|By Michelle Kaske, Bloomberg, 05/31/2013|
MarketMinder's View: In our view, this rather overstates investors’ optimism. More likely, some investors are moving from US Treasurys to higher-yielding debt like corporates and munis because the Fed has depressed long-term interest rates through quantitative easing.
|By Staff, Reuters, 05/31/2013|
MarketMinder's View: This isn’t great news for the UK, but monthly data are always choppy. It will take time to see whether recent programs to boost small and medium business lending bear fruit and boost growth in the UK’s private sector.
|By Staff, EUbusiness, 05/31/2013|
MarketMinder's View: Should this happen, it would be Greece’s third default in less than two years. When Greece’s problems metastasized in 2010, most investors likely thought three consecutive Greek defaults would cause eurozone disintegration. That Greece weathered last year’s defaults without incident—and that a potential number three doesn’t seem to be rattling folks—speaks to how far the eurozone’s progressed and how investor confidence has improved.
|By Pingfan Hong, China Daily, 05/31/2013|
MarketMinder's View: An interesting look at some of the challenges facing China in the near term. Whether Chinese officials respond by further opening the economy and liberalizing the financial sector is likely a key market driver looking ahead.
|By Ambrose Evans-Pritchard, The Telegraph, 05/31/2013|
MarketMinder's View: Though the headline may be a touch overstated, this is a pithy look at how Brazil’s heavy-handed government has created economic headwinds via price controls, protectionism and currency manipulation. While this likely isn’t fully bearish for Brazilian stocks, the largest, most globally integrated Brazilian firms—those least impacted by domestic policy—likely fare best over the period ahead.
|By Staff, Xinhua, 05/31/2013|
MarketMinder's View: The more countries that sign up for the Trans-Pacific Partnership free trade bloc, the merrier, in our view—markets love free trade! At the same time, we’d suggest tempering enthusiasm as large trade deals like this have historically proven difficult to finalize.
|By Santanu Chakraborty and Buma Shrivastava, Bloomberg, 05/31/2013|
MarketMinder's View: On June 3, a rule mandating company founders hold no more than 75% of publicly listed Indian firms takes effect, and many executives are tendering huge amounts of shares in advance. Such an increase in stock supply is a potential negative, but in this case, it seems robust foreign demand for these shares is offsetting the supply increase—a positive for Indian markets.
|By Staff, EUbusiness, 05/31/2013|
MarketMinder's View: This is an interesting development, but it’s likely not a eurozone game changer—for better or worse. With or without a full-time “euro chief,” the region likely remains weak for some time as nations work to regain competitiveness. However, the global impact of a weak eurozone is limited—the global economy likely continues growing ok, and markets likely keep marching upward on the many underappreciated positives at work.
|By Staff, EUbusiness, 05/31/2013|
MarketMinder's View: The continued tit-for-tat over import “dumping” remains worth watching, as these disputes could potentially escalate into wider-spread protectionism—historically a negative for stocks. However, for now, the disputes appear isolated, and global trade is trending freer.
|By David Wessel, The Wall Street Journal, 05/30/2013|
MarketMinder's View: We’d argue the economy is far healthier—and issues like the watered-down sequester are far less impactful—than this piece suggests. From solid corporate earnings led by a robust private sector to underappreciated housing growth, evidence points to broad strength, which in turn, suggests stocks have plenty of fuel to run on as investors become more optimistic.
|By John O’Donnell and Ilone Wissenbach, MSN Money, 05/30/2013|
MarketMinder's View: A welcome development, as the proposed tax would likely hollow out the participating nations’ financial and corporate sectors. The more it’s delayed and watered down, the better off capital markets likely are.
|By Ylan Q. Mui, The Washington Post, 05/30/2013|
MarketMinder's View: An example of how many are over-focused on the Fed’s potential tightening. In our view, folks should welcome the end of QE, not fear it—allowing the yield curve to steepen likely gooses bank lending and economic activity, giving stocks another tailwind.
|By Thomas Brown, BankStocks, 05/30/2013|
MarketMinder's View: A mostly sensible take on the limited impact of ratings agencies. Ratings agencies are usually late to the game—in this case, one rater has only just upgraded the US banking industry from “negative” to “stable,” even though the industry’s been on the mend for years and earned record-high profits in Q1. Markets largely ignore these scores, which typically confirm information stocks have already discounted.
|By Staff, Xinhua, 05/30/2013|
MarketMinder's View: The best innovation tends to happen organically, not when mandated by government. Relaxed regulations would be more effective than forced edicts at stimulating innovation. Markets would likely see such loosening on the private sector as a positive, too.
|By Yi Whan-woo, The Korea Times, 05/30/2013|
MarketMinder's View: Though this isn’t a panacea for Korea’s competition issues, it seems a sensible way to promote entrepreneurship and small business development—absent enthusiastic private bank lending, that is. How Emerging Markets like Korea and China foster private sector growth likely has some influence on those nations’ stock returns looking ahead.
|By Mitsuru Obe, The Wall Street Journal, 05/29/2013|
MarketMinder's View: It seems Japanese Prime Minister Shinzo Abe will outline his “third arrow” in the coming days, but if this report is accurate, it would appear his announcement will target mostly politically easy reforms carrying little real economic benefit, not more challenging ones bringing a greater economic return.
|By Diana Olick, CNBC, 05/29/2013|
MarketMinder's View: In our view, it’s hard to argue still-low mortgage rates and rising home prices (after a steep decline) is a recipe for disaster. Further, rising prices are a function of tight supply and increased demand driving a housing market recovery, supported by a healthy economy. For more, see our 05/29/2013 cover story, “Underappreciated—Not Underperforming.”
|By Razeen Sally, The Wall Street Journal, 05/29/2013|
MarketMinder's View: We’re all for freer global trade, and clearly, free trade agreements can help in that regard—a boon to the global economy. But they’re no panacea. Many trade pacts today overlook the fact exports are typically made of multiple imports from various countries—hence, caveats to agreements, like “country of origin” rules, potentially limit global trade more than the pact can promote it.
|By Avinash Persaud, Financial Times, 05/29/2013|
MarketMinder's View: Restrictions to freely trading in markets likely ultimately limit market activity, potential for profits (for businesses and individuals) and economic growth. A financial transaction tax is fodder for such unintended consequences.
|By Staff, EUbusiness, 05/29/2013|
MarketMinder's View: Once again, the EU shows its targets are more a political construct than an actual requirement. For this reason, one shouldn’t worry about the global market impact of missing such arbitrary lines in the sand.
|By Sara Sjolin, Market Watch, 05/29/2013|
MarketMinder's View: The concept of QE coming to an end isn’t necessarily negative, in our view—the flatter yield curve reduces banks’ incentive to lend. In essence, what the OECD is saying is that a monetary policy error—in this case, sharply and suddenly changing directions with respect to bond buying—could negatively affect the bond markets and economy. And that’s true! But it’s always true. However, should the Fed exit via a more gradual process, there’s no reason for it to have such dire effects.
|By Zheng Yangpeng, China Daily, 05/28/2013|
MarketMinder's View: China’s ability to foster small and private business growth will be key to its long-term economic performance—and whether officials put policies in place for this to happen (as well as broader financial liberalization) is likely a key driver of Chinese stock returns looking ahead.
|By Alen Mattich, The Wall Street Journal, 05/28/2013|
MarketMinder's View: In our view, evidence overwhelmingly suggests stocks are undervalued. Equity valuations (e.g., price-to-earnings ratio) are still relatively cheap, both compared to historical levels and levels witnessed earlier in this bull market. Plus, stocks haven’t risen nearly as quickly, nor as high, as corporate earnings. The market isn’t without risk but, in our view, fundamentals point to more upside from here
|By Helena Smith, The Guardian, 05/28/2013|
MarketMinder's View: It seems the country’s privatization program is finally progressing a bit—a welcome (though incremental) step forward for Greece. Continued eurozone progress is likely a tailwind for investor sentiment.
|By James Fontanella-Khan, Financial Times, 05/28/2013|
MarketMinder's View: The European Commission’s potentially inconsistent responses to high-deficit EU member-states bear watching, as erratic government intervention tends to spook stocks. However, officials still seem willing to compromise and relax deficit targets for the most troubled states, which is likely more meaningful for global stocks for now.
|By Philip Aldrick, The Telegraph, 05/28/2013|
MarketMinder's View: The Financial Transactions Tax would likely be a small negative for European stocks, too, since it would punish anyone trading a share of a firm domiciled in the FTT zone.
|By Leah Schnurr, Reuters, 05/28/2013|
MarketMinder's View: Though housing is a small piece of the US economy, rising prices likely incentivize new construction—a slight economic tailwind. Moreover, investors don’t yet seem to fully appreciate how well housing has rebounded, so there’s ample room for continued improvement to lift investor sentiment.
|By Jason Zweig, The Wall Street Journal, 05/28/2013|
MarketMinder's View: In our view, Japan’s recent selloff likely isn’t a sign US stocks will tank once the Fed pulls back QE. Rather, it’s a sign Japanese stocks have come pretty far pretty fast, and fundamentals don’t quite support the rise. US fundamentals appear much stronger, making our outlook for US stocks much brighter than for Japanese markets.
|By Keith Bradsher, The New York Times, 05/28/2013|
MarketMinder's View: The ongoing trade tiff between the EU and China bears watching as it could very well lead to rising protectionism. At the moment, however, the world is still tilting toward freer trade overall—a positive for stocks.
|By Elaine Kurtenbach, Associated Press, 05/24/2013|
MarketMinder's View: So far, it appears Japanese officials aren’t reacting erratically to this week’s stock and bond market volatility, which may help instill investor confidence. However, for Japanese equities to experience a truly sustainable rally (and for the economy to recover), Prime Minister Shinzo Abe will likely have to pursue deep economic reform.
|By Staff, Reuters, 05/24/2013|
MarketMinder's View: Another sign of the US private sector’s underappreciated strength—one of many positive fundamentals for stocks.
|By Staff, Xinhua, 05/24/2013|
MarketMinder's View: Those who fear monetary tightening could weigh on Chinese stocks will likely be pleased to see the central bank has continued supporting liquidity as needed. Though it’s also worth noting monetary policy isn’t the sole driver of Chinese equity returns—progress toward financial liberalization will also be key looking ahead.
|By Szu Ping Chan, The Telegraph, 05/24/2013|
MarketMinder's View: More evidence the eurozone’s stronger core can help pull the weaker periphery along. Plus, as market fundamentals remain strong outside of Europe, global stocks can likely continue rising while the eurozone economy remains weak.
|By Staff, EUbusiness, 05/24/2013|
MarketMinder's View: Even with the EU establishing preconditions for free-trade negotiations, this is a noteworthy step. Free trade between Europe and the US won’t just benefit both economies—stocks like free trade, too.
|By Michael Rappaport, The Wall Street Journal, 05/24/2013|
MarketMinder's View: This seems a sensible step toward improving market transparency (good for stocks), and it’s a noteworthy sign of economic cooperation between the world’s largest economies.
|By Geoffrey T. Smith, The Wall Street Journal, 05/24/2013|
MarketMinder's View: An incremental but noteworthy sign of continued eurozone progress.
|By Andrew Sheng and Xiao Geng, Project Syndicate, 05/23/2013|
MarketMinder's View: China’s made progress on property rights and ensuring fair competition, but it still lacks adequately transparent institutions and judiciary to ensure its private firms can compete. How officials tackle this challenge will be key, and reform plans and progress likely influence Chinese stock returns looking forward.
|By Ashoka Mody, Project Syndicate, 05/23/2013|
MarketMinder's View: The global economy isn’t all rosy, but it’s also healthier than many suspect. Moreover, markets long ago digested the eurozone’s woes and other issues discussed here, and stocks likely don’t need robust economic growth to keep rising.
|By Martin Crutsinger, Associated Press, 05/23/2013|
MarketMinder's View: Though housing comprises just a small part of the US economy, continued growth in home sales is likely a slight economic tailwind—as housing continues recovering, construction likely picks up, with many downstream economic effects. Plus, as housing’s newfound strength catches people off guard, it could very well boost investor sentiment a bit—positive for stocks.
|By Daniel Inman, The Wall Street Journal, 05/23/2013|
MarketMinder's View: These seem like odd reasons to attribute Japan’s selloff to. The recent rally seems based on sentiment, not fundamentals, and it’s natural for sentiment to take a breather after such a strong, largely uninterrupted run.
|By Staff, EUbusiness, 05/23/2013|
MarketMinder's View: The US’s shale boom and the cheap energy it provides has caught the attention of Europe, which spends about €1 billion per day on imported energy. If Europe allows shale to develop the US did, energy would likely get cheaper, helping firms be profitable and more productive—a potential tailwind for European growth in the future.
|By Harry Wilson, The Telegraph, 05/23/2013|
MarketMinder's View: It seems UK banks may finally get some regulatory relief, as the new regulatory body has thrown out the Bank of England’s earlier claims that some banks are undercapitalized. Raising capital would have required banks to hoard cash—a negative for lending and economic activity—or issue new equity, a negative for share prices.
|By Jeremy Warner, The Telegraph, 05/23/2013|
MarketMinder's View: In our view, recent market volatility demonstrates more that many investors remain falsely convinced quantitative easing is the only thing propping up stocks. Typically, fears of a falsehood are bullish—when investors realize they’re wrong, there’s ample room for stocks to surprise to the upside.
|By Tom Fairless, The Wall Street Journal, 05/23/2013|
MarketMinder's View: The EU’s decision to delay Solvency II requirements for pension funds is a noteworthy regulatory development. Had the proposed rules taken effect, pension funds likely would have had to adjust capital balances on the fly, resulting in funds making very short-term trading decisions that could run counter to their long-term goals and obligations—potentially causing ripples in markets
|By Jeremy van Loon and Rebecca Penty, Bloomberg, 05/22/2013|
MarketMinder's View: Pipelines are vital for Canada to make the most of its new oil-sands exploration—natural resources need an efficient means of distribution. Hence, hampering oil pipeline development could also hamper economic activity and growth.
|By Aan Zibel and Sarah Portlock, The Wall Street Journal, 05/22/2013|
MarketMinder's View: The US housing market continued improving in April, with sales at a 4.97 million units seasonally adjusted annual pace (+9.7% y/y)—the highest level since November 2009. Also interestingly, sales of foreclosed properties fell in the month, showing banks’ property liquidations were a non-factor in April’s sales gains.
|By Craig Torres, Bloomberg, 05/22/2013|
MarketMinder's View: A flattening yield curve disincentivizes bank lending and subsequently lessens economic activity. Hence, it’s unsurprising inflation’s not running rampant. Neither, however, argues for greater continued or greater QE.
|By Allan Sloan, CNN Money, 05/22/2013|
MarketMinder's View: This argument starts from a fallacious point and draws incorrect conclusions, in our view. The Fed’s actions overall aren’t a buoyant force driving big economic gains, the sequester has had little to no effect, and TARP’s passage in 2008 didn’t stop the financial crisis or even materially help (remember: the market trough is March 9, 2009, not October 2008 when TARP passed). All in all, this is giving government too much credit for its economic impact, for good or ill.
|By Ainsley Thomson and Paul Hannon, The Wall Street Journal, 05/22/2013|
MarketMinder's View: If “austerity” is taken as “budget cuts”—as it appears to here—then the UK’s seen very little (to no) austerity recently. In our view, the UK would fare better under increased regulatory clarity than higher government spending.
|By Jason Lange, Reuters, 05/21/2013|
MarketMinder's View: We commonly see folks complaining the US is too debt laden, but now, it’s cutting its deficit too much? In our view, there’s little to fear here. The deficit is falling, in large part, due to higher tax receipts from higher income.
|By Johan Carlstrom and Niklas Magnusson, Bloomberg, 05/21/2013|
MarketMinder's View: More potential regulatory overreach, which could put a damper on lending and overall economic activity.
|By Philip Aldrick, The Telegraph, 05/21/2013|
MarketMinder's View: Stocks aren’t tied to economic growth—they’re tied to publicly traded firms. With stock growth still lagging earnings growth during this bull market, there’s not much evidence stocks are overvalued. For more, see today’s cover story, “All-Time Highs … and Still Undervalued?”
|By Marek Strzelecki, Bloomberg, 05/21/2013|
MarketMinder's View: Shale gas exploration and production could benefit Poland tremendously—but not if the government punishes producers with super-high taxes. The more firms are allowed to profit, the more incentive they’ll have to develop the resource, and the more Poland will likely gain.
|By Todd Buell, The Wall Street Journal, 05/21/2013|
MarketMinder's View: And rightly so. Despite the tremendous drag of its neighbors, Germany’s competitive government remains structurally competitive and should be fine going forward.
|By Editorial Board, The Wall Street Journal, 05/21/2013|
MarketMinder's View: “Extensive labeling requirements will hit small, traditional producers the hardest, and they’ll stop inventive restaurants from serving oil infused with herbs and other flavorings.” Just another example of how well-intended regulations can carry unintended consequences.
|By Deborah Ball and James R. Hagerty, The Wall Street Journal, 05/21/2013|
MarketMinder's View: For folks who fear the US is doomed to the fate of the PIIGS, a reminder the US, for its faults, is pretty darn competitive.
|By Brett Arends, The Wall Street Journal, 05/20/2013|
MarketMinder's View: In our view, there’s no “cognitive dissonance” between low Treasury yields and high stock prices. Yields are artificially low due to the Fed, and stocks are rising in sympathy with corporate earnings. And 12-month trailing and forward P/Es—which are far more relevant than the 10-year trailing P/E used here—remain low by historical standards, suggesting investors don’t fully appreciate how strong corporate America is.
|By Ambrose Evans-Pritchard, The Telegraph, 05/20/2013|
MarketMinder's View: We don’t see much evidence markets are “euphoric” or rising on QE alone. Much of the QE money globally is on deposit at the central banks as excess reserves, not leaking into stocks, and yield-hungry institutional investors are shifting more into higher-yielding fixed income than stocks. That said, we’d welcome an early end to QE, which is contractionary—it flattens the yield curve, which reduces banks’ incentive to lend and thus hampers economic activity.
|By Amy Schatz, The Wall Street Journal, 05/20/2013|
MarketMinder's View: It seems several states are jumping the gun and planning how to spend online sales tax revenue before Congress approves the Marketplace Fairness Act—potentially a risky maneuver, considering the bill appears unlikely to pass the House. Plus, even if it’s passed, states may get less revenue than anticipated as shoppers may gravitate away from sales-tax-charging online retailers. For more, see our 4/24/2013 cover story, “Tax Shenaniganery.”
|By Holly Ellyatt, CNBC, 05/20/2013|
MarketMinder's View: A new report shows some French households’ tax bills exceeded their annual income in 2012—which could very well be one big reason France is back in recession. In our view, lowering tax rates and allowing households to spend more money as they see fit would likely help bolster growth.
|By Steven Mufson, The Washington Post, 05/20/2013|
MarketMinder's View: After much debate, the US gave an LNG export terminal permission to send LNG to Japan. In our view, this is a win for all involved as cheaper natural gas should help Japan combat rising energy costs (post-Fukushima) and US firms can potentially reap higher profits by selling into pricier foreign markets.
|By Mark J. Perry, AEIdeas, 05/20/2013|
MarketMinder's View: Another great example of how innovation—the offspring of free markets—can help improve quality of life. In this case, advancements in 3D printing technology give amputees more options for prosthetic limbs.
|By Staff, Economist, 05/20/2013|
MarketMinder's View: China has a lot of low-hanging fruit for economic reform, and as this piece shows, progress on this front could provide a big boost. The government appears to understand longer-term economic success will require strong domestic demand, a robust private sector and more economic freedom, and officials have announced broad reform plans. Whether action follows, however, remains to be seen. Events here bear watching as Chinese leaders likely grapple with some policy give-and-take. For more, see our 4/16/2013 cover story, “Chinese Checkers.”
|By Jim Puzzanghera, Los Angeles Times, 05/20/2013|
MarketMinder's View: It seems more folks are realizing the sequester isn’t as impactful as feared—strong businesses and consumers can more than offset slower government spending. For more, see our 4/3/2013 cover story, “Seq-Watered-Down.”
|By Allan S. Roth, The Wall Street Journal, 05/20/2013|
MarketMinder's View: Whether you’re considering an annuity (the topic here) or any other investment, it’s important to do your due diligence and find out what incentive your adviser has to recommend a particular product—and read all of the prospectus’s fine print—to determine whether it’s really in your best interests.
|By Daniel Gross, The Daily Beast, 05/20/2013|
MarketMinder's View: Venezuela’s toilet paper shortage highlights the unintended consequences of government intervention in markets—specifically, price and currency controls.
|By Editorial Staff, Bloomberg, 05/17/2013|
MarketMinder's View: Actually, in our view, there’s ample data showing stocks’ recent rally isn’t a Fed bubble or otherwise driven by credit. Most of the money printed by the world’s central banks is sitting as excess bank reserves, and bank lending hasn’t meaningfully increased. Yes, margin debt has risen on an absolute level, but the ratio of margin debt to cash is well below historical levels, suggesting claims of a market rally built on fragile leverage are unfounded.
|By Alan Tonelson, Bloomberg, 05/17/2013|
MarketMinder's View: If the complex protectionist system touted here were really the solution for poor working conditions in developing-world garment factories, then why were conditions in many nations so poor during its 1974-2005 existence?
|By Ambrose Evans-Pritchard, The Telegraph, 05/17/2013|
MarketMinder's View: While a weak yen contributed to the 1997 Asian currency crisis, today’s weak yen doesn’t necessarily herald a repeat. Most of 1997’s trauma came from Asian nations defending, then discarding misaligned currency pegs. Today, these countries largely have free-floating currencies, making them less vulnerable to yen movement. For more, see our 4/23/2013 column, “Now and Yen.”
|By Staff, Der Spiegel, 05/17/2013|
MarketMinder's View: The apparent disconnect between Germany Chancellor Angela Merkel and French President François Hollande isn’t necessarily as meaningful as this piece suggests—more likely, it’s a function of temporary domestic political interests. Merkel has a re-election campaign to fight and, thus, a vested interest in not appearing too lenient with eurozone partners, while Hollande is fending off members of his cabinet who think he’s untrue to his Socialist party’s agenda. But that needn’t prevent compromise on eurozone matters when necessary.
|By Staff, EUbusiness, 05/17/2013|
MarketMinder's View: Bank stress tests are largely window-dressing—they don’t really tell you how a bank will respond to actual stress. To wit, Cyprus’s now-failed Laiki bank passed 2010 stress tests with flying colors.
|By Editorial Board, The Wall Street Journal, 05/17/2013|
MarketMinder's View: Fiscal and monetary stimulus gave Japan a boost in Q1, but sustained growth likely requires deep structural reform—and this piece highlights many of the most glaring needs. Prime Minister Shinzo Abe may have the rare political capital to pull off meaningful change, but whether he can seize the opportunity remains to be seen.
|By Fisher Investments Editorial Staff, The Street, 05/17/2013|
MarketMinder's View: Our latest for The Street, on the underappreciated health of US demand.
|By Staff, Reuters, 05/17/2013|
MarketMinder's View: While LEI’s not a perfect gauge of economic direction, a high and rising LEI is one more sign of the US’s underappreciated economic strength.
|By Jeremy Warner, The Telegraph, 05/17/2013|
MarketMinder's View: “As this week’s dismal GDP figures demonstrate, Europe desperately needs some kind of deregulatory growth agenda, and yet it seems determined only on the reverse. To be pushing ahead with a stifling and invasive initiative at a time of deepening recession fair takes the breath away.” On the bright side, though, many in Europe have seemingly started realizing this, and the financial transactions tax looks increasingly likely to get watered down or scrapped altogether.
|By Staff, Jiji Press, 05/17/2013|
MarketMinder's View: Though both nations would likely be better off if Japan scrapped the beef tariff altogether, reducing it from 38% to 30% could help them get past one of the remaining sticking points in their free-trade negotiations.
|By Steve Goreham, The Washington Times, 05/17/2013|
MarketMinder's View: Here’s an interesting look at the economic inefficiencies of solar energy. In our view, if an industry can’t profit without massive taxpayer subsidies, its time likely hasn’t come yet—markets, not governments, will tell us when solar’s the way to go.
|By Howard Schneider, The Washington Post, 05/17/2013|
MarketMinder's View: Removing Bangladesh’s preferential market access may seem like an obvious policy response to deplorable working conditions in the nation’s garment factories, but as this piece highlights, it’s not necessarily the best solution. It could very well whack Bangladeshi workers without inciting the government to tackle the corruption enabling overcrowded, shoddily constructed factories.
|By Staff, Central News Agency, 05/17/2013|
MarketMinder's View: Absent official diplomatic relations with most of the world, these economic cooperation agreements are about as close to free trade as Taiwan can get with anyone other than China. Taiwan’s progressing on several such pacts, which should promote trade growth both on the island and throughout Asia.
|By Christopher Rugaber, Time, 05/16/2013|
MarketMinder's View: Higher jobless claims during one week isn’t great—but weekly data are incredibly volatile. What’s more telling is the four-week and longer-term averages have decreased, and as the US private sector continues to grow, that’s likely to continue.
|By Christopher Matthews, Time, 05/16/2013|
MarketMinder's View: Higher tax revenues lowering the budget deficit isn’t necessarily an economic positive. It just means funds the healthy private sector could put toward growth-generating activities are instead going to government coffers—where they’re likely used inefficiently, slowly and (often) for political, not economic, gain.
|By Staff, Bloomberg, 05/16/2013|
MarketMinder's View: Tit for tat at work. First the EU slaps China, then China figures out a means of retribution. None of this is productive or generates a positive economic return, and it all likely makes solar energy even less cost-competitive than it was before. In our view, this primarily illustrates how government involvement in trade generally hurts much more than it helps.
|By James Kanter, The New York Times, 05/16/2013|
MarketMinder's View: If the airlines in question didn’t pay the carbon tax, why would the EU be convinced they’ll pay a fee for the offense? Moreover, all this seems a very trivial thing to go after China’s state-run airline for.
|By Staff, Associated Press, 05/16/2013|
MarketMinder's View: “Monetary policy can't solve the problems that have to be solved by financial and economic policy, structural policy.” We agree—in fact, excessive quantitative easing is often contractionary, as we’ve written.
|By Emma Rowley, The Telegraph, 05/16/2013|
MarketMinder's View: And if it does, expanding shale gas exploration likely benefits the UK’s economy—promoting increased industry, jobs and domestic and foreign investment and potentially lowering dependence on foreign energy.
|By Ana Palacio, Project Syndicate, 05/16/2013|
MarketMinder's View: Spot on, in our view. The World Bank’s Doing Business study is a valuable assessment of some major contributors to national development and advancement. For more, see MarketMinder Managing Editor Lara Hoffmans’ recent Forbes column, Mind Your Own Doing Business.
|By Charles Riley, CNN Money, 05/16/2013|
MarketMinder's View: 3.5% y/y growth is good short-term news for any economy and perhaps suggests the weakened yen may have provided a bit of a bump, but Japan really needs structural reform for sustainable economic growth.
|By Daniel J. Arbess, The Wall Street Journal, 05/15/2013|
MarketMinder's View: There’s not much evidence the US economy needs stabilizing or a demand boost—consumer spending and business investment are at all-time highs and growing. Giving Fed-issued “helicopter money” to Congress to spend in order to strengthen the “recovery” would just likely bring economic distortions and crowd out the private sector.
|By Mark Thompson, CNN Money, 05/15/2013|
MarketMinder's View: Trade relations between the EU and China have been deteriorating into tit-for-tat allegations of “unfair” trading practices (e.g., “dumping” products below market price), and this is the latest salvo. Creeping protectionism is a negative and worth watching, though for now, on balance, trade is still getting freer globally.
|By Cadie Thompson, CNBC, 05/15/2013|
MarketMinder's View: No doubt cheaper venture capital helps start-ups, but we’d argue a bigger reason they’re being bought up at high prices has less to do with the Fed’s monetary policy and more to do market forces dictating the worth of the start-ups, as well as the general strength of the purchasing companies to make such an acquisition.
|By Anne D'Innocenzio, Associated Press, 05/15/2013|
MarketMinder's View: This private-sector-driven solution seems a step in the right direction to prevent future tragedies, though it’s not a panacea. The biggest improvements likely come from reducing government corruption and reforming the permitting processes that allowed shoddy buildings to be constructed and inhabited by employees in the first place. The World Bank’s latest Doing Business report further highlights the need for institutional change in Bangladesh and other developing-world garment manufacturing hubs.
|By Doug Bandow, Cato at Liberty, 05/15/2013|
MarketMinder's View: Burma’s (Myanmar) made great strides toward political and economic freedom, and its progress is encouraging. Yes, there’s much to be done, especially in quelling ethnic violence, but if the Burmese government continues to relax its grip and promote foreign investment and trade, the future should be bright for a country that once endured one of the modern world’s most oppressive regimes.
|By Staff, Central News Agency, 05/15/2013|
MarketMinder's View: An interesting development in Indonesia, which is setting up an island (Morotai) as a special economic zone geared towards Taiwanese investors. Though Morotai is still a work in progress, projects aiming to boost trade ties, scientific exchange and other beneficial relations could be a model for similarly free commerce throughout the region.
|By Jeannette Neumann, The Wall Street Journal, 05/14/2013|
MarketMinder's View: We’d suggest the proposed legislation would still position credit-ratings agencies as exclusive raters of bonded debt. It would be better to eliminate regulations’ reliance on them and change the payment model to user-pays. This would effectively put them on par with sell-side stock analysts.
|By Joel Kotkin, The Daily Beast, 05/14/2013|
MarketMinder's View: Companies in Silicon Valley have the same general goals as any other private business in the world: Make money (via product or service) and protect their interests (including but not solely through political means) or risk going out of business. To suggest a certain sector has an alternative agenda and aspires to control our lives seems a bit too conspiracy-laden for us to take.
|By Staff, BBC News, 05/14/2013|
MarketMinder's View: A disappointing development for advocates of public discourse, as the TV station was considered to be the only media source willing to criticize Venezuela’s authoritarian government. The channel’s new management has announced its editorial line will move “toward the centre” (read: in line with government ideology). For more about Venezuela, see our 03/07/2013 cover story, “Viva Venezuela!”
|By Brad Tuttle, Time, 05/14/2013|
MarketMinder's View: “Because imports are so beneficial to so many groups in America, policymakers should avoid legislation that involves trade tariffs and any practices that ‘limit the benefits of imports to the US economy.’” There’s a cause we can get behind!
|By Richard Cooper and Richard Dobbs, Project Syndicate, 05/14/2013|
MarketMinder's View: In the United States, Internet-based businesses have sometimes been viewed at odds with brick and mortar retail. In China, as this article points out, the retail landscape is still quite malleable, and Internet marketplaces will be able to shape how business is conducted. The developments and innovations made in Chinese “e-tail” may have an impact on the future of retail and bear watching
|By Alex Brittain, The Wall Street Journal, 05/14/2013|
MarketMinder's View: While far from gangbusters growth, it seems the pace of year-over-year eurozone contraction has slowed some in a number of economic data series, with volatile monthly readings suggesting growth may have returned in Q1.
|By Staff, The Yomiuri Shimbun, 05/14/2013|
MarketMinder's View: Here’s an interesting look at recent polling data involving Japanese Prime Minister Shinzo Abe’s two primary (and seemingly, competing) platform priorities: revitalizing the economy and rewriting Japan’s pacifist constitution. For more, see our 04/25/2013 cover story, “Abe’s Constitutional Gambit.”
|By Simon Johnson, Bloomberg, 05/13/2013|
MarketMinder's View: We wouldn’t necessarily call the Fed’s slow-go here a fail—quickly implementing vague regulations like Title II of Dodd-Frank can bring unintended consequences. In this case, requiring banks to fund operations differently and hold more capital could hinder economic growth as they have less capacity to lend.
|By Mohamed El-Erian, CNN Money, 05/13/2013|
MarketMinder's View: This characterization of the US as a lackluster economy propelled only by the Fed seems misplaced. To the contrary, the US economy is growing despite the Fed’s contractionary monetary policy, corporate earnings are at all-time highs and growing, and consumers and businesses are spending plenty.
|By Telis Demos and Matt Jarzemsky, The Wall Street Journal, 05/13/2013|
MarketMinder's View: High IPO issuance, framed as bullish here, is more of a risk—it increases stock supply, which can pressure prices absent higher demand. It’s not a huge risk right now, with plenty of share buybacks to offset new issuances, but it bears watching.
|By Whitney Kisling, Bloomberg, 05/13/2013|
MarketMinder's View: Throughout this bull market, stocks have risen in tandem with corporate earnings, which is a good sign the run is far from over—market fundamentals are strong and sentiment largely remains skeptical, so there’s plenty of room for investors to bid prices higher.
|By Mark J. Perry, AEIdeas, 05/13/2013|
MarketMinder's View: In our view, this video highlights well the myriad benefits of competition and free markets.
|By Chuck Jaffe, MarketWatch, 05/13/2013|
MarketMinder's View: Our quibbles with very long-term forecasts and the Dow in general aside, this piece makes two important, oft-overlooked points. One, over time, stocks rise much more often than not, and there doesn’t appear to be a catalyst to change that looking ahead. And two, though reaching milestones is always nice, “a new level for the stock market is more like crossing a state-line than breaking the sound barrier. It signals a new territory is being entered; it doesn’t change the game.”
|By Bruce Einhorn, BusinessWeek, 05/13/2013|
MarketMinder's View: China’s food prices are rising, and the country’s policy of self-sufficiency seemingly bears much of the blame. If China relied less on local farmers and more on imports, food supply would likely improve, helping prices moderate. And other nations would benefit from increased trade—a win for all involved.
|By Damian Paletta, The Wall Street Journal, 05/10/2013|
MarketMinder's View: It’s great that higher revenues give Congress some debt ceiling wiggle room, but we’re fairly confident in politicians’ ability to politick and dither when the time comes—and market jitters could very well accompany the likely kerfuffle. However, the debt ceiling itself remains an arbitrary construct, and if we hit it, the Treasury has several ways to continue meeting obligations.
|By Edward Wyatt, The New York Times, 05/10/2013|
MarketMinder's View: While it’s great that the government plans to auction more wireless spectrum rights to improve consumer choice and pricing in in-flight Wi-Fi, the fact it will take at least two years for us to see the results speaks to the amount of bureaucracy and red tape hampering progress throughout the entire economy.
|By Staff, EUbusiness, 05/10/2013|
MarketMinder's View: This is likely a tit-for-tat move in response to the EU’s proposed 47% tariff on solar panel imports from China. Tariffs are typically a solution in search of a problem—protectionism begets more protectionism, which could make goods more expensive and limit the flow of goods and services globally. At the same time, these small disputes tend not to have an outsized economic impact.
|By Simone Foxman, Quartz, 05/10/2013|
MarketMinder's View: An interesting look at how Dodd-Frank has created winners and losers in US banking. Medium banks have grown nicely since the law’s passage, but the smallest banks are struggling due to prohibitively high compliance costs. In our view, a better piece of legislation wouldn’t distort competition like this.
|By Staff, EUbusiness, 05/10/2013|
MarketMinder's View: This package isn’t a panacea and doesn’t guarantee Slovenia avoids a bailout, but privatizations and other reforms should help shore up public finances and help Slovenia become more competitive over time.
|By Staff, Central News Agency, 05/10/2013|
MarketMinder's View: By ending double-taxation, Taiwan and Germany have seen a huge boost in cross-border investments, and citizens in both sides should benefit from the freer flow of capital.
|By Nasreen Seria and Chris Kay, Bloomberg, 05/10/2013|
MarketMinder's View: That African nations like Nigeria and Rwanda can get financing on global markets at competitive rates speaks to how far they’ve progressed economically in recent years. As these nations develop, modernize and become larger players in the world economy, their citizens likely become better off, and we all should benefit from a more competitive global supply chain.
|By Eoin Burke-Kennedy, The Irish Times, 05/10/2013|
MarketMinder's View: More evidence the ECB’s transmission mechanism—the impact its policies have on eurozone economies—is broken. How the ECB chooses to address this will be key over the period ahead. For more, see our 5/3/2013 cover story, “Tricky (Central) Bank Predicaments.”
|By Rana Foroohar, Time, 05/09/2013|
MarketMinder's View: This is an excellent documentation of rampant skepticism, suggesting we’re not at a bull market’s typically euphoric peak. Further, we believe the Fed’s stimulus is actually contractionary in the sense reducing bank profits isn’t an incentive to lend. Hence, QE money is largely parked back at the Fed earning risk-free interest—not the stuff of bubbles. A gap between sentiment and fundamentals is indeed driving stocks—it’s just that the gap is skepticism of a stronger-than-appreciated private sector.
|By Wayne Ma, The Wall Street Journal, 05/09/2013|
MarketMinder's View: A disappointing development in the name of free and open markets—tariffs and other forms of protectionism discourage trade and may harm relations for future business deals. Also, those interested in solar energy may be negatively affected, as tariffs are often just passed on to consumers—raising costs.
|By Staff, Bloomberg, 05/09/2013|
MarketMinder's View: So what criteria should we grade the ratings by? We generally view ratings agencies’ opinions with skepticism—they carry conflicts of interests, don’t have a great track record and aren’t predictive of anything meaningful. Now we have another reason: They claim to have no track record at all.
|By Joseph Sternberg, The Wall Street Journal, 05/09/2013|
MarketMinder's View: While many seem to be celebrating Abenomics-driven yen devaluation lately, we agree with the cautionary tale that rumors of its success seem premature. “More broadly, exports are struggling despite the weak yen. In the first three months of this year, Japan's real global exports were 10% lower than during the same period a year earlier, according to Richard Katz of the Oriental Economist Report. (A ‘real export’ measures units shipped, not the yen value.)” For more about Japan, see our Research Analysis from 4/19/2013, “March 2013 Japanese Trade Update.”
|By Thomas Brown, BankStocks.com, 05/09/2013|
MarketMinder's View: There is no magic elixir—in this case, proposed mandatory capital levels—banks can take to completely nullify the possibility of failure. Rather, we agree with the author’s argument: Even in banking, diversification is the ideal strategy in mitigating risk.
|By Nick Miroff, The Washington Post, 05/09/2013|
MarketMinder's View: Should this come to pass, it could mean small businesses will be able to invest more in new infrastructure, jobs and innovation—all positives for the Mexican economy.
|By The Editorial Board, USA Today, 05/08/2013|
MarketMinder's View: Yes, unemployment remains high, but as a late lagging indicator, it has little to no bearing on stocks—by definition, a forward-looking indicator of economic conditions. Moreover, there’s no evidence the Fed’s policy of jacking up excess reserves on deposit at the Fed—QE’s principal accomplishment—has inflated anything except those excess reserves. Finally, the Dow is a price-weighted index of 30 stocks—hardly an ideal benchmark for this measurement.
|By Staff, BBC News , 05/08/2013|
MarketMinder's View: These tariffs are a poor idea, and they likely breed market inefficiencies—punishing consumers via reduced choice and higher prices. “Protective tariffs are poisonous for the solar industry.” Concise and, in our view, true in many more industries than just solar.
|By Editorial Board, The Washington Post, 05/08/2013|
MarketMinder's View: While a greener society and a simpler tax code are admirable goals, additional taxes and government intervention bring about unintended consequences. Besides, Europe’s experimenting with both carbon emissions taxes and carbon trading has struggled to accomplish much of anything.
|By Neil Shah, The Wall Street Journal, 05/08/2013|
MarketMinder's View: This article doesn’t outright say this, but for those who argue the Fed’s easing is goosing loan growth and inflating the economy artificially, take a look at the chart here showing total household and nonfinancial credit growth in this expansion versus other recent expansions. It’s the slowest since at least the recovery from the mid-1970s’ recession.
|By Donald J. Boudreaux, Pittsburgh Tribune-Review, 05/08/2013|
MarketMinder's View: Profit motive is a powerful incentive—and in the quest for profits, competition leads companies overall to provide better wages, a safer working environment, products and prices. In fact, history seemingly shows it’s more effective than any piece of legislation.
|By Jeff Black, Bloomberg, 05/08/2013|
MarketMinder's View: Following yesterday’s report that factory orders rose nicely, today’s industrial output growth—also the second month in a row—is an encouraging sign the eurozone might avoid another quarter of contraction.
|By Wei Tian, China Daily, 05/08/2013|
MarketMinder's View: Specifics of this plan remain to be seen, but reducing barriers to capital flow and investment are a positive for the global economy.
|By Staff, Associated Press, 05/08/2013|
MarketMinder's View: A nice windfall for New Zealand and a positive step to ensuring cheaper, more efficient energy for the Kiwis.
|By Staff, Associated Press, 05/07/2013|
MarketMinder's View: This bill still has to pass the House—unlikely, in our view. But all in all, it’s a poor idea that would greatly increase the complexity of sales tax collection/distribution for remote merchants. That complexity likely favors larger online/remote merchants over smaller or midsize. While retailers under $1 million in revenue are exempt, that’s not a very high hurdle. For more see our 04/24/2013 cover story, “Tax Shenaniganery.”
|By Staff, EUbusiness, 05/07/2013|
MarketMinder's View: Artificially fixing carbon credit prices (aka, distorting the market) amounts to intentionally increasing business costs in order to maintain a carbon-trading platform, the efficacy of which in reducing pollution is unproven. That’s a cost/benefit issue. But moreover, if this carbon-credit-trading system is successful, it will kill itself ultimately by eliminating carbon emissions. Hence, low-priced carbon credits aren’t necessarily “calling into question the future of the system,” the system itself is.
|By Jeff Sommer, The New York Times, 05/07/2013|
MarketMinder's View: On a macroeconomic level, stocks’ movements have much more to do with earnings and revenues than GDP growth rates, which have wonky calculations and aren’t a meaningful input to stock prices regardless of the index. After all, stocks are a piece of wealth and GDP is a flow of economic activity. We’d add the Dow is particularly poorly constructed. For more, see our 08/04/2012 contribution to InvestorPlace.
|By Don Stammer, The Australian, 05/07/2013|
MarketMinder's View: Deficits alone aren’t necessarily bad, nor do they absolutely hinder economic growth. And focusing exclusively on budget deficits or surpluses mistakenly overlooks the many other factors driving economic health. Besides, Australia is far from over-indebted and isn’t a huge deficit-spending nation.
|By Michael Peel, Financial Times, 05/07/2013|
MarketMinder's View: Saudi Arabia’s oil industry illustrates well government subsidies’ unintended consequences, beneficiaries and waste (of time, money and, notably, energy).
|By Serena Ruffoni and Patricia Kowsmann, The Wall Street Journal, 05/07/2013|
MarketMinder's View: Portugal took another crucial step toward weaning itself off foreign aid on Tuesday by raising €3 billion ($3.92 billion) in its first 10-year bond sale since requesting a bailout two years ago.
|By Staff, Bloomberg, 05/07/2013|
MarketMinder's View: Chinese policy announcements should generally be taken with a grain of salt, but should this plan go through, China may see freer capital flows—an economic positive.
|By Bettina Wassener, The New York Times, 05/07/2013|
MarketMinder's View: “In China, 58 percent of respondents in the PwC report said they shopped online at least once a week ... by far the highest of any of the countries covered.” “By comparison, only 42% of US respondents, 41% of those in Britain and 29 percent of German respondents said they shopped online at least once a week.”
|By Stefan Richer, Bloomberg, 05/07/2013|
MarketMinder's View: German factory orders have risen 2.2% in two consecutive months, with this month’s blowing away estimates of a -0.5% drop. Additionally, in a sign of global economic resilience, “orders for German exports rose 2.7 percent in March, with those from the euro area surging 4.2 percent.”
|By Elisabeth Dellinger, Investor’s Business Daily, 05/07/2013|
MarketMinder's View: Editorial staff member Elisabeth Dellinger’s latest article discusses headwinds to the globalization of the shale revolution—namely, governments.
|By Jeff Cox, CNBC, 05/06/2013|
MarketMinder's View: It’s true another flash crash is always possible, but the lesson of the last three years is long-term investors needn’t fret over momentary volatility. For more, see our 4/26/2013 cover story, “#Tweet #Retreat.”
|By Mike Konczal, The Washington Post, 05/06/2013|
MarketMinder's View: According to law firm Davis Polk & Wardwell LLP’s Dodd-Frank Progress Report, no material progress was made in April to finalize the 62% of Dodd-Frank mandated rules that remain unwritten. With that said, the likelihood any piece of legislation renders the economy bulletproof vis a vis a financial panic, rounded to the nearest whole number, is zero. For more, see our 10/12/2012 cover story, “Dodd-Frankly, That’s Dumb.”
|By Staff, Reuters, 05/06/2013|
MarketMinder's View: As we’ve written, imposing protectionist measures is tantamount to shooting yourself in the foot economically. In this case, it likely makes solar panels more expensive in the EU and thereby harms consumers, particularly those with less disposable income. In our view, the EU would benefit from freer trade with China, and other nations.
|By Stephanie Condon , CBS News, 05/06/2013|
MarketMinder's View: But as the Wall Street Journal reported, it’s unlikely to pass Congress—a positive outcome from gridlock. We have no quibble with enforcing tax laws already in place, however we’d posit legislation like the Marketplace Fairness Act interferes with competition and is fraught with unintended consequences. It could easily drive up the costs of compliance and/or subject businesses to future audits. For more, see our 4/24/2013 cover story, “Tax Shenaniganery.”
|By Staff, Xinhua, 05/06/2013|
MarketMinder's View: An interesting look at the benefits of crowd funding as its popularity spreads throughout the world.
|By Enda Curran, The Wall Street Journal, 05/06/2013|
MarketMinder's View: Australia is taking an interesting approach to spurring foreign investment by offering a program which would provide temporary and permanent visas to millionaires willing to invest in the local economy by way of bonds, funds or directly into Australian companies.
|By Staff, Reuters, 05/06/2013|
MarketMinder's View: Privatizing more entities like the telecom firms and banks not only makes business sense, since they tend to be better run by the private sector, but it would likely aid Slovenia’s chances of avoiding a bailout.
|By Jason Zweig, The Wall Street Journal, 05/06/2013|
MarketMinder's View: A very interesting perspective on risk tolerance questionnaires, highlighting some of the inherent behavioral problems with this approach. “That [static questions] might be useful if your risk tolerance were an integral part of who you are, no more changeable than your IQ or your shoe size. Nothing could be further from the truth.”
|By Staff, EUbusiness, 05/03/2013|
MarketMinder's View: While this isn’t great news, markets have long been aware of the likelihood of continued eurozone economic malaise. Plus, with the US and Emerging Markets growing at a decent clip, overall global growth likely continues just fine—stronger areas pull the weaker ones along, not the reverse. And for global markets, what matters more is that fears of the eurozone suddenly splintering seem very unlikely to materialize.
|By Thomas Schulz, Der Spiegel, 05/03/2013|
MarketMinder's View: Certainly some jobs are lost to technology and automation, but that historically hasn’t been a net negative for employment, and there’s no reason that has to change looking forward. With new technology comes new jobs to sell, service and operate that technology—humans will always have a place. Plus, greater efficiency gives firms more money to deploy in other areas, which also has downstream economic and employment effects. For more, see our 5/2/2013 cover story, “Manufacturing Innovation.”
|By Ambrose Evans-Pritchard, The Telegraph, 05/03/2013|
MarketMinder's View: This is an interesting idea, but eurozone monetary constraints aren’t Italy’s fundamental problem. The real issues are Italy’s fading economic competitiveness, bloated public sector and widespread corruption. Using gold reserves to abate the need for “internal devaluation” does nothing to address these.
|By Staff, The Yomiuri Shimbun, 05/03/2013|
MarketMinder's View: Prime Minister Shinzo Abe’s push for constitutional change continues. Not only could this potentially stall much-needed economic reform, but making the constitution easier to amend could set the stage for more extreme and potentially ill-considered changes in the future.
|By Wang Xiaotian, China Daily, 05/03/2013|
MarketMinder's View: The rise in Chinese non-performing loans bears watching, but this piece misses a key point—China can easily use some of its whopping forex reserves to recapitalize the banks if necessary, as it’s done six times since 1998. Over time, China needs to continue reforming its financial system to break banks’ dependency on the state, but for now, officials have plenty of bandwidth to buy more time. For more, see Research Analyst Brad Pyles’ 6/8/2011 column, “China: Bank Bailout Rumor.”
|By Jeffrey Sparshott and Eric Morath, The Wall Street Journal, 05/03/2013|
MarketMinder's View: Better-than-expected hiring doesn’t necessarily mean employment skyrockets from here, but it is evidence labor markets’ trend of long-term improvement remains intact.
|By Glenn Jacobs, The Tennessean, 05/03/2013|
MarketMinder's View: Though we quibble with the notion of a stagnant economy, we agree with the premise here—the Marketplace Fairness Act likely distorts competition, slaps Internet retailers with a large compliance cost burden and prevents markets from functioning efficiently. For more, see our 4/24/2013 cover story, “Tax Shenaniganery.”
|By Saul Butera, Bloomberg, 05/03/2013|
MarketMinder's View: This is the first of over a dozen partial privatizations planned over the next two years—a key step to modernizing Rwanda’s economy and the government becoming more self-sufficient. That the country has the capital markets architecture to accomplish this domestically is a testament to how far it’s come since the horrific 1994 genocide. For more, see our 4/30/2013 cover story, “Rwanda, 19 Years Later.”
|By Rebecca Clancy, The Telegraph, 05/03/2013|
|By Serena Ruffoni, The Wall Street Journal, 05/03/2013|
MarketMinder's View: One successful bond sale doesn’t mean Slovenia’s out of the woods, but it likely does buy the new government additional time to implement reforms. It’s also more evidence of investors’ tendency to shrug off a ratings agency’s backward-looking decision.
|By Harold James, Project Syndicate, 05/02/2013|
MarketMinder's View: The modern economy has brought with it a whole host of new, service-oriented jobs—and with them, new opportunities and fields. Likening tutors and life coaches to Louis XIV’s Groom of the Stool slights the many people who make a gainful living and add significant value through personal service employment. Modern growth isn’t “immoral”—it’s the source of the many improvements we enjoy on a daily basis.
|By Todd Woody, Yahoo! Finance, 05/02/2013|
MarketMinder's View: Fracking likely has at least some impact on fresh water supply, but much of that is due to how water is regulated, rather than the actual amount of drinking water in the US. Adjusting regulations could ease potential shortages. Plus, considering how profitable fracking has been and can still be, frackers have ample incentive to find innovative ways to manage their water usage, like investing in desalination plants.
|By Geoffrey T. Smith, The Wall Street Journal, 05/02/2013|
MarketMinder's View: The ECB’s continuing drive to support the euro is noteworthy, but it’s not clear whether the “more dramatic measures” discussed here will help much. Easing programs only help if they incentivize banks to lend, and given eurozone banks’ low appetite for risk, making the deposit rate negative may prompt banks to purchase bonds with surplus capital rather than lend enthusiastically
|By Richard Blackden, The Telegraph, 05/02/2013|
MarketMinder's View: One month of slowing manufacturing output doesn’t necessarily indicate forward-looking economic weakness. Monthly data are always variable, and manufacturing isn’t a leading indicator—and both countries’ economies have plenty of other positives at work. For more about the growth prospects of China and the US this year, see our 4/16/2013 cover story, “Chinese Checkers” and our 4/29/2013 cover story, “US GDP—Better Beneath the Surface.”
|By Betsey Stevenson and Justin Wolfers, Bloomberg, 05/02/2013|
MarketMinder's View: No matter how compelling and well-reasoned an economic study might seem, there’s always a possibility of errors or imperfect data. It’s important always to be discerning when reading and not simply accept an article’s argument because it claims statistical significance. The tips in this article are a helpful guide. For more, see our 04/19/2013 column, “Monkeying About.”
|By Tom Acitelli, The Wall Street Journal, 05/02/2013|
MarketMinder's View: Cheers to the rise of American beer, which “was spurred by efforts to cut taxes and regulation that unleashed entrepreneurship.” Innovation, commerce and opportunity thrive when the government removes barriers to production.
|By Staff, Central News Agency, 05/02/2013|
MarketMinder's View: Taiwan’s decision not to intervene with its currency is a sensible move, in our view. Taking action to artificially weaken the currency may have been popular locally in the wake of slower exports, but it wouldn’t have been a net benefit. For more on the fallacy of competitive devaluations, see Research Analyst Tim Schluter’s “March 2013 Japanese Trade Update.”
|By Nektaria Stamouli, The Wall Street Journal, 05/02/2013|
MarketMinder's View: "'The first big privatization in our country was successfully completed today,' said finance minister Yannis Stournaras." That this occurred three years after the first bailout pretty much sums up Greek progress—plodding, but slowly moving forward.
|By Ambrose Evans-Pritchard, The Telegraph, 05/01/2013|
MarketMinder's View: It’s possible the eurozone could experience persistent deflation and slow growth, though that risk seems overstated here. Moreover, if that were to happen, quantitative easing likely isn’t the best solution. Evidence overwhelmingly shows QE is not the growth-stoking monetary policy many believe it to be—just look at the US and UK, where QE has made lending less profitable and incentivized banks to deposit huge sums at the Fed and BoE.
|By Alanna Petroff, CNN Money, 05/01/2013|
MarketMinder's View: While selling state assets is a grand idea, the revenue gained from this sale is just a drop in the barrel. France’s overall success will depend more on boosting economic competitiveness than on selling frivolities to cover public spending.
|By Martin Kaste, NPR, 05/01/2013|
MarketMinder's View: Here’s another instance of inefficient regulation hindering technological and economic growth. While privacy concerns regarding unmanned aircraft (UAV) are understandable, the technology’s many potential commercial uses—carrying medicine, lab samples, tacos, etc.—would likely be a net benefit, and the industry could contribute nicely to US growth. But regulators likely won’t permit commercial UAV testing for at least two years. In the interim, the industry could very well move elsewhere.
|By Annalyn Kurtz, CNN Money, 05/01/2013|
MarketMinder's View: Private sector hiring still continued—though at a slower pace—and unemployment is improving overall. One (or two) months of lackluster data don’t presage future economic weakness—especially with backward-looking indicators like unemployment.
|By Jeremy Warner, The Telegraph , 05/01/2013|
MarketMinder's View: Though the forthcoming revisions to GDP are backward-looking, the fact the UK’s productivity was better than initially estimated says much about GDP calculations and the economic realities they can overlook. For more, see MarketMinder managing editor Lara Hoffmans’ recent Forbes piece, “Faster GDP, Different Rules.”
|By Carol Matlack, Bloomberg Businessweek, 05/01/2013|
MarketMinder's View: Italy’s new Prime Minister seems to be eyeing measures to boost economic competitiveness and remove government redundancies, but whether his shaky coalition can pass meaningful reforms is another matter. For more, see Research Analyst Scott Botterman’s latest column, “What to Expect From Italy’s New Government.”
|By Joyce Hanson, AdvisorOne, 05/01/2013|
MarketMinder's View: Here’s an interesting take on non-traded real estate investment trusts, which highlights some of the issues investors should be aware of. We do have some quibbles—like the notion that not being traded necessarily means less volatility, when it really just means less price discovery (Exhibit 1 being many mortgage-backed security valuations in 2008)—but this is overall a sensible view.
|By Kathy Chu, The Wall Street Journal, 05/01/2013|
MarketMinder's View: With China losing manufacturing jobs to Asian nations with lower labor costs, it likely needs to make some whopping productivity gains to stay competitive. That gives the government every incentive to accelerate an economic transformation to a high-tech and services-based system, much like Japan and South Korea did in the 20th century, which augurs well for continued liberalization.
|By Lara Hoffmans, Investor’s Business Daily, 05/01/2013|
MarketMinder's View: MarketMinder managing editor Lara Hoffmans’s latest column discusses the upcoming 2014 Senate elections and their potential market impact.
|By John Kemp, Reuters, 05/01/2013|
MarketMinder's View: Here’s an interesting look at hydraulic fracturing’s water usage, an oft-overlooked regulatory issue surrounding the shale revolution.
|By Staff, EUBusiness, 05/01/2013|