|By Staff, The Telegraph, 07/31/2012|
MarketMinder's View: It seems to us Greece has been “on the brink” for the better part of the last three years. And that fact likely reflects eurozone officials’ resolve to prevent a disorderly default or breakup of the euro in the short-term—they keep finding ways to get Greece the money it needs. In this particular instance, it’s likely eurozone leaders do so again, perhaps by providing a bridge loan or loosening and extending the terms of its bailout agreement a little. For more, see our 07/23/2012 cover story, “Greece’s ‘Stranger Than Fiction’ Past and Present.”
|By Paul Krugman, The New York Times, 07/31/2012|
MarketMinder's View: Whatever your view of economic theory, the UK’s recent downturn can’t be blamed it its entirety on fiscal austerity—because they haven’t cut much spending at all. In fact, when excluding depreciation, public expenditures have risen consistently in recent years. For more, see our cover story, “Dousing the Flame?”
|By Neil Shah, The Wall Street Journal, 07/31/2012|
MarketMinder's View: While this piece accurately points out some of the wonkiness of the unemployment rate (and its many variations), it misses the main thing all should keep in mind when analyzing unemployment data: Unemployment is a late-lagging indicator and doesn’t presage the economy’s direction. And while unemployment (or underemployment) figures have been elevated for some time, history shows economic growth eventually begins to work it off.
|By Donald J. Boudreax, Newsday, 07/31/2012|
MarketMinder's View: On what would have been his 100th birthday, the MarketMinder Editorial Staff extends a hat-tip to one of the influential economists of our time. As we wrote back in 2006, “Friedman was unabashedly vociferous about freedom’s singular purpose as the ultimate human value.”
|By Staff, The Wall Street Journal, 07/31/2012|
MarketMinder's View: Tax something, and you’ll get less of it. In this case, the French will likely find that taxing financial transactions only results in less total investment. And as this piece details, they may also find the tax accelerates, rather than curbs, supposedly speculative trading. Likely not the outcome they had in mind. For more, see our 07/25/2012 cover story, “Aphorism Tuesday.”
|By Staff, USA Today, 07/31/2012|
MarketMinder's View: We remain sympathetic to the plight of the many people in India without power right now. However, the demonstrable lesson here is the inefficiency of state-run enterprise. In India’s case, its antiquated state-run power grid wasn’t able to keep pace with the country’s massive growth and demand for electricity.
|By Rose Yi and Sarah Chen, The Wall Street Journal, 07/31/2012|
MarketMinder's View: More evidence China’s still aiming to boost growth ahead of its critical leadership transition this fall. For more, see our 07/16/2012 column for TheStreet, “Mid-Year China Check-In.”
|By Richard Barley, The Wall Street Journal, 07/31/2012|
MarketMinder's View: Minor quibbles aside, this piece makes a key point: While the ECB can take steps to alleviate some of the eurozone’s current woes, long term, it’s up to sovereigns to strengthen their banking system and address their underlying fiscal and economic competitiveness issues. For more, see our 07/27/2012 cover story, “Super Mario?”
|By Tom Orlik, The Wall Street Journal, 07/30/2012|
MarketMinder's View: The thesis China’s rise has come at the expense of American manufacturing jobs is oft heard. Yet over the same period, many countries—including China—have lost manufacturing jobs. The fact is, this is much more a function of technologically generated productivity gains than global competition.
|By Robert Reich, Huffington Post, 07/30/2012|
MarketMinder's View: Including Q2, the US economy has now grown for 12 straight quarters. Perhaps it hasn’t done so as quickly as some would like, which is a fair point. At the same time, though, it seems a stretch to compare an economy that’s grown for three full years to the Great Depression and then suggest massive government intervention to boost demand is the way out. Moreover, the ideas embedded here—like reviving the WPA—are fraught with unintended perils. For more, see our 05/12/2011 cover story, “WPA, Reductio Ad Absurdum.”
|By Kate Linebaugh, The Wall Street Journal, 07/30/2012|
MarketMinder's View: It seems odd to us to spend so much time discussing analysts’ lowered Q3 forecasts roughly halfway through Q2 earnings season’s actual reporting. Especially since Q2 is, yet again, beating analysts’ too-dour expectations.
|By Travis Hoium, The Motley Fool, 07/30/2012|
MarketMinder's View: This article starts out fine enough with a recap of the year to date. Our major quibbles come in the back half, where a forecast for the balance of the year is discussed. From debt ceilings to downgrades to the fiscal cliff, the discussion here is, in our view, quite overwrought. For more see our 07/18/2012 research analysis, “A Closer Look at the Fiscal Cliff” or, for a refresher on the debt ceiling, see our 07/12/2011 column, “Full Faith and Credit.”
|By Catherine Rampell, The New York Times, 07/30/2012|
MarketMinder's View: While many decry tepid GDP growth and employment gains, the reality is they’re very much being weighed down by a shrinking public sector. In that way, using these headline figures as a pure gauge of economic health could easily lead one to incorrect conclusions. For more, see today’s cover story, “Three Views of US GDP.”
|By Staff, EUbusiness, 07/30/2012|
MarketMinder's View: Italy held a successful bond auction Monday morning, selling its full allotment of bonds at overall lower yields.
|By Amanda Williams, InvestorPlace, 07/30/2012|
MarketMinder's View: Editorial Staff member Amanda Williams’ latest contribution to InvestorPlace discusses the workings of the UK Guarantees—a new British program targeting infrastructure development.
|By Paul Krugman, The New York Times, 07/27/2012|
MarketMinder's View: This operates on what are, in our view, a few basic misconceptions: That the economy needs a demand boost; that this boost needs to come from the government; and that austerity’s definitively failed in Europe, when many have yet to try it. In our view, the private sector is likely much more efficient at allocating money to areas of need. Furthermore, as Friday’s GDP figure asserts, the US economy is actually growing, so the need for this big demand-side boost is questionable to begin with.
|By Staff, EUbusiness, 07/27/2012|
MarketMinder's View: Rather, if countries focused on competing via comparative advantages, global trade would be freer with fewer duties—which would benefit all participants.
|By Staff, Associated Press, 07/27/2012|
MarketMinder's View: Let’s be clear: Growth is growth—slow or otherwise. Furthermore, economies have demonstrated their ability to expand despite other dour data points.
|By Julien Toyer and Luke Baker, Reuters, 07/27/2012|
MarketMinder's View: Though a fairly comprehensive collection of current eurozone woes, worries listed here likely have less market impact than feared and seemingly have counterbalancing fundamentals—i.e., the recently approved Spanish bank bailouts and continually reaffirmed political will to prevent a disorderly euro breakup.
|By Staff, EUbusiness, 07/27/2012|
MarketMinder's View: Good news from the eurozone—and a sign European leaders’ continued willingness to say and do what’s necessary continues inspiring investor confidence.
|By Reuters, CNBC, 07/27/2012|
MarketMinder's View: Just a day after Mario Draghi spoke on behalf of the ECB vowing to do what’s necessary to preserve the euro, French President François Hollande and German Chancellor Angela Merkel, made a similar announcement, reinforcing the oft-repeated message of political will to back the eurozone.
|By Parija Kavilanz, CNN Money, 07/27/2012|
MarketMinder's View: On a macroeconomic level, more foreign direct investment by China in the US is a plus for all parties involved. For example, Chinese businesses potentially face lower costs (and possibly fewer tariffs), while likely creating more jobs in the US—win-win.
|By Simon Kennedy and Rich Miller, Bloomberg, 07/26/2012|
MarketMinder's View: While we’re all for global monetary authorities taking what steps are appropriate when appropriate, we’re not totally convinced they should be held responsible for solving all the world’s difficulties, which seems to be the implication here. Monetary policy has a rather narrow focus by definition—meaning it’s not always and everywhere applicable. And if overused, that would seemingly risk diminishing its efficacy in future situations where monetary action is truly warranted.
|By Emma Charlton and David Goodman, Bloomberg, 07/26/2012|
MarketMinder's View: There’s nothing saying any given interest rate precipitates immediate crisis. Which means interim patches as eurozone nations face varying difficulties are likely preferable to a one-size-fits-all attempt at correcting everything—which would be far more likely to carry negative unintended consequences and potentially fail at achieving its goal.
|By Gonzalo Vina and Svenja O’Donnell, Bloomberg, 07/26/2012|
MarketMinder's View: To those who question the wisdom of the Chancellor of the Exchequer’s austerity program, we’d ask one simple question: What austerity program? Fact is UK government spending has increased annually since 1985. For more, see today’s cover story, “Dousing the Flame?”
|By David Wessel, The Wall Street Journal, 07/26/2012|
MarketMinder's View: This is an overly dour look at recent data combined with a rather one-sided take on other factors—like a strengthening dollar, for instance. A stronger dollar inarguably makes US exports more expensive abroad—as mentioned here. But it also makes imports cheaper for US consumers—meaning relative domestic spending power increases. That doesn’t sound so terrible to us. All told, it seems the current positives, though widely downplayed or outright ignored, largely outweigh the negatives, which exist but are quite well known at this point.
|By Jeff Black and Jana Randow, Bloomberg, 07/26/2012|
MarketMinder's View: Lest investors forgot, European officials yet again affirmed their willingness to do what’s needed to prevent a disorderly breakup of the common currency—as ever, a far cry from proclaiming the silver bullet’s discovery, but reassuring nevertheless.
|By David Uren, The Australian, 07/26/2012|
MarketMinder's View: Contrary to popular belief, trimming government subsidies for less-than-efficient industries often results in increased production, not the opposite. As effectively articulated here: “Propping up outdated and sub-scale manufacturing with subsidies … is trying to turn back the clock to an era that earlier policy-makers had the courage to look beyond.”
|By Neelabh Chaturvedi, Emese Bartha and Eamon Quinn, The Wall Street Journal, 07/26/2012|
MarketMinder's View: The proposed size and scope of Ireland’s upcoming auction seemingly points to rather robust confidence in the likelihood of its success—a positive sign for a country that not long ago required a bailout.
|By Bob Davis and Lingling Wei, The Wall Street Journal, 07/26/2012|
MarketMinder's View: China, which has already employed several other measures aimed at prompting growth this year, has turned to yet another—allowing its currency to depreciate relative to the dollar (primarily). While likely to make US politicians cranky, it’s seemingly another measure aimed at stimulating Chinese growth. For more, see our 07/16/2012 cover story, “China—Choking or Choking Up?”
|By Broc Romanek, The New York Times, 07/25/2012|
MarketMinder's View: SarbOx’s 10th anniversary is bringing out many an op-ed, yet scant few we’ve seen suggest SarbOx might have been a misguided solution in search of a problem. This piece, for example, argues the law “doesn’t seem to [have] too much in the way of negative unintended consequences.” Sure, that’s open for debate. But considering the vast costs alluded to in our recent book review and that aspects of SarbOx seemingly contributed to 2008’s panic, claiming it had few negative consequences seems a bit off.
|By Brad Plumer, The Washington Post, 07/25/2012|
MarketMinder's View: We’re rather skeptical about the supposed need for more Fed intervention—particularly in the form of QE3, considering much of QE2’s extra liquidity ended up parked back at the Fed as excess reserves. Moreover, while US growth has slowed somewhat, there’s not much evidence it’s anything other than the growth-rate volatility fairly typical of economic expansions.
|By Angela Monaghan, The Telegraph, 07/25/2012|
MarketMinder's View: The deeper than expected contraction isn’t great news for the UK, but as the Office for National Statistics’ report explains, there are some mitigating factors—namely, extraordinarily rainy weather (perhaps impacting construction) and the extra bank holiday for Her Majesty’s Diamond Jubilee. Notably, the services sector—around two-thirds of the UK economy—contracted only 0.1%, an improvement from Q1.
|By Ambrose Evans-Pritchard, The Telegraph, 07/25/2012|
MarketMinder's View: While recession is always possible, it seems a stretch to say one regional survey’s recent volatility means the US is in recession and the world on the verge of “global depression.” That conclusion simply doesn’t square with all of the underappreciated positive fundamentals at work in the US and globally.
|By Staff, EUbusiness, 07/25/2012|
MarketMinder's View: We’re not sure what constitutes unfair competition, and the French government didn’t specify—but our guess is South Korean automakers are simply producing better cars more efficiently than in the past and thus providing French consumers attractive alternatives, which is hardly unfair at all. It’s healthy competition.
|By Staff, The Chosun Ilbo, 07/25/2012|
MarketMinder's View: Apparently, North Koreans can now establish family farms, rather than communal plots, and they can sell much more of their output on the open market. Incremental reforms, to be sure, but changes North Korea desperately needs—and, perhaps, the first steps in a longer economic reform process.
|By Stacy Meichtry, The Wall Street Journal, 07/25/2012|
MarketMinder's View: Fiscal rehab seems a sensible prescription for Sicily, with its 17,000-strong public-sector workforce, uncompetitive regional economy and notorious mafia troubles. The mandate also confirms Italy’s determination to get public finances in check—likely boosting its credibility with EU officials.
|By Jim Brunsden, Jeff Black and Rebecca Christie, Bloomberg, 07/25/2012|
MarketMinder's View: Or, rather, they’re trying to rush—as this piece describes, there are a host of challenges and disagreements to overcome before leaders can devise a system anywhere near optimal (if they can at all), and the process could easily drag beyond the self-imposed deadline. However, while direct recapitalization of eurozone banks is contingent upon the regulatory system’s establishment for now, officials can likely redraw this line in the sand if need be.
|By Staff, Central News Agency, 07/25/2012|
MarketMinder's View: The ban’s lifting clears the way for Taiwan to resume importing US beef—removing a longstanding trade barrier between the two nations and clearing the way for Taiwan to join free-trade talks with the US and the Trans-Pacific Partnership.
|By Michael Mackenzie, James Wilson, Gerrit Wiesmann and Peter Spiegel, Financial Times, 07/24/2012|
MarketMinder's View: Moody’s latest announcement further demonstrates how ratings agencies are often late to the game—it’s long been known core Europe bears most of the periphery’s bailout burden. For more, see Fisher Investments Editorial Staff member Naj Srinivas’s most recent contribution to Investor’s Business Daily, “Ratings Agencies—Late to the Game.”
|By Mary Watkins, Financial Times, 07/24/2012|
MarketMinder's View: While higher yields are undoubtedly less than preferable, they needn’t necessarily stay elevated—and despite higher yields, demand increased at today’s Spanish auction. Moreover, European officials continue to show the political will to adapt and prevent a disorderly breakup of the euro wherever possible. If Spain needs further assistance down the road, we believe there’s likely ample political will to back it.
|By Alex Brittain and Alkman Granitsas, The Wall Street Journal, 07/24/2012|
MarketMinder's View: The facts here—PMI levels—are perfectly fine. Eurozone weakness has been widely known for some time. However, presenting three weeks’ worth of data as evidence Germany will contract in Q3 seems a bridge too far.
|By Simon Rabinovitch, Financial Times, 07/24/2012|
MarketMinder's View: Although this latest reading still indicates factory growth is contracting at a slow pace among China’s smaller, private-sector producers, that it improved considerably this month likely reflects officials’ efforts to stoke growth in this leadership transition year beginning to take hold. For more, see our 07/16/2012 commentary on The Street, “Mid-Year China Check-In.”
|By Adria Cimino, Bloomberg, 07/24/2012|
MarketMinder's View: Tax something and you get less of it. In this case, investors buying French stocks. But you also get more of something—and that’s investor incentive to find tax loopholes.
|By Don Boudreax, Café Hayek, 07/24/2012|
MarketMinder's View: No doubt some folks do benefit from minimum wage increases—but, as this piece objectively highlights, minimum wage isn’t necessarily the most efficient economic policy and can carry unintended consequences, like higher consumer prices.
|By Alan Bjerga, Bloomberg, 07/24/2012|
MarketMinder's View: As we detailed recently, profit motive is a strong incentive for producers to grow crops that are currently in shorter supply.
|By Jason Zweig, The Wall Street Journal, 07/24/2012|
MarketMinder's View: Although we quibble with some aspects of this piece, on balance, it’s a sensible look at one of the (many) behavioral traits that make investing such a challenge.
|By Gar Alperovitz, The New York Times, 07/23/2012|
MarketMinder's View: Banking crises and panics have occurred periodically for many decades, regardless of the size of institutions involved. In fact, the 2008 crisis was more related to regulatory missteps (FAS 157 and the bizarre government actions that followed) than the size of institutions involved.
|By Jeff Cox, CNBC, 07/23/2012|
A recession is generally defined as a period of overall reducing economic activity. Yet the data here show increasing sales and revenues, which is an example of increasing economic activity. Thus, the macro conclusion drawn here seems, well, a stretch.
|By Ben Rooney, CNN Money, 07/23/2012|
MarketMinder's View: Moves like this have been common in recent years when volatility’s high, particularly in Europe. Yet there’s little evidence banning short selling actually reduces volatility—its goal. If such a ban were effective (they rarely are), it could also have the opposite effect of drying up liquidity.
|By James Bone, The Times, 07/23/2012|
MarketMinder's View: Speculation Greece is soon to be cast aside by the troika has been common—a near quarterly occurrence in recent years. Yet the reality is there’s little reason to believe the current episode is anything different from what we’ve already seen: political dramatics. For more, see today’s cover story, “Greece’s ‘Stranger Than Fiction’ Past and Present.”
|By John D. McKinnon, The Wall Street Journal, 07/23/2012|
MarketMinder's View: It’s no secret our government makes many efforts to spur business activity of certain types (hiring US citizens, buying American, etc.), and it often does so through tax incentives. But the reality is, there are so many tax breaks, and in many cases, the breaks are of such questionable monetary value, many businesses just ignore or aren’t aware of the ones they qualify for. In our view, a flatter, simpler tax code with fewer gimmicks would be a positive.
|By Mark J. Perry, Carpe Diem, 07/23/2012|
MarketMinder's View: An interesting table containing many commonly purchased goods for which prices have fallen in the last 12 months. For more, see our 07/20/2012 cover story, “Gotta Have My Pops!”
|By Manuel Baigorri, Bloomberg, 07/23/2012|
MarketMinder's View: Far be it from us to suggest eliminating an afternoon nap is all it will take to cure what ails Spain, but the move to allow more discretion to shopkeeps regarding their businesses’ hours of operation seems a step in the right (more competitive) direction. Perhaps this move is as symbolic as it is impactful, but to us, it’s interesting and noteworthy.
|By Nouriel Roubini, Project Syndicate, 07/20/2012|
MarketMinder's View: Much of this argument relies on the assumption politicians won’t act to prevent a “fiscal cliff,” which is unlikely, in our view, considering voters would likely punish them for it when they seek re-election. Recession is always possible, but current fundamentals don’t square with a weakening economy.
|By Staff, Taiwan News, 07/20/2012|
MarketMinder's View: We tend to agree there isn’t “a right time to launch a capital gains tax.” Remember: When you tax something you get less of it—and Taiwanese officials may find they get less capital markets activity should this tax get approved.
|By Gonzalo Vina, Bloomberg, 07/20/2012|
MarketMinder's View: To us, this piece misses a key point: UK borrowing costs are very, very low—10-year yields are only 1.5%. So while we wouldn’t encourage the Brits to pile on more and more debt, issuing a bit more than analysts expected in June doesn’t much compound the UK’s overall debt service burden—the truest measure of debt’s sustainability.
|By Lefteris Papadimas, Reuters, 07/20/2012|
MarketMinder's View: Another setback for Greece’s privatization program isn’t great—but, given the new government’s stated commitment to meeting the privatization requirements of its bailout, this gentleman’s departure seems unlikely to fully derail the already delayed program. Perhaps a change in personnel will kick-start matters.
|By Ben Rooney, CNN Money, 07/20/2012|
MarketMinder's View: Eurozone finance ministers finalized Spain’s bank rescue package, agreeing to disburse €30 billion in the very near team and keep €70 billion available through 2013 in return for Spain’s restructuring its banking sector along EU guidelines. This compromise is yet another sign of political will to keep peripheral Europe solvent.
|By Staff, The Telegraph, 07/20/2012|
MarketMinder's View: The idea of economic reform in North Korea is a story to watch, especially if it involves freer markets. Whether anything materializes remains to be seen, but a legitimate move to a non-military-controlled economy would be a step in the right direction, provided the ruling party promotes the freer flow of goods, services and food throughout North Korea.
|By Staff, Bloomberg, 07/20/2012|
MarketMinder's View: More evidence of Chinese loosening—and officials’ determination to prevent a hard landing. For more, see our 07/16/2012 cover story, “China—Choking or Choking Up?”
|By Richard Barley, The Wall Street Journal, 07/19/2012|
MarketMinder's View: While higher yields are undoubtedly less preferable, one debt auction doesn’t seal Spain’s fate—whether positive or negative, in fact. And the reality is European officials have shown plenty of willingness to adapt as individual countries’ circumstances have shifted. If Spain needs further bolstering down the road, we believe there’s ample political will to back them.
|By Amir Sufi, Bloomberg, 07/19/2012|
MarketMinder's View: We’d rather argue the costs far outweigh the benefits of using eminent domain to “solve” the “housing crisis,” which we think far more likely to be effectively (and relatively risk-free) resolved by the private sector. For more, see our recent contribution to Investor’s Business Daily, “A Risky Solution to a Non-Issue.”
|By Angela Monaghan, The Telegraph, 07/19/2012|
MarketMinder's View: We’re not quite sure why the IMF believes itself in a position to give advice to the UK, an entirely solvent country that’s no doubt grown slower than they’d probably like, but is still growing, and continues taking steps it believes likely to return it ultimately to a stronger growth trajectory.
|By James Saft, Reuters, 07/19/2012|
MarketMinder's View: We find little to agree with here—particularly the overly simplistic assumption leaders’ words translate directly into market movement. Markets are just far more complicated than that. Furthermore, we find European officials’ overall slow-go approach rather sensible, providing private parties an opportunity to find preferable, market-based solutions where possible.
|By Katherine Rushton and Szu Ping Chan, The Telegraph, 07/19/2012|
MarketMinder's View: Though many in the media presume a dearth of European demand would hurt major exporters, like the UK, this shows economies are far more adaptive than they’re typically given credit for. As European demand has been relatively damp, the UK has found plenty of markets elsewhere to export to—and is in fact seeing overall higher trade as a result.
|By Pascal Salin, The Wall Street Journal, 07/19/2012|
MarketMinder's View: Though we have our quibbles with aspects of this and it likely overstates the case some, we largely agree with the overarching point—which is that the majority of eurozone woes are much more political than they are economic and seem more attributable to decisions made over the long term than the common currency. Said differently, the trouble largely stems from individual countries suffering from too little competitiveness and too much socialism. Solve those issues, and many of the eurozone’s difficulties likely decrease significantly.
|By Staff, Xinhua, 07/19/2012|
MarketMinder's View: Chinese loan growth continues to be quite strong—and will likely ultimately work its way through the economy, possibly helping goose growth in the year’s back half.
|By Jonathan Macey, The Wall Street Journal, 07/19/2012|
MarketMinder's View: This hits the nail on the head, in our view—“the problem was not the government’s then-required disclosure forms, but the chicanery of the lenders who filled them in. The government’s new rules probably will not protect against fraud. But they will reduce the range of consumer choice.” And in the long run, less consumer choice likely leads to higher overall prices—which ultimately probably hurts more than it helps.
|By Tom Barkley and Corey Boles, The Wall Street Journal, 07/19/2012|
MarketMinder's View: This still has a long way to go and a lot of details to iron out, given it’s only passed the Senate thus far. But it’s still a first step toward what may ultimately prove freer trade—which would benefit not only the US, but Russia as well. For more, see today’s cover story, “Protectionism, Patriotism and Politicking.”
|By Amanda Williams, Investor’s Business Daily, 07/19/2012|
MarketMinder's View: The latest contribution by Editorial Staff member, Amanda Williams, to Investor’s Business Daily—in which she examines the apparent folly behind a recently proposed solution to the “housing crisis.”
|By Li Congjun, The New York Times, 07/18/2012|
MarketMinder's View: We disagree with most all of this, which posits the global economy is a “contracting fishbowl.” That metaphor doesn’t at all square with ever-increasing global demand and GDP, which continues logging new highs. Among our countless other quibbles is the idea “privatization, deregulation and free trade” can’t drive growth. History has overwhelmingly proven the opposite. (Though, that we’d disagree with the head of China’s state-run media seems quite unsurprising.)
|By Staff, The Telegraph, 07/18/2012|
MarketMinder's View: We rather disagree the eurozone has “reached a new and critical stage”—as ever, the region continues muddling through, as officials compromise as needed on incremental solutions. Perhaps QE, more LTRO or more sovereign debt purchases would give the region a boost, but they don’t address the underlying competitiveness gaps at the heart of the eurozone’s issues. Continuing to address those, while doing what’s needed to prevent any member state’s disorderly collapse, still seems a sensible approach.
|By Michael A. Fletcher and Zachary A. Goldfarb, The Washington Post, 07/18/2012|
MarketMinder's View: The predictions here seem overwrought to us, considering how likely it is Congress ultimately keeps “Taxmageddon” at bay—lawmakers likely realize voters would severely punish them for raising taxes, and being politicians, they don’t want to harm their reelection chances. Moreover, tax changes don’t correlate much with stock returns, and this issue has been widely discussed for some time. For more, see our commentary on Real Clear Markets.
|By Michael Birnbaum, The Washington Post, 07/18/2012|
MarketMinder's View: Greece is indeed in a hard spot, but this piece misses a key point: The August deadline for repaying the ECB likely isn’t make or break for Greece’s continued euro membership. Eurozone officials have already signaled their willingness to provide a bridge loan to cover the repayment—another example of their compromising as needed to prevent the monetary union’s disorderly breakup.
|By Staff, The Telegraph, 07/18/2012|
MarketMinder's View: Through “UK Guarantees,” the Treasury will back about £50 billion in loans to private-sector developers—similar to the approach used in “funding for lending,” but targeted at major construction projects. Time will tell whether it helps boost economic growth, but it does exemplify the government’s creative approach to addressing the UK’s economic issues while keeping the private sector in the driver’s seat. For more, see our latest column, “A Spot of Monetary Trickery.”
|By Sarah Portlock and Alan Zibel, The Wall Street Journal, 07/18/2012|
MarketMinder's View: While this piece’s view of the US economy is a touch overwrought, its data-driven discussion of the housing market’s continuing recovery is on point. Though housing is only 2% of US GDP and not a huge driver of economic growth, improvement there is one of many underappreciated signs of US economic health—and could potentially boost sentiment.
|By Rajesh Roy and Paul Beckett, The Wall Street Journal, 07/18/2012|
MarketMinder's View: India’s economic policy wheel is spinning again as officials weigh whether to open the airline and grocery industries to foreign investment. The last attempt to open India’s markets fell victim to politicking. If these plans meet a happier fate, India would likely benefit from the influx of much-needed foreign capital.
|By Staff, EUbusiness, 07/18/2012|
MarketMinder's View: An actual deal is likely a ways off, if it happens at all—but opening talks is an important step toward what would likely be one of the world’s biggest free trade deals.
|By William Pesek, Bloomberg, 07/17/2012|
MarketMinder's View: We’d rather argue China’s relative economic slowdown, thus far, is mostly engineered for political reasons. Further, to presume growth can’t resume because other areas of the globe aren’t generating sufficient demand pays overly short shrift to the rest of the economy—namely, the producers. For more, see our 07/16/2012 cover story, “China—Choking or Choking Up?”
|By Nathalie Tadena, The Wall Street Journal, 07/17/2012|
MarketMinder's View: Here, again, the ratings agencies seem to be merely confirming what markets have long known. For more, see our 07/09/2012 Investor’s Business Daily column, “Ratings Agencies—Late to the Game.”
|By Staff, Associated Press, 07/17/2012|
MarketMinder's View: This piece largely confuses causation: It’s the velocity of money flowing through an economy that causes inflation—not (supposedly) weak growth inhibiting companies from raising prices. As Milton Friedman eloquently put it: “Inflation is always and everywhere a monetary phenomenon,” not a lack of consumer demand phenomenon.
|By Staff, Associated Press, 07/17/2012|
MarketMinder's View: This piece largely confuses causation: It’s the velocity of money flowing through an economy that causes inflation—not (supposedly) weak growth inhibiting companies from raising prices. As Milton Friedman eloquently put it: “Inflation is always and everywhere a monetary phenomenon,” not a lack of consumer demand phenomenon.
|By Staff, Associated Press, 07/17/2012|
MarketMinder's View: Confidence and expectations indicators like these are almost always backward looking (coincident at best) and presage little about the future direction of the economy or markets.
|By Ben Sills and Angeline Benoit, Bloomberg, 07/17/2012|
MarketMinder's View: Spanish yields continue to fall, and demand continues to be strong—just another point exemplifying ratings agencies are often late to the game. For more, see our 07/09/2012 Investor’s Business Daily column, “Ratings Agencies—Late to the Game.”
|By Fisher Investments, TheStreet, 07/17/2012|
MarketMinder's View: Our latest contribution to TheStreet.
|By Staff, Bloomberg, 07/17/2012|
MarketMinder's View: While the title here may be a bit overstated, this article does a decent job of detailing yet another stimulative measure taken by China’s leaders. For more of China’s moves targeting a reacceleration, see our 07/16/2012 article on TheStreet, “Mid-Year China Check-In.”
|By Donald H. Gold, Investor’s Business Daily, 07/17/2012|
MarketMinder's View: Here’s an example of the free market continuing to work in the natural gas space. As we’ve written, if the profit motive is strong enough, innovation will likely follow—and that seems to be at work here.
|By Alex Kowalski, Bloomberg, 07/17/2012|
MarketMinder's View: June’s higher than forecast production surge erases May’s slight drop—demonstrating the US economy continues to be more resilient than many folks think. And although these figures are subject to month-to-month volatility, on balance, the overall trend has been growth. For more, revisit our commentary on TheStreet from 06/27/2012, “Six Key Stock Market Questions for the Rest of the Year.”
|By Ambrose Evans-Pritchard, The Telegraph, 07/16/2012|
MarketMinder's View: And yet one contractionary monthly read in ISM manufacturing data is the closest thing to evidence of this contraction the article provides. The other data points are positive hiring, a positive yield curve at low rates and a few forecasts or historical connections. All the rest here is rhetoric. We ask: Does the rhetoric seem warranted given the evidence?
|By Editorial Staff, Bloomberg, 07/16/2012|
MarketMinder's View: While we’re neither for nor against electric cars, we would suggest the free market is a far better tool than government subsidies (no matter whom they’re given to) for determining winners, losers and whether a technology is actually commercially viable.
|By Tom Orlik and Bob Davis, The Wall Street Journal, 07/16/2012|
MarketMinder's View: While we agree a hard landing isn’t likely in China, our rationale is very different. This is a very demand-side view of China’s economy, paying little credence to the supply side’s role in creating the outcomes noted herein. Moreover, the discussion of China’s recently slower growth rates here is, in our view, a touch overwrought.
|By Joe McDonald, Associated Press, 07/16/2012|
“The IMF reduced its China growth outlook for 2012 by 0.2 percentage points to 8 percent and for 2013 by 0.3 points to 8.5 percent.” A hard landing is, in fact, always a possibility, so the IMF’s statement here doesn’t yield much actionable information. It’s what’s probable that counts, and we believe China will avoid a sharp deceleration in growth. For more, see today’s cover story, “China—Choking or Choking Up?”
|By Staff, The Wall Street Journal, 07/16/2012|
MarketMinder's View: As this article illustrates well, protecting private property rights is key to fostering innovation. This seems particularly apropos to us: “The deeper lesson is that this [the shale gas boom] is a revolution that came about not through government planning or foresight, but through a combination of individual risk-taking and private property.”
|By Shobhana Chandra, Bloomberg, 07/16/2012|
MarketMinder's View: July’s New York regional manufacturing gauge expanded at a faster pace than anticipated—yet more evidence of the US economy’s underappreciated health.
|By Staff, The Wall Street Journal, 07/16/2012|
MarketMinder's View: This is an interesting look inside some of the regulations hampering Spain’s economy and labor market. Now, it’s worth noting making these changes wouldn’t actually create jobs—economic activity does that—but it would simplify hiring and better set the stage for increased employment.
|By Elisabeth Dellinger, InvestorPlace, 07/16/2012|
MarketMinder's View: Here’s our latest contribution to InvestorPlace by Editorial Staff member Elisabeth Dellinger. This time, she details some rather befuddling French plans targeting increased economic competitiveness.
|By Jeremy Warner, The Telegraph, 07/13/2012|
MarketMinder's View: This is far too dour, in our view—and predicated upon the assumption demand is the only possible source of economic growth, which just isn’t the case. In our view, struggling eurozone nations, like Spain, need a strong dose of competitiveness-boosting medicine. To a degree, that necessitates lessening the government’s overall role, not the reverse. For more, see our 05/11/2012 column, “What’s In a Name?”
|By Dexter Roberts, Bloomberg Businessweek, 07/13/2012|
MarketMinder's View: We’d rather argue the stimulus hasn’t had sufficient time to work itself through the economy—and signs are already starting to show it should reflect in data in the near future. In our view, China continues growing—and likely even picks up the pace.
|By Szu Ping Chan, The Telegraph, 07/13/2012|
MarketMinder's View: We’d suggest taking any long-term forecasts with a significant grain of salt. There are just too many intervening variables that can completely change the future outcome. For example, what if growth is significantly stronger than expected, resulting in larger-than-forecast tax receipts? There is a near-infinite number of ways the UK’s situation could play out.
|By Ben Rooney, CNN Money, 07/13/2012|
MarketMinder's View: This mostly rehashes well-known fears, which typically have less ability to move markets much. And in our opinion, a successful bond auction despite a ratings agency downgrade is more a success story than not.
|By Philip Aldrick, The Telegraph, 07/13/2012|
MarketMinder's View: The UK revealed details of its “fund for lending scheme,” which likely lowers interest rates and ups competitiveness between banks—both of which potentially lead to UK economic growth. An example of the creativity with which UK leaders are attempting to address continued economic sluggishness. For more, see our 06/18/2012 column, “A Spot of Monetary Trickery.”
|By Don Boudreaux, Café Hayek, 07/13/2012|
MarketMinder's View: This outlines the subjectivity of protectionism and how it can potentially snowball into unexpected areas. We especially agree with this: “The illogic of protectionism is rooted in its mistaken premise that political borders are economically meaningful.” Hear, hear!
|By Ian Johnson, The New York Times, 07/13/2012|
MarketMinder's View: A 7.8% growth rate is still quite growthy—especially compared to an overall slower global economy. And coupled with fairly stable employment, changing leadership (historically a booster for growth) and likely upcoming effects of recent stimulus and economic liberalization, it seems China’s economy is in a pretty sweet spot for future growth.
|By Staff, RTT News, 07/13/2012|
MarketMinder's View: While some dismissed Italy’s auction results because demand was primarily from domestic banks, that the auction was oversubscribed is largely positive—as is the fact borrowing costs for medium and long-term bonds declined.
|By Paul Mozur, The Wall Street Journal, 07/12/2012|
MarketMinder's View: The trouble here isn’t the reporting so much as it’s the story itself—which is one of a rather silly, unproductive trade spat between the EU and China. Rather than threatening retaliatory action, both sides would be well advised to instead remove existing trade barriers altogether.
|By Catherine Rampell, The New York Times, 07/12/2012|
MarketMinder's View: This doesn’t quite prove there’s currently much of a wealth or income disparity problem. Actually, the data seemingly suggest the opposite: 84% of Americans exceed their parents’ incomes on an inflation-adjusted basis (pretty darn good, if you ask us), 50% exceed their parents’ wealth (still half!) and roughly 60% of those born in the very top or bottom quintiles move down/up the wealth and income ladders, respectively—suggesting income and wealth mobility are more common than not.
|By Bruce Bartlett, The New York Times, 07/12/2012|
MarketMinder's View: A few quibbles here. While the Hoover administration was hardly economically perfect, by definition it wasn’t austere—government expenditures rose throughout his presidency. As to central banks, the comparison is stark: The Fed in recent years has been perfectly willing to undertake easing, regardless of whether deflation has occurred, is occurring or is even likely to occur. The lesson: Beware overly simplistic attempts at comparing today to history.
|By Staff, Xinhua, 07/12/2012|
MarketMinder's View: Make no mistake, China’s loan growth numbers were red hot in June—a positive sign attempts to spur growth continue working their way through the economy. What’s off base (and a touch humorous) is the concomitant concern inflation (which is at its lowest rate since January 2010) will begin ticking up—when just a few days ago, there was a hue and cry over imminent deflation.
|By Josh Mitchell and Eric Morath, The Wall Street Journal, 07/12/2012|
MarketMinder's View: “The number of US workers filing applications for jobless benefits fell to the lowest level in more than four years, as some factories skipped their typical summer shutdown.” Sounds to us like evidence not only that unemployment continues recovering, but that manufacturing is at least holding steady, if not growing. Positive all around.
|By Staff, EUbusiness, 07/12/2012|
MarketMinder's View: Though media skeptics abound, here’s some evidence the eurozone economy isn’t foundering to the extent commonly presumed.
|By Staff, BBC, 07/12/2012|
MarketMinder's View: Seems initial estimates of Ireland’s 2011 growth rate vastly underestimated the Celtic Tiger’s relatively robust rebound.
|By Staff, The Wall Street Journal, 07/12/2012|
MarketMinder's View: We entirely agree using eminent domain to seize underwater mortgages would be an exceptionally bad idea—fortunately, it’s still just that: an idea.
|By Don Boudreaux, Pittsburgh Tribune-Review, 07/12/2012|
MarketMinder's View: The mainstream media is riddled with common economic misperceptions—including this one: “More ‘confident’ consumers mean more freely spending consumers, and more freely spending consumers mean a healthier economy.” But the reality is “saving” is not a bad word. And in fact, those dollars must be put somewhere—typically winding up as some form of investment, which similarly leads to growth.
|By Bob Davis and Tom Orlik, The Wall Street Journal, 07/11/2012|
MarketMinder's View: This factoid provides fodder for a juicy story, but it has little to no economic significance. Here’s what is significant: US exports to China are at an all-time high and growing, while more imports from China provide American consumers with more and cheaper choices. The gap between the two is merely a political straw man.
|By Catherine Rampell, The New York Times, 07/11/2012|
MarketMinder's View: We’re not sure the data here square with the argument. If “across the income distribution, every income bracket saw gains,” how are folks somehow becoming more impoverished? Yes, there’s a wealth disparity in America (and every other nation). But there’s no sign it’s a problem requiring a fix of any kind—in fact, our free-market system, which is what helped incomes rise across the spectrum, is a fix to the far greater disparities in closed, corrupt nations.
|By Eric Liu and Nick Hanauer, The New York Times, 07/11/2012|
MarketMinder's View: We find a few gaping holes in this argument for ever more regulation. It’s no secret markets aren’t perfectly rational in the very short term—short-term moves are often emotion-fueled, which is by definition irrational. Yet the events of 2008 don’t “prove irrefutably how inefficient and irrational markets truly are.” Rather, they prove ill effect can follow clumsy government intervention—the opposite of what this piece suggests.
|By John Steele Gordon, The Wall Street Journal, 07/11/2012|
MarketMinder's View: Behold, the power of innovation: Because of the series of inventions that ultimately led to air conditioning, economies have grown and thrived in the hottest of places. This development would’ve been very unlikely absent the incentives brought by free markets and intellectual property rights. Safeguarding these globally likely paves the way for similarly impactful innovations we can’t even imagine today.
|By Elisabeth Dellinger, Real Clear Markets, 07/11/2012|
MarketMinder's View: Our latest contribution to Real Clear Markets—on why the eurozone’s plans for political union aren’t a fix-all for the region’s current issues.
|By Yang Lina, Xinhua, 07/11/2012|
MarketMinder's View: More stimulus in China—in a package that promotes private investment, competition and modernization of a key segment of China’s economy. It’s an incremental step toward economic liberalization, and one China likely benefits from over time.
|By Douglas Busvine, Reuters, 07/11/2012|
MarketMinder's View: An important step in the global march away from protectionism.
|By Staff, EUbusiness, 07/11/2012|
MarketMinder's View: As expected, Spain will raise its VAT and shrink its public sector in exchange for an extension on meeting EU deficit reduction targets. Though the spending cuts may have some unpleasant economic side effects for Spanish citizens, they’re likely not as severe as they would have been if the EU hadn’t granted the extension—once again, flexibility and compromise buy the periphery more time to muddle through. For more, see today’s cover story, “Typical Tidbits.”
|By Aaron Back, The Wall Street Journal, 07/10/2012|
MarketMinder's View: Although Chinese trade growth slowed in the month, both measures—exports and imports—overall continued expanding. Recent stimulus measures enacted by the Chinese government should also help boost domestic demand in the period ahead. For more, see our 07/10/2012 cover story, “Deflating Chinese Inflation Concerns.”
|By Wolfgang Münchau, Financial Times, 07/10/2012|
MarketMinder's View: This piece misses a key point: Officials have spent three years drawing and re-drawing lines in the sand. If lack of agreement on a banking union risks preventing other needed actions, then perhaps the banking union will no longer be a requirement. We still believe officials’ slow-go strategy of changing only what needs changing and otherwise kicking cans as needed buys the union time to muddle through and the private sector time to devise solutions. For more, see our 06/26/2012 cover story, “Nineteenth Time’s the Charm?”
|By Ilona Billington, The Wall Street Journal, 07/10/2012|
MarketMinder's View: In aggregate, eurozone industrial production exceeded overly dour expectations. And in our view, the regional divergences merely confirm pockets of strength and weakness exist throughout Europe—a few contracting countries don’t necessarily herald a region-wide retrenchment. Besides, these data are frequently subject to a significant degree of volatility.
|By Laurence Norman and David Roman, The Wall Street Journal, 07/10/2012|
MarketMinder's View: Officials also agreed on Spain’s first bank aid installment—both welcome developments. In our view, this is yet another example of eurozone officials remaining steadfast in their desire to prevent a disorderly breakup of the monetary union.
|By Naj Srinivas, Investor’s Business Daily, 07/10/2012|
MarketMinder's View: Our latest contribution to Investor’s Business Daily—dispelling the notion ratings agencies’ decisions have much market impact.
|By Ben Casselman, The Wall Street Journal, 07/10/2012|
MarketMinder's View: Dreary headlines after last Friday’s jobs report abound, but employment gains typically come after economic growth—sometimes much after. And the positives noted here likely point to a solid foundation for continued job growth. For more, see our 07/09/2012 cover story, “Debating Dour Datapoints.”
|By Chuin-Wei Yap, The Wall Street Journal, 07/10/2012|
MarketMinder's View: While many fretted over slowing Chinese import growth, the fact is this is a nearly perfect illustration of how and why economic data can be so variable and potentially lead to incorrect conclusions. As the author writes, “Reports of the demise of China’s appetite for commodities would be very premature.”
|By Paul Taylor, Reuters, 07/09/2012|
MarketMinder's View: This seems yet another in a nearly endless line of critiques of EU leaders’ slow-go approach to addressing peripheral debt woes—one heavy on opinion and short on facts. Where are the “signs” a faster approach is needed? TARGET2 and capital flowing (slowly) from one nation to another seem neither new nor evidence exhorting EU leaders to suddenly change pace. The reality is fast-acting politicians are generally bad for markets and economies.
|By Robert Cookson, Financial Times, 07/09/2012|
MarketMinder's View: China’s historical pattern is to fight inflation in the year before a power transition (and slow growth as a byproduct), then reaccelerate it in the transition year itself. That this seems to be playing out again—with inflation figures falling since tightening measures and the government announcing cyclical stimulus measures recently—is unsurprising to us.
|By Richard Thaler, The New York Times, 07/09/2012|
MarketMinder's View: Behaviorism has many applications in finance. But we’ve long said much of behavioral finance has devolved into efforts to influence public policy, as this article indicates. Behaviorism is best used by investors as a tool to understand their own cognitive failings.
|By Binyamin Appelbaum, The New York Times, 07/09/2012|
MarketMinder's View: This article puts too much stake in the necessity of another round of quantitative easing to prop up the economy—which, in our view, doesn’t need much propping. Also, this struck us as odd: “After all, the Federal Reserve is legally required to minimize unemployment.” Low unemployment is one part of their dual mandate. But it’s not as if the Fed is breaking the law if unemployment fails to fall.
|By Matina Stevis and Stephen Fidler, The Wall Street Journal, 07/09/2012|
MarketMinder's View: In the wake of the recent EU summit, finance ministers seem to be making headway toward a central bank regulator for the EU—an important step toward finalizing Spain’s recent bank bailout.
|By Elisabeth Dellinger, Investor’s Business Daily, 07/09/2012|
MarketMinder's View: Our latest contribution to Investor’s Business Daily—on the widely held misperception that Glass-Steagall’s repeal was responsible for the 2008 credit crisis.
|By Alkman Granitsas, The Wall Street Journal, 07/09/2012|
MarketMinder's View: Greece’s ruling coalition seems on sounder footing to pursue renegotiation of current bailout requirements.
|By Staff, EUbusiness, 07/09/2012|
MarketMinder's View: And they’ll probably get that time. Throughout this saga, bailout stipulations have been shifting political lines in the sand that can be (and have been) redrawn in an effort to maintain the monetary union.
|By Emily Jane Fox, CNN Money, 07/06/2012|
MarketMinder's View: Higher borrowing costs aren’t great for Spain, but they also needn’t spell disaster. As we’ve written before, though yields have hit euro-era highs, Spain’s recent debt auctions have seen robust demand, suggesting Spain can continue meeting its funding needs, at least for now.
|By Staff, The Telegraph, 07/06/2012|
MarketMinder's View: That this decision even came about shows how much room Portugal has for further reform—like privatizing industry or liberalizing the labor code to allow firms to decide whether to provide extra holiday pay would be healthy steps forward. Positively though, Portugal may still be able to meet its deficit target, even without limiting additional holiday pay for public sector workers.
|By Staff, Reuters, 07/06/2012|
MarketMinder's View: This seems to be politicking at its finest: 51 former members of Prime Minister Yoshihiko Noda’s party want to force a confidence vote, and stonewalling a budget bill seems a handy way to do that. But as has happened before (in Japan, the US and the eurozone), politicians likely compromise and ultimately do what’s needed for Japan to stay afloat. But there’s plenty of time for more political wrangling before the deadline in October.
|By Ben Casselman, The Wall Street Journal, 07/06/2012|
MarketMinder's View: Even seemingly weak jobs growth is still growth. Plus, unemployment’s a late-lagging indicator—June’s jobs report says nothing about the economy’s future direction. In fact, as our 07/04/2012 cover story shows, the US economy has plenty of underappreciated strength.
|By Giada Zampano, The Wall Street Journal, 07/06/2012|
MarketMinder's View: Though unpopular, the approved spending cuts should help Italy comply with EU requirements—important if Italy wants the ESM to purchase its sovereign debt—and underscore the government’s efforts to reduce its deficit and increase competitiveness.
|By Staff, The Associated Press, 07/06/2012|
MarketMinder's View: Greece’s new government kicked off bailout renegotiations by reaffirming its commitment to economic reform and asking only to delay previously agreed-to public-sector wage, pension and job cuts. Though plenty of debate and politicking lies ahead, these seem sensible steps in the right direction.
|By David Weidner, The Wall Street Journal, 07/06/2012|
MarketMinder's View: Behold, the unintended consequences of overregulation: Small, local banks often struggle to follow layers of rules because of the high compliance costs—rules ostensibly meant for larger banks. This can limit competition in the banking sector with fewer small banks opening due to regulatory challenges, while those that remain likely can’t lend as freely as they otherwise would.
|By Yajun Zhang and Lilian Lin, The Wall Street Journal, 07/06/2012|
MarketMinder's View: Generally, trade wars don’t much benefit either party—so hopefully China’s tempered response to the US’s WTO claim is evidence officials don’t want this to escalate. In the meantime, Chinese consumers apparently aren’t letting tariffs significantly impact their buying foreign cars, and US automakers, so far, haven’t seen much impact. Then again, "It's not about cars, but about politics"—which is all too true about most trade tiffs.
|By Bob Davis, Aaron Back and Lingling Wei, The Wall Street Journal, 07/05/2012|
MarketMinder's View: We rather doubt China’s rate cuts are as much of a warning sign as this article suggests—China’s been trying to make cheaper loans available to small businesses for a while. Plus, coupled with recent fiscal stimulus, the move seems in keeping with officials’ apparent efforts to boost growth in this election year.
|By Staff, Reuters, 07/05/2012|
MarketMinder's View: Slowing retail sales needn’t necessarily indicate a weakening economy—growth is growth, and consumer spending, though 70% of GDP, hasn’t been the main driver of this expansion, as we wrote Monday. That honor falls to business investment, which remains firm overall and on average. Besides, retail sales aren’t a forward-looking indicator—and only one of many economic indicators.
|By Christopher Matthews, Time, 07/05/2012|
MarketMinder's View: Maybe Europe is having a bit of an impact—but it’s likely not to the degree this piece suggests, considering peripheral Europe doesn’t account for a huge portion of US export demand. Additionally, one month’s disappointing manufacturing doesn’t necessarily indicate a contracting economy—more likely, it’s simple growth-rate volatility. Occasional weak or contracting manufacturing amid an economic expansion isn’t unusual. For more, see our 07/03/2012 research article, “US ISM Manufacturing and Factory Orders.”
|By Staff, EUbusiness, 07/05/2012|
MarketMinder's View: Hungary’s ill-advised central bank meddling continues—a disappointing development after it seemed Prime Minister Viktor Orban was ready to comply with the EU and IMF’s demands to ensure the institution’s independence. For more, see our 01/11/2012 column, “Hungary’s Crossroads.”
|By Hibah Yousuf, CNN Money, 07/05/2012|
MarketMinder's View: Ireland’s first public bond auction since receiving a bailout was a decided success with “strong demand, [a] competitive interest rate and the presence of significant international interest.” This is a significant step in Ireland’s journey back to primary debt markets.
|By Hugh Carnegy and Scheherazade Daneshkhu, Financial Times, 07/05/2012|
MarketMinder's View: It seems France may learn the hard way the more you tax something—in this case, high earners and wealthy folks—the less you get of it. How the new government’s tax plans impact businesses and France’s economic competitiveness bears watching, though it’s not certain they’ll come to pass. Markets may force moderation.
|By Alex Kowalski, Bloomberg, 07/05/2012|
MarketMinder's View: And the private sector added 176,000 jobs, far more than forecast. Though it’s only one month’s data point, between more private-sector jobs and fewer jobless claims, it seems employment’s gradual improvement continues.
|By Kevin Hamlin, Bloomberg, 07/05/2012|
MarketMinder's View: More evidence the Chinese economy’s likely in better shape than most assume. Though only one independent survey of Chinese economic data, the data seem scientifically gathered and, on the whole, perhaps more reliable than the Chinese government’s official data (which tend to exclude smaller firms, among other things).
|By Neil Shah and Ben Casselman, The Wall Street Journal, 07/03/2012|
MarketMinder's View: We caution against reading too much into any single month’s data point—particularly one prone to such volatility as manufacturing. Then, too, Tuesday’s report of rebounding factory orders may very well point to a manufacturing rebound this month and point to only a temporary slowdown.
|By Peter Gumbel, Time, 07/03/2012|
MarketMinder's View: Markets are the ultimate leading indicator, rising before investors recognize the positive outlook. So recent relatively positive market action would seemingly indicate a better outlook than widely perceived. Now, that doesn’t preclude a correction ahead, and it certainly doesn’t mean stocks go straight up from here—but nothing truly precludes market volatility.
|By Richard Blackden, The Telegraph, 07/03/2012|
MarketMinder's View: We’re not convinced the IMF’s the ultimate source of economic wisdom some presume. Particularly given such long known and widely anticipated developments as tax cuts’ expiration and spending cuts rarely have enough juice to move markets most—that’s more often accomplished by surprises.
|By Kenneth Lieberthal and Michael O’Hanlon, Los Angeles Times, 07/03/2012|
MarketMinder's View: We actually think the US’s debt level isn’t the concern many deem it—particularly given historically low interest rates that allow us to finance that debt at a low cost. For more, see our 03/12/2012 column, “US Debt Perspectives.”
|By Eric Morath and Sarah Portlock, The Wall Street Journal, 07/03/2012|
MarketMinder's View: Though volatile, like any economic data point, increasing factory orders would seemingly point to likely growth ahead—and argue against concerns the US is on the verge of recession.
|By Mark J. Perry, Carpe Diem, 07/03/2012|
MarketMinder's View: An illuminating example of the ways in which capitalism helps achieve socially desirable outcomes at a lower overall cost—in this case, helping bring carbon dioxide levels down dramatically. Which is more than can be said for the solar industry, which currently functions primarily with significant government help.
|By Jeff Bennett and Melodie Warner, The Wall Street Journal, 07/03/2012|
MarketMinder's View: Strong auto sales seemingly argue against widespread concern about the impending death of American consumers. For more, see today’s cover story, “A Dearth of Demand?”
|By Don Boudreaux, Café Hayek, 07/03/2012|
MarketMinder's View: This hits the nail on the head, in our view: “But the proposition that trade between America and, say, India is beneficial for the people of both countries rests on assumptions no more unrealistic, tentative, or fragile than does the proposition that trade between Arizona and Indiana is beneficial for the people of both states.”
|By Juan Williams, The Wall Street Journal, 07/03/2012|
MarketMinder's View: We agree completely—freer markets and societies lead inevitably to greater freedom and wealth for a country’s citizens. Then, too, “Secure markets are necessary for successful trade policy, and investment cannot take root when dictators can usurp property rights.” Hear, hear!
|By Christopher S. Rugaber, Associated Press, 07/02/2012|
MarketMinder's View: May’s small manufacturing contraction isn’t great news, but growth-rate volatility amid a longer-term expansion is fairly typical. One month’s negative print doesn’t necessarily suggest “weakness will likely persist in the coming months.”
|By Ben Casselman, The Wall Street Journal, 07/02/2012|
MarketMinder's View: We’re rather puzzled by the claim “consumer spending isn’t likely to enjoy a sustained recovery until the job market improves,” considering consumer spending is at all-time highs in the US. Plus, to say employment improvement is necessary for future economic growth is backward—growth typically begets jobs, not the other way around.
|By Fiona Maharg-Bravo, The Globe and Mail, 07/02/2012|
MarketMinder's View: They do indeed, which is why we’d suggest taking last week’s EU summit optimism with a grain of salt. However, this piece misses an important point: EU officials have regularly drawn lines in the sand only to compromise and redraw them as needed. If they can’t agree on a banking union by yearend—and we’d argue they shouldn’t rush, lest they create a solution in search of a problem—we wouldn’t be surprised if officials compromised further to help Spain’s banks.
|By Roger Bootle, The Telegraph, 07/02/2012|
MarketMinder's View: We’d argue it’s not, but our main quibble is with this piece’s underlying assumption: That demand-side factors drive economic growth and, thus, efforts to boost the economy must focus on demand. In our view, it’s more important to ensure the economy’s free functioning—removing barriers to productivity and efficiency and giving the market’s invisible hand the most room to work.
|By Staff, Central News Agency, 07/02/2012|
MarketMinder's View: This is a welcome development for free trade in Taiwan, which is also mulling a similar agreement with Japan. Kick-starting long-stalled US/Taiwan trade talks—and actually reaching an agreement—would likely benefit consumers and producers in both nations.
|By Dakin Campbell and Michael J. Moore, Blooomberg, 07/02/2012|
MarketMinder's View: Ratings agencies, as this piece shows, are frequently late to the party: “The corporate market thinks for itself and credit ratings agencies are often lagging indicators.” In fact, many of the banks in question are in better shape today than a couple years ago.
|By Philip Aldrick, The Telegraph, 07/02/2012|
MarketMinder's View: Efforts to remove regulatory uncertainty and make it a bit easier for banks to lend aren’t a fix-all for the British economy, but they do seem a sensible step—letting the private sector deploy capital seems more efficient than having Her Majesty’s Treasury funnel money to the economy through infrastructure projects. For more, see our latest column, “A Spot of Monetary Trickery.”
|By Cherice Chen, Taiwan News, 07/02/2012|
MarketMinder's View: It seems the Japanese government’s decision to push a sales tax increase through its parliament may prompt another turn of Japan’s revolving prime ministerial door. For more, see our 06/27/2012 cover story, “Weighing Tuesday’s Follies.”