|By Peter Whoriskey, The Washington Post, 03/30/2012|
MarketMinder's View: We’re skeptical as it is of mostly data-based metrics like GDP and unemployment—let alone those that would be based on subjective things like feelings. In our view, the free market overall tells you what people think of things—simply, if they do like it, they buy it; if they don’t, they won’t. This seems to increasingly muddy the waters, not clear them up.
|By John Maxfield, The Motley Fool, 03/30/2012|
MarketMinder's View: As we’ve argued before, what matters far more than a country’s absolute debt level is its ability to pay that debt. While there are some troubled nations globally, by and large, most nations are thus far perfectly capable of managing their debts. For more, see our 03/12/2012 column, “US Debt Perspectives.”
|By J. Bradford DeLong, Project Syndicate, 03/30/2012|
MarketMinder's View: We disagree “governments’ refusal, when push comes to shove, to match aggregate demand to aggregate supply in order to prevent mass unemployment” has much to do with the world’s current economic status. There may be times when government intervention and support in the market are overall helpful, but now doesn’t much seem like one of those times, given continued economic growth, however slow and plodding.
|By Annabel Hepworth, The Australian, 03/30/2012|
MarketMinder's View: Regulations like this that require potentially burdensome requirements on potential investors are more likely to result in those investors looking to other, more easily accessed markets. Meaning this likely ultimately has deleterious, if unintended, consequences in Australia.
|By Staff, Financial Times, 03/30/2012|
MarketMinder's View: Though many—primarily in the media—have frequently bemoaned European officials’ slow-go approach to eurozone debt woes, they’ve thus far averted the predicted implosion. Their continuing efforts speak to their considerable political will to prevent future issues.
|By Patricia Kowsmann, Dow Jones Newswires, 03/30/2012|
MarketMinder's View: Recent media chatter has seemingly focused increasingly on the likelihood Portugal’s the next domino to fall. However, reports like this indicate Portugal continues implementing the necessary measures to avoid that scenario—no matter how politically difficult they may be.
|By Amol Sharma, Meghan Bahree and Paul Beckett, The Wall Street Journal, 03/30/2012|
MarketMinder's View: An interesting look at some of India’s recent, less-than-friendly plans for increasing government revenues. If they’re looking to also increase foreign investment, these seem dubious methods for achieving that goal.
|By Carlos Torres, Bloomberg, 03/30/2012|
MarketMinder's View: Despite concerns oil and gas prices would derail US economic growth, business activity continued expanding in March.
|By John Glover, Bloomberg, 03/29/2012|
MarketMinder's View: This piece neglects a couple of key facts: Of the €189 billion in Greek debt tendered in the private-sector restructuring, only €12 billion is governed by foreign law—and private creditors voluntarily agreed to restructure 60% of that by March 9. Relative to Greece’s overall debt burden, the amount in question here is quite small. For more, see our 03/27/2012 commentary on iStockAnalyst, “Greek Fears Easing?”
|By G. Scott Thomas, The Business Journals, 03/29/2012|
MarketMinder's View: State-level retail employment is one teensy statistic and not at all indicative of broader economic health. On balance, most US economic data point to continued private-sector strength.
|By Matthew Yglesias, Slate, 03/29/2012|
MarketMinder's View: It’s no secret the BLS’s labor figures use some funky calculations—like any single economic metric, they should be taken with a grain of salt. But that doesn’t mean recent employment gains are fake or unsustainable, whether due to warm weather or anything else. When one samples all available private-sector and government data, it’s clear US labor markets have been healing for quite some time. For more, see our 03/12/2012 cover story, “Evidence of Employment.”
|By Katy Daigle, Associated Press, 03/29/2012|
MarketMinder's View: It’s all well and good that BRICS leaders want to invest in less developed countries, but their comments about the World Bank and its ilk not improving developing countries’ “access to capital” seem one-sided. Development banks spent decades providing cheap capital to undeveloped nations, only to often see corrupt governments hijack funding and food aid. If that pattern continues, BRICS leaders may find themselves less inclined to invest.
|By Lucia Mutikani, Reuters, 03/29/2012|
MarketMinder's View: While headline GDP went unrevised in the BEA’s final Q4 estimate, household incomes and business investment were revised up substantially, confirming the US economy’s underlying strength.
|By Eamon Quinn and Paul Hannon, The Wall Street Journal, 03/29/2012|
MarketMinder's View: Ireland’s deal to repay emergency loans from its central bank with a long-term bond not only improves the government’s near-term cash flows, but it demonstrates faith in Ireland’s ability to meet long-term obligations. Both are likely important steps toward Ireland’s planned 2013 return to primary debt markets.
|By George F. Will, The Washington Post, 03/29/2012|
MarketMinder's View: All too often, the government’s heavy hand impedes entrepreneurship and economic activity. Liberalizing certain trades, like taxi driving and casket retail as described in this piece, would promote healthy competition, benefiting businesses and consumers alike.
|By Quentin Peel, Financial Times, 03/29/2012|
MarketMinder's View: A look at the latest German politicking over eurozone policy measures and Chancellor Merkel’s difficult balancing act between the monetary union’s needs and her domestic political concerns. For more on the relationship between German and Continental politics, see our 03/27/2012 cover story, “Walking the German Tightrope.”
|By Guy Chazan, Financial Times, 03/28/2012|
MarketMinder's View: That an oil price spike has preceded past recessions is an interesting observation—but coincidence isn’t causality. Plus, higher outlays on oil imports don’t necessarily mean spending elsewhere must fall. Oil is one of many economic inputs, and plenty of other drivers remain strong.
|By Gail MarksJarvis, Chicago Tribune, 03/28/2012|
MarketMinder's View: This is a very, very long-term forecast—and those are typically fraught with peril. Today’s unemployment rate doesn’t automatically mean folks will make less over their entire working lives. Many other factors will influence incomes over the coming years and decades.
|By Bruce Watson, Daily Finance, 03/28/2012|
MarketMinder's View: Tracking “indicators” like salon visits and how often consumers buy new underwear is a flawed economic forecasting strategy, in our view. Such data are typically backward-looking, or are at best coincident with economic moves, and tell nothing about the future.
|By Chris Isidore, CNN Money, 03/28/2012|
MarketMinder's View: This isn’t a good thing, in our view—it makes the US less business-friendly, likely encouraging firms to domicile in countries with lower tax rates and disincentivizing US-based firms from repatriating profits. Plus, while most pay less than the headline rate, the large amount they spend on tax preparation offsets much of those savings.
|By Eduardo Porter, The New York Times, 03/28/2012|
MarketMinder's View: We’ve said it before: The more you tax something, the less you get of it. And in this case, if taxes on top income earners (and all the small businesses that file individual, rather than corporate, returns) are raised, they’re likely to spend less—an unintended, negative consequence that can directly impact the economy. For more, see our 02/21/2012 cover story, “All Over the Map on Taxes.”
|By Doug Cameron, The Wall Street Journal, 03/28/2012|
MarketMinder's View: The US is the latest country to propose taking action over the EU’s tax on flights to, from and over Europe. As more nations follow suit and airlines cut back on flights to the Continent or re-route flights around European airspace to avoid paying the tax, the EU may lose economic activity and tax revenue. For more, see our 03/21/2012 cover story, “Today’s Beef With Government Regulation.”
|By Lingling Wei, The Wall Street Journal, 03/28/2012|
MarketMinder's View: China’s decision to liberalize some parts of Wenzhou’s financial system is encouraging, and legitimizing the shadow banking system would likely improve small businesses’ access to capital. How this works, and whether the government effects these changes nationwide, is something to keep an eye on.
|By Stephanie Clifford, The New York Times, 03/28/2012|
MarketMinder's View: This is a perfect example of how consumers benefit from advances in technology, which can increase the flow of information and bring more efficient price discovery. Today’s consumers can more easily compare prices than ever before due to online sites—and pay less for the same items.
|By Don Lee, Los Angeles Times, 03/28/2012|
MarketMinder's View: Business capital expenditures are up double digits over the past year as firms continue investing in machinery, computers and transport. Unfilled orders have also risen, suggesting demand is firm and can drive continued economic growth.
|By Robin Emmott, Reuters, 03/27/2012|
MarketMinder's View: It’s not terribly surprising problems in the eurozone remain. However, officials’ continued backstopping of the euro and can-kicking are largely appropriate steps to continue addressing these issues—and mitigate the chances of a sudden disaster, in our view. For more, see our 03/27/2012 commentary on iStockAnalyst, “Greek Fears Easing?”
|By Anne D’Innocenzio, The Globe and Mail, 03/27/2012|
MarketMinder's View: Confidence and sentiment indicators presage little about markets’ or the economy’s future direction—and therefore aren’t terribly useful for investors seeking to form a forward-looking strategy.
|By Irwin M. Stelzer, The Weekly Standard, 03/27/2012|
MarketMinder's View: Although there has been plenty of protectionist rhetoric lately, there’ve been far more free-trade measures enacted. Take, for example, talks between Japan and Canada or the recently enacted US-Korea trade pact—not to mention data showing world trade and output at new highs in January.
|By Staff, Associated Press, 03/27/2012|
MarketMinder's View: Italy represents 59% of total PIIGS debt to be rolled over in 2012—and recent auctions (including this one) show, for now, it keeps hitting the milestones.
|By Mark J. Perry, Carpe Diem, 03/27/2012|
MarketMinder's View: Rumors of US manufacturing’s demise have been greatly exaggerated. Though its share of the labor force has decreased over time, that’s largely thanks to enormous productivity gains—a positive for consumers and the economy overall. For more, see our 03/02/2012 cover story, “Manufacturing on the Mind.”
|By Staff, The Economist, 03/27/2012|
MarketMinder's View: We agree “Europe needs more competition, not less, to overcome its crisis.” Giving in to domestic political pressures and incrementally closing previously free trade avenues would likely be an ill-advised move.
|By Stephen S. Roach, Project Syndicate, 03/27/2012|
MarketMinder's View: While aspects of this piece may be a bit overwrought, it does outline Chinese officials’ commitment to stability—in our view, one major reason China’s government has historically attempted to goose growth in political transition years like 2012. For more, see our 02/29/2012 cover story, “A Look at China’s Political Process.”
|By Venkatesh Narayanamurti, Los Angeles Times, 03/26/2012|
MarketMinder's View: This article operates on two major assumptions: That American manufacturing is in decline (based on manufacturing employment’s share of the workforce) and has been for many years—and that innovation will go with it. Yet American innovation is alive and well—and is one major force explaining employment trends in manufacturing. American manufacturers today produce far more than they did in prior decades but use less labor. That’s largely due to innovation and technological advances and is a sign of a vibrant, ultra-competitive sector.
|By Michael Schuman, Time, 03/26/2012|
MarketMinder's View: This article does make some interesting points regarding a few factors partly responsible for Asian growth. But it starts from a fallacious question—exactly what does Western-style capitalism need saving from? The US economy is growing and at record-high levels of output. The downturn the US experienced, a cyclical function of capitalism, is over. In Europe, much of the difficulty countries like Greece are running into is, in our view, due to too many socialistic tendencies, not Western-style capitalism.
|By Larry Swedroe, CBS News, 03/26/2012|
MarketMinder's View: While we don’t question the fact many—if not most—active managers don’t beat the market over the long run, there are certainly those who do. Yet this fact is unaddressed in this article. What’s more, the article presumes passive investing is easy. Fact is, most “passive” investors aren’t—that’s illustrated in any number of different studies showing folks’ behavior. Many so-called passive investors buy and sell frequently—and very often, at the wrong times.
|By Emese Bartha, The Wall Street Journal, 03/26/2012|
MarketMinder's View: The facts here—like rates’ current level and direction—are perfectly fine. But placing huge meaning on what, at this point, appears to be short-term bond market volatility seems more an expectations problem than a real issue. Rates are very unlikely to consistently move in either direction—up or down. And that movement can be driven by far more than just one factor. For more, see our 03/23/2012 cover story, “Behind Global Bond Yield Gyrations.”
|By Mari Yamaguchi, Associated Press, 03/26/2012|
MarketMinder's View: It’s early, but this is an interesting story worth following: “If established, the [Japan-Canada free-trade] pact would be Japan's first with a country from the Group of Eight major economies.”
|By William Boston, The Wall Street Journal, 03/26/2012|
MarketMinder's View: In another sign of politicians’ resolve in backing the euro, German Chancellor Angela Merkel has agreed to plans to boost the scope of the European Stability Mechanism (ESM—permanent bailout fund) by allowing the temporary bailout fund to run concurrently with it. The size increase may be a bit less than some had hoped for, but that Germany seems ready to push forward is also better than others had feared.
|By Toko Sekiguchi, The Wall Street Journal, 03/26/2012|
MarketMinder's View: Many folks aren’t aware Japan Post is among the largest banks in the world by deposits. The privatization of this firm has been planned since legislation passed in 2005, yet the plans have been mired in Japan’s legendary political quicksand. It now seems privatization may move forward—a plus for all involved, in our view. Though we’d be very unsurprised if more delays beset the project.
|By Clifford Krauss, The New York Times, 03/26/2012|
MarketMinder's View: Here’s a very interesting look at the pace of change and technological advance extant in America’s shale oil and gas boom. Consider: “A well that once took two days to drill can now be drilled in seven hours.”
|By Carlos Torres, Bloomberg, 03/26/2012|
MarketMinder's View: It appears the US services industry has gained strength in recent months—and has actually (by one measure) grown more quickly than manufacturing over the last eight months or so. Throughout an expansion, leadership can and does change among nations and industry groups, which appears to be at work here.
|By Richard Blackden, The Telegraph , 03/23/2012|
MarketMinder's View: We acknowledge we’re not ratings agencies’ biggest fans—but neither are we governments’ biggest fans. Handing over credit-rating decisions to the same folks who gave us Sarbanes-Oxley and Dodd-Frank seems fraught with peril. Better, in our view, would be to simply remove regulations’ reliance on ratings and go from there.
|By John Bussey, The Wall Street Journal, 03/23/2012|
MarketMinder's View: In terms of how politicians think of trade, this is probably fairly close to reality. But depicting a globalized economy as a battle involving an arms race of sorts is hugely skewed. Fact is, even if goods from China are subsidized and, hence, artificially cheap, it’s not as though China’s the sole beneficiary. After all, many US consumers and businesses buy and use those goods—if they’re actually artificially cheap, that means purchasers have more cash left to spend elsewhere. What’s more, periodic trade spats unfortunately are quite common. This makes the issue seem vastly bigger than it actually is at this point.
|By Binyamin Appelbaum, The New York Times, 03/23/2012|
MarketMinder's View: We’re puzzled by the suggestion too-slow population growth has hurt economic growth following 2008’s financial crisis. The reality is population growth is far, far from the only input determining economic activity. That their own study shows growth has outpaced their expectations speaks to some apparent flaws in the methodology.
|By Neelabh Chaturvedi, The Wall Street Journal, 03/23/2012|
MarketMinder's View: Bond markets are volatile, so claiming a three-week-long move totaling roughly 60 basis points higher means Spain is the next “flashpoint in the eurozone” seems a very myopic stretch to us. Especially when you consider Spain’s rates are well below their peak, its debt-to-GDP ratio is around Germany’s levels and its interest payments’ share of tax revenue is very low. Not only that, but bond yields are up globally in the last few weeks—so while the rise may be partly due to Spain’s deficit announcement, it likely isn’t the full story. For more, see today’s cover story, “Behind Global Bond Yield Gyrations.”
|By Staff, Associated Press, 03/23/2012|
MarketMinder's View: We applaud political leaders’ continued efforts supporting increased free trade. For more on free trade around the world, see our 03/20/2012 cover story, “The Politics of Preferential Purchasing.”
|By Judith Sloan, The Australian, 03/23/2012|
MarketMinder's View: The title may go a bit far here, but the argument is sound. And what’s true in Australia is equally true in the US or the UK—or anywhere else participating in global trade. For more, see our 03/22/2012 cover story, “Handicapping Energy.”
|By Staff, The Wall Street Journal, 03/23/2012|
MarketMinder's View: We wholeheartedly agree the best way to fight China’s perceived unfair trade practices is not sinking to their level—rather, “the better way for Europe to crack the half-open door is to guarantee Chinese firms protections in Europe in exchange for greater foreign access to Chinese public-sector deals.”
|By Christopher Emsden and William Horobin, The Wall Street Journal, 03/23/2012|
MarketMinder's View: Despite broad eurozone sluggishness, there are still periodic bright spots—like Italian retail sales, which rose +0.7% from December, contrary to expectations.
|By Mohamed El-Erian, Project Syndicate, 03/22/2012|
MarketMinder's View: This is an overly dour view not only of the US economy’s current status but also of its overall strength and ability to rebound and grow in ways currently unfathomed. Assuming what economic growth will look like in the future based solely on what it’s looked like in the past vastly underestimates capital markets’ abilities to innovate and beat expectations. Could economic growth slow unexpectedly? Possibly—but we think that far less likely than that the opposite happens and America grows faster than most anticipate this year.
|By Andy Bruce and Nick Edwards, The Globe and Mail, 03/22/2012|
MarketMinder's View: The possibility exists the eurozone overall enters recession this year—but that’s been the case for over a year now. Furthermore, while there have undoubtedly been some slower economic numbers out of China and the eurozone, there have also been positives—pointing to the inescapable fact economic data are always volatile, so it’s important to step back and survey the economic picture’s entirety.
|By Staff, The Economist, 03/22/2012|
MarketMinder's View: Mistaking correlation for causation can be a very costly error—as noted briefly toward the end of this piece. Without a causal connection between income inequality and financial crises, the argument holds relatively little water.
|By Neelabh Chaturvedi, The Wall Street Journal, 03/22/2012|
MarketMinder's View: Yes, Spanish and Italian yields have ticked up—volatility is really quite normal, even in bond markets. But in addition, US, UK, German and French yields have also risen some recently. Seems possible something other than eurozone debt woes is incrementally pushing on global yields—highlighting the importance of taking a global view when reviewing any economic data.
|By Staff, Associated Press, 03/22/2012|
MarketMinder's View: US leading economic indicators rose again in February—and at an accelerating rate versus January. Another sign US economic growth seems likely to continue, despite many fears to the contrary.
|By Andy Sharp, Bloomberg, 03/22/2012|
MarketMinder's View: Those who bemoaned Japan’s significant trade deficit last month overlooked a few salient points: First, data like these are notoriously volatile—so a single month’s down (or up) number doesn’t tell you much about where the economy’s headed. Second, pinning hopes on a wonkily calculated statistic like net trade can be misleading when assessing overall economic health. What’s more important here is Japanese exports handily topped estimates, and imports also rose.
|By Staff, Bloomberg, 03/22/2012|
MarketMinder's View: While a relatively small move, that China’s policymakers remain flexible in terms of stimulating economic activity is a positive sign—and makes a drastic economic slowdown seem less likely.
|By Stephen Fidler and Matthew Dalton, The Wall Street Journal, 03/22/2012|
MarketMinder's View: As immediate, country-specific concerns continue largely waning, European officials turn their attention to reforms aimed at preventing a reoccurrence of the recent debt scramble. This proposal’s far from a done deal, but the shift in thinking among eurozone leaders is noteworthy and interesting.
|By George Will, The Washington Post, 03/22/2012|
MarketMinder's View: An entertaining read about creative destruction’s continual march through history—and the benefits it’s heaped on society along the way.
|By Staff, EUbusiness, 03/21/2012|
MarketMinder's View: We’re a touch puzzled by the scramble for “alternatives” to rare earths and the claim China is “monopolizing” the supply. Yes, China’s likely suppressing export quotas to keep prices artificially high, but China isn’t the only nation with considerable rare earths deposits—it’s just the cheapest producer, which drove other nations to shutter their mines. But the US and others could resume mining to fill a Chinese shortfall—they just haven’t been willing to do so yet. For more, see our 11/30/2010 column, “An Overview of Rare Earth Metals.”
|By James Politi and Jeremy Lemer, Financial Times, 03/21/2012|
MarketMinder's View: Though the new tariff on Chinese solar cells is small, protectionism is never the answer. This move likely proves feckless in helping the US’s solar industry, and it could easily prompt retaliatory moves from China.
|By Bret Jensen, Seeking Alpha, 03/21/2012|
MarketMinder's View: We’d actually call these 10 bricks in the wall of worry stocks love to climb. While a pullback is always possible, the fears cited here are largely either overwrought or already widely discussed. Remember, surprises typically move markets most.
|By Keith B. Richburg, The Washington Post, 03/21/2012|
MarketMinder's View: “Buy Chinese” doesn’t seem any more sensible than “Buy American” or the recently proposed “Buy European”—and it’s likely this populist move does little to help China’s auto industry.
|By Mark J. Perry, Carpe Diem, 03/21/2012|
MarketMinder's View: And the US made strong contributions to both, reflecting “the underlying strength in America’s manufacturing sector.” For more, see our 03/02/2012 cover story, “Manufacturing on the Mind.”
|By Steve Hargreaves, CNNMoney, 03/21/2012|
MarketMinder's View: No one much likes higher gas prices. However, as this piece shows, retail sales ex-gasoline are still rising. And thanks to efficiency gains, Americans today spend less of their disposable income on gas than they did 30 years ago, even though they drive substantially more. For more, see our 02/27/2012 cover story, “As Oil Prices Rise, So Do Theories.”
|By Simon Kennedy and Gonzalo Vina, Bloomberg, 03/21/2012|
MarketMinder's View: The Chancellor’s 2012 budget proposal has some things to like and some things to question, but the steps toward lowering marginal rates and streamlining parts of the tax code are encouraging. Most noteworthy, in our view, is the lowered corporate tax rate, which should help foster British growth over time.
|By Staff, Der Spiegel, 03/21/2012|
MarketMinder's View: An interesting look at Italian politics in the Mario Monti era—and how the public’s positive perception of him could impact next year’s election and the chances of future economic reforms.
|By Staff, EUbusiness, 03/21/2012|
MarketMinder's View: That Greek lawmakers signed off on all the conditions for receiving bailout money speaks to the prevailing will to prevent a disorderly default. For more, see our 03/06/2012 cover story, “The Great Greek Swap Meet.”
|By Constantine von Hoffman, CBS MoneyWatch, 03/20/2012|
MarketMinder's View: The data cited here are backward-looking and likely don’t presage much about China’s future direction—remember, Chinese officials were incentivized to slow growth last year in order to accelerate it during this year’s leadership transition in an effort to stymie potential social unrest. But should that not happen, it likely wouldn’t much impact the US’s ability to finance government debt, considering China only owns 7.2% of outstanding net public debt. For more, see our 02/29/2012 cover story, “A Look At China’s Political Process.”
|By Ambrose Evans-Pritchard, The Telegraph, 03/20/2012|
MarketMinder's View: Italy no doubt faces challenges, but its need for creative austerity and growth reforms hardly amount to a “prison of nations.” Plus, this remains true for Italy and the other PIIGS, —eurozone officials seem to continue to be staunchly committed to preventing a disorderly default or breakup of the union. For more, see our 02/16/2012 cover story, “Slow Eurozone—No Surprise.”
|By Floyd Norris, The New York Times, 03/20/2012|
MarketMinder's View: Although we agree the US economy is certainly strengthening, no one indicator perfectly captures its health—and certainly not one as anecdotal as described here.
|By Joseph Orovic, International Business Times, 03/20/2012|
MarketMinder's View: It appears several countries will ban their airlines from paying the EU’s carbon tax—potentially by barring them from flying into/over the EU. The EU will likely learn firsthand the lesson of “if you tax something, you get less of it.”
|By Staff, EUbusiness, 03/20/2012|
MarketMinder's View: It seems the ECB’s liquidity measures (among other European adjustments) continue to help bolster investor confidence in Europe—as evidenced by another successful Spanish bond auction.
|By Martin Hesse and Christoph Pauly, Der Spiegel, 03/20/2012|
MarketMinder's View: Though this piece lends a bit much credence to the view of derivatives as “harmful,” it also sensibly illustrates some of the unforeseen consequences of the proposed EU financial transactions tax—including the ultimate costs to consumers. For more on governments’ misunderstanding of taxes, see our 02/21/2012 cover story, “All Over the Map on Taxes.”
|By Ed Morse, The Wall Street Journal, 03/20/2012|
MarketMinder's View: Though we’d always suggest taking very long-term forecasts with a grain of salt, on balance this outlines what’s possible should the United States embrace its newfound energy revolution.
|By Bethany McLean, Reuters, 03/20/2012|
MarketMinder's View: A fascinating deconstruction of what many have wrongly claimed to be the root of 2008’s financial crisis, though we’d argue no story of 2008 is complete without a discussion of the deleterious impact of FAS 157 on banks’ balance sheets. For more, revisit our 05/16/2011 cover story, “Marking to Footnote.”
|By Joshua M. Brown, The Christian Science Monitor, 03/19/2012|
MarketMinder's View: We have a hard time squaring the theory the Fed’s super-low rates reduce expected returns for stocks and other investments with these facts: During the current bull market that began a bit over three years ago, global stocks have annualized returns of about 26%—above the historical bull market average. All the while, the fed funds target rate has been 0-0.25%. For more, see our 03/09/2012 cover story, “The Bull Turns Three.”
|By Andrew Sentance, Financial Times, 03/19/2012|
MarketMinder's View: We agree strong growth in Emerging Markets over the past decade has rapidly increased their commodities consumption and put upward pressure on prices. The article effectively states every year the global economy has grown in the past decade commodity prices have risen. And it notes a potential 2012 acceleration in global growth could pressure commodity prices further—but suggests this is bad and a call for action by central banks. That’s something of a headscratcher—economic growth is now bad?
|By Simon Johnson, Bloomberg, 03/19/2012|
MarketMinder's View: Of course, no government-ordained bank stress test is going to run the gamut of all potential risk factors—that’s impossible. But it isn’t as though the stress tests in question here relied on a totally goldilocks scenario, either. Positing the government should tell banks to constantly increase capital because there’s “uncertainty” in the economic outlook is tantamount to telling them they’ll never be able to increase dividends or buy back shares—the existence of uncertainties in an economic outlook is a certainty.
|By Carolyn T. Geer, The Wall Street Journal, 03/19/2012|
MarketMinder's View: We have a number of quibbles with this piece. First, the risk it refers to is solely and exclusively volatility—it doesn’t address other forms of risk. Second, it vastly oversimplifies how to make asset allocation decisions, focusing mostly on questionnaires and the like.
|By David Oakley, Financial Times, 03/19/2012|
MarketMinder's View: Questions have swirled surrounding Greek CDS for months. Would this insurance against default pay out given Greece’s negotiated default? If it did, would the amount be problematic for banks and insurers? If it didn’t, could CDS still be considered a valid hedge against default risk? In the end, CDS did pay out, seemingly validating their existence. And the net amount came to only €2.5 billion—much less than feared.
|By Joyce Koh, Bloomberg, 03/19/2012|
MarketMinder's View: This might not be the most impactful news for global markets or economics, but it struck us as fascinating. After all, it’s been nearly 40 years since the Khmer Rouge took power in Cambodia and dissolved markets. Seems Cambodia’s government may be seeing the gains logged by China’s gradually increasing openness and may be attempting to emulate the successes.
|By Staff, Associated Press, 03/19/2012|
MarketMinder's View: The US Treasury has closed yet another chapter of 2008’s financial panic, completing the sale of a $225 billion mortgage-backed security portfolio it acquired through Fannie Mae and Freddie Mac. And in the process, the government apparently netted a nice profit of $25 billion. For more discussion on the government winding down crisis-era programs, see our 03/16/2012 cover story, “Pulling Bank (the) TARP.”
|By Mark J. Perry, Carpe Diem, 03/19/2012|
MarketMinder's View: Here’s a handy chart of the Chicago region’s manufacturing sector, which has been at the forefront of economic growth the past few years.
|By Dan Burrows, CBS Moneywatch, 03/16/2012|
MarketMinder's View: Though pullbacks are always possible, none of the widely discussed “reasons” listed here seem likely to materially disrupt the market over time. For example, corporate earnings may be growing a bit slower, but that’s normal at this stage in an expansion. And Greece and Portugal’s issues are widely known, but eurozone leaders still appear willing to do what’s necessary to avoid a messy default. Remember, surprises typically move stock markets most.
|By Amol Sharma and Shefali Anand, The Wall Street Journal, 03/16/2012|
MarketMinder's View: A solution in search of a problem, in our view—a retroactive levy on 50 years of foreign commerce likely makes foreign companies more hesitant about doing business in the country. That means fewer tax revenues for the Indian government and much less of the foreign investment the country needs.
|By Ruth Mantell, MarketWatch, 03/16/2012|
MarketMinder's View: Consumer sentiment surveys are typically lagging (or at best coincident) indicators and overall tell little about the future direction of the economy or stocks—or even consumer spending, as this piece posits. Plus, how folks feel at the moment doesn’t always square with what they do, as we saw when retail sales regularly moved opposite sentiment last year.
|By Benjamin Reeves, International Business Times, 03/16/2012|
MarketMinder's View: We’d argue Spanish sovereign yields aren’t nearly so dependent on EFSF and ESM size. More important, in our view, is Spain’s continued progress on debt reduction and pro-growth reforms. Plus, Spain has addressed roughly 70% of its debt maturing in 2012, helping lessen the likelihood it needs external aid in the near term.
|By Staff, Der Spiegel, 03/16/2012|
MarketMinder's View: German citizens haven’t been too happy about bailing out peripheral eurozone members, and Chancellor Merkel’s popularity has taken a hit because of it. Despite the politicking within Germany, however, it’s likely the Bundestag and Bundesrat will ultimately support the EU fiscal pact.
|By Staff, Associated Press, 03/16/2012|
MarketMinder's View: On balance, this is a sensible take on the latest inflation data, which show inflation remained pretty mild despite gas-fueled fears to the contrary.
|By Staff, EUbusiness, 03/16/2012|
MarketMinder's View: Though the proposed flurry of EU free trade agreements is in the early stages, it’s certainly an encouraging development. Fewer trade barriers mean more efficiently produced goods for more competitive prices, as well as higher exports—in all participating nations! Win-win, in our view.
|By David Wessel, The Wall Street Journal, 03/15/2012|
MarketMinder's View: We agree there are risks out there—but that’s nothing new. And when some risks are going on three years old, the chance they have sufficient surprise power to truly stun markets seems fairly low. If anything, they likely provide a wall of worry for stocks to overall keep climbing.
|By James Moore, The Independent, 03/15/2012|
MarketMinder's View: Make no mistake: No regulation, no matter how long debated and thoroughly considered, can possibly legislate away every bit of risk. And the likelihood such regulations actually do more harm than good outweighs the majority of the benefits, in our view.
|By David Rosenberg, Financial Times, 03/15/2012|
MarketMinder's View: Drawing such absolute conclusions—like, “The recent market gains have been all about the more than €1 tn injected into the European financial system,” (emphasis added), among others—seems to overlook the myriad inputs into stock market performance. The reality is the stock market is the greatest of all news discounters—despite the risks that undoubtedly remain, markets are likely pricing in the global economy’s ability to move beyond them over the course of 2012.
|By Simon Johnson, The New York Times, 03/15/2012|
MarketMinder's View: This piece includes plenty of politicians’ and regulators’ sound bites, but scant evidence there was actually widespread wrongdoing on the finance industry’s part in 2008—presumably because readers should take that as fact. But more skeptical readers may be left wondering where the case populist bank-bashing is a sound foundation upon which to regulate actually is.
|By JB Silver-Greenberg, The New York Times, 03/15/2012|
MarketMinder's View: We’re skeptical the Fed’s recently completed stress tests overstated bank health—the hypothetical scenario employed was quite severe. Plus, to assume banks would pay out dividends to such an extent they’d undermine their own ability to operate is to give bank management far too little credit—they may be widely (and incorrectly, in our view) blamed for 2008’s crisis, but likely the last thing they want is to put themselves out of work.
|By Kathleen Madigan, The Wall Street Journal, 03/15/2012|
MarketMinder's View: A continuing manufacturing pick-up is seemingly spurring continued hiring—both positive signs economic growth continues apace.
|By James Wilson, Financial Times, 03/15/2012|
MarketMinder's View: Likely words of wisdom from the ECB—as has been demonstrated by US QE, too. As many have pointed out (and some fretted), the Fed’s significant liquidity injection recently hasn’t directly translated into faster economic growth or bank lending—rather, it’s taken some time to work through the system. That isn’t necessarily a bad thing, though, as it’s likely helped maintain relatively low inflation rates thus far.
|By Don Boudreaux, Café Hayek, 03/15/2012|
MarketMinder's View: A salient point from Dr. Boudreaux—motorists who purchase gas before their tank is empty in anticipation of a higher price a few days from now are doing precisely the thing they bemoan is affecting prices: They’re speculating.
|By Emese Bartha, The Wall Street Journal, 03/15/2012|
MarketMinder's View: Closely watched bond auctions in Spain and France went off relatively well, seemingly indicating ECB liquidity measures (among other European adjustments) continue overall bolstering investor confidence.
|By Simon Avery, The Globe and Mail, 03/15/2012|
MarketMinder's View: As illustrated here, rare earth minerals’ “rarity” comes primarily from China’s comparative advantage in mining them—not so much from their physical rarity. As prices rise, others will (and apparently are already) find it profitable to mine themselves, ultimately helping rein in prices some.
|By Michael T. Snyder, Seeking Alpha, 03/14/2012|
MarketMinder's View: We see little to no evidence other peripheral European nations are clamoring for debt haircuts of their own. Quite the opposite, in fact—Spain, Ireland and Italy appear dedicated to austerity and pro-growth reforms. And their yields have fallen in recent months, suggesting investors see sovereign debt as a bit less risky, contrary to what this suggests.
|By Martin Crutsinger, MSN Money, 03/14/2012|
MarketMinder's View: We quibble with the notion that the US “trade deficit acts as a drag on growth.” Yes, it detracts from GDP, but that doesn’t mean the US economy isn’t growing. Despite December’s slight drop, exports grew over 2011. Imports just grew higher, which tells us domestic demand is robust. Robust demand typically doesn’t hamper growth.
|By Kaitlyn Kiernan, The Wall Street Journal, 03/14/2012|
MarketMinder's View: We’ve no issue with how this piece is written—rather, the misperception is the sheer existence of the titular product, which allows investors to bet on the volatility of, well, volatility. Among our many questions: Short-term volatility is inherently unpredictable, so how, exactly, does one formulate a VIX-squared investing strategy?
|By Peter Orszag, Bloomberg, 03/14/2012|
MarketMinder's View: Though we’re all for boosting productivity, we have a rather different take on the merits of a feckless legislature: In our view, a Congress that passes more legislation increases the likelihood of new laws bearing unintended consequences. A gridlocked Congress that passes fewer or watered-down measures typically introduces less legislative risk.
|By John Maxfield, The Motley Fool, 03/14/2012|
MarketMinder's View: This concise look at ratings agencies’ recent follies has an important takeaway: “In short, you don’t want to depend on ratings agencies for your understanding of the health or quality of an investment. They’re the last to know.”
|By Lam Vo, NPR, 03/14/2012|
MarketMinder's View: These pictures say a thousand words: The US still exports a ton, and we provide a broad spectrum of goods and services to the rest of the world. And it’s no coincidence our top-two trading partners are free trade agreement co-signees. Think how much bigger the export pie would be with even more FTAs!
|By Staff, Reuters, 03/14/2012|
MarketMinder's View: After months of brinksmanship, eurozone finance ministers finally signed off on Greece’s second bailout and its first disbursement, which should ensure Greece meets its upcoming obligations. It’s an encouraging step, though we likely haven’t seen the last of bailout-related politicking.
|By Annabel Hepworth and Lisa Macnamara, The Australian, 03/14/2012|
MarketMinder's View: And we largely agree—simplifying the Aussie corporate tax code across the board would likely foster competition and growth far more than the proposed measure, which would offset a one percentage point cut to the corporate rate with a windfall tax on miners.
|By Staff, EUbusiness, 03/14/2012|
MarketMinder's View: With this longstanding trade barrier torn down, Europeans get more meat and North Americans get more chocolate, cheese and mustard—once again, freeing trade means more exports and greater choice for all involved.
|By Joseph Stiglitz, Financial Times, 03/13/2012|
MarketMinder's View: We find much to disagree with here—particularly the suggestion the US can’t be expected to grow at “above-average” rates. But also that the government needs to “do something” to spur further economic growth. The fact unemployment improvement’s lagging is hardly surprising—in fact, it’s a quite normal pattern seen historically. That this time turns out terribly different and requires vast demand-side support seems highly unlikely to us. For more, see our 03/12/2012 cover story, “Evidence of Employment.”
|By Charles Calomiris, The Wall Street Journal, 03/13/2012|
MarketMinder's View: This seems largely predicated on myriad assumptions about what could happen from here—but the Fed still has numerous options available should inflation indeed tick up. Taking preemptive action seems unnecessary, in our view, and more likely to do some harm than good.
|By Christopher Matthews, Time, 03/13/2012|
MarketMinder's View: We’re puzzled by the suggestion we’ve had a “GDP-less” recovery. Maybe growth hasn’t been as robust as folks would like, but growth is growth—and much data seemingly point to an economy gaining steam, not stalling.
|By Staff, Compliance Week, 03/13/2012|
MarketMinder's View: Though we’d overall prefer a complete rollback of some of the discussed legislation (Sarbanes-Oxley, for one), this seems an incremental step in the right direction. As we’ve detailed before, Sarbanes-Oxley and Dodd-Frank likely have more onerous unintended consequences than they have benefits.
|By John Tamny, Real Clear Markets, 03/13/2012|
MarketMinder's View: While we’d quibble with aspects of this, it’s a highly sensible look overall at the economics underlying trade deficits and the fallacy of their negative effects. For more, see our 09/09/2011 cover story, “Trade Deficit Trifles.”
|By Carsten Volkery, Der Spiegel, 03/13/2012|
MarketMinder's View: So, if European countries are resistant to implementing a financial transactions tax because they fear “they will become less competitive on the international playing field,” why all the debate in the first place? For more, revisit our 11/17/2011 cover story, “Taxation and Competitiveness 101.”
|By Staff, The Telegraph, 03/13/2012|
MarketMinder's View: In our view, what matters most here is that total trade rose in the UK. Though the UK and Europe as a whole likely face a bumpy economic road this year, various data points seemingly indicate all is not doom and gloom across the pond.
|By Donald J. Boudreaux and Walter E. Williams, The Wall Street Journal, 03/13/2012|
MarketMinder's View: No matter how well-intentioned, price caps just don’t often accomplish their goal, which is commonly to help those at the income spectrum’s lower end—here’s a look at the economics behind why that is. For more, see our 02/03/2012 column, “Want Cheaper Rent? End Rent Control.”
|By Staff, Associated Press, 03/13/2012|
MarketMinder's View: Retailers are building up inventories again ahead of expectations for a continued strong economy.
|By Lucia Mutikani, Reuters, 03/13/2012|
MarketMinder's View: Despite widespread fears rising gas prices would derail consumers (and hence, the economy as a whole), retail sales, even after stripping out volatile autos and gasoline figures, continued rising in February—demonstrating more resilience than the economy’s typically credited with.
|By Peter Schiff, The Street, 03/12/2012|
MarketMinder's View: January’s report, which showed a $52.6 billion trade deficit, also showed rising imports and exports. That means US demand for foreign goods grew, as did global demand for US-made goods. Neither of those facts implies our recovery is “threatened.” Simply, the trade deficit is not a reliable indicator of economic cycles—and isn’t a great way to view trade, either. For more, see our 09/15/2011 column on The Street, “Trade Gap Irrelevant for US Economic Growth.”
|By Tom Orlik, The Wall Street Journal, 03/12/2012|
MarketMinder's View: First, we’d not take China’s growth target—which was recently lowered to 7.5% at face value. (See our article on The Street, “Don’t Be Fooled By China’s Growth Forecast,” for more on that.) But second, the economic calculus here is odd—should China’s growth rate slow, there’s little to no assurance this would benefit anyone. The global economy simply isn’t zero sum; it expands—and China has aided in growing the global pie for quite some time now. That’s to the benefit of nearly everyone involved.
|By Zvi Boddie and Racelle Taqqu, The Wall Street Journal, 03/12/2012|
MarketMinder's View: Yes, bear markets happen—and they’re painful when they do, at least in the short term. Yet even including that, long-term equity returns are roughly 10% per year, annualized. Fact is, risk isn’t all about volatility—it’s more about losing the purchasing power of the money you invest. There is no magic, risk-free solution—and that includes the strategies discussed here. The reality is many investors do need equity-like growth to meet their objectives, and there’s no cute way to manufacture those returns without risk
|By Robert Samuelson, Washington Post, 03/12/2012|
MarketMinder's View: Invoking a comparison between Japan’s lost decade and the US’s current reality is beyond a stretch. Japanese GDP is lower than it was in 1995. The US is at an all-time high now. Moreover, the drivers of Japan’s lost decade are far more complicated and nuanced than is laid out here. Simply, that US politicians seem to have a hard time getting along isn’t at all likely to flatten the economy’s trajectory.
|By Tommy Stubbington, Dow Jones Newswires, 03/12/2012|
MarketMinder's View: Interbank lending markets have shown significant improvement since the ECB’s actions in December, mitigating a potential risk to Europe’s banking system. In our view, the liquidity brought by the ECB seems largely appropriate policy—and seems to have aided credit markets significantly since implementation.
|By Staff, BBC, 03/12/2012|
MarketMinder's View: Nearly a year to the day after Japan was hit by a massive earthquake and tsunami, data showed the economy continues to recover.
|By Staff, Associated Press, 03/12/2012|
MarketMinder's View: Greece got enough voluntary support from private-sector bondholders to complete its bond swap—essentially, an orderly default. Eurozone finance ministers meet today to finalize terms of the second bailout arrangement (which the swap was a precondition for). While the deal doesn’t seem likely to fix all Greece’s woes—it doesn’t necessarily enhance Greek economic competitiveness—it would seem to reduce uncertainties in Europe a good deal.
|By Mark J. Perry, Carpe Diem, 03/12/2012|
MarketMinder's View: One more private-sector data series showing the labor market appears to be improving. For more, see today’s cover story, “Evidence of Employment.”
|By Ian Talley and Jeffrey Sparshott, The Wall Street Journal, 03/09/2012|
MarketMinder's View: We think US trade data tell a different story: Exports rose, showing increased global demand for American goods. But imports rose even faster, hitting a record high, confirming robust domestic demand. Both are solid news for the US economy, which gives us a hard time squaring the facts with the negative bent presented here.
|By Dave Carpenter, Associated Press, 03/09/2012|
MarketMinder's View: It’s encouraging to see folks feeling more optimistic, but we don’t quite follow the logic here. It suggests that because stocks rebounded sharply from last year’s correction, consumers will feel richer and thus spend more. But is there any evidence this has happened in the past? Does the wealth effect have predictive power, or does it merely reflect what’s already happened?
|By Philip Aldrick, The Telegraph, 03/09/2012|
MarketMinder's View: A one-month contraction in industrial production doesn’t necessarily tip Britain into recession—services comprise about two-thirds of the UK’s economy, and that sector continued growing in January and February.
|By Simit Patel, Seeking Alpha, 03/09/2012|
MarketMinder's View: We have many quibbles with this piece, but the biggest is the conclusion. The dollar’s status as the world’s reserve currency isn’t all that’s preventing hyperinflation. Nor does the US need to negotiate a debt cancellation agreement—interest costs are very manageable relative to GDP, and we likely continue servicing our debt just fine. Plus, demand for US Treasurys doesn’t persist because the dollar’s the world’s reserve currency, but because of the unmatched depth and liquidity of our capital markets.
|By Spencer Jakab, The Wall Street Journal, 03/09/2012|
MarketMinder's View: We’ve no quibble with the notion government employee statistics may be a bit wonky, but the skepticism here seems overwrought. Private-sector employment reports, too, have been broadly positive, and, on balance, all recent data suggest employment is steadily improving in sympathy with the economic expansion—as it usually does.
|By Staff, Der Spiegel, 03/09/2012|
MarketMinder's View: Greece secured 85.8% voluntary participation in the private-sector debt swap, more than many expected. While it’s still uncertain whether the collective action clause and credit default swap payouts will be triggered, Greece apparently has restructured enough of its debt to finalize its pending €130 billion bailout package, which should buy it time to continue working through its fiscal issues. For more, see our 03/06/2012 cover story, “The Great Greek Swap Meet.”
|By Diane Brady, BloombergBusinessweek, 03/09/2012|
MarketMinder's View: On balance, this is an even-handed, sensible take on the follies of protectionism. As ever, we believe free trade does incalculably more for employment and overall growth than tariffs and import restrictions could ever pretend.
|By Fisher Investments Editorial Staff, The Street, 03/09/2012|
MarketMinder's View: Our latest for The Street.
|By Vikas Bajaj, The New York Times, 03/09/2012|
MarketMinder's View: A sensible move, in our view. Cutting reserve requirements gives banks more lending flexibility, which should help them more efficiently allocate capital throughout the Indian economy.
|By Margit Feher, The Wall Street Journal, 03/09/2012|
MarketMinder's View: German imports rose, too—a key counterpoint for those fearing a weak eurozone’s impact on the global economy. Germany is the eurozone’s most globally impactful economy, and despite weakness in the periphery, German trade data suggest core Europe still has ample demand for foreign goods.
|By Ambrose Evans-Pritchard, The Telegraph, 03/08/2012|
MarketMinder's View: The potential troubles discussed here are well-known and have been hashed and rehashed by markets for going on three years, in most cases—significantly diminishing their ability to surprise markets much. In our view, more likely is a market which finally moves past old headlines and continues the now three-year old bull market this year.
|By Kemal Derviş, Project Syndicate, 03/08/2012|
MarketMinder's View: If you take the premise at face value—that income inequality is increasing and poses significant problems globally (though we’d largely disagree)—this still ignores a critical point: Even wealthy folks must do something with the money they’re saving. We doubt many of them are putting it under the mattress—which means they’re depositing it somewhere (in brokerage, bank or other accounts), where it’s being invested elsewhere in one form or another. Meaning it’s trickling through the economy, creating wealth for others to capture. To see it as this piece does is to assume “wealth” is some fixed pie—but history shows that’s simply not the case.
|By Peter Morici, The Street, 03/08/2012|
MarketMinder's View: We’re confused how the trade deficit’s to be blamed for too-weak demand, in turn leading to too-weak growth. After all, though American dollars may flow abroad to purchase cheap, Chinese (or someone else’s) imports, that’s good for Americans (cheaper goods!), and those dollars must be invested somewhere. In lots of cases (including China’s), most are invested in US Treasurys—helping maintain record-low US interest rates (also ultimately good for US consumers). What’s more, it’s not as though all money spent on imported goods—from China or elsewhere—leaves America. So that the trade deficit is really doing much harm is an overly short-sighted view, to us.
|By David R. Baker, San Francisco Chronicle, 03/08/2012|
MarketMinder's View: Forgive us if we doubt politicians’ infallible and expert ability to determine the cause of recently increasing oil and gas prices. In our view, it’s far more likely quite normal market forces are at work—and they may just signal to producers an opportunity to increase supply, which would in turn ultimately bring prices down.
|By Matthew Dalton, The Wall Street Journal, 03/08/2012|
MarketMinder's View: In an interesting development, private businesses have won a legal battle regarding government-mandated downsizing of banks in the EU. It remains unclear whether this has any meaningful ramifications on bank operations moving forward, but it’s certainly worth being aware of.
|By Glenda Korporaal, The Australian, 03/08/2012|
MarketMinder's View: This is an important developing storyline in free trade’s continuing progress. As we’ve said before, the freer global trade is, the more all participants can benefit. For more see, our 10/17/2011 cover story, “Racing Towards Zero.”
|By David Crowe, The Australian, 03/08/2012|
MarketMinder's View: As we’ve said before, the trouble isn’t the motivation—alternative energy pursuits are undoubtedly important, and innovation is nearly always a force for societal good. The trouble is government subsidization of an industry thus far economically uncompetitive—“The British study warns of the rising cost to consumers of wind power subsidies on the grounds that governments could achieve the same environmental benefits by other means at much lower cost.” For more, see our recent contribution to Real Clear Markets, “Angry Birds: Fun Game or Innocent Wind Power Victims?”
|By Alex Dumortier, The Motley Fool, 03/08/2012|
MarketMinder's View: A brief, informative look at some of the likely troubles and questions surrounding the institution of a gold standard.
|By Takashi Nakamichi and Kelly Olsen, The Wall Street Journal, 03/08/2012|
MarketMinder's View: Actually, it was significantly smaller than expected, pointing to a couple interesting things: First, as we’ve said before, any number calculated by a government will undoubtedly exhibit some wonkiness—and Japan’s Q4 GDP requiring such a significant revision speaks to that. Second, it seems Japan continues to recover fairly nicely from the earthquake and tsunami just under one year ago.
|By Gabi Thesing, Bloomberg, 03/08/2012|
MarketMinder's View: There seemingly remain areas of strength in the eurozone economy—including Germany, which has recently (and expectedly) had some up and down numbers, but once again saw a strong increase in industrial output.
|By Bruce Yandle, US News, 03/07/2012|
MarketMinder's View: Looking only at the inflation rate and unemployment rate to gauge the economy is missing a lot of the overall economic picture, in our view—particularly since unemployment is a late-lagging indicator. The reality is the economic picture just isn’t as simple as an assessment of two data points.
|By Sarah Mishkin and HelenThomas, Financial Times, 03/07/2012|
MarketMinder's View: History’s rife with examples of the enormous economic and societal benefits of open, free markets. Limiting foreign participation is likely to hurt more than help, no matter how noble the stated aim.
|By Jim Armitage, The Independent, 03/07/2012|
MarketMinder's View: If the goal is encouraging banks to lend to small and medium businesses, we’re not convinced this will do the trick (or that banks will be clamoring to participate)—particularly since banks will pay a fee to the UK Treasury for a guarantee that only protects them if the bank fails, but leaves them on the hook if the business they lend to fails.
|By Staff, Reuters, 03/07/2012|
MarketMinder's View: We’d quibble with the notion protectionism is a viable means of creating a more level playing field for American producers. As history has shown over and over again, such regulations tend to hurt more than help. For more, see our 12/22/2011 cover story, “The Grinch Who Stole Free Trade.”
|By Maria Petrakis and Fabio Benedetti-Valentini, Bloomberg, 03/07/2012|
MarketMinder's View: As we’ve written, Greece’s government faces a bit of a challenge in getting private-sector creditors to volunteer for its bond swap. But as time has gone on, more seem to see the value in signing on. For more details on Greece’s debt exchange, see our 03/06/2012 cover story, “The Great Greek Swap Meet.”
|By Staff, The Wall Street Journal, 03/07/2012|
MarketMinder's View: It’s hard not to find some humor in Spain’s PM announcing higher deficit targets than allowed in the EU’s new fiscal pact a day after signing it. Nevertheless, an interesting look at the difficulties Spain faces, and a wise recommendation for helping fix their fiscal woes: “There’s no better way of improving the overall budgetary picture than by growing the overall economy. For that, Spain needs lower tax rates, less regulation and more incentives to invest—whatever the mandarins in Brussels, Berlin or Paris might say.”
|By Jon Hilsenrath, The Wall Street Journal, 03/07/2012|
MarketMinder's View: In our view, more Fed action seems entirely unnecessary at this point. But the interesting aspect here is the discussion and comparison of various approaches the Fed’s employed in the recent past with “sterilized” QE—the current idea the Fed’s considering.
|By Staff, Reuters, 03/07/2012|
MarketMinder's View: Private businesses’ ramping up hiring speaks to their expectations economic growth likely continues.
|By Alex Chambers and Steve Slater, Reuters, 03/06/2012|
MarketMinder's View: Ever since Greece’s debt crisis began, all involved parties have regularly played up the situation’s urgency—and potential consequences—to incite action. To us, the IIF’s leaked note seems like another example of that. But we’ve seen ample evidence Greece’s private creditors, like EU officials, realize it’s in everyone’s best interests to prevent the disorderly default explained in this scenario.
|By Keith Bradsher, The New York Times, 03/06/2012|
MarketMinder's View: As we’ve pointed out, ahead of leadership transition years (like 2012), Chinese officials historically have allowed the economy to slow so they can reaccelerate during the transition year without risking runaway inflation. And focusing so heavily on its announcement their growth target will be 7.5% seems a bit overwrought—historically, that target has acted more as a floor for actual growth than a ceiling. For more, see our 02/29/2012 cover story, “A Look at China’s Political Process.”
|By Stephen S. Roach, Financial Times, 03/06/2012|
MarketMinder's View: We rather doubt China’s command economy should be a blueprint for the capitalist economies of the west (and their central banks). Nor is it even comparable due to China’s pegged currency and tight capital controls. In our view, the West’s free-market approach is far more sound and sustainable over time.
|By Gary Burtless, Real Clear Markets, 03/06/2012|
MarketMinder's View: We quibble with the notion private enterprise needs subsidies to promote employment growth. The historical success of such measures is tenuous at best. Besides, economic growth ultimately begets jobs—thus, a less heavy government hand, rather than subsidies, likely fosters employment gains over time.
|By Margo D. Beller, CNBC, 03/06/2012|
MarketMinder's View: On balance, this is a sensible piece detailing stocks’ reflection of future economic conditions. And right now, stocks’ strength seemingly reflects the US’s underappreciated economic strength. For more, see our 03/01/2012 article on TheStreet, “Despite Mood, Economy Is Waking Up.”
|By Fisher Investments Editorial Staff, Real Clear Markets, 03/06/2012|
MarketMinder's View: Our latest for Real Clear Markets.
|By Gideon Rachman, Financial Times, 03/06/2012|
MarketMinder's View: “No matter how debt-ridden and dysfunctional they look, the world’s democracies are still winning the global beauty contest.” And even more important, for investors is what helps them win said beauty contests—private property rights, more efficient allocation of resources and capital and economies that foster innovation.
|By Roger Cohen, The New York Times, 03/06/2012|
MarketMinder's View: In a globalized world—particularly one where folks can easily move between nations (like in Europe)—slapping a huge tax increase on wealthy citizens increases the likelihood they “vote with their feet” and leave. As we’ve pointed out before, when you tax something, you typically get less of it.
|By Adam Davidson, The New York Times, 03/06/2012|
MarketMinder's View: Aside from some minor qualms (mostly pertaining to its long-term forecasts), this is an interesting look at how regulation affects the competition between two major global financial hubs.
|By Kirk Spano, MarketWatch, 03/05/2012|
MarketMinder's View: Always remember: Correlation doesn’t mean causation. That oil prices rose to cyclical highs around the top of the indicated expansions doesn’t mean those high prices caused all the recessions. It seems more likely to imply economically sensitive oil prices rose to highs as the economy expanded to then-highs—and fell when recession began. Also, consider the opposite of demand-side focus on oil prices: High oil prices incentivize exploration and production—which could buoy economic growth. The economy is just far more complicated than simple high-oil-prices-mean-disaster theories imply.
|By ES Browning, The Wall Street Journal, 03/05/2012|
The Dow is a flawed index, as we’ve discussed many times. But beyond that, this article presumes heated rhetoric during an election year will create uncertainties. However, uncertainties surrounding political debate are a near constant—like the last two years. And in the past, election years have historically been quite good for stocks. Why? Legislative uncertainty matters far more than rhetorical uncertainty. And while politicians are stumping for votes, they’re unlikely to pass major, sweeping laws. For more, see our election year infographic here.
|By Robert Reich, The Christian Science Monitor, 03/05/2012|
MarketMinder's View: Considering the slew of economic data sitting at all-time highs—including (but not limited to) real GDP, consumer spending and exports—evidence there’s insufficient demand to support US economic growth seems a bit hard to come by.
|By Staff, Reuters, 03/05/2012|
MarketMinder's View: We’re quite skeptical of Chinese growth “targets.” After all, China’s growth target has been 8% for the past five years, which they’ve handily beaten time and again. Therefore, it seems recent growth targets are more about under-promising and over-delivering than they are an actual economic forecast. Politicking, perhaps? For more, see our 02/29/2012 cover story, “A Look at China’s Political Process.”
|By Gail MarksJarvis, Chicago Tribune, 03/05/2012|
We’d quibble with nearly all of this, except the fact a pullback is possible (which is always true). The article essentially implies stocks have come “too far, too fast” by noting some recent round numbers a couple indexes reached and the market’s long-term average return (about 10% per year historically). But those arbitrary “milestones” mean little to stocks’ future direction, and actual annual returns are rarely average. Consider: During bull markets, stocks’ average annual return is more than double that 10% figure. For more, see our 02/02/2012 cover story, “After the Pause.”
|By Liz Alderman, The New York Times, 03/05/2012|
MarketMinder's View: Here’s an interesting look at large global companies seeking to take advantage of Europe’s weakness and expand while costs are in their favor.
|By Eamon Quinn, The Wall Street Journal, 03/05/2012|
MarketMinder's View: Many Irish voters remain undecided ahead of the planned referendum, but among those who’ve made up their mind, it seems the EU’s fiscal treaty is in the lead. For more, see our 03/01/2012 column, “Éirinn go Brách!”
|By Staff, BBC News, 03/05/2012|
MarketMinder's View: Eurozone data continue to be mixed—in this case, retail sales unexpectedly rose +0.3% in January. Meanwhile, composite PMI showed slight contraction in February after logging growth the prior month.
|By Bob Willis, Bloomberg, 03/05/2012|
MarketMinder's View: “The Institute for Supply Management’s index of non-manufacturing industries, which account for almost 90 percent of the US economy, rose to 57.3 in February from 56.8 a month earlier.” More data indicating continued US economic growth.
|By Joe Light, The Wall Street Journal, 03/02/2012|
MarketMinder's View: Selling stocks just because the markets are up is a poor strategy—especially when the urge to sell is based on a fear of heights, not a forward-looking assessment of fundamentals.
|By Brian Bremner, Bloomberg Businessweek, 03/02/2012|
MarketMinder's View: First, investor pessimism doesn’t tell much of anything about future stock market movement. In fact, investor sentiment is a notoriously lagging indicator—leading most investors to buy high and sell low. Just the kind of wall of worry markets love to climb.
|By Constantine von Hoffman, CBS News, 03/02/2012|
MarketMinder's View: Actually, increasing inventories can point to businesses’ anticipating high future demand (especially when revenues have grown as they have recently)—which would imply likely growth ahead. Plus, growth is growth, be it faster or slower—so quibbling over why the economy grew seems to miss the forest for the trees some. For more, see our 01/30/2012 cover story, “The Grass Is Greener Than Many Think.”
|By Jon Danielsson, VoxEU, 03/02/2012|
MarketMinder's View: While it’s true European leaders may not have fully grasped all implications of fiscal union at the time they entered it, it seems they mostly have a decent handle on it now and are taking a slow and steady approach to addressing those issues—which we think is better than making hasty decisions. For more, see our 02/14/2012 cover story, “Running the Greek Marathon.”
|By Gabriele Steinhauser, The Associated Press, 03/02/2012|
MarketMinder's View: Though the new treaty still faces ratification in the individual countries (no small task) and was not signed by the UK or the Czech Republic, that European leaders continue discussing steps to ensure current issues are mitigated moving forward speaks to the level of support for keeping the union intact.
|By Staff, EUbusiness, 03/02/2012|
MarketMinder's View: Hungary’s deficit fell only because it nationalized billions in private pension assets. And while PM Orban is (and has been) a tad prickly about his country’s budget, in our view, it’s likely he’ll make concessions if necessary. For more, see our 01/11/2012 column, “Hungary’s Crossroads.”
|By Shan Li, Los Angeles Times, 03/02/2012|
MarketMinder's View: While such data fluctuate month to month, that retail sales are up is yet another sign the US economy remains quite healthy.
|By Ambrose Evans-Pritchard, The Telegraph, 03/01/2012|
MarketMinder's View: The possibility does exist European leaders make monetary policy mistakes down the road which make things worse. But in our view, the ECB’s moves to ensure adequate liquidity in the European banking system have been largely appropriate and needn’t spell disaster moving forward. For more, see today’s cover story, “Leaping to Conclusions.”
|By David Böcking, Maria Marquart and Stefan Kaiser, Der Spiegel, 03/01/2012|
MarketMinder's View: We’d agree capital flight from struggling peripheral nations isn’t great—but that’s precisely the point of the various liquidity measures the ECB’s implemented like the LTRO and TARGET2, both of which are aimed at supporting banks at precisely a time like this.
|By Matthew Philips, Bloomberg Businessweek, 03/01/2012|
MarketMinder's View: Adding an additional layer of bureaucratic oversight seems fraught with unintended consequences to us. Not to mention it seemingly aims at the wrong target—in our view, much of the trouble in 2008 arose from ill-advised regulation (FAS 157) in the first place. Maybe we should regulate legislation and regulation like drugs?
|By Staff, Reuters , 03/01/2012|
MarketMinder's View: Rarely does any piece of economic data grow in a straight trajectory, up or down. So it’s not too surprising manufacturing grew at a slightly slower pace last month—and it needn’t tell you anything more foreboding than economic growth fluctuates constantly.
|By Caroline Baum, Bloomberg, 03/01/2012|
MarketMinder's View: A lighthearted look at the politicized nature of most discussions of oil prices—regardless of which party happens to be in power at the time.
|By Charles Forelle, The Wall Street Journal, 03/01/2012|
MarketMinder's View: Though yesterday’s LTRO results will continue playing out for awhile, initial signs indicate the program may be working mostly as intended, as evidenced by strong Spanish bond results Thursday.
|By Peter Eavis, The New York Times, 03/01/2012|
MarketMinder's View: This isn’t yet the final word—the ruling still could change as it pertains mostly to the subordination of private bondholders to the ECB. Questions still linger regarding the addition and potential use of collective-action clauses and whether they will trigger credit default swaps. But one piece is seemingly done.
|By Donald Jay Korn, Financial Planning, 03/01/2012|
MarketMinder's View: From a tax perspective, there are many quirks to investing in gold that those considering such a move should weigh—here’s a rather detailed look at some.
|By Staff, EU Business, 03/01/2012|
MarketMinder's View: In what largely seems the logical next step as immediate debt concerns are increasingly alleviated, European leaders are beginning what will no doubt be long, difficult and contentious discussions of how best to set the stage for European growth moving forward.
|By Tim Worstall, Forbes, 03/01/2012|
MarketMinder's View: “These last 30 years of the neoliberal globalization thing have seen the largest reduction in human poverty ever. More people have moved from the destitution that was man’s lasting lot to a better life of three squares a day and a roof over their heads than in any other time period in our species’ history.”
|By MarketMinder Editorial Staff, The Street, 03/01/2012|
MarketMinder's View: Our latest contribution to The Street.