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By , CNBC, 03/31/2014

MarketMinder's View: We may still see the cold weather’s impact as more March economic data roll in—but markets are pretty good at seeing through that sort of thing, as they have throughout this winter. What won’t give investors much insight? The March jobs report. Employment is a late-lagging indicator. Considering employment bottomed eight months after the economy did this last time around, it seems a mighty big stretch to say March hiring will tell you something meaningful about Q1 growth.

By , The Wall Street Journal, 03/31/2014

MarketMinder's View: While global markets likely shrug off Japan’s sales tax hike, Japan itself is another matter. Most seem to expect it to bite into consumer spending, and the government is already prepping a fiscal stimulus package, but expectations may yet prove too high. In our view, that consumer spending fell in February—when it should theoretically have risen as consumers front-loaded purchases—is telling about Japan’s current state.

By , The New York Times, 03/31/2014

MarketMinder's View: One way it’s not looking like 1999 in the stock market: Folks are pointing out it’s looking like 1999 in the stock market. Pre-tech bubble burst, everyone from your barber to mail delivery person was handing out stock tips—euphoria abounded and skepticism like this was nowhere to be found. Plus, most recent IPOs have actual revenues, if not earnings, and overall far more sustainable business models than the “clicks are the new earnings” slop that invaded markets during the tech bubble.

By , The Wall Street Journal, 03/31/2014

MarketMinder's View: Any time you see a thesis underpinned by conspiracy theory rather than fact or widely accepted economic theory, that’s a pretty big clue the thesis is patently wrong. This piece, which argues every crash over the past 30-plus years is the result of “financial crimes,” falls into that bucket, in our view. We’d also add that with everyone hyper focused on trying to spot a crash just like the last one, chances are high the next one looks very different—just like 2008 looked nothing like 2000, which looked nothing like the Savings & Loan crisis, which looked nothing like the energy bubble in 1980, which looked nothing like …

By , Xinhua, 03/31/2014

MarketMinder's View: This is why folks have fretted the falling Chinese yuan—a weaker Chinese currency makes dollar-denominated debt more expensive, and the amount outstanding has risen quite a bit. But it’s also less than 10% of China’s total economy—far smaller than the triple-digit foreign debt loads that helped trigger crisis in Thailand, South Korea and Indonesia in 1997—and it’s a huge stretch to assume all of these loans are on the brink of failure. Plus, the weaker yuan was deliberate, and the People’s Bank of China was well aware of debt levels when it started engineering this slide, suggesting they don’t see rising debt as particularly alarming. If need be, they can always engineer an appreciation.

By , MarketWatch, 03/31/2014

MarketMinder's View: Media is a for-profit business—gloom-and-doom headlines tend to bring in more readers than light and fluffy ones, regardless of whether they match reality. Tuning out the noise and focusing on the fundamentals—longer-term outlook, not day-to-day market movement—and staying disciplined will likely get you farther in investing than following the media’s advice.

By , Financial Times, 03/31/2014

MarketMinder's View: The warning signs? Q1 S&P 500 returns of 0.5%, higher long-term bond returns and slashed earnings forecasts. Thing is, past performance doesn’t dictate future return, stocks and bonds have no inherent relationship, and analysts have ratcheted down earnings expectations for the past couple years, only to be humiliated by continued growth. Moreover, far from “shrugging off” these items, most investors seem all too willing to assume they mean the end is nigh. Our advice: Ignore the noise. The reality of a growing world and profitable companies is far brighter than pieces like this suggest.

By , The Telegraph, 03/31/2014

MarketMinder's View: If current account deficits spelled economic disaster, the UK wouldn’t have grown leaps and bounds over the past 31 years of current account deficits. The difference between exports and imports doesn’t matter—total wealth created does, and the UK has created an extraordinary amount of wealth. Partly, we’d add, due to the surplus of foreign investment that comes along with that current account deficit.

By , The Wall Street Journal, 03/28/2014

MarketMinder's View: If high and rising profits are really the next “problem” the US faces, we must be in pretty darned good shape. As for the thesis here, which argues profits are high only because businesses aren’t spending (which will allegedly hit growth looking forward), what about the fact business investment is at all-time highs? What about the fact S&P 500 revenues, too, are at all-time highs, with Q4 2013 revenue growth (in dollars) roughly matching earnings growth?

By , The Telegraph, 03/28/2014

MarketMinder's View: The current account deficit isn’t any more meaningful today than when it was at a record high. It isn’t an economic driver, good or bad—it simply means the UK imports a lot (Cheaper goods! More choice!) and gets a lot of foreign investment.

By , The Telegraph, 03/28/2014

MarketMinder's View: The current account deficit isn’t any more meaningful today than when it was at a record high. It isn’t an economic driver, good or bad—it simply means the UK imports a lot (Cheaper goods! More choice!) and gets a lot of foreign investment.

By , Financial Planning, 03/28/2014

MarketMinder's View: As this shows, many financial professionals are no more disciplined than the clients they try to serve. If you’re a long-term investor, it’s important to work with an adviser who keeps focused on your long-term goals and strategy and doesn’t encourage you to zig and zag in the short term.

By , Reuters, 03/28/2014

MarketMinder's View: It seems UK and EU regulators have figured out securitized loans (e.g., mortgage-backed securities) aren’t the societal and economic ills many believed after 2008 (though, we’d also add their role in that saga is inaccurately oversimplified here—securitized loans didn’t cause the financial panic). When paired with sensible accounting rules, securitization helps more businesses get funding—a force for growth.

By , The Telegraph, 03/28/2014

MarketMinder's View: When is this headline ever not true? No sector—including finance—is completely problem-free, and one can’t ever foresee with precision how any firms will react during a crisis. The causes and chain reactions are too unpredictable to account for in hypothetical models—stress tests would fail at capturing this whether or not the past five years’ worth of new regulations were in place. We agree most of these new regulations were a solution in search of a problem, but the notion the financial system is significantly riskier as a result seems off the mark when you consider just how much healthier bank balance sheets are.

By , Bloomberg, 03/28/2014

MarketMinder's View: The warning is a drop in consumer spending two months before the sales tax hike kicked in—theoretically, a time when consumers should be pulling big-ticket purchases forward, goosing sales. Rising inflation was also supposed to goad folks into buying today instead of waiting for a better deal tomorrow. In short, things aren’t working as planned. We rather doubt Prime Minister Shinzo Abe’s solution—fast-tracking fiscal stimulus—works any better than the other fiscal stimulus packages that have failed to foster lasting improvement since 1997.

By , Reuters, 03/28/2014

MarketMinder's View: Which is more important: What people say or what they do? Actions, of course! Feelings aren’t a component of output. Actual spending is. And spending normally deviates from consumer sentiment readings, which measure how folks feel at one moment in time.

By , The Wall Street Journal, 03/28/2014

MarketMinder's View: It’s interesting that they’re thinking about the mechanics of the next rate hike—i.e., whether to raise the target range, raise the upper bound, revert to a single benchmark level or use another rate instead of Fed Funds—but this is largely just noise at this point. Considering how far inflation is from the target, policymakers have plenty of time to think this through. Slow isn’t a problem.

By , The Washington Post, 03/28/2014

MarketMinder's View: This is an interesting observation—nothing more. Basing investing decisions on the location of a company’s shareholder meeting is sheer folly.

By , The Wall Street Journal, 03/28/2014

MarketMinder's View: Underpinning this entire article is a huge fallacy: The notion gold is a safety blanket or inherently less risky than any other asset. Seems an odd claim to make of a volatile commodity with huge sentiment-driven price swings, a two-plus year bear market, lagging long-term performance and a big drop in 2008. But hey, maybe safety is in the eye of the beholder. 

By , China Daily, 03/28/2014

MarketMinder's View: Considering the Shanghai free trade zone was a testing ground for nationwide reform, this is a good sign. If Chinese officials see tangible benefits from freer finance and freer trade, that increases the likelihood of more sweeping changes from coast to coast, which would benefit China and investors.

By , The Washington Post, 03/27/2014

MarketMinder's View: Yes, as technology gets more advanced, it replaces jobs. But it also creates unfathomable new jobs and even entire industries! Free trade further enables this, by creating broader markets internationally. None of these shifts happen overnight, and it’s all too easy to focus on those jobs that are displaced, but over time, the benefits of trade and technology are far greater and spread to all Americans—and they create more value for shareholders in the process.

By , Time, 03/27/2014

MarketMinder's View: Don’t write globalization’s epitaph just yet. It’s true global trade has advanced more slowly than global GDP in recent years—but that’s sort of to be expected when the eurozone is in an 18-month recession. If demand is down in a region encompassing over 15% of the global economy, the impact on global trade could easily dwarf the drop in regional output. Moreover, “easy money” isn’t responsible for 30 years of growing trade. Money isn’t even easy today! Though, it’s getting easier as the yield curve widens, thanks to the end of the decidedly not-easy-money policy of quantitative easing.

By , The Telegraph, 03/27/2014

MarketMinder's View: Let’s see if we can sort through the Fed and BOE’s logic: They’re flummoxed by how to interpret/structure stress tests, because all the new regulation post-2008 financial crisis makes the banking system more opaque and risk more difficult to gauge. Regulation these central banks helped write and heartily support. And folks trust central bankers to predict and guard against future systemic risks … why again? For more, see Elisabeth Dellinger’s column on Investor’s Business Daily, “What the FOMC Ignored in 2008.”

By , The Wall Street Journal, 03/27/2014

MarketMinder's View: Though backward looking, this third reading of Q4 2013 GDP confirms what we’ve known for a while now—the US is growing just fine and remains on strong fundamental footing.

By , Bloomberg, 03/27/2014

MarketMinder's View: A little jawboning doesn’t exactly constitute promotion, but no matter. With growth picking up, money supply slowly rising and most disinflation coming from energy prices—which the ECB sees as a positive—the likelihood of euro quantitative easing, negative deposit rates or something equally drastic and harmful appears exceedingly low. For more, see our 02/28/2014 cover story, “Deleverage or Deregulate.”

By , Barron’s, 03/27/2014

MarketMinder's View: The “case” rests on valuations—your big clue it’s probably wrong. Valuations aren’t predictive—no P/E ratio is inherently too high or too low. Nor must high and low P/Es automatically revert to an arbitrary mean level. Valuations do tell you about sentiment, though, and the fact P/Es haven’t expanded wildly tells you sentiment hasn’t improved enough to drive investors to bid up the value of future earnings. That’s bullish.

By , The Independent, 03/27/2014

MarketMinder's View: Who would’ve thought: Despite the UK’s wettest February in 24 years, retail sales growth more than tripled expectations. And while some fear this means consumers are tapping into savings to create an unsustainable boom, other recent data show incomes are finally rising faster than inflation. Looking ahead, the UK is on increasingly enviable footing.

By , The Associated Press, 03/27/2014

MarketMinder's View: Places where people migrate to work: New York City … Silicon Valley … Odessa, Texas? It’s true—thanks to the shale oil revolution, economies (and jobs) have boomed in Texas, North Dakota and elsewhere in the Great Plains/Mountain West regions. So has overall energy production, giving firms and households nationwide a big boost from cheap, abundant supply.

By , The New York Times, 03/26/2014

MarketMinder's View: After 10+ years of research, a leading scholar of income inequality abandoned his book on the subject. Why? He couldn’t find hard proof income inequality has the disastrous consequences many claim. Most income inequality arguments (like those included here) heavily rely on correlations and social arguments—but neither support a fundamentally economic conclusion. Nor, apparently, does any other available “evidence.” For more, see Elisabeth Dellinger’s commentary, “Grabbing the Third Rail: Income Inequality and Stocks.”

By , The Washington Post, 03/26/2014

MarketMinder's View: It’s logical big banks’ bonds have lower interest rates than smaller rivals—and not because they have some implicit government guarantee. Big financial institutions are well-capitalized, have good business models, diverse balance sheets, strong fundamentals and are less likely to default (for those very reasons). Ironically, the Fed’s efforts to end “too big to fail” and bailouts in general only make the big banks bigger, as depositors flock to banks with the most perceived safety.

By , Bloomberg, 03/26/2014

MarketMinder's View: In our view, that folks are more concerned about businesses’ spending less on equipment (-1.3% m/m) than happy to hear durable goods orders rose (+2.2% m/m) is a sign skepticism lingers. Monthly data are volatile—a decrease in one measurement amid bad weather isn’t foretelling of future or overall business investment (which hit an all-time high in Q4 2013).

By , Slate, 03/26/2014

MarketMinder's View: In our view, this weighs short-term market moves too much. Markets may swing after, say, Janet Yellen announces short-term interest rates will eventually rise—but that doesn’t suggest anything fundamental. Short-term market moves are driven by sentiment. Quick, dicey movements typically even out (or even rebound) as markets digest information and its forward-looking implications. For more, see our 03/21/2014 commentary, “The Early Bird Scares the Worm.”

By , Bloomberg, 03/26/2014

MarketMinder's View: Currently, officials can use as few as two quotes to set the benchmark interbank funding rate—not the best way to get a true, market-wide estimate of funding costs. The proposed system would bump the quotes to 50—much more in line with developed-world systems (e.g., Libor and Euribor), which should make for a more transparent rate and a lower likelihood of manipulation (i.e., a Chinese equivalent of the Libor scandal). 

By , The New York Times, 03/26/2014

MarketMinder's View: After months of discussion, London will become the largest Western market for trading in Chinese renminbi. This is a plus for both economies—it bolsters London’s status as a global financial hub—but China, a relatively closed economy, is especially poised to benefit. A bigger renminbi marketplace makes the currency more liquid and helps open up the economy long term.

By , Bloomberg, 03/25/2014

MarketMinder's View: We could point to any number of reasons this decision (like most ratings agency missives) doesn’t mean much for investors—it relies on backward-looking information, long-term forecasts and widely known factors, to name three. But we’d rather just let the data speak for itself: “In almost half the instances, yields on government bonds fall when a rating action by Moody’s Investors Service and S&P suggests they should climb, according to data compiled by Bloomberg on 314 upgrades, downgrades and outlook changes going back to the 1970s.” Folks, trust the market.

By , Financial Advisor, 03/25/2014

MarketMinder's View: We’ll spare you the trouble of reading this one—both growth and value win irregularly over short periods. Same goes for all styles, sectors and countries—no one category is inherently better than others or best for all time. Understanding the drivers that influence a category’s returns—and forecasting likely trends—is key to identifying and seizing opportunities that arise.

By , Reuters, 03/25/2014

MarketMinder's View: China still seems on track to end up near its official growth target in 2014, and all signs indicate officials remain comfortable with the growth rate, even if it has slowed compared to past years, which would suggest a massive stimulus package is unlikely. We might see a few small measures to keep folks happy, but probably nothing on par with 2008. For more, see our 3/14/2014 cover, “China’s Great Wall of Worry.”

By , The Wall Street Journal, 03/25/2014

MarketMinder's View: The West is bootin’ Putin from the G8, which might seem a harsh step with potential economic or market ramifications, but we can’t think of a single thing the G8 has done that leads folks to think it’s so g-reat.

By , The Korea Times, 03/25/2014

MarketMinder's View: The other big economic risks Koreans fear include a Chinese slowdown, household debt and instability in Emerging Markets. Sound familiar? False fears have gone global—that’s bullish.

By , The Telegraph, 03/25/2014

MarketMinder's View: There is a term for an economy that features modest growth and tame inflation: Goldilocks. Not too hot, not too cold. The UK is smack in the middle of a Goldilocks scenario right now—a favorable (and underappreciated) backdrop for stocks.

By , Reuters, 03/25/2014

MarketMinder's View: While the S&P/Case-Shiller isn’t a perfect gauge, its January rise of +0.8% m/m after a particularly frigid winter is yet more evidence of the housing market’s continued recovery—a still-underappreciated (though small) economic tailwind.

By , Market Watch, 03/25/2014

MarketMinder's View: While consumer confidence surveys can help highlight where sentiment is today—moving closer to optimism—they really don’t gauge much else (i.e., economic activity). These surveys report how people feel at the time they take the survey, not necessarily how they’ll actually behave.

By , BusinessWeek, 03/24/2014

MarketMinder's View: While we’d quibble with some aspects of this, the broader thesis—which argues today seems to resemble the early/mid-1990s—seems rather spot on to us. Then, too, we had a Goldilocks economy—not too hot, not too cold, with benign interest rates. Where the Internet goosed productivity then, today we have the shale revolution, cloud/mobile computing, 3D printing and ever-cheaper, faster technology. Now, does that mean we see another five-plus years of growth and bull market? Who knows—you can’t forecast that far into the future. But it does speak to an exceedingly favorable backdrop for stocks today.

By , The Wall Street Journal, 03/24/2014

MarketMinder's View: The titular fretting seems based on the belief a rate hike means the Fed is yanking the “easy money” that allegedly underpinned this recovery. False! What matters more than Fed Funds is the spread between short and long rates. Since the Fed has also held down long rates through quantitative easing, the near-zero Fed Funds rate hasn’t translated to a flood of cheap money. Hiking it isn’t inherently bearish or bullish—whether the timing is ultimately appropriate is something you can’t game today. Though, it’s also worth noting past hikes haven’t much disrupted markets. For more, see our 3/21/2014 cover story, “The Early Bird Scares the Worm.”

By , Barron’s, 03/24/2014

MarketMinder's View: Well, yes, if you look in hindsight at the 14-year trailing returns of the 50 highest-yielding US stocks that never cut dividends, it pretty much goes without saying that they did well—companies that didn’t have to cut were probably in better financial health. You’ve retroactively weeded out the dogs. But you can’t structure a portfolio based on this information. 1) High-dividend stocks aren’t inherently better (or worse) over time than non-dividend payers. Stocks are stocks. 2) There is no way to know which of today’s high payers will skate through the next several years without cutting dividends. How many bank stock owners 14 years ago foresaw dividend cuts in Financials?

By , Reuters, 03/24/2014

MarketMinder's View: Seems right to us. Allowing companies and investment products to default should add transparency and foster a marketplace that better weighs risk. Only time will tell if officials resist the temptation to step in when the going gets tough, but if so, the resulting freer market would be a long-term positive. For more, see our 3/6/2014 cover story, “China’s Path to Free-Market Reforms: Default?

By , The Wall Street Journal, 03/24/2014

MarketMinder's View: While banks are likely still gun-shy after the housing bubble, quantitative easing (QE) also weighs on mortgage availability. Though mortgage lending is improving, QE weighs on banks’ profitability by decreasing the spread between short- and long-term rates (which represents their gross margin). With margins slim, the risk/reward tradeoff favors only the most creditworthy borrowers. Looking ahead, mortgage lending likely picks up as QE winds down and banks’ margins improve.

By , Bloomberg, 03/24/2014

MarketMinder's View: Though oft-maligned, high-frequency trading offers investors many benefits, like improved price efficiency. Because HFT lets markets reflect all widely known information near-instantaneously, investors can make better-informed trading decisions and needn’t guess at whether the current price has already discounted a data or earnings release. For more, see Talia Hosenpud’s 10/10/2013 column, “High-Frequency Fallacies.”

By , The Wall Street Journal, 03/24/2014

MarketMinder's View: Even if you ignore the many flaws in the Shiller P/E’s methodology and the fact valuations aren’t predictive, the information here still isn’t terribly useful. You shouldn’t invest today for the next 10-year period. Too many unknown variables will enter into the equation, and those variables will give rise to gameable trends in the interim.

By , CNBC, 03/24/2014

MarketMinder's View: Markit’s measures of French services and manufacturing returned to growth in March, driven by forward-looking new orders and backlogs. And while Germany grew a bit slower, it exceeded the eurozone average—which was only a hair slower than February. Overall, the region’s recovery looks set to continue.

By , The Wall Street Journal, 03/21/2014

MarketMinder's View: EU leaders also accelerated similar deals with Moldova and Georgia and held a super-secret meeting to decide on another round of sanctions against Russia—blocking wifi and confiscating cell phones, no doubt to keep anyone (ahem, Cyprus) from texting their oligarch buddies with a warning to move their money back to Moscow. This will all no doubt peeve Vladimir Putin, who sees sanctions as a dare and EU overtures into the former USSR as incursions into his own territory. Whether more Crimea-style invasions follow in “pro-Russian” regions, like Moldova’s Transnistria, only time will tell.

By , Reuters, 03/21/2014

MarketMinder's View: Let’s be clear: The amount of cash on the sidelines (whatever that even means) has zip to do with how calm markets have been this week. To say it does implies markets are calm because there is more money in cash and less in stocks. False! If you hold cash instead of stocks, that just means someone else owns those shares instead. They haven’t evaporated. They aren’t sitting on a shelf waiting for someone to put money in them. The reason markets haven’t tanked, in our view, is they’ve decided neither the Fed nor Vladimir Putin poses a material risk to future earnings.

By , The Washington Post, 03/21/2014

MarketMinder's View: By zombie apocalypse, they mean hypothetical financial meltdown arbitrarily pre-determined shape and size. Yep, it’s time for that meaningless exercise known as Fed stress tests! 29 of 30 banks passed round 1, which means nothing. The one failure—Zions Bancorporation—says more about the Volcker Rule’s unintended consequences (the bank took a quick capital hit due to the rule last December) than its viability. Stress tests tell you nothing about what a bank will do when times get tough.

By , The Telegraph, 03/21/2014

MarketMinder's View: This is all very speculative. Yes, if Scotland ultimately goes it alone, the country will have some big financial issues to figure out. But that’s in the far future. The referendum on independence, scheduled for September, isn’t guaranteed to pass—and polls currently show the “no” vote winning. If the referendum does pass, it merely allows the Scottish government to negotiate an independence agreement with the UK. That process is likely painstaking, and monetary and other issues will likely settle gradually throughout, giving markets plenty of time to digest them.

By , Bloomberg, 03/21/2014

MarketMinder's View: Ever the forward-thinkers, Fitch and Standard & Poor’s cut Russia’s credit rating due to the apparent economic risks of sanctions Russia brought on itself by being, well, Russia. Sanctions that were previewed weeks ago. Our guess is Russian bond buyers made their judgments on this when it was, you know, news.  

By , Sentaku Magazine, 03/21/2014

MarketMinder's View: The cracked coalition in question is Japan’s. The ruling Liberal Democratic Party’s (LDP) relationship with junior partner New Komeito is fraying, leaders of various LDP factions are nipping at Prime Minister Shinzo Abe’s heels—and it’s all because Abe is pushing pet issues like military resurgence while letting economic issues dangle. The more fractured the government becomes, the more Abe loses clout, and the slimmer the chances he can pass meaningful economic reforms. Investors who expect otherwise—and there remain many—likely end up disappointed.

By , Financial Times, 03/21/2014

MarketMinder's View: Yes, the US and EU’s sanctions against a handful of Russian politicians (and one bank) create some losers, but the broad global economic impact is minimal. Russia is about 2% of the global economy—sanctions would have to erase the country’s entire GDP (and then some) for the world to feel much heat.

By , Quartz, 03/21/2014

MarketMinder's View: Cherry-picking a few lackluster days during that period as evidence of “poor” performance is a massive stretch. Fact is retail sales in January and February combined were still up big over 2013. Considering Chinese officials have said they’d be quite content with growth a bit below the official target, we’d suggest folks not expect a stimulus blitz simply because a couple still-growing data points lag arbitrary expectations.

By , The Telegraph, 03/21/2014

MarketMinder's View: Yes, UK consumer credit and consumer spending are rising, and the savings ratio is falling. But business investment is much stronger than this piece suggests, having grown all four quarters last year. Exports are choppy, but so was external demand. Looking ahead, with the yield curve spread wider—making lending more profitable—and many regulatory concerns in the rearview, banks appear better-positioned to boost business lending, which should further help corporate Britain invest and grow.

By , The Wall Street Journal, 03/21/2014

MarketMinder's View: The “structural” budget balance is the actual surplus/deficit adjusted for economic conditions—if a country were in recession, it’s a rough estimate of what the surplus or deficit would be under more normal conditions. The EU had adjusted the calculation to give countries more wiggle room when times are tough, which should be a long-term positive—arbitrary as the calculation is, it’s the EU’s benchmark for whether a country needs to cut spending. Easing the burden lowers the likelihood of pro-cyclical adjustments. 

By , Bloomberg, 03/21/2014

MarketMinder's View: It’s a rough estimate, and it might not account for some of the rule’s unintended consequences, which are still being discovered. But whether the actual cost ends up a little higher or lower than $4.3 billion, it will likely pale in comparison to the $14.3 trillion in total assets on US banks’ balance sheets as of March 5.

By , The Wall Street Journal, 03/20/2014

MarketMinder's View: It’s no doubt true French PMI fell, offsetting a German acceleration, causing the eurozone-wide composite PMI to slow by 0.2 percentage point to a still-expansionary 52.7 in February. However, it’s worth noting that French PMI has been in contractionary (sub-50) territory for months—yet other, broader economic data like GDP have shown growth. Be skeptical of big conclusions drawn from this single series.

By , Bloomberg, 03/20/2014

MarketMinder's View: Some argue high-frequency trading (HFT) gives some traders an unfair advantage or can create additional volatility in the market—even though markets are always volatile and humans are the ones using HFT, meaning their decision-making isn’t infallible. As pointed out here, additional regulation isn’t necessary on HFT: “If you find yourself unable to understand how the people you regulate make money, that does not in itself mean you need more regulation. It means you need more understanding.” For more, see Talia Hosenpud’s column, “High-Frequency Fallacies.”

By , The Washington Post, 03/20/2014

MarketMinder's View: “Something on the order of around six months.” That jawboning comes from Janet Yellen’s first news conference as Fed Chair, and it has many in the media squawking about what exactly it means—and fearing it means bad things for the economy. But we’d suggest investors not get their feathers ruffled by anything Yellen says—she also qualified that statement by saying such a move will depend on economic data. Focus instead on what central bankers do, not say—their actions mean more than their words. And even if they do hike, there is no evidence an initial rate hike in a cycle is bad for stocks. For more, see Elisabeth Dellinger’s column, “Forward Misguidance.”

By , The Telegraph, 03/20/2014

MarketMinder's View: This has been the constant critique of the UK’s economic recovery: too dependent on consumer spending, not enough growth from exports and investment. It doesn’t feel “real”—because apparently customers shopping at the mall (demand) don’t have the same kind of economic impact of shale oil drillers in North Dakota (supply). But solid economies are largely characterized by rising supply and demand. Britain has both. Finally, let’s play reductio ad absurdum: If credit growth means 2014’s economy is false growth, then 2008’s credit-driven bust has to be a false downturn. That, however, is an argument we never see in the media.

By , Bloomberg, 03/20/2014

MarketMinder's View: The big takeaway here is the data. The Leading Economic Index rose more than expected in February, with the wider yield spread and building permits being key positive contributors. This is just another sign the US likely continues growing in the immediate future.

By , Bloomberg, 03/20/2014

MarketMinder's View: The Bank of Spain estimates foreign direct investment in Spain increased last year by 40%—a sign that foreign companies aren’t as dour as many investors are towards the eurozone’s periphery. This article is an interesting rundown of the reforms made helping increase the nation’s prospects.

By , Bloomberg, 03/20/2014

MarketMinder's View: Though EU finance ministers and representatives of the European Parliament reached a compromise for the EU’s Single Resolution Mechanism for failing banks, those anticipating an immediate release of uncertainty around eurozone banks probably shouldn’t hold their breath—it now moves on to the European Parliament and then to all 28 national governments for approval. Clearing this major hurdle would be a plus for EU banks in that details would become a known factor, but there could still be significant haggling and changes made to the proposal from here.

By , Money Watch, 03/19/2014

MarketMinder's View: Other than Janet Yellen’s seating position, nothing materially new came from the Fed this month. As expected, asset purchases will continue decreasing (from $65 billion to $55 billion a month). Though it’s interesting the Fed announced it would scrap using unemployment as a sole gauge for interest rate movements, it’s not unlikely at least some Fed members have been doing so this whole time.

By , The Wall Street Journal, 03/19/2014

MarketMinder's View: We largely agree: Stress tests won’t prevent economic crises because they can’t predict the causes—they couldn’t have predicted mark-to-market accounting and the Fed’s inconsistent actions would spur the last crisis. They didn’t predict the eurozone crisis. They’re too backward looking to suggest much about banks’ health moving forward. They do, however, create a headwind for lending—more dollars must be allocated to reserves to pass hypothetical downturn scenarios.

By , Market Watch, 03/19/2014

MarketMinder's View: Simply, the current account deficit is not a measure of America’s financial standing with the rest of the world. Nor is it a sign of economic weakness—if it were, the US wouldn’t have grown leaps and bounds since the mid-1970s, when deficits became the norm. Nor would it be the world’s biggest and one of its most competitive economies. Current accounts just don’t matter.

By , Financial Times, 03/19/2014

MarketMinder's View: It isn’t especially surprising investors using technical analysis to time the market’s short-term moves lose out. Technical analysis is backward looking—it’s based on stocks’ past performance, which has nothing to do with future returns. Stocks move on forward-looking fundamentals, not pretty charts.

By , The Guardian, 03/19/2014

MarketMinder's View: Brits likely benefit from tax cuts and higher contribution limits for retirement accounts, but in our view, removing the requirement for pensioners to buy annuities is by far the biggest change the UK’s 2014 budget offers. Annuities—particularly investment-linked annuities—aren’t the silver bullet many assume. They do provide regular income, but they’re also restricted, often low-returning and, as UK regulatory investigations have recently uncovered, not always right for the purchaser’s financial situation. Providing retirees more investing freedom can help them discover which assets best suit them.

By , Bloomberg, 03/19/2014

MarketMinder's View: It wasn’t so long ago folks feared Greece would trigger eurozone collapse. That a Greek bank held a successful debt auction for the first time since bailouts began shows how far the country has come. Eurozone sentiment—even for the weakest spots—is improving: Though Greece relies on foreign aid and isn’t issuing new debt yet (an auction is scheduled for May), yields have about halved since the crisis.

By , The Wall Street Journal, 03/19/2014

MarketMinder's View: While Japan’s February trade report was better than previous months’, there is little suggesting fundamental improvement. This cites the waning trend of front-running big-ticket purchases like imported autos before April’s sales tax hike as a positive, but that simply means higher taxes are about to crimp demand (a negative). And though exports grew in both value and volume, this was likely skewed by the Lunar New Year, which regularly impacts Chinese purchasing. The weak yen still poses risks—like making necessary imports (energy) very expensive.

By , The Independent, 03/19/2014

MarketMinder's View: This gives forward guidance too much credit. Businesses don’t increase investment or hire new employees because they like what the central bank says. They invest when they have sufficient capital and economic conditions support future growth. Ending quantitative easing over a year ago did much more for the economy—actions, not words, matter.

By , Associated Press, 03/18/2014

MarketMinder's View: Inflation remains tame—the consumer price index increased by +0.1% m/m in February. But our major interest here is how backwards this article gets the cause of that tame result. The slow annual inflation rate isn’t so much about energy price comparisons, hiring and firing, sluggish GDP or other external factor. Inflation is always and everywhere a monetary phenomenon, and the real driver of slow inflation and sluggish economic growth is lack of lending caused, largely, by the Fed’s quantitative easing that this article claims is “stimulus.”

By , Bloomberg, 03/18/2014

MarketMinder's View: It seems the Fed may remove the 6.5% jobless rate threshold and replace it with another form of forward guidance. Though, whatever “qualitative rate guidance” may entail, we wouldn’t advise spending much time analyzing it. Fed heads used to call talk “jawboning,” and it was widely considered to be unreliable in terms of divining future policy. In our view, whatever you call it, talk is still awfully cheap. 

By , Bloomberg, 03/18/2014

MarketMinder's View: Some high frequency trading (HFT) practices might be considered questionable—like co-location, where trading firms pay to house their systems with exchange’s computer servers, allowing their transactions to outpace other HFT traders by milliseconds. But, that shouldn’t downplay HFT’s overall benefit to investors—by adding liquidity, HFT makes the market operate more efficiently and smoothly.

By , Kiplinger, 03/18/2014

MarketMinder's View: Not only does the fracking boom bring more oil and natural gas to the economy, but it also encourages an array of new technologies to conserve water, increase the safety of fracking fluid and transportation—adding to the overall economic return of the fracking boom and reducing environmental concerns.

By , The Reformed Broker , 03/18/2014

MarketMinder's View: This seems about right to us in terms of where investor sentiment generally is today: “The current phase of the bull market as the “acceptance phase”—in which it is widely acknowledged that we are in a bull market and bull market behavior begins to be felt outside of the markets themselves.”

By , The Irish Times, 03/18/2014

MarketMinder's View: In an unsurprising development, Germany’s Constitutional Court upheld the legality of the eurozone’s permanent bailout fund, the European Stability Mechanism with a few small caveats. This has more or less been the Constitutional Court’s modus operandi throughout the eurozone crisis. (Ironically, it’s unclear they even have jurisdictional standing to impact the eurozone-wide programs, but that’s not relevant for now.) The outstanding item is a ruling on the constitutionality of the ECB’s heretofore unused sovereign bond buying program, the Outright Monetary Transactions (OMT) program. Tuesday, they punted a ruling on that to the European Court of Justice, though the likelihood they overturn OMT is low.

By , Reuters, 03/18/2014

MarketMinder's View: It might open the door to a potential tax on foreign exchange trades later, but expanding the financial transactions tax to include forex isn’t in the cards presently. In our view, the EU’s 11 nation financial transactions as it is presently constructed is an incremental negative for EU banks, but lacks both the needed size and surprise power to derail the bull market.

By , Reuters, 03/18/2014

MarketMinder's View: While US housing starts ticked down slightly (-0.2% m/m) in February, housing permits jumped up by +7.7% m/m. Increased permitting suggests future housing starts—and construction activity—may be poised to rebound, an incremental positive for the economy.

By , CNBC, 03/17/2014

MarketMinder's View: This is altogether too Pollyanna-ish: If the Ukraine escalated into a global, World War III-type event, it would probably be very bad for stocks. Yet that’s also extremely unlikely—and nothing about the Crimean referendum changes that. Moreover, the notion that the Fed can  “counter anything with easy money,” is a wild misperception about the Fed’s track record recently or historically, in the crisis or since, and it misperceives the effect of Fed policies like quantitative easing. The Fed missed 2008’s cause, applied an alphabet soup of inaccurate fixes and then launched a deflationary, contractionary monetary policy that masquerades as stimulus.

By , The Wall Street Journal, 03/17/2014

MarketMinder's View: Last year’s market returns are irrelevant to stocks’ direction in 2014. But even if we don’t see a correction, volatility is normal. That said, many of the factors mentioned here have long been known, meaning investors have already acted on them, defanging their ability to move stocks much. For example, a quantitative easing taper and slower Chinese growth. And in our view, factors such as P/E ratios and so-called cash on the sidelines are sentiment indicators at best, but by no means guaranteed indicators that the bull market’s end is close. For more, see our 3/10/2014 cover story, “Happy Fifth Birthday, Bull Market.”

By , The New York Times, 03/17/2014

MarketMinder's View: A few issues here. The reason prices are falling is actually just a sign of capitalism’s huge success—market forces like competition, increasing productivity and creative destruction are making them more affordable. And those lower prices merely mean more consumption elsewhere. Let’s consider the opposite: The higher education system in the US isn’t very exposed to pure market forces, and prices, if you haven’t noticed, aren’t falling.

By , Reuters, 03/17/2014

MarketMinder's View: US manufacturing rebounded in February as the polar vortex passed—another sign growth continued in 2014’s early months, despite the weather-created noise. For more, see our 2/11/2014 cover story, “Weathering the Storm.”   

By , The Wall Street Journal, 03/17/2014

MarketMinder's View: New developments out of Crimea this weekend as the occupied region overwhelmingly voted to re-join Russia. Many seem surprised markets had little reaction, but this move likely wasn’t surprising given recent events. Looking ahead, barring severe escalation, the long-term market impact is likely minimal. 

By , The Wall Street Journal, 03/17/2014

MarketMinder's View: This highlights well a key problem for long-term investors: For many, investing can be an emotional ride. When things get rough, they fall prey to fear and sell at the wrong time. Many then hesitate to buy back in, potentially missing years of a bull market. In our view, those who invest long-term with an asset allocation geared toward reaching their goals likely have the best chance of success.

By , AEIdeas, 03/17/2014

MarketMinder's View: A significant decrease in government sector jobs is the primary contributor to the pace of job creation so many headlines bemoan as a sign of a moribund economy. However, it seems more like a reflection of public policy choices. America’s dynamic private sector has created 63% more jobs in the past 55 months than it did in the same period following the 2001 recession. While payrolls are recovering from a bigger recession-driven hole this time, they are, in fact, recovering—payrolls are only 129,000 away from their pre-recession high.

By , The Korea Times, 03/17/2014

MarketMinder's View: Fears surrounding China’s slower growth impacting the broader global economy seem overwrought. It’s true a significant Chinese slowdown could negatively impact the Korean and the global economy, but for now, Chinese growth still adds hugely to global economic activity—about as much as it did when growth was in the double-digits.  Recent data may have disappointed some analysts, but they still suggest growth at a high rate ahead—not a hard landing.  For more, see our 3/14/2014 cover story, “China’s Great Wall of Worry.”

By , The Sydney Morning Herald, 03/14/2014

MarketMinder's View: Words of wisdom for investors everywhere: “This gratuitous urgency [in stock market investing] is a fantasy. Any experienced investor will tell you, to have a chance of achieving long-term wealth you can't be short term. You will fail being short term in the long term.” Now, we wouldn’t ascribe much to some of the statistics used late in the article, but that’s a very, very minor quibble in what’s overall a great discussion.

By , The Wall Street Journal, 03/14/2014

MarketMinder's View: While we don’t agree with everything here, it does make a key, oft-overlooked point: Fed bond buying has robbed the private sector of the capital it needs to invest and grow. Now that the Fed is backing off, the yield curve is steepening, and lending is rising at a faster pace. Looking ahead, this should be a powerful, underappreciated tailwind for the US economy.

By , Financial Times, 03/14/2014

MarketMinder's View: The Fed’s custody holdings of foreign-owned US Treasurys fell by a record-high $105 billion last week, leading many to believe Russian firms are offshoring their dollar-denominated assets—preparing for economic sanctions to kick in if the situation in Ukraine escalates. This would also suggest Russians expect an escalation—and Russia’s foreign minister intimated as much Friday. However, the long-term market risk here remains minimal—the situation remains exceedingly unlikely to turn into a major, global armed conflict.

By , The Telegraph, 03/14/2014

MarketMinder's View: With the UK government launching several initiatives to boost competition in high-street banking, savers are likely deluged with offers to switch banks. This is a great rundown of the many items folks should consider as they analyze the potential costs, benefits and risks of switching.

By , Foreign Policy, 03/14/2014

MarketMinder's View: The Ukraine conflict is bad news, but as this piece shows, it might have a long-term silver lining. EU leaders appear unusually motivated to start exploiting their vast shale reserves, and if they see things through, it would be a big long-term positive for the Continent’s industry and energy markets.

By , The Wall Street Journal, 03/14/2014

MarketMinder's View: None of the issues here are powerful or surprising enough to derail this bull market, in our view, and some are just plain misperceived. A slowing China, for example, is just fine for global markets, and demand there is still growing. Corrections are always possible and can happen for any reason, but predicting and timing them perfectly is impossible. Enduring them is a necessary trade-off for long-term growth.

By , The Washington Post, 03/14/2014

MarketMinder's View: Don’t fear for the millennial generation’s long-term financial viability just yet—the assumptions here are heavily skewed by the recent past. How milliennials do financially—and how that in turn impacts Social Security and other entitlements—will depend on how the economy and markets grow over the next several decades. Both are too long-term and too unknown to forecast. 

By , The Wall Street Journal, 03/14/2014

MarketMinder's View: Whether you love or loathe President Obama’s plans to use Executive Orders to implement economic policy, don’t expect a huge impact (good or bad). His plan can’t override Congressional gridlock—the fact is, Obama cannot greatly change the American economic or political landscape unilaterally.

By , EUbusiness, 03/14/2014

MarketMinder's View: The European Parliament just passed a bill mandating all mobile phones, tablets, GPS systems and any other portable electronic device that emits radio waves use a common charger. Well-intentioned as this may be, it does introduce obstacles for the Tech and Telecom firms trying to sell products there.

By , The Telegraph, 03/14/2014

MarketMinder's View: The fund, launched in 2011, charged 0.25% annually—plus 20% of the spread over the benchmark any time it outperformed. It closed because no one signed up, which isn’t shocking. This fee structure gives the manager a powerful incentive to take undue short-term risk—not what long-term growth investors need.

By , The Korea Times, 03/14/2014

MarketMinder's View: And it boosted US service exports to Korea. Total US exports of goods to Korea fell, but exports of goods covered by the free trade agreement rose over 10%. With investment, goods and services flowing more freely across the Pacific, both sides are benefiting nicely—this is why markets love freer trade.

By , Reuters, 03/13/2014

MarketMinder's View: Breaking news: Folks don’t stop buying things during bad weather. Defying concerns about the potential economic impact of a particularly cold winter, consumers continued their spending ways in February, with retail sales rising +0.3% m/m and +1.5% y/y, continuing their overall upward trend.

By , Bloomberg, 03/13/2014

MarketMinder's View: Consider this Chinese Premier Li Keqiang’s way of setting expectations for slower 2014 growth—which should be fine for the global economy and stocks. As the world’s second largest economy, China contributes heavily to global GDP whether it grows 7.5%, 7.2% or even a bit less.

By , Bloomberg, 03/13/2014

MarketMinder's View: Some were perplexed when Ireland decided to exit its bailout program without a safety net, but judging from today’s auction, they didn’t need it—if you’re issuing 10-year debt at record lows, it’s fair to say markets don’t perceive you as a gigantic credit risk.

By , The Wall Street Journal, 03/13/2014

MarketMinder's View: Though investors generally—including individual investors—appear to be gaining some optimism, as measured by metrics like fund flows and sentiment surveys, it’s really just beginning. As such, fears of a euphoric equity bubble seem misplaced in the here and now.

By , Market Watch, 03/13/2014

MarketMinder's View: Identifying your long-term goals and the time horizon for your assets, letting these factors determine your long-term strategy, and having the discipline to stick with that strategy are key to investing success. Investing without considering your long-term goals is like aiming without a target.

By , The Wall Street Journal, 03/13/2014

MarketMinder's View: It seems a big stretch to interpret a rise in Japan’s core machinery orders as a sign businesses will handle the coming tax hike without issue. One, it’s a sales tax, which would seem more of an issue for consumers. Two, even if there were a connection, this spike in core machinery orders could very well be demand getting pulled forward, before the tax goes into effect. Three, the sharp upturn, as the article notes, isn’t a radical shift from a slowing trend—it’s a rebound to that trend after December’s drop.

By , The Guardian, 03/13/2014

MarketMinder's View: Two points here. First, UK R&D fell in 2012 not because businesses were less innovative, but likely because they couldn’t get funding—business lending fell all year. Second, this data is from 2012, a year when overall business investment suffered. With business investment rising all four quarters last year, it’s a fair assumption R&D improved, too. Either way, though, this report is utterly backward-looking.

By , The Guardian, 03/13/2014

MarketMinder's View: Under current rules, only deferred salary can be clawed back, and only within a three to five year window. The proposal to allow claw-backs of paid bonuses up to six years after the fact is a big change, though not quite as onerous as the 10-year window suggested by Parliament. It also isn’t certain to become reality, given the public comment period hasn’t begun yet. For more, see our 03/05/2014 cover story, “Looking Beyond the Crimea—Policy Edition.”

By , USA Today, 03/12/2014

MarketMinder's View: True: Going on margin is risky and can force liquidations, exacerbating a selloff. But the absolute level of margin debt tells you nothing—it’s normal for the level of margin to rise as total market cap rises. If stocks are at all-time highs, all-time-high margin doesn’t much surprise. Plus, high margin levels don’t necessarily indicate folks are making risky bets left and right. Margin can be used to buy stocks when investors feel confident markets will rise, but it’s also necessary to short stocks when they anticipate a fall. Investors also use margin when they take a collateralized loan against their account, which they could use for anything. A rapid rise in the level of margin might be telling about sentiment, but we aren’t seeing that today.

By , Slate, 03/12/2014

MarketMinder's View: As this piece nicely illustrates, our trade deficit with China isn’t disastrous—or anywhere near as big as people think! Global supply chains mean various countries (including the US) contribute to most final products, and imports provide great economic value regardless what of “made in” stickers say. But technology isn’t an economic threat, either. It has replaced jobs and industries, but it has created even more. How? Technology increases productivity and spawns new industries—this has been going on for centuries and is a big reason everyone is much better off today (read: wealthier) than even a decade ago.

By , The Washington Post, 03/12/2014

MarketMinder's View: Especially after reviewing these charts, it’s no wonder the Abe administration is interested in restarting nuclear energy plants even though many oppose it. Without nuclear plants, the island nation heavily depends on energy imports—which a weakening yen makes very expensive, creating another headwind for the stagnating economy. Whether he proceeds with these plans in the face of opposition will be telling about his broader ability to drill through vested interests.

By , Associated Press, 03/12/2014

MarketMinder's View: Whether you see arguments about restricting American name use for European cheeses as holey or even a little nutty, this latest tiff is a prime illustration of how protectionism holds back global trade and the free exchange of ideas. And it’s another example showing why a US-EU trade agreement likely moves slowly—cheese makers won’t be the only special interest group causing a stink over losing preferential treatment.

By , Bloomberg, 03/12/2014

MarketMinder's View: New Prime Minister Matteo Renzi’s cabinet has proposed a number of ideas Italy would likely benefit from, including tax cuts, labor market overhauls and electoral reform. But, though they’re getting a lot of press, details are sparse, and official changes still seem a ways off. This story is certainly worth watching, but it likely doesn’t impact much for now.

By , EUbusiness, 03/12/2014

MarketMinder's View: January’s industrial output fall (-0.2% m/m) was disappointing but still an improvement from December (-0.4% m/m). More importantly in our view, it rose +2.1% from last year. Shorter-term data are uneven, but the longer-term trend shows growth—the area’s bumpy recovery likely continues on.

By , The Chosunilbo, 03/12/2014

MarketMinder's View: After eight years, Korea and Canada finalized a free trade agreement, removing tariffs on Korean cars and Canadian beef. Overall, this move is small—and largely went unnoticed by the media—but it’s a notable step toward freer global trade and likely a positive for both parties long-term.

By , Financial Times, 03/12/2014

MarketMinder's View: Unsurprisingly, progress toward a single resolution mechanism for a eurozone banking union is slow. Officials have agreed on a few measures—like simplifying decisions on when to close a bank and expediting the resolution fund’s creation—but conflicting interests likely keep any final decisions from happening before upcoming European Parliament elections. Which isn’t necessarily bad—it’s more important for officials to make moves prudently than quickly—but likely also weighs on eurozone financials.

By , Investor’s Business Daily, 03/11/2014

MarketMinder's View: Editorial staff member Elisabeth Dellinger’s latest article discusses why folks shouldn’t count on the Fed to spot and defuse the next financial crisis (or any bubble) before it’s too late.

By , Bloomberg News, 03/11/2014

MarketMinder's View: Under the pilot program, 10 large privately run companies will compete for five banking licenses—they theoretically have the clout, capital, know-how and resources to get a bank off the ground and compete with the state-run megabanks. Whether the government truly enables them to compete remains to be seen, but if this works, China’s capital-starved small and mid-sized firms could finally access much-needed funding, alleviating the economic consequences of the crackdown on shadow financing.

By , The Wall Street Journal, 03/11/2014

MarketMinder's View: Geological research indicates Poland has vast shale reserves—perhaps enough to wean it off Russian natural gas—but exploration and production stalled out as tax and competition concerns drove off foreign Energy firms. By offering firms six years of tax breaks, the Polish government hopes to woo back these firms and kick-start production—if it’s successful, it would be a long-term positive for the country.

By , Reuters, 03/11/2014

MarketMinder's View: Prime Minister Pedro Passos Coelho’s response to the call in question says it all: “If I wanted to put the country’s financing and its public policies at risk today, I’d sign that manifesto.” Debt restructuring is just a fancy word for default, which would likely push up Portugal’s funding costs and raise questions about its creditworthiness. Considering Portugal is growing again and issuing debt at pre-crisis rates, there just doesn’t appear to be a need to muddy the waters with a default.

By , EUbusiness, 03/11/2014

MarketMinder's View: EU finance ministers claim they’ve made progress on the so-called Single Resolution Mechanism—the procedure for winding down failing banks—by identifying points where they can compromise at least somewhat with the European Parliament, but they aren’t giving any details. So for now it’s too soon to tell how quickly this progresses and whether they’ve addressed some of the many outstanding questions, including when the ECB could close a bank. As long as uncertainty persists, it likely continues weighing on eurozone financials.

By , Reuters, 03/11/2014

MarketMinder's View: Though it’s just one month of data, rising German exports (+2.2% m/m) and imports (+4.1% m/m) suggest demand in Germany and throughout Europe is rising—more fuel for the ongoing recovery.

By , The Telegraph, 03/11/2014

MarketMinder's View: While industrial production missed expectations by rising only +0.1% m/m in January, the weakness was largely tied to a fall in always-volatile (and lately declining) North Sea oil and gas output. The manufacturing sector, which provides a more useful read of UK industry grew +0.4% m/m. 

By , Associated Press, 03/11/2014

MarketMinder's View: Though wholesaler sales fell in January likely due to poor weather conditions, year-over-year sales still grew +3.9%. Plus, inventories rose, suggesting they’re optimistic about future demand.

By , The Wall Street Journal, 03/10/2014

MarketMinder's View: This is the kind of article we expect to see as sentiment shifts toward optimism. As markets approach euphoria, expect these to be much more common with almost a nanny-nanny-boo-boo tone toward those who were bearish too long.

By , CNBC, 03/10/2014

MarketMinder's View: Inflation is always and everywhere a monetary phenomenon—too many dollars chasing too few goods and services. Now, if labor markets are in fact “tighter” than most statistics currently suggest—possible, but unlikely—then tighter services capacity is potentially inflationary. However, we do not have money rapidly coursing through the economy presently, largely due to the Fed’s quantitative easing. Do they perfectly time the program’s end? We doubt it. After all, that they did it wasn’t exactly sensible, in our view. But the key here is none of this is likely in the next 12 months (the foreseeable future) and would generally have a long lead time.

By , MarketWatch, 03/10/2014

MarketMinder's View: This theory centers on seven (dubious) reasons the bull market will end, but in reality, it’s basically acrophobic—“the higher it (the market) goes, the more dangerous it becomes.” Among the reasons: Surveys, the VIX, a nascent increase in fund flows and the sweeping claims that “fundamentals are being ignored” and “2008 has been forgotten.” While there is no proving the latter definitively, the existence of this form of article casts the notion into doubt. As to the former, the economy has grown and leading economic indicators point toward more growth ahead, companies are very profitable based on rising sales and valuations are about average. Those are fundamentals—so what’s being ignored, we wonder?

By , Bloomberg, 03/10/2014

MarketMinder's View: Though GDP is backward-looking, Japan’s downward Q4 GDP revision to an +0.9% annual pace is yet another data point suggesting more needs to be done with Prime Minister Shinzo Abe’s structural reforms looking forward. Monetary and fiscal stimulus alone have been tried before in Japan, with little success. We see no reason to think the outcome will be different if those are the government’s only actions.

By , EUbusiness, 03/10/2014

MarketMinder's View: It is worth watching Russia for potential signs of major escalation in tensions, but there is little evidence of it to this point beyond the “jitters” in Eastern Europe. For markets—barring tensions escalating into something on a global scale—aside from some short-term volatility, the market impact of current events in Crimea is likely minimal. For more, see our 3/4/2014 cover story, “Back in the USSR.”

By , Bloomberg, 03/10/2014

MarketMinder's View: Omitted from this article: The level of assets globally. Consider: According to this article, US households alone are worth $80 trillion. The likelihood is high assets vastly outweigh debt globally. And, as the article itself notes, “Yields on all types of bonds from governments to corporates and mortgages average about 2 percent, down from more than 4.8 percent in 2007.”

By , Forbes, 03/10/2014

MarketMinder's View: Not very surprising considering the 113th Congress is the most do-nothing legislative body in modern American history. Heavy gridlock means agreeing to and passing a budget containing potentially objectionable aspects is extremely difficult. On top of that, midterm elections are just months away, and the chance those up for re-election will propose, let alone vote for, a potentially controversial budget is slim. However, for stocks, this is a plus: Big, sweeping legislation that spooks markets likely doesn’t get passed.

By , The Wall Street Journal, 03/07/2014

MarketMinder's View: A magnificent discussion of some major statistical flaws in the argument Corporate America is profiting at the expense of workers, causing a hollowing out of America’s middle income brackets. When you include employee benefits and use a more apples-to-apples inflation measure, you find the disconnect between rising output per hour and pay disappears. For more on a related topic, see Elisabeth Dellinger’s recent column, “Grabbing the Third Rail: Income Inequality and Stocks.”

By , Truth on the Market, 03/07/2014

MarketMinder's View: This in-depth discussion is a comprehensive guide to what’s at stake in Halliburton v. Erica P. John Fund, a case currently being heard in the Supreme Court. At issue in the case: The determination of eligibility to join a securities class action lawsuit as a plaintiff. The current standard, Fraud on the Market, assumes any erroneous or fraudulent statement by a public company entitles any shareholder to join the case, regardless of whether they knew of the statement at issue. Should the rule be overturned or amended, it could greatly reduce the frequency and size of securities class action lawsuits. In our view, this would be a plus for investors. Typically, plaintiffs recover pennies on the dollar in securities suits—and current investors wind up bearing the legal costs.

By , The Telegraph, 03/07/2014

MarketMinder's View: The rising price of beer since the early 1970s is no more indicative of the “falling value of money” than rising prices of food, clothing, fuel or commodities. As the UK (and US) economy has grown and money supply has expanded over time, it has created vast wealth for society—prices have risen in sympathy. That some goods have seen higher price rises than others is simply an issue of supply and demand.

By , The Guardian, 03/07/2014

MarketMinder's View: Even if UK “austerity” lasts a while longer, if it’s like the austerity already in the books, it shouldn’t much impact the economy—the tax hikes did have an impact, but the government’s contribution to GDP kept growing. Slow growth during that time was much more a function of quantitative easing and regulatory pressure, which weighed on loan growth (and, thus, private investment).

By , The Reformed Broker, 03/07/2014

MarketMinder's View: While we agree with the conclusions drawn here—that the bull market at five years of age has room to run—we’d caution against using pure technical analysis to support that assumption. Charts can be illustrative and very instructive, but they are not forecasting tools. They are depictions of the past—and the past isn’t telling about future returns.

By , Foreign Policy, 03/07/2014

MarketMinder's View: They aren’t. Our growing population of senior citizens is a testament to medical and technological advancement and overall quality of life—and they contribute to economic output and pay taxes like everyone else. None of the measures here claiming to show otherwise holds water. Entitlement spending represents a fraction of total outlays, and while it’s true discretionary government spending is falling, this piece flat ignores the private sector’s vast contributions to investment, R&D and overall growth.

By , The Wall Street Journal, 03/07/2014

MarketMinder's View: The “rush” alluded to here amounts to 42 companies that went public in January and February. Assuming that pace is unchanged, 252 firms would go public in 2014—a faster clip than in recent years, but still far below the period 1995-1999, when more than 400 firms went public annually. In addition, as Douglas Epstein details here, equity supply is down dramatically over the past decade. Supply of equities currently doesn’t seem stretched and a middling pace of IPOs isn’t solid evidence of euphoria.

By , Der Spiegel, 03/07/2014

MarketMinder's View: The European Parliament election is heating up, with national leaders already butting heads over how the next European Commission and Council Presidents should be chosen. The Lisbon Treaty says Parliament should elect the Commission chief, but some leaders prefer to keep the presidency as an appointed position. However the chips fall, expect plenty of politicking and horse trading—all of which could stall key measures, like the pending legislation on eurozone bank regulation and resolution.

By , The Yomiuri Shimbun, 03/07/2014

MarketMinder's View: The proposed changes would encourage small farms to consolidate—an interesting change that might rankle the Liberal Democratic Party’s agricultural power base. Whether this is an example of Prime Minister Shinzo Abe “drilling” through vested interests (to use his own metaphor) remains to be seen, but that his cabinet is considering a politically contentious change—and one necessary for Japan to join the Trans-Pacific Partnership—is certainly noteworthy.  

By , The Australian, 03/07/2014

MarketMinder's View: Australia’s Mineral Resources Rent Tax (MRRT), designed to raise government revenue by taxing mining firms, raised only A$232 million in fiscal 2013—despite mining companies’ profits rising. This is far below original forecasts, which presumed the tax take would be in the billions. The tax has proven nearly totally feckless for Aussie mining firms, and if Aussie Prime Minister Tony Abbott follows through on a campaign promise, a repeal looms.

By , Deutsche Welle, 03/07/2014

MarketMinder's View: January’s 0.8% m/m rise was a big jump from December’s 0.1%, offering further evidence Germany’s Q4 slowness was a blip.

By , The Washington Post, 03/06/2014

MarketMinder's View: Based on Wednesday’s arguments, the Supreme Court doesn’t appear to have strong leanings for or against the “fraud on the market” ruling underpinning most securities class actions. What they ultimately decide, however, is still anyone’s guess. For more, see our 03/05/2014 commentary, “Looking Beyond the Crimea—Policy Edition.”

By , CNN Money, 03/06/2014

MarketMinder's View: While some of the stats here aren’t quite right—the analysis ignores the bear market in 1990—the thesis is largely correct. This bull market isn’t as long in the tooth as people think. Moreover, while bull markets die for many reasons, age and magnitude alone aren’t among them. Looking ahead, the combination of still-skeptical investor sentiment and a positive political and economic backdrop points to more bull market. For more, see our 1/21/2014 cover story, “A Bullish 2014.”

By , The Telegraph, 03/06/2014

MarketMinder's View: This is a concise, backward-looking snapshot of how various asset classes have performed amid the escalation of the crisis in Crimea—and no more than that. It doesn’t tell you how the situation there will impact markets. Barring massive global escalation—an exceedingly unlikely outcome—its longer-term impact on global markets should be minimal considering the Ukraine is 0.2% of GDP and business continues largely as usual in the remaining 99.8%. For more on the Ukraine, see our 03/04/2014 cover, “Back in the USSR.”

By , The Telegraph, 03/06/2014

MarketMinder's View: This is a concise, backward-looking snapshot of how various asset classes have performed amid the escalation of the crisis in Crimea—and no more than that. It doesn’t tell you how the situation there will impact markets. Barring massive global escalation—an exceedingly unlikely outcome—its longer-term impact on global markets should be minimal considering the Ukraine is 0.2% of GDP and business continues largely as usual in the remaining 99.8%. For more on the Ukraine, see our 03/04/2014 cover, “Back in the USSR.”  

By , The Guardian, 03/06/2014

MarketMinder's View: While this interpretation of “black swan” doesn’t quite match the definition according to Black Swan author Nassim Nicholas Taleb, the advice is largely on point: As scary as big market gyrations like 2010’s flash crash and other quick selloffs can be, making a hasty, decision to get out typically isn’t the best move—short-term jumps and dives are impossible to predict, and experiencing volatility is the trade-off for achieving market-like returns over time.

By , Project Syndicate, 03/06/2014

MarketMinder's View: It shouldn’t be hard to see why Greek exports aren’t growing—output is down big throughout the country. If Greece is making less, it has less to export. If Greek officials can create a more favorable environment for starting a business, remove barriers to productivity and allow the private sector to grow, then exports will follow. That—and not trying to goose exports for the sake of a balanced current account (which just doesn’t matter)—is what Greece’s adjustment program aims to do. It just takes time and political will.

By , Australian Associated Press, 03/06/2014

MarketMinder's View: This story nicely captures current investor sentiment: Good news (in this case, rising Australian retail sales) is couched as something that can’t last. That’s not to say the Aussie economy shoots up from here—but until euphoric sentiment overshoots economic and fundamental market data, this bull market should have more room to run.

By , The Economist, 03/06/2014

MarketMinder's View: The Mt. Gox collapse illustrates one of Bitcoin’s biggest drawbacks: It’s easily susceptible to hacking schemes, and investors have no chance to recover losses like they would at an FDIC-insured bank. Once a Bitcoin is stolen, it’s gone forever—a major reason Bitcoin seems to be a long ways off from being a viable currency. For more, see Talia Hosenpud’s column, “Bitcoin Goes Boom.”

By , The Australian, 03/06/2014

MarketMinder's View: For many policymakers, GDP is the go-to stat in determining how productive a country’s economy is. But as this commentary rightfully (and colorfully) points out, there are many limitations to this measurement. The government’s contribution, for example, can both obscure strength and whitewash weakness in the private sector, creating a mismatch between total GDP and the economy’s underlying health. Investors shouldn’t rely on any one statistic as a perfect indicator of economic health—markets are too complex to be captured in one measurement.

By , CNN Money, 03/05/2014

MarketMinder's View: Analysts expect harsh winter conditions to weigh on February’s employment report (to be released Friday) like it did on January’s—a very likely scenario! But it’s nothing investors should worry much about: “If weather truly is the culprit, then the latest bout of weak data should prove temporary, and the economy will likely pick up in the spring.” Plus, employment is a lagging indicator—growth leads to jobs, not the other way around.

By , The Telegraph, 03/05/2014

MarketMinder's View: No surprises here: China’s leaders set 7.5% as their minimum tolerable growth rate for 2014 (likely planning to beat it—under-promise and over-deliver seems to be their M.O.) and reiterated their dedication to opening up China’s economy, with a bonus objective of cutting back pollution. Meeting these goals would certainly be beneficial, but leaders likely move very slowly so as not to sacrifice growth—we’d temper optimism over policy changes for now.

By , Bloomberg, 03/05/2014

MarketMinder's View: Inflation (and deflation) is a monetary phenomenon, and eurozone money supply is rising—albeit slowly. Weakness in eurozone money markets isn’t tied to “too tight” monetary policy, though—an onerous regulatory environment is incentivizing banks to hoard capital. Quantitative easing (QE) won’t change this any more than Japanese (or US or UK) loan growth. QE flattens yield curves, disincentivizing bank lending—and weighing on money supply growth and velocity in the process.

By , The Wall Street Journal, 03/05/2014

MarketMinder's View: The Dow is no more a “defensive” index than the S&P 500 is a “momentum” index—stocks are stocks. The Dow is simply a 30-stock, price-weighted index not fairly representative of overall markets (US or otherwise) in any environment.

By , The Guardian, 03/05/2014

MarketMinder's View: There are a number of misperceptions here, but the biggest (and most confusing) is the assumption big capital reserves at private firms mean they aren’t investing in the economy. But they are! US business investment has grown in all but two quarters since Q1 2010 (+7.3% in Q4 2013!) and hit an all-time high in Q4 2013. Research and development spending has fairly steadily grown since Q2 2009. High profits aren’t only for shareholders—they enable firms to keep boosting investment without depleting cash buffers, keeping balance sheets healthy (a good thing).

By , Der Spiegel, 03/05/2014

MarketMinder's View: Here’s a comprehensive review of the ECB’s upcoming stress tests on European banks and the uncertainty surrounding them. Banks don’t know the standards they’ll be held to, the ECB’s review team isn’t yet established, banks’ business models vary greatly per country and—the kicker—banks that fail could be liquidated or shut. For more on this and other regulatory headwinds for eurozone banks, see our 2/28/2014 commentary, “Deleverage or Deregulate.”

By , The Los Angeles Times, 03/05/2014

MarketMinder's View: One month’s slower growth isn’t necessarily a signal of worse data to come, especially if that decline occurred amid severe winter weather in much of the US. Tellingly, one of the biggest detractors was a contraction in the employment index, while forward-looking new orders grew faster.

By , Yahoo! News, 03/05/2014

MarketMinder's View: With Q4 2013 GDP rising +0.3% q/q, household spending still growing, final PMIs’ showing strong results and Germany, France, Italy and Spain all expanding, the eurozone’s economy seems to be in much better shape than sentiment suggests—reactions focused on “not enough growth” and still-high unemployment.

By , Bloomberg, 03/04/2014

MarketMinder's View: While base pay ticked up +0.1% y/y in January for the first time since March 2012 as companies raised part-time workers’ pay, Japan’s labor market still has a ways to go—full-time wages didn’t budge, and total pay dropped -0.2%. Plus, wage growth remains well behind inflation and April’s sales tax hike adds another burden on consumers. In our view, this isn’t the start of a Japanese consumption melt up.

By , EUbusiness, 03/04/2014

MarketMinder's View: With the EU and Russia’s relationship deteriorating amid the Crimean conflict, there are some concerns Vladimir Putin might cut off the natural gas that flows through Ukraine to the rest of Europe. But as this shows, Europe is ready—gas reserves are significantly higher than the last two times Putin cut supply, spring is around the corner, and Norway now plays a greater role in EU energy markets.

By , The Wall Street Journal, 03/04/2014

MarketMinder's View: Whether you love or loathe the President’s new budget, we’d suggest not getting too excited. Given the Senate has already passed a budget agreement for fiscal 2015, and given how divided the House and Senate are over fiscal matters, this stands almost no chance of passing.

By , The Australian, 03/04/2014

MarketMinder's View: And the award for most creative defense argument goes, once again, to S&P! After calling its own ratings “puffery” in response to criminal suits in the US, S&P employed the Top Gear defense Down Under, saying its ratings are like the TV program’s car reviews—only a guide. In other words, even the raters admit their decisions are matters of opinion, not hard, fast statements of a company or country’s creditworthiness. We’d also add that they’re backward-looking and don’t tell investors anything markets don’t already know. For more, see Todd Bliman’s 04/23/2013 column, “Puffery: S&P’s Magical First Amendment Defense.”

By , Quartz, 03/04/2014

MarketMinder's View: While Europe may have experienced heavy flooding in 2013, there is no guarantee the pace escalates from here or that it becomes anywhere near this costly. Long-term weather forecasts, like long-term economic forecasts, are fraught with peril. Whether you agree with the science here or not, economic conditions and technology change over long periods in ways few can predict today. 

By , Reuters, 03/04/2014

MarketMinder's View: French PMIs have shown contracting business activity since October, but the Treasury’s surveys have reported growth—and France’s GDP is up. The debate here shows one reason why: The Treasury’s survey has a bigger dataset. We’d add another: PMI surveys tell you how many firms are growing, but they don’t report the magnitude of growth (or decline) for each firm. If a minority of firms are growing, but they grow more than other firms contract, output will still rise.

By , BBC News, 03/04/2014

MarketMinder's View: Despite severe flooding, the construction PMI hit 62.6, indicating growth continued at a robust place and underscoring the UK’s economic strength.

By , CNBC, 03/03/2014

MarketMinder's View: Probably not, and this piece largely captures the reasons why. Ukraine’s economy is relatively small, representing 0.2% of global GDP, and outside of Russia, foreign banks’ exposure to the country is small. Investors also seem to realize Ukrainian currency volatility stems from country-specific issues, not anything categorical in Emerging and Frontier Markets. As for global markets, while events in Crimea likely weigh on investor sentiment in the short term, barring the conflict escalating into a major global event, its longer-term impact is likely minimal. For more, see our 3/3/2014 commentary, “Back in the USSR.”

By , Bloomberg, 03/03/2014

MarketMinder's View: For all the jitters about the weather’s impact on US manufacturing, factory activity accelerated in February, with new orders leading the charge. Production fell into contraction, but this was largely due to a shortage of parts, which points to a pickup in the near future as manufacturers replenish component inventories.

By , Seeking Alpha, 03/03/2014

MarketMinder's View: Calendars aren’t predictive. The observation that March is the S&P’s third-best month over the past 20 years is just, well, an observation. It means nothing for this March—or for stocks over the foreseeable future. We’re bullish, but not because of market returns over arbitrary past periods.

By , The Wall Street Journal, 03/03/2014

MarketMinder's View: No. The payouts are typically cents on the share, which usually doesn’t compare with potential losses caused by whatever behavior triggered the lawsuit in the first place. The settlements and legal fees also hurt the business’s costs, which hits current shareholders—which could very well include class action claimants. All things to keep in mind as the Supreme Court reviews the practice this week.

By , Bloomberg, 03/03/2014

MarketMinder's View: Slower Chinese manufacturing growth isn’t surprising given the government’s ongoing efforts to tackle steel and other supply gluts. The crackdown on shadow banking also doesn’t help, as it starves smaller, private firms of funding. But this isn’t indicative of broad economic weakness. As also described here, a separate survey showed faster growth in the service sector, which is now the largest component of China’s economy. Seems to us China is simply shifting as officials intend.

By , BBC News, 03/03/2014

MarketMinder's View: Regional growth slowed a bit, but the four largest economies—Germany, France, Italy and Spain—grew output simultaneously for the first time in nearly three years. Overall, this report is more evidence the region’s recovery is broadening.

By , The Telegraph, 03/03/2014

MarketMinder's View: While this might not kill the UK housing recovery, it is a timely example of new regulations’ unintended consequences. Starting in April, banks—not borrowers—are responsible for assessing the “affordability” of each new mortgage, and banks anticipate the arbitrary standards will force them to knock mortgage approvals by about one-third. While this would be a headwind, the UK economy runs on far more than real estate.