|By Matthew Lynn, MarketWatch, 03/28/2013|
MarketMinder's View: While we agree many aspects of the Cypriot bailout are far from good plans—like decimating the island nation’s principal industry and forcing depositors to take a haircut—we’d caution against the presumption this is somehow a game changer. Cyprus is less than 1% of eurozone output, secured depositors were protected in the end and, while European economic conditions aren’t great, it’s important to note that Germany isn’t Greece, which isn’t Spain (etc.).
|By Staff, CNN Money, 03/28/2013|
MarketMinder's View: A big deal for trivia lovers and S&P 500 historians, but for everyone else? A non-event. For more, see our column from 03/18/2013, “About That Magic Number.”
|By Jeffrey D. Sachs, Project Syndicate, 03/28/2013|
MarketMinder's View: We would prefer to see markets decide which energy sources merit further research and development, rather than governments—this is the tried-and-true way of ensuring they’re actually “sustainable.”
|By M.J. Perry, Carpe Diem, 03/28/2013|
MarketMinder's View: With natural gas production at record levels, oil output at its highest in almost two decades and America’s energy self-sufficiency in 2012 higher than any year since 1991, the recent story of energy in the United States is one of innovation and success.
|By Tom Stoukas, Maria Petrakis and Marcus Bensasson, Bloomberg, 03/28/2013|
MarketMinder's View: A credit to the Cypriot people, who unfortunately had to pay for the mistakes of their banks. It will be painful in the near-future, as capital controls and other concessions go into effect, but for now, bank runs have not materialized.
|By Sarah Portlock and Eric Morath, The Wall Street Journal, 03/28/2013|
MarketMinder's View: GDP has its limitations (backward-looking and not indicative of future numbers), but it does reinforce the solid fundamentals we’ve seen for the past couple of years. The private sector continues carrying the US economy to new heights—illustrated well in this report by strongly growing business fixed investment.
|By Sarah Portlock and Eric Morath, The Wall Street Journal, 03/28/2013|
MarketMinder's View: GDP has its limitations (backward-looking and not indicative of future numbers), but it does reinforce the solid fundamentals we’ve seen for the past couple of years. The private sector continues carrying the US economy to new heights—illustrated well in this report by strongly growing business fixed investment.
|By Margot Patrick, Max Colchester and Jason Douglas, The Wall Street Journal, 03/27/2013|
MarketMinder's View: Increasing liquidity requirements (like too much quantitative easing) likely further discourages bank lending overall and does little to reduce systemic risks. The UK’s economic stagnation seemingly stems mostly from a banking system that’s reluctant to lend—so we don’t see how increasing regulatory pressure on banks will help.
|By Steven Russolillo, The Wall Street Journal, 03/27/2013|
MarketMinder's View: We’d warn against seasonal aphorisms like this. The calendar simply has no bearing on market outcomes.
|By Staff, The Wall Street Journal, 03/27/2013|
MarketMinder's View: Yes, investing comes with risk, but it also should come with commensurate reward potential. So calling bank depositors “investors,” and therefore deserving of considerable risk because their accounts may meet a certain threshold, seems a stretch to us.
|By James Fontanella-Khan, Kester Eddy and Richard Milne, Financial Times, 03/27/2013|
MarketMinder's View: “Cyprus isn’t Ireland isn’t Italy” isn’t Malta isn’t Luxembourg. Cyprus’s “bail in” is a unique situation that shouldn’t be extrapolated onto other small countries with large banking sectors. Banking sector size versus GDP doesn’t dictate economic health or hurt. Rather, banking diversification and management have a much greater effect—both of which Cyprus handled poorly.
|By Staff, BBC News, 03/27/2013|
MarketMinder's View: Well, how much this may safe guard against future financial crises remains to be seen—but by and large a currency swap between Brazil and China likely encourages more global free trade and more open economic borders (at least for China).
|By Donald J. Boudreaux, Pittsburgh Tribune Review, 03/27/2013|
MarketMinder's View: Though smart individuals’ inventions are impressive, global market forces that allow such innovations to develop are immeasurably “smarter” and more worth celebrating.
|By James Mackenzie, Reuters, 03/27/2013|
MarketMinder's View: The main takeaway here is anti-establishment Beppe Grillo’s refusal to create a coalition government with both of his rivals. Ultimately, this likely means another round of Italian elections will be needed.
|By Youkyung Lee, Associated Press, 03/26/2013|
MarketMinder's View: Talks kicked off despite these nations’ various territorial disputes—more evidence economic good sense can overcome geopolitical spats. For more, revisit our 2012 cover stories on the disputes, “Disputed Territory” and “Japan and China’s Island Tug-of-War.”
|By Jeremy Warner, The Telegraph, 03/26/2013|
MarketMinder's View: Occasional hyperbole aside, this is a well-reasoned indictment of the problems with Cyprus’s bailout package. Among them: “Lawyers who have had sight of the draft capital controls describe them as ‘draconian,’” potentially contravening Cyprus’s “some 20 ‘bilateral investment treaties,’ which guarantee rights of deposit withdrawal, including with Russia.”
|By John W. Schoen, NBC News, 03/26/2013|
MarketMinder's View: With further discoveries and innovations in the field, the energy market has a great deal of room to run, meaning many stand to benefit from its growth. For more, see our 3/5/2013 cover story, “Energy in the Spotlight.”
|By Ilya Shapiro, Cato at Liberty, 03/26/2013|
MarketMinder's View: Courts ruled Louisiana could not impose barriers on the St. Joseph Abbey monks for making and selling caskets, stating it was unconstitutional for governments to establish laws detrimental to competition. This isn’t just a victory for the monks— it’s a victory for lovers of economic liberty everywhere.
|By Mike Cohen and Illya Arkhipov, Bloomberg, 03/26/2013|
MarketMinder's View: The BRICS’ desire to help the developing world grow is noble, but we don’t quite see how their new development bank will be any more efficient than the World Bank or IMF. Whenever competing political interests come together, bureaucracy tends to emerge—that’s likely especially true among these five divergent nations. Plus, history overwhelmingly shows free markets and capitalism much more efficiently bring societal benefits than supranational organizations whose work often brings unintended consequences.
|By Ira Stoll, Reason, 03/26/2013|
MarketMinder's View: We don’t disagree tax increases sap production and, in their very best light, are necessary evils. However, comparing them to the outright asset seizures Cyprus did with large depositors seems to be a bit of a stretch. For more, see today’s cover story, “SIGHprus.”
|By Brad Plumer, The Washington Post, 03/26/2013|
MarketMinder's View: Or, maybe it’s because a strengthening economy, rather than the tax holiday, drove spending gains in 2011 and 2012—spending was growing before the small temporary cut took effect, and it didn’t speed up much during the holiday. Incremental temporary tax changes tend not to have much of an effect. For more, see our 02/11/2013 cover story, “Inside the Payroll Tax Hike.”
|By Staff, RTT News , 03/26/2013|
MarketMinder's View: Consumer confidence is a volatile measurement reflecting how people feel rather than the economic reality. And a historical review of various consumer sentiment indexes shows they tend to follow market and economic conditions, not lead them. For a detailed look, see our 10/31/2011 commentary from The Street.
|By Robert Samuelson, The Washington Post, 03/25/2013|
MarketMinder's View: The last four years may not “feel” like a recovery, but that doesn’t mean the economy’s still “stuck in recessionary territory.” Evidence overwhelmingly shows the economy is well into expansion: GDP’s at all-time highs and growing, the robust private sector has added jobs, businesses have strong corporate balance sheets and the housing market’s improving, to name a few examples.
|By Paul Krugman, The New York Times, 03/25/2013|
MarketMinder's View: We hardly agree that unrestricted capital movement is a failed experiment. To the contrary, we’d argue this (and other aspects of a free market) can and does foster growth throughout the global economy. In our view, reverting back to the “bad old days when it wasn’t that easy to move lots of money across borders” would only hinder continued economic development—fostering less than efficient uses of capital.
|By Tennille Tracy, The Wall Street Journal, 03/25/2013|
MarketMinder's View: The idea of passing a law to restrict liquefied natural gas exports is, in our view, misguided. If natural gas prices remain low (the goal), then producers will likely begin to curtail output over time, reducing supply—potentially increasing prices regardless of how much gas is shipped abroad.
|By Eleanor Bloxham, CNN Money, 03/25/2013|
MarketMinder's View: First, from an economic or market point of view, there’s nothing inherently bad nor good about speculation—so the idea of using tax policy to discourage it seems motivated by biases more than anything. But more importantly, HFT, trading and speculation all aid market liquidity—which is a key advantage for the US relative to other countries’ markets. Why would we want to hamper that?
|By Staff, EUbusiness, 03/25/2013|
MarketMinder's View: Well, it seems the EU and Cyprus agree on the framework of a new bailout plan, which now awaits formal troika approval. The key to this agreement is the onerous planned taxes on all Cypriot bank deposits have been dialed back some in favor of essentially winding down the island nation’s two biggest banks and subjecting their depositors with more than €100,000 to a far larger haircut.
|By Jennifer Liberto, CNN Money, 03/25/2013|
MarketMinder's View: In our view, this is another illustration of the fact that political deadlines and outcomes are nearly universally changeable. Meat inspectors, a supposed victim of the sequester, will no longer be forced into an 11-day furlough in calendar year 2013. Crisis averted! For more, see our column, “Was That Cry Wolf?”
|By Mitsuru Obe and Toko Sekiguchi, The Wall Street Journal, 03/25/2013|
MarketMinder's View: Though reaching an agreement may take some time, that Japan and the EU have begun free trade negotiations is, in our view, a welcome development towards breaking down global trade barriers.
|By Thomas Brown, Bankstocks, 03/25/2013|
MarketMinder's View: A mostly sensible look at how testing banks with arbitrary and unclear criteria under controlled conditions doesn’t seem to yield the most accurate assessment. The results of the Fed’s stress tests don’t reveal much about the health of banks, and the rationale behind the tests themselves is murky, as the Fed has shown little interest in explaining its methodology. For more, see our cover story from 3/15/2013, “Testing What Stress How?”
|By Baylen Linnekin, Reason.com, 03/25/2013|
MarketMinder's View: Another example of the troubles with subsidies. A free raisin market would save taxpayer dollars, lower prices and reduce regulatory uncertainty for producers.
|By Staff, EUbusiness, 03/22/2013|
MarketMinder's View: Cypriot banks are lobbying Parliament to resurrect the deposit tax, but that doesn’t make it likelier to pass. Parliament seems more intent on forcing the banks to restructure, which would cut banks’ recapitalization needs and, perhaps, placate the troika.
|By Ezra Klein, The Washington Post, 03/22/2013|
MarketMinder's View: Yes, the eurozone has its share of political risks. But it’s highly unlikely troika officials are as tough with other troubled nations as they are with Cyprus, widely viewed as a special case due to its financial ties to Russia. That lowers the risk of a huge standoff in, say, Spain or Italy.
|By Michael R. Crittenden and Matt Wirz, The Wall Street Journal, 03/22/2013|
MarketMinder's View: History suggests the Fed is no better at spotting bubbles than the average Joe. And while the evidence here suggests leveraged lending is up, that fact alone doesn't mean it’s a bubble or a surge disconnected from fundamentals. To make that claim, more information about borrower's health on a revenue/profitability front is required. And considering the private sector’s robust health overall, seeing more credit extended to businesses isn’t that surprising.
|By Bob McTeer, NCPA Economic Policy Blog, 03/22/2013|
MarketMinder's View: A very accurate take from former Dallas Fed President Bob McTeer on why QE hasn’t spurred inflation—and why it likely won’t.
|By Staff, EUbusiness, 03/22/2013|
MarketMinder's View: A good step for both sides, considering free trade’s myriad benefits, and a good sign of Japanese Prime Minister Shinzo Abe’s willingness to pursue economic reform and tear down Japan’s longstanding protections.
|By James Hurley, The Telegraph, 03/22/2013|
MarketMinder's View: While some government regulation is no doubt needed, self-regulation is often more efficient than its government equivalent, as the rules are drafted by people with an intimate understanding of the industry and its quirks. This new plan should allow asset-based lenders to continue providing small businesses with the financing they can’t get from banks—which are hamstrung by the government’s clunky regulatory approach.
|By Kristina Peterson, The Wall Street Journal, 03/22/2013|
MarketMinder's View: Lawmakers continue watering down the Affordable Care Act, proving even the most extreme-seeming legislation is fungible.
|By Menelaos Hadjicostis and Elena Becatoros, Investor’s Business Daily, 03/21/2013|
MarketMinder's View: Much of Cyprus’s politicking is an effort for favorable bailout terms—and resistance to EU incursions on private property. Even if no plan is reached by Tuesday, the global impact will likely be minimal.
|By Annalyn Kurtz, CNN Money, 03/21/2013|
MarketMinder's View: In our view, the Fed’s asset purchases are contractionary—flattening the yield curve and thereby stifling lending. In this way, QE is a headwind the economy has grown in spite of, not because of.
|By Michael Sivy, Time, 03/21/2013|
MarketMinder's View: A strong (or weak) dollar has no material impact on stock market returns and its impact on exports, while real, shouldn’t be overstated. In this globalized economy, final exports are often largely comprised of imported components—more expensive with a weak dollar. Finally, currency movements do not signify much about economic health—they’re heavily influenced by relative interest rates.
|By Staff, BBC, 03/21/2013|
MarketMinder's View: Modest tax cuts and decreasing government spending growth are sensible—allowing the more efficient private sector room to grow. However, the budget includes more monkeying with bank policy—a primary reason Britain’s businesses and consumers seem to have difficulty getting credit.
|By Charles Riley, CNN Money, 03/21/2013|
MarketMinder's View: Fears of a Chinese hard-landing continue to abate. While monthly figures will gyrate, the broader trend shows reacceleration.
|By Jason Douglas, The Wall Street Journal, 03/21/2013|
MarketMinder's View: It seems a year and a half from now, Scottish voters (including 16- and 17-year olds) will vote on a referendum on independence from the UK. This idea’s been circulating awhile now, but most questions over how an independent Scotland functions—financially and politically—remain unanswered. For more, see our 10/16/2012 cover story, “Alba Gu Brath.”
|By Lucia Mutikani, MSN Money, 03/21/2013|
MarketMinder's View: The housing market’s recovery continues, likely boosting sentiment and providing an incremental tailwind to the economy.
|By Janet Hook, The Wall Street Journal, 03/21/2013|
MarketMinder's View: It seems the widely discussed budget debate is going on hiatus through September. But that’s nothing new for a Congress that’s failed to pass a budget the last four years.
|By Mark Drajem, Bloomberg, 03/21/2013|
MarketMinder's View: This milestone itself isn’t that significant, but it illustrates the extent of US oil production’s rapid growth in recent years.
|By Robert J. Shiller, Project Syndicate, 03/20/2013|
MarketMinder's View: This all presumes economic growth can only come from public jobs—which isn’t the case. The private sector has been driving the current expansion (as it typically does). We have a hard time seeing how raising taxes and spending will boost a country’s economy—and the PIIGS seemingly confirm our suspicions.
|By Al Lewis, MarketWatch, 03/20/2013|
MarketMinder's View: There’s a lot we disagree with here (and find rather flippant), but primarily, US is not Cyprus—not even close. Not only is US debt is very affordable, we have a thriving, expanding economy—which is only expected to grow moving forward.
|By Eyder Peralta, NPR, 03/20/2013|
MarketMinder's View: We doubt continued easing will lower the unemployment rate. In fact, unemployment’s more likely to drop as the private sector continues growing—which it has, despite contractionary Fed policy.
|By Andrew Frye, Bloomberg, 03/20/2013|
MarketMinder's View: Yes, Italy doesn’t have a government yet, but that doesn’t merit the hyperbole here, in our view. Not only has Italy seen similar gridlock before, but bond yields are still under 5%—reflective of investors’ opinions.
|By Mark Thompson, CNN Money, 03/20/2013|
MarketMinder's View: Cyprus’s next move is uncertain, but it’s at least good news the country rejected what could have been a worrying precedent—a levy on bank depositors to “bail in” a eurozone country. For more on Cyprus see our 03/19/2013 cover, “Cyprus Bailout Blues.”
|By Kevin Begos, NBC News, 03/20/2013|
MarketMinder's View: This is certainly worth watching: US fracking companies may soon be able to submit their operations for independent (read: not US government) review to determine environmental impact—potentially a boon for US fracking as much of the skepticism surrounding the industry is rooted in environmental concerns.
|By Mark J. Perry, AEIdeas, 03/20/2013|
MarketMinder's View: “As leading indicators of future construction activity [like architecture billings shown here], we can expect the commercial real estate market to continue to improve going forward in 2013 and 2014.”
|By Jeanne Whalen and Ainsley Thomson, Associated Press, 03/19/2013|
MarketMinder's View: We understand British reservations following phone-hacking scandals recently. However, this proposed regulator seems to have the ability to impinge upon freedom of the press—a critical characteristic of a well-functioning capitalist society.
|By Matina Stevis, Alkman Granitsas and Gabrielle Steinhauser, The Wall Street Journal, 03/19/2013|
MarketMinder's View: We applaud the decision to reject the bank deposit tax. However, no matter where the line is drawn to exempt depositors from the levy, it sets a poor precedent and may ultimately lead to a run on banks—exacerbating Cyprus’s problems. That said, the global fallout appears limited.
|By Staff, Bloomberg, 03/19/2013|
MarketMinder's View: Make no mistake, this isn’t a reduction in overall subsidies (which we’d cheer for, as subsidies subvert normal market pressures) as much as a reallocation of funds from large solar projects to smaller projects in areas hit by power shortages. We’d argue China would be overall better served eliminating subsidies altogether—forcing the industry to become self-sufficient and actually work sustainably. Or not, and be replaced by something more productive.
|By Andrew Ross Sorkin, The New York Times, 03/19/2013|
MarketMinder's View: Overall, a sensible take on the limited global repercussions of Cyprus’s bank levy. For more, see today’s cover story, “Cyprus Bailout Blues.”
|By Staff, Taiwan News, 03/19/2013|
MarketMinder's View: Taiwanese farmers are turning previously wasted bananas into a starch to sell to Japan at a tidy profit—yet another example of free trade’s myriad benefits.
|By Lorraine Woellert, Bloomberg, 03/19/2013|
MarketMinder's View: Signs of a nascent recovery in housing continue to abound. Should the trend continue, this could provide a nice tailwind to already fine US economic growth.
|By Sharon Smyth, Bloomberg, 03/19/2013|
MarketMinder's View: If finalized, this would mark the first property sold by Greece’s privatization agency. For more, see our recent cover story, "Greek Privatization Physics."
|By Jonathan Cheng, The Wall Street Journal, 03/18/2013|
MarketMinder's View: Index levels—either on their own or how they relate to past index levels (e.g., moving averages)—aren’t predictive of future market direction. Record high or not, arbitrary levels are just that. For more, see our 03/18/2013 column, “About That Magic Number.”
|By Alex Barker, Financial Times, 03/18/2013|
MarketMinder's View: The EU regulating individual banker compensation made little economic sense, and expanding it to certain fund managers makes even less. Few, if any, serious observers think either 2008 or the eurozone travails were caused by fund managers. Perhaps a British representative involved in the talks was right when he said, “This moves appears to be more motivated by a dislike of high salaries rather than mitigating systemic risk.”
|By Binyamin Appelbaum, The New York Times, 03/18/2013|
MarketMinder's View: We find continuation of the Fed’s largely counterproductive QE and the associated flatter yield curve less than reassuring. To us, it’s more like the Fed stating the beatings will continue until morale improves.
|By Staff, The Wall Street Journal, 03/18/2013|
MarketMinder's View: While Cyprus is likely too small to have much fundamental economic impact (it’s less than 1% of eurozone GDP), the tax on all bank deposits—even those below the €100,000 EU deposit insurance ceiling—sets a poor precedent. It’s all designed to reduce the bailout’s size by raising €5.8 billion in tax revenue, but if deposit flight intensifies for fear of taxation, Cypriot banks’ needs could grow. Here’s another, more detailed point of view on the same.
|By Louise Armstead, The Telegraph, 03/18/2013|
MarketMinder's View: In our view, this is a pretty spot-on take highlighting some key reasons UK loan growth is weak: “‘Rather than forcing the banks to raise extra capital to boost their buffers the Bank of England should encourage the banks to use their excess capital to lend," the report says. Combined with QE making lending less profitable, we’d suggest BoE policy does little to stimulate the economy.
|By Eric Felten, The Wall Street Journal, 03/18/2013|
MarketMinder's View: People, including those who ran cabarets in the 1940s, respond to incentives. Government policy such as the tax alluded to here creates winners and losers, often in unintended ways.
|By Stephen Bierman, Bloomberg, 03/18/2013|
MarketMinder's View: An interesting look at how the globalization of the hydraulic fracturing and horizontal drilling techniques that originated in the US is helping to reverse long-standing output declines at old Soviet oil fields.
|By Shai Ahmed, CNBC, 03/15/2013|
MarketMinder's View: The methodology here is flawed, in our view. Markets don’t move on pre-determined time cycles. They move on fundamentals—particularly, the gaps between investors’ expectations and reality. Right now, with sentiment still pretty skeptical and investors only starting to rationally perceive a strong economic reality, a continued bull market seems likely.
|By Ruth Mantell, MarketWatch, 03/15/2013|
MarketMinder's View: But it remains extremely low by historical standards. And likely remains there as long as the velocity of money remains at all-time lows.
|By Keith Johnson, The Wall Street Journal, 03/15/2013|
MarketMinder's View: Those concerned the Keystone XL pipeline will boost exports at the expense of domestic fuel supply miss a crucial point: Oil will flow (pun intended) where it makes most economic sense. Refiners will sell wherever there’s demand as long as there’s a potential profit.
|By Denise Roland, The Telegraph, 03/15/2013|
MarketMinder's View: Well, no, it’s not—Ireland’s economy is much more competitive. What Greece needs more than extra bailout money is deep economic reform, which is in progress but maddeningly slow. For more, see our 03/12/2013 cover story, “Greek Privatization Physics.”
|By Elaine Kurtenbach, Associated Press, 03/15/2013|
MarketMinder's View: Prime Minister Shinzo Abe’s realization Japan needs to tear down trade barriers is encouraging, though these talks—and domestic resistance to freer trade—will likely test his resolve. This will be a key test of his dedication to broader economic reform—the most important piece of Abenomics.
|By Tim Ross and Bruno Waterfield, The Telegraph, 03/15/2013|
MarketMinder's View: As an unnamed British official said, “We are looking at dozens of EU regulations to make life easier for small businesses. People often think this is technical and boring. But it is actually one of the most important things Britain can do to make the single market work properly.”
|By Staff, Taiwan News, 03/15/2013|
MarketMinder's View: China’s handover of power went seamlessly, but now the real work starts: Reformers in the Communist Party’s inner circle must keep pushing financial liberalization and overcome opposition from hardliners. So far, it seems reform likely continues, but in fits and starts.
|By Staff, EUbusiness, 03/15/2013|
MarketMinder's View: Positively, officials seem to be moving away from proposals to make bank depositors take a haircut. For more, see our recent column on Equities.com.
|By Staff, EUbusiness, 03/15/2013|
MarketMinder's View: A sensible move, considering the tax hikes Portugal’s had to pass to meet creditors’ demands have hurt GDP—the denominator in the deficit ratio. With looser targets, Portugal can have more tax flexibility, which should help the economy and—counterintuitively—could help Portugal lower its deficit faster.
|By Fisher Investments MarketMinder Editorial Staff, The Street, 03/15/2013|
MarketMinder's View: Our latest for The Street, on why mega cap likely outperforms small in the period ahead.
|By Brian Blackstone, The Wall Street Journal, 03/14/2013|
MarketMinder's View: Austerity as a path to long-term growth is a fine concept, so long as it’s the “right” austerity. Often, nations clump cuts in government spending (which give the private sector room to grow) and increases in taxes (which generally starve firms of expansion capital, ding spending, etc.) together under the “austerity” umbrella. All austerity is not created equal.
|By Staff, EUbusiness, 03/14/2013|
MarketMinder's View: We applaud the European Commission for targeting barriers to free trade, but we’d suggest they look to their own trade barriers before calling out others.
|By Staff, The Telegraph, 03/14/2013|
MarketMinder's View: We’re no fans of QE for a variety of reasons—especially the Fed’s particularly yield-curve-flattening and (therefore) contractionary brand. However, it seems odd to us to focus on the profitability of QE—or potential lack thereof—as much of a risk. This is just how central banks work, for good or ill: Monetary policy is primarily affected by the purchase and/or sale of government securities.
|By Howard Schneider, The Washington Post, 03/14/2013|
MarketMinder's View: Perhaps it’s both. Ireland has, over the past few decades, established itself as a capitalist “tiger” with low tax rates and lower barriers to entrepreneurship. Unfortunately, its business-friendly environment is a bit of an exception in the rest of the eurozone.
|By John D. McKinnon, The Wall Street Journal, 03/14/2013|
MarketMinder's View: The US corporate tax rate is one of the highest and most complicated in the developed world. Reform to simplify and lower overall corporate taxes in any form is something we can cheer for.
|By Michelle V. Rafter, MSN Money, 03/14/2013|
MarketMinder's View: More examples of increasing technology improving lives and driving down costs. Food sensors may soon improve grocery store supply management and radically reduce food waste in homes.
|By Lucia Mutikani, Reuters, 03/14/2013|
MarketMinder's View: Ignore the weekly data, which is subject to significant variation. The longer-term trend, reflected by the four-week moving average for new unemployment claims, continues to show improvement.
|By David Pilling, Financial Times, 03/14/2013|
MarketMinder's View: Myanmar’s made great strides in increasing freedom and opening markets to capitalism in recent years. However as this piece sensibly points out, there’s still much work to be done.
|By Staff , The Wall Street Journal , 03/14/2013|
MarketMinder's View: Sadly, another voice of dissent in Venezuela is silenced. Whether the next president can alter Venezuela’s course, and how quickly, remains to be seen. For more, see our commentary “Viva, Venezuela!”
|By Elaine Kurtenbach, Associated Press, 03/14/2013|
MarketMinder's View: As expected, Japanese Prime Minister Shinzo Abe’s pick for the head of the Bank of Japan sailed through confirmation. The quick confirmation averts a potential showdown, as Abe threatened to propose legislation giving the government more direct control over the BOJ had it gone less smoothly.
|By Paul Vigna, The Wall Street Journal, 03/13/2013|
MarketMinder's View: Sure, core retail sales were somewhat slower than headline, but the number is still positive and beat estimates. But also, consider: Of the 13 major categories the Census Bureau includes, only four showed declining sales in February. What’s more, the notion that the Fed’s policy is solely underpinning the present bull market discounts the fact the Fed’s policy has resulted in basically a flatter yield curve and more excess bank reserves parked idly at the Fed. Not some big stimulus for stocks or the economy.
|By Clemens Bomsdorf, The Wall Street Journal, 03/13/2013|
MarketMinder's View: While likely too small to matter globally, restricting foreign capital and investment likely reduces the amount of greenbacks Greenlanders have—or whatever color currency they print.
|By Chiara Vassari, Bloomberg, 03/13/2013|
MarketMinder's View: Italian yields have risen some lately ... but they’re still less than 5% on 10-year debt. To put that in more perspective, that's about 3 percentage points lower than rates seen just last year.
|By James Saft, Reuters, 03/13/2013|
MarketMinder's View: It’s possible the Fed reels in QE and maybe that could cause some very near-term wiggles, but given QE’s less-than-stimulative nature, we’d suggest the move would actually be positive. The US private sector is strong—strong enough to carry the economy (as it’s been doing) in spite of Fed policy that’s contractionary, in our view.
|By John Deutch and Edward Steinfeld, The Wall Street Journal, 03/13/2013|
MarketMinder's View: In a global economy, measures to reward (or punish) “Made in the USA/UK/China/etc.” overlook the fact many intermediate parts and technologies cross borders contributing to the final product—regardless who gets their sticker on it in the end.
|By Lucia Mutikani, Reuters, 03/13/2013|
MarketMinder's View: The directionality of inventories can be interpreted a number of different ways. But in our view, since today’s report is coupled with rising sales and follows a GDP report weighed down by low inventories, this seemingly implies firms are restocking in anticipation of demand—buoyant for future GDP and seemingly positive economic news.
|By Dara Doyle and Roxana Zega, Bloomberg, 03/13/2013|
MarketMinder's View: Ireland continues to improve. Its first 10-year bond auction since its bailout was wildly successful—almost doubling expectations at affordable yields.
|By Staff, Central News Agency, 03/13/2013|
MarketMinder's View: Lowering transaction taxes seems a very sensible move for Taiwan. Lower overall transaction costs encourage investment and private sector economic activity.
|By Staff, EUbusiness, 03/12/2013|
MarketMinder's View: Hungarian Prime Minister Victor Orban seems to have picked up right where he left off in another despotic power grab. Last year he made similar moves to undermine the judiciary’s checks and balances against his regime. The new amendment similarly marginalizes the Constitutional Court. Although EU intervention could again force a U-turn like earlier threats to the central bank’s independence, this remains an issue to be watched.
|By William Gale, Real Clear Markets, 03/12/2013|
MarketMinder's View: We have no issue with reducing pollution or cutting government spending, but in our view, carbon taxes aren’t the way to do it. Reaping a carbon tax’s benefits while avoiding its pitfalls requires near perfect planning. But governments monkeying around with markets far too frequently creates unintended consequences—much as the EU has recently experienced with their carbon tax experiment. For more, revisit our 01/23/2013 cover story, “Tax Follies in the EU.”
|By Eric Parnell, Minyanville, 03/12/2013|
MarketMinder's View: Although the Fed continues to engage in what we believe to be misguided QE, it’s in fact contractionary--not expansionary--and most of banks’ excess liquidity remains parked right back at the Fed.
|By Anthony Harrup and Nicholas Casey, The Wall Street Journal, 03/12/2013|
MarketMinder's View: This is another sensible step for Mexico that likely helps further increase its overall economic competitiveness—increasing consumer choice, driving prices lower and increasing market penetration.
|By Bret Stephens, The Wall Street Journal, 03/12/2013|
MarketMinder's View: Freedom of the press and free speech are essential to healthy, functioning, capitalist societies.
|By Shane Romig and Nick Winning, The Wall Street Journal, 03/12/2013|
MarketMinder's View: We won’t opine on the matter of which country the Falklands belong to, but in our view, perhaps the “Kelpers” vote to remain a UK overseas territory was a vote against Argentina’s protectionist measures, including restrictions on purchasing dollars and massive wealth redistribution which have alienated the middle class, while soaring public spending, welfare schemes and capital controls continue to cripple the country’s economy.
|By Ambrose Evans-Pritchard, The Telegraph, 03/12/2013|
MarketMinder's View: There’s still a long way to go for “ice gas” to become a viable source of energy, but this is quite a noteworthy innovation, particularly given Japan’s recent energy woes tied to the shutdown of nuclear reactors in 2011.
|By Kemal Derviş , Project Syndicate, 03/11/2013|
MarketMinder's View: The economy and the stock market are not one in the same. Stocks can boom on lackluster growth, and vice versa. Simply, GDP measures output, and stocks reflect the market’s expectation of future earnings—there’s no direct connective tissue.
|By David Barboza, The New York Times, 03/11/2013|
MarketMinder's View: Regardless the source, cyberattacks are at odds with intellectual property rights—essential for investing and innovation. Nationalist politicking—from any country—doesn’t help.
|By Henry Farrell, Washington Monthly, 03/11/2013|
MarketMinder's View: While austerity is publicly unpopular, many of the countries mentioned are badly in need of economic reform. A smaller government provides room for the private sector.
|By Steve H. Hanke, Cato Institute, 03/11/2013|
MarketMinder's View: Transitioning to a free-floating currency, or adopting the US dollar, would be a sensible economic reform for Venezuela. Their myriad economic woes won’t be solved, but this would be a step towards eliminating hard-currency shortages and the black market.
|By Staff, BBC, 03/11/2013|
MarketMinder's View: This is positive, but we caution investors against looking at these numbers as an indicator for the future. Rather, employment gains confirm economic growth.
|By Jerry Brito, reason.com, 03/11/2013|
MarketMinder's View: An example of the failure of government price-fixing and excessive regulation via lobbying. This sensible proposal to let free markets set rates may encourage innovation and increase competition among music providers—an all-around win for consumers.
|By Janet Hook and Kristina Peterson, The Wall Street Journal, 03/11/2013|
MarketMinder's View: Fiscal salvos continue. Neither of these will likely pass in their current shape (if a budget is passed at all). Rather, they likely serve as rhetorical fodder for 2014 mid-term elections.
|By Andrey Ostroukh, The Wall Street Journal, 03/11/2013|
MarketMinder's View: Profit-motive is a powerful incentive for entrepreneurs. Further taxing gains and increasing regulation likely prove a headwind to innovation—or at least send it underground.
|By Jeremy Warner, The Telegraph, 03/08/2013|
MarketMinder's View: While this points out some of today’s positive fundamentals (e.g., all-time high corporate profits, strong Emerging Markets and growing earnings), the discussion of quantitative easing (QE) misses a key point. There’s no evidence QE is causing a stock bubble—in the US, UK and Japan, most of the QE money’s parked at the central banks as excess reserves.
|By Spencer Jakab, The Wall Street Journal, 03/08/2013|
MarketMinder's View: This argument rests on the assumption the Fed’s QE has been somehow stimulatory—but the money’s not flowing through to the real economy. Unemployment’s been improving despite the Fed, not because of it, so there’s no need to move the goal posts (unless it’s to end the program early—an endeavor we’d happily support).
|By Michael R. Crittenden, Dan Fitzpatrick and Liz Rappaport, The Wall Street Journal, 03/08/2013|
MarketMinder's View: Stress tests are rather arbitrary gauges of banks’ health—and if arbitrary test results prompt regulators to slap banks with even tougher arbitrary capital requirements, the sector will continue facing headwinds despite its alleged health.
|By James K. Glassman, Bloomberg, 03/08/2013|
MarketMinder's View: We certainly agree stocks seem to have plenty of upside, but this prediction seems rather over the top—just another instance of the extreme, hyperbolic reporting our Editorial Staff member Todd Bliman discusses in his latest column, “Was That Cry ‘Wolf’?”
|By Staff, Taiwan News, 03/08/2013|
MarketMinder's View: The National League for Democracy’s first legal public congress is another sign of how far the nation’s come since the days when opposition politicians were jailed or silenced. Continued political reform is key to Myanmar’s rapid emergence—free societies tend to attract the most private investment.
|By Fisher Investments MarketMinder Editorial Staff, The Street, 03/08/2013|
MarketMinder's View: Our latest for The Street, on how far this bull market has come.
|By Staff, Associated Press, 03/08/2013|
MarketMinder's View: And combined January/February exports, which smooth out the impact of the week-long Lunar New Year holiday, rose 23.6% year over year.
|By Elisabeth Dellinger, Investors.com, 03/08/2013|
MarketMinder's View: The latest from MarketMinder Editorial Staff member Elisabeth Dellinger, on why Japan’s newly politicized central bank is likely far less worrisome than Hungary’s.
|By Annett Meiritz, Der Spiegel, 03/08/2013|
MarketMinder's View: “We don’t want money from you, but we want a more welcome atmosphere.” That’s what one entrepreneur told German Chancellor Angela Merkel yesterday. Germany’s tech startups don’t need or want government investment—just less bureaucratic red tape and regulatory restrictions. Economic reform: The best kind of stimulus.
|By Corey Boles, The Wall Street Journal, 03/07/2013|
MarketMinder's View: Yet another short-term Band-Aid setting up another political battle in the not-too-distant future.
|By Tami Luhby, CNN Money, 03/07/2013|
MarketMinder's View: This is too narrow a look at these stats. Increasing productivity allows workers to focus efforts on higher-earning functions. What’s more, nearly everyone benefits from access to higher quality goods produced at lower prices. Take this to an extreme: Are workers overall better or worse off since massive productivity gains have vastly reduced agriculture’s share of total employment?
|By Geoffrey T. Smith, The Wall Street Journal, 03/07/2013|
MarketMinder's View: Maybe they will, maybe they won’t intervene further. But unlike the Fed, which has increasingly signaled future actions, the ECB has typically played their hand closer to the vest.
|By Mary Anastasia O’Grady, The Wall Street Journal, 03/07/2013|
MarketMinder's View: An excellent look at the obstacles Venezuela faces in its road to (maybe) recovery. For more, see our cover story, Viva, Venezuela!
|By Mary Watkins, Peter Spiegel and Kerin Hope, The Financial Times , 03/07/2013|
MarketMinder's View: For good reason. Cyprus is likely to have to enforce stricter anti-money laundering procedures for the EU to agree to aid, though some still seem to be misguidedly pushing for depositors at Cypriot banks to take a haircut. For more, see our recent column, “Keep an Eye on Cyprus,” by Elisabeth Dellinger.
|By Ambrose Evans-Pritchard, The Telegraph, 03/07/2013|
MarketMinder's View: While the Tobin tax appealed to those wanting to punish banks for their perceived role in the credit crisis, officials are increasingly seeing the potential drawbacks to such a scheme.
|By Staff, Reuters, 03/07/2013|
MarketMinder's View: More evidence of the job market’s recovery.
|By Manuela D’Alessandro, Reuters, 03/07/2013|
MarketMinder's View: Berlusconi was sentenced for just one of his convictions, but the Italian legal system allows politicians to still run and serve during the appeals phase. This won’t impact the Italian run-off nor, likely and amazingly, public opinion of him.
|By Felix Salmon, Reuters, 03/06/2013|
MarketMinder's View: There are many economic fallacies here, and much we find confusing—how is government spending not fiscal? But our main issue is the assumption government spending creates growth—it doesn’t. And any argument declaring the “government gets by far the best [prices] in the market” overlooks the fact artificially legislated prices distort the market (i.e., it’s no longer free), which ultimately hurts the economy.
|By Staff, Xinhua, 03/06/2013|
MarketMinder's View: Here’s our suggestion: Instead of a government agency deciding what gas prices should be (ultimately that’s what this mechanism does), perhaps China could let the market determine gasoline’s true price.
|By Andrew Frye, Bloomberg, 03/06/2013|
MarketMinder's View: While it seems Italy may move towards an anti-austerity government, we see no cause for alarm just yet. As with Greece, these politicians are overall just politicking for favor with voters, and that’s all. In the end, eurozone leaders have consistently shown dedication to long-term solutions over sentiment.
|By Steven Russolillo, The Wall Street Journal, 03/06/2013|
MarketMinder's View: Here’s an excellent breakdown of one of the Dow’s chief faults: price-weighting. It lets a small number of stocks dictate an index’s overall performance, regardless of said stocks’ economic impact. For more, see today’s cover story, “Up, Dow.”
|By Staff, The Economist, 03/06/2013|
MarketMinder's View: “An innovation may displace humans from some jobs … but make them more productive in others,” and, often, new technologies create new jobs altogether in previously unforeseen industries, allowing for more economic growth overall.
|By Robert Plummer, BBC, 03/06/2013|
MarketMinder's View: We’re a bit split on this one. We agree Venezuela has largely lagged its neighbors, but we disagree greater income equality is a virtuous goal or the poor have benefited under Chavez. The poor are as hurt by shortages and inflation as anyone else—maybe more so. Ultimately, Chavez’s regime exemplified how a too heavy-handed government skews markets to its advantage over that of its citizens.
|By Staff, Reuters, 03/06/2013|
MarketMinder's View: More evidence the US private sector’s strong and growing.
|By Matt Jarzemsky, The Wall Street Journal, 03/05/2013|
MarketMinder's View: As we’ve noted myriad times before, the Dow is a broken index based on a narrow slice of US companies. It’s not a fair representation of the global market. More damning is its poor construction—as a price-weighted index, a stock’s impact is driven by its per-share price, not its actual size. What’s more, we find folks’ obsession with reaching past highs or large round numbers (like 14,000 or 15,000) quite puzzling. Markets aren’t serially correlated—past movements don’t predict future returns—so arbitrary markers, milestones or “records” have little impact on where the market goes from here.
|By Francesco Guerrera, The Wall Street Journal, 03/05/2013|
MarketMinder's View: Limiting bonuses paid to bankers could hamper companies’ ability to retain high-revenue generating and high-earning talent. To the extent bankers “vote with their feet” and flee to companies not subject to such onerous rules, EU banks could easily be harmed. In an industry where expertise is a core need, paying bonuses can be equivalent to reinvesting in the business.
|By Alex Brittain and Paul Hannon, The Wall Street Journal, 03/05/2013|
MarketMinder's View: Given the eurozone’s weakness the last three years, it should be no surprise economic reports continue to be dour. However, it’s important to recall the eurozone isn’t one uniform nation, so applying broad brush stroke theories likely obscures some pockets of resilience. In our view, what’s most important however, is strong growth in other parts of the world that continue to pull the lagging eurozone along.
|By Jack Nicas and Susan Carey, The Wall Street Journal, 03/05/2013|
MarketMinder's View: As we’ve noted, sequestration likely doesn’t have the highly dramatized outcomes many folks fret.
|By Paul C. “Chip” Knappenberger, Cato at Liberty, 03/05/2013|
MarketMinder's View: The Keystone XL pipeline isn’t exactly a panacea for US energy markets’ various inefficiencies, but it should bring much-needed help. This latest report likely clears some opposition to the proposed oil conduit. For more, see today’s cover story, “Energy in the Spotlight.”
MarketMinder's View: We caution against making too much of just one or even a few data points. However, that the US service sector expanded on higher demand highlights the still underestimated strength of the economy.
|By Rebecca Christie, Bloomberg, 03/05/2013|
MarketMinder's View: Ireland’s made considerable progress in reforming its economy the last few years—a point we’ve made before. From here, more time to repay bailout loans and work through their issues would be a positive for its economy.
|By Vipal Monga, The Wall Street Journal, 03/05/2013|
MarketMinder's View: To us, that businesses are sensibly tapping currently cheap long-term debt markets means they’re are able to finance expansion plans with more stability than having to repeatedly refinance the bonds they issue or access bank loans. And with rates so cheap, it’s inexpensive to do so. Finally, as the piece notes, businesses’ balance sheets are still far less indebted than the historical average today. Simply, America’s private sector is in robust health.
|By Tom Orlik, Bob Davis and Esther Fung, The Wall Street Journal, 03/05/2013|
MarketMinder's View: Following last year’s leadership transition, moves by the Chinese government to boost domestic consumption, slow rising prices and increase welfare spending were expected. During these undemocratic “elections,” the ruling Communist party is highly focused on minimizing social unrest. China’s government tends to use its considerable influence over its command economy to preemptively satiate potential dissenters.
|By Staff, The Economist, 03/05/2013|
MarketMinder's View: This sensible piece outlines the myriad unintended consequences when governments meddle with free markets.
|By Nelson D. Schwartz, The New York Times, 03/04/2013|
MarketMinder's View: Since the recession ended, the US private sector has added nearly five million jobs. While that pace may not be as fast as some would hope for, the reality is hiring is ongoing and likely wouldn’t be if the private sector weren’t profitable. Firms bleeding cash tend not to go on hiring sprees.
|By Jim Tankersley, The Washington Post, 03/04/2013|
MarketMinder's View: Potential GDP is a purely academic measure that’s virtually meaningless for most folks. Simply put, it’s essentially a guess at what GDP would have been in a world devoid of recessions, slower than “trend growth” and more.
|By Simon Kennedy, Emma Charlton and Ye Xie, Bloomberg, 03/04/2013|
MarketMinder's View: Yes, some nations left the gold standard during the 1930s, but that was after a full-fledged trade war and deep recession were already ongoing (the first nation—the UK—left the gold standard in 1931, while Smoot-Hawley was debated in 1928 and 1929 and became law in 1930). The notion a country will get a benefit from beggar-thy-neighbor policies targeting increased exports misperceives today’s highly intertwined global economy. For more, see our 01/28/2013 cover, “Mutually Assured Devaluation.”
|By Jennifer Ryan, Bloomberg, 03/04/2013|
|By Ben Casselman, The Wall Street Journal, 03/04/2013|
MarketMinder's View: Here’s a very interesting look at the long-term decreasing footprint of the federal government in US employment.
|By Staff, The Wall Street Journal, 03/04/2013|
MarketMinder's View: For those of you who enjoy a good data dump, here’s a very interesting infographic.
|By Staff, EUbusiness, 03/04/2013|
MarketMinder's View: While there will likely continue to be bumps in the road on the way to a free trade deal between the EU and Japan—if one ever materializes—it’s encouraging to see talks are planned. Simply, opening markets more to foreign trade would be a plus for both parties—especially for quasi-mercantilist Japan.
|By Matina Stevis, The Wall Street Journal, 03/04/2013|
MarketMinder's View: Now that Cyprus’ elections are over, the newly elected government is diving right into bailout talks. And it seems the new administration is sensibly distancing itself from prior proposals involving a “bail-in” in which depositors at Cypriot banks are subjected to potential loss. For more, see our 02/28/2013 contribution to Equities, “Keep an Eye on Cyprus.”
|By Shannon Pettypiece, Bloomberg, 03/04/2013|
MarketMinder's View: While there’s little discernible market impact from this story, it is a very interesting look at an important development in the global fight against HIV/AIDS and another milepost in the world’s continuing advance toward a healthier, longer-lived human race.
|By Staff, Associated Press, 03/01/2013|
MarketMinder's View: Monthly data are always variable, and January’s income fall follows a high increase in December—which included several one-time bonuses and dividends before some taxes rose on January 1.
|By Mark Mazower, Financial Times, 03/01/2013|
MarketMinder's View: Yes, the rise of extreme parties in the eurozone periphery is troubling, but we rather disagree “it is but a short step from writing off the political class to writing off the institutions of democracy.” Actually, the democratic process is what allows citizens to write off the so-called political class—they can vote the bums out. Continually.
|By Alex Brittain, The Wall Street Journal, 03/01/2013|
MarketMinder's View: Not good news, but not surprising, given the eurozone’s ongoing recession. Unemployment is backward-looking.
|By Staff, EUbusiness, 03/01/2013|
MarketMinder's View: Even with sequestration, federal spending’s still set to grow—just at a slower rate. Moreover, the private sector—which drives the lion’s share of transatlantic trade—remains plenty healthy.
|By Jeremy Warner, The Telegraph, 03/01/2013|
MarketMinder's View: If the EU’s latest regulatory proposals go through, bankers—key to London’s status as a global financial hub—likely “vote with their feet and go somewhere else, leaving Britain very much the poorer for it.”
|By Neil Shah, The Wall Street Journal, 03/01/2013|
MarketMinder's View: Individuals want to borrow, and more credit’s available—good signs for the US economy’s continued strength.
|By Staff, The Asahi Shimbun, 03/01/2013|
MarketMinder's View: Thanks to agricultural land law deregulations in 2003 and 2009, businesses in all sorts of industries have put idle farmland to work, opening new revenue streams. This is just one example of how structural reform can foster growth in Japan.
|By Graham Ruddick, The Telegraph, 03/01/2013|
MarketMinder's View: Corporation tax rates may steal the headlines, but high business taxes—essentially levies on commercial property—make it difficult for UK brick and mortar retailers to compete with online retailers, which don’t have to pay them.