolly, The New York Times, 02/07/2012|
MarketMinder's View: Though 15,000 is a teensy share of Greece’s bloated public sector, that the government would take even this small step—amid national anti-austerity demonstrations—speaks to Greek leaders’ continuing resolve to make changes necessary to get their bailout money.
|By Staff, EUbusiness, 02/07/2012|
MarketMinder's View: A succinct rundown of the proposed EU financial transaction tax’s potential unintended consequences—like slower economic growth, higher costs (likely passed to consumers) and perhaps riskier behavior by financial institutions seeking to maintain margins. For more, see our 09/29/2011 cover story, “Trifling With Transaction Taxes.”
|By Kevin Kingsbury, The Wall Street Journal, 02/07/2012|
The 16% increase in US job openings in 2011 is yet another sign of the private sector’s underappreciated strength. For more, see our 01/06/2012 cover story, “Private-Sector Strength.”
|By Staff, The Wall Street Journal, 02/07/2012|
MarketMinder's View: Here’s strong evidence cutting taxes can boost growth and revenues: Income-tax-free states “have recorded faster revenue growth to pay for government services over the past two decades than states with income taxes. That’s because growth in the economy from attracting jobs and capital has meant greater tax collections.”
|By Novrida Manurung and Widya Utami, Bloomberg, 02/07/2012|
MarketMinder's View: High Indonesian growth is a good sign of strength in emerging Asia—a region we expect to be overall robust in 2012.
|By Stewart Lansley, The Guardian, 02/06/2012|
MarketMinder's View: This article attempts to build the case the Great Depression was triggered by a wealth gap—but doesn’t address monetary policy errors, protectionism and regulatory changes, of the day. In our view, those go far further in explaining what happened than a relative comparison of incomes.
|By Mark Carnegie, The Australian, 02/06/2012|
MarketMinder's View: This article is all over the map. It simulataneously argues to buy bonds but worries they might be overvalued. It worries about deflation and inflation. And has a host of other comments that seemingly cancel one another.
|By Paul Krugman, The New York Times, 02/06/2012|
MarketMinder's View: We agree unemployment remains high. But this is an altogether too-dour take on the US economy, in our view. What’s more, the call for more Fed action assumes QE has been successful in creating jobs. We’d suggest that has much more to do with a healthy (and gorwing) private sector.
|By Staff, BBC, 02/06/2012|
MarketMinder's View: Recently, the IMF has been doling out negativity nearly daily. Coincidentally (or perhaps not), the IMF is seeking to boost its cash coffers via increased national government contributions. Absent some new, shocking development, it seems unlikely to us eurozone weakness has a severe global impact. For more, see our article on The Street, “Mapping Stress From Eurozone.”
|By Nikolaj Gammeltoft, Inyoung Hwang and Whitney Kisling, Bloomberg Businessweek, 02/06/2012|
MarketMinder's View: In our view, what’s sensible about this story is it highlights today’s gap between sentiment and fundamentals quite well—a bullish feature we expect to provide a tailwind for stocks in 2012. For more, see our 02/02/2012 cover story, “After the Pause.”
|By Staff, Chicago Tribune, 02/06/2012|
MarketMinder's View: We’d quibble with minor aspects of this, but the general thrust is spot on: The principal “I” word resulting in more US jobs is innovation, not insourcing.
|By Tom Fairless, The Wall Street Journal, 02/06/2012|
MarketMinder's View: Propelled by orders from outside the eurozone, German factory orders rose in December—seemingly alluding to the fact the global economy is growing and demand from abroad can help buoy the eurozone.
|By Staff, Fisher Investments MarketMinder, 02/06/2012|
MarketMinder's View: Our latest contribution to The Street.
|By Peter Morici, The Street, 02/03/2012|
MarketMinder's View: Unemployment is undoubtedly still high and likely will take time to fall toward the long-term average. But the take here on Friday’s data is overall too bearish, in our view—particularly given the data weren’t bearish. Moreover, there’s little evidence trade deficits—regardless of cause or source—actually hamper growth or jobs much. Consider the workers employed at ports unloading imports. Or the truckers transporting them to stores, or the retailers selling them and so on.
|By Philip Coggan, Bloomberg, 02/03/2012|
MarketMinder's View: Forecasts like this are a stretch considering China’s far from a liberalized and modern financial system. Meaning such arguments are at best very long-range forecasts—which are notoriously unreliable.
|By Bob Pisani, CNBC, 02/03/2012|
MarketMinder's View: Considering VIX fluctuations aren’t reliably predictive of future stock market movements—or even future VIX movements—it’s likely neither.
|By Lucia Mutikani, Reuters, 02/03/2012|
MarketMinder's View: Unemployment numbers continue improving, providing more evidence of a growing US economy.
|By Daniel Wagner, Associated Press, 02/03/2012|
MarketMinder's View: “US service companies grew at the fastest pace in 11 months in January as companies started hiring to keep up with rising demand”—highlighting a point we’ve made before: employment recovery is a lagging indicator. Businesses typically won’t hire until well into expansion, when reduced staffs are no longer able to keep up with business demand—which is seemingly increasingly the case.
|By Arnold Kling, The Wall Street Journal, 02/03/2012|
MarketMinder's View: “US service companies grew at the fastest pace in 11 months in January as companies started hiring to keep up with rising demand”—highlighting a point we’ve made before: employment recovery is a lagging indicator. Businesses typically won’t hire until well into expansion, when reduced staffs are no longer able to keep up with business demand—which is seemingly increasingly the case.
|By Ott Ummelas, Bloomberg Businessweek, 02/03/2012|
MarketMinder's View: Though many have decried the euro as unsustainable in light of its recent woes, here’s an interesting look at a country realizing enormous benefits that accompany participation in the single currency.
|By Al Lewis, The Wall Street Journal, 02/02/2012|
MarketMinder's View: We disagree with the notion government stimulus has been too small—or that 2008’s financial crisis and ensuing recession created a hole that’s “too big to fill.” Rather, we’d argue the economy and market have come a long way since the recession, albeit in fits and starts—but that’s much more typical of markets and economies than most folks think. Instead of more stimulus, we’d recommend the government stand aside in every practicable sense and let the market and economy continuing “fixing” themselves.
|By Michael Sivy, Time, 02/02/2012|
MarketMinder's View: We’d argue instead the measures European officials and financial institutions have instituted to help backstop struggling peripheral nations have been largely appropriate—and the fact credit markets seemingly continue demonstrating investors’ confidence in European sovereign debt speaks to the low likelihood of a sudden eurozone implosion. Are there risks? Yes—as always. But the alternatives to helping those countries maintain their liquidity are seemingly far direr.
|By Laura Tyson, Project Syndicate, 02/02/2012|
MarketMinder's View: Rather than focusing on ways government can invest in areas believed to be “underfunded” (though we’d disagree that’s the case), we’d suggest it instead focus on ways it may be preventing or disincentivizing the private sector from growing or investing more. As has been demonstrated myriad times, the private sector is a much wiser investor and spender than the government—the chances it’s much different this time seem pretty small.
|By Staff, International Business Times, 02/02/2012|
MarketMinder's View: While such theories can be fun for investors and sports fans alike, the reality is they’re better fodder for trivia night than they are a sound basis for investment decisions. Always remember: Correlation is not causation.
|By Caroline Baum, Bloomberg, 02/02/2012|
MarketMinder's View: We agree with most of the suggestions here—in our view, government and taxes should generally be as unobtrusive as possible while still providing services best provided by government (though of course what those services are is up for debate—and therein lies much of the rub). For more, see our 09/28/2011 cover story, “Taxing Regulation.”
|By David Enrich, The Wall Street Journal, 02/02/2012|
MarketMinder's View: As we’ve noted, one potential risk to markets this year is the possibility European regulators enact draconian financial and/or banking regulations—so that they’re considering loosening them some is likely a positive, in our view. For more, see today’s cover story, “After the Pause.”
|By Patricia Kowsmann, Dow Jones Newswires, 02/02/2012|
MarketMinder's View: Privatization is an important step not only in Portugal, but in peripheral Europe as a whole—which, to our minds, has overall too much state ownership and too little private ownership. That state assets are thus far going for a premium is icing on the cake.
|By Amity Shlaes, Bloomberg, 02/02/2012|
MarketMinder's View: An interesting look at a historical period demonstrating lower tax rates can actually raise federal revenues—though even proponents at the time doubted it would be as successful as it was.
|By Mark J. Perry, Carpe Diem , 02/02/2012|
MarketMinder's View: Consumers in Pennsylvania are realizing significant savings because they’re switching personal energy consumption from oil to natural gas. This sums it up perfectly: “When energy sources like natural gas make sense based on their scientific and economic merits, government and political support is unnecessary.” For more, see our 09/21/2011 column, “Government’s Very Un-Invisible Hand.”
|By Markos Kaminis, Seeking Alpha, 02/01/2012|
MarketMinder's View: We’re slightly puzzled by the notion high unemployment, dour consumer sentiment and a weak housing market are somehow “secret”—these issues are a few years old now. The real “secrets”—and, in our view, the ones more likely to affect markets over time—are today’s many underappreciated positives. For more, see our 12/13/2011 research analysis, “Six Indicators of Underappreciated Economic Strength.”
|By Staff, EUbusiness, 02/01/2012|
MarketMinder's View: Growth measures sound dandy in theory, but the recently leaked Franco-German proposal on ways to “strengthen growth” included a financial transaction tax and corporate tax harmonization—two measures, in our view, more likely to prove solutions in search of a problem than growth-enhancing. For more, see our 01/24/2012 column, “The Harm in Harmony.”
|By David Cottle, The Wall Street Journal, 02/01/2012|
MarketMinder's View: Like the US, the UK has a sizable debt load in absolute terms. Yet, also like the US, when you scale British net public debt to GDP and tax revenues, it appears relatively benign (compared to history) and affordable. In our view, Britain’s bond markets seem to be “hearing” just fine.
|By Andrew Tyrie, The Wall Street Journal, 02/01/2012|
MarketMinder's View: History is full of unintended consequences from officials trying to “fix” troubled nations and regions. Thus, we’d argue giving the IMF or any supranational organization a mandate to “fix” the eurozone isn’t the wisest move. In our view, EU officials’ slow-go approach, while frustrating to many, is likely the sounder path. For more, see our 01/31/2012 cover story, “A European Spectacle.”
|By Christopher S. Rugaber, The Globe and Mail, 02/01/2012|
MarketMinder's View: More evidence of a robust US economy—one of many underappreciated positive factors we think are likely to buoy stocks in 2012.
|By A. Barton Hinkle, Reason, 02/01/2012|
MarketMinder's View: A delightful look at free markets, the innovation they spur, and the consumer choice that brings—just some of the “glories” of capitalism.
|By Staff, The Telegraph, 02/01/2012|
MarketMinder's View: Whether Chinese manufacturing expanded (as reported by the government) or contracted (as suggested by a private firm’s perhaps less “dirty” data) a bit in December, as this piece points out, the stage seems set for increasingly accommodative monetary policy. We believe China’s government has every incentive to boost economic growth in this “election” year—likely helping that nation avoid a hard landing. For more, see our 01/11/2012 cover story, “China’s Confounding Trade Data.”
|By Staff, Central News Agency, 02/01/2012|
MarketMinder's View: US-Taiwan free-trade talks stalled in 2007 over Taiwan’s import restrictions on American beef, but Taiwan wants to overcome that disagreement and resume the conversation. Given the issue’s sensitivity, it’s likely not resolved overnight, but even renewed dialogue is incremental progress in the global race towards zero protectionism.