|By Graham Bowley and Liz Alderman, The New York Times, 09/30/2011|
MarketMinder's View: A slow and steady approach on the part of eurozone leaders is likely rather a good method. For more, our 09/19/2011 cover story, “The Greek Shuffle.”
|By Matt Phillips, The Wall Street Journal, 09/30/2011|
MarketMinder's View: Suffice it to say, our expectations are rather lower for the impact of the Fed’s Operation Twist. The Fed tried a Twist back in the early 1960s, and it’s widely accepted to have largely failed.
|By Leo Lewis, The Times , 09/30/2011|
MarketMinder's View: Yes, there’s a gap between the rich and poor in China. But even those at the lower end of the income spectrum have seen gains since China began to open to capitalism more. So the “affair” China is having with capitalism is far from “dirty” or “destructive.” China would be well served to embrace capitalism further, in our view. Over time, that would likely continue to improve the lot of the vast majority of Chinese citizens.
|By Ambrose Evans-Pritchard, The Telegraph, 09/30/2011|
MarketMinder's View: It’s true the German bailout vote on proposed EFSF enhancements isn’t a cure-all. But in our view, this is overly dour on the eurozone situation and overlooks the fact eurozone leaders have shown more than once they’re willing to stand behind troubled nations (after some political wrangling). For more, see today’s cover story, “Easing on Down the Eurozone Road.”
|Howard Packowitz, The Wall Street Journal, 09/30/2011|
MarketMinder's View: “Bolstered by solid employment and production gains, the Chicago Business Barometer rose to 60.4, rebounding from a 21-month low of 56.5 in August, the Institute for Supply Management-Chicago reported”—and marking two years of expansion. Yet another sign the US economic picture isn’t so gloomy as many seemingly think.
|By Daniel Ikenson, Cato@Liberty, 09/30/2011|
MarketMinder's View: Keep in mind: The legislation discussed here is far from becoming law, and similar legislation has been presented in recent years and gone nowhere. With that said, this is an excellent critique of recent China bashing.
|By Tara Siegel Bernard and Ben Protess, The New York Times, 09/30/2011|
MarketMinder's View: Here’s a rather clear example of the unintended consequences of government legislation: Dodd-Frank’s Durbin Amendment mandated a reduction in debit card “swipe fees” banks charged merchants. So what are some banks likely to do? Pass the costs along in a different fashion. For more, see our 07/01/2011 cover story, “A Little Less Legislation, Please.”
|By Philippe Douste-Blazy, The New York Times, 09/29/2011|
MarketMinder's View: This starts from an incorrect assumption—that trading somehow sparked 2008’s global financial crisis—and largely falls apart from there. Taxes aren’t the great levelers many assume them to be—and implementing taxes as a form of revenge for financial institutions’ assumed role in the 2008 crisis hardly seems a recipe for sound legislation. For more, see today’s cover story, “Trifling With Transaction Taxes.”
|By Kathleen Madigan, The Wall Street Journal, 09/29/2011|
MarketMinder's View: We’d suggest this is taking what’s largely a positive and spinning it into a negative—an indication sentiment is increasingly dour. That businesses are investing in capex is a positive—and likely leads down the road to increased hiring as they ramp up production. But it’s hardly surprising hiring is lagging other critical investments—in fact, it’s historically the overarching trend.
|By Paul Vigna, The Wall Street Journal, 09/29/2011|
MarketMinder's View: Well, of course it isn’t—but we’d suggest the idea all recent market upside has been irrational hope tied to Europe is off base. What do seem more disconnected from reality, in our view, are the pessimism and bearish sentiment of the past few months—hallmarks of a correction. Negative sentiment presumes a recession is coming—but there’s little evidence supporting that thesis at this point.
|By C. Fred Bergsten, The New York Times, 09/29/2011|
MarketMinder's View: The assumption imports detract from eitherexports or opportunities to instead produce in America ignores the fact that much of what we import is intermediate goods used to produce final goods, which are then either sold domestically or exported. As for imports that are final goods, who’s transporting them? Selling them? Servicing them? Largely Americans. So the reality is, imports actually do help support domestic jobs—meaning attempts to close the trade deficit are largely misguided, in our view.
|By Robert Reich, The Guardian, 09/29/2011|
MarketMinder's View: Actually, we’d argue the government’s efficacy when it comes to job creation is extremely limited. Instead, unleashing the private sector to do what it does best—innovate and produce—would likely ultimately bring unemployment down. For more, see our 09/12/2011 column on Real Clear Markets, “Time and Patience Is What Will Fix the Employment Problem.”
|By Staff, Bloomberg, 09/29/2011|
MarketMinder's View: This largely hits the nail on the head—given Europe’s concerns about their global competitiveness and their need to spur growth to help ease peripheral debt troubles, the addition of a transaction tax now suggests a dubious sense of timing at best. For more, see today’s cover story, “Trifling With Transaction Taxes.”
|By William Boston,Mary Lane and Bernd Radowitz, The Wall Street Journal, 09/29/2011|
MarketMinder's View: And another hurdle cleared in the continuing eurozone debt drama—one many feared Germany might struggle with at that.
|By Steve Schaefer, Forbes, 09/29/2011|
MarketMinder's View: While likely not the gangbusters number most would prefer, growth is still growth. And history shows growth hardly ever happens in a straight line. Combined with an (also unevenly) improving jobs number, the data continue to point to economic growth and argue against a return to recession in the near future.
|By Scott Grannis, Seeking Alpha, 09/29/2011|
MarketMinder's View: This highlights well the differences between Greece and the other PIIGS, namely Ireland. While Ireland’s returned to growth, Greece continues to face significant challenges—and credit markets essentially tell that story. For more, see our 09/20/2011 cover story, “Eyeing Ireland.”
|By Fisher Investments Editorial Staff, Real Clear Markets, 09/29/2011|
MarketMinder's View: Our latest contribution to Real Clear Markets.
|By Fisher Investments Editorial Staff, The Street, 09/29/2011|
MarketMinder's View: The latest from our editorial staff for The Street.
|By Staff, EU Business, 09/28/2011|
MarketMinder's View: We’d argue the so-called Tobin tax isn’t a grand idea, given its potential knock-on effects on European economic growth and capital markets activity—particularly when they’re fretting about member states’ competitiveness. The UK—Europe’s global financial center—has already denounced the proposal, which would require approval by all 27 EU countries to pass, so it’s far from certain this takes effect.
|By Ilan Goldfajn, The Wall Street Journal, 09/28/2011|
MarketMinder's View: No economy is ever without challenges and uncertainty, but it’s important to take a measured view, balancing positives and negatives. Moreover, it’s impossible to forecast the far future. How the global economy behaves over the next 10 years depends on a multitude of as yet unknown variables.
|By Hugh Carnegy, The Financial Times, 09/28/2011|
MarketMinder's View: Super taxes on very high incomes are en vogue, but in our view, they’re not the best prescription for economic health. Historically, redistribution of wealth has been a market and economic negative.
|By Constantine von Hoffman, BNET, 09/28/2011|
MarketMinder's View: We’d quibble with much of this “proof,” which cites actual GDP growth as evidence of a recession. But perhaps the most suspect evidence, in our view, is the tally of newspaper articles mentioning the word “recession”—to us, this says little to nothing about the true state of the economy and more about the true state of media.
|By Kim Clark, CNN Money, 09/28/2011|
MarketMinder's View: We believe the notion of a “balance sheet recession” misses the mark—though unnoticed by many, US consumers on balance have stopped deleveraging, and credit is expanding again. For more, see our 08/23/2011 research analysis, “A Discussion on Consumer Credit Trends.”
|By Charles R. Schwab, The Wall Street Journal, 09/28/2011|
MarketMinder's View: “As we did after 1974, our country can and will thrive again. But the leaders of both parties, Republicans and Democrats alike, must lend their voices to encourage and support private enterprise, both for what it can do to turn our economy around and for the spirit of opportunity it represents.” Well said!
|By Carrick Mollenkamp and Serena Ng, The Wall Street Journal, 09/28/2011|
MarketMinder's View: Much recent financial news cites CDS spreads as a measure of sovereign and corporate debt risk, but as this article nicely shows, that’s not necessarily the best gauge. The CDS market is fairly illiquid, and the prices quoted often don’t reflect actual trades—hence the spreads are likely frequently detached from reality.
|By Staff, Central News Agency, 09/28/2011|
MarketMinder's View: Taiwan’s banks have a massive buildup of excess deposits, and they now have the green light to invest these funds in public infrastructure and other development projects. While we’d argue the capital could be more efficiently deployed outside the public sector, the fact these funds are now allowed to flow through Taiwan seems a net positive for that state.
|By Staff, The Telegraph, 09/28/2011|
MarketMinder's View: Another Greek austerity measure—an incremental positive for Europe—falls into place.
|By Ruth Mantell, MarketWatch, 09/28/2011|
MarketMinder's View: Though overall unemployment remains high—which history demonstrates is normal even a few years into economic expansion—some areas of the job market are growing. And as businesses continue growing and new technologies (like mobile apps!) are born, it seems likely employment will tick steadily higher.
|By Justin Lahart, The Wall Street Journal, 09/27/2011|
MarketMinder's View: There are numerous problems with the methodology described by this study. But most importantly, as the article points out, the study fails to account for many of free trade’s benefits since they are often not directly measurable. What’s the value of getting cheaper intermediary goods? What’s the value to a consumer of having greater choice?
|By William Horobin, MarketWatch, 09/27/2011|
MarketMinder's View: After almost every recession we can measure, unemployment has remained elevated for some time into recovery and expansion before finally diminishing. Although incentives for businesses to hire (like competitive corporate tax codes and incentives to hire new workers) would be additive to employment payrolls, we’d say the natural course of global economic growth might actually result in the desired effect.
|By Larry Ribstein, Truth on the Market, 09/27/2011|
MarketMinder's View: The problem with the corporate tax isn’t just that it exists separately from personal tax; it’s that the tax system in its entirety is too complicated and promotes the use of loopholes and tax shelters. Where people can get away with avoiding taxes, they nearly always do.
|By Mary M. Lane, Bernd Radowtiz and Jonathan House, The Wall Street Journal, 09/27/2011|
MarketMinder's View: More in the political back and forth over bailouts for the eurozone’s periphery. Keep in mind, this isn’t the final word. This process has been marked with constant back-and-forth negotiation.
|By Janet Hook and Keith Johnson, The Wall Street Journal, 09/27/2011|
MarketMinder's View: The likelihood of another government shutdown was remote, given the public backlash to August’s debt ceiling controversy.
|By Derek Kravitz, MSN Money, 09/27/2011|
MarketMinder's View: That home prices rose again is evidence the housing market might be stabilizing. But bear in mind, a housing rebound—though additive—isn’t required for overall economic growth.
|By Jonathan Russell, The Telegraph, 09/26/2011|
MarketMinder's View: European leaders have already discussed expanding the powers of the EFSF. Now they’re discussing increasing its size. This is far from final at this point, but it is clearly a story to watch.
|By Fisher Investments Editorial Staff, The Street, 09/26/2011|
MarketMinder's View: Our latest contribution to The Street.
|By James Altucher, MarketWatch, 09/26/2011|
MarketMinder's View: This article is a bit more dismissive of the European situation than we are, but there are great nuggets of information and perspective to be found.
|By Allan Roth, MoneyWatch, 09/26/2011|
MarketMinder's View: “Those that jumped off the ‘old rules that no longer applied’ in 1979 missed out on some stellar returns. Not to say that was the last time. In March of 2009, those who accepted the new paradigm of the great depression ahead missed out on stocks getting to within three percentage points from their all-time high in 2007. I’m hoping you see a pattern here.”
|By Robert J. Shiller, Slate, 09/26/2011|
MarketMinder's View: Sentiment surveys have a long history of not matching folks’ actions. Americans have been depressed about the economy for the past two years—and what’s happened? Eight straight quarters of economic growth and consumer spending at an all-time high. As we’ve said repeatedly, consumer sentiment is a lagging indicator at worst and coincident at best.
|By Keith Bradsher, The New York Times, 09/26/2011|
MarketMinder's View: This seems like a great deal of handwringing over what was China’s intended outcome: Cooling growth rates and taming inflation. So this shouldn’t surprise nor should it be interpreted as a massive negative. As the article states, the IMF still expects China to grow roughly 9% this year. Plus, China is not the sole driver of global economic growth.
|By Jack Ewing, The New York Times, 09/23/2011|
MarketMinder's View: Potlicians can talk about joblessness until they’re blue in the face, but fact is (and historically), unemployment typically recovers well after a recession—without politicians’ help.
|By Joshua M. Brown, The Christian Science Monitor, 09/23/2011|
MarketMinder's View: Well, since the global economy has expanded for eight quarters, and expectations broadly are for continued growth, there can’t already be a recession, double-dip or otherwise. Could the world fall into recession? Sure, always possible. But to get a recession, you need shrinking GDP. We don’t have that.
|By Elena Becatoros, The Globe and Mail, 09/23/2011|
MarketMinder's View: More evidence credit ratings agencies merely, at best, confirm what’s already widely known.
|By Nicola Kean, Portfolio.com, 09/23/2011|
MarketMinder's View: Whether or not a shutdown happens, history shows repeatedly that markets don’t much care.
|By Scott Grannis, Calafia Beach Pundit, 09/23/2011|
MarketMinder's View: “There's no denying that Greece is almost certainly going to default, and that it will be the biggest sovereign default on record. Whether that is big enough to bring down the entire world is the question at hand. I just don't see it.” And we agree. Further, this post takes a look at other positive developments that go largely ignored.
|By Staff, Reuters, 09/23/2011|
MarketMinder's View: The sensible thing in this article has nothing to do with the Trade Adjustment Assistance program—which is likely ineffectual but largely harmless. Instead, it’s the fact the Obama administration said this is what they require to approve the long-stalled free trade agreements with Korea, Panama and Colombia.
|By Staff, San Francisco Chronicle, 09/23/2011|
MarketMinder's View: The knock-on effects of the Dodd-Frank Act continue. Here, legislators’ efforts to limit debit card fees have resulted in raised fees for some transactions instead.
|By Brett Arends, The Wall Street Journal, 09/22/2011|
MarketMinder's View: Yes, volatility can be uncomfortable—but investing decisions shouldn’t target an emotional return. Instead, they should target earning a real return—one that puts investors on track to reach long-term goals. For more, see our 08/15/2011 column, “Conquering Volatility, Grandpa Dex Style.”
|By Oliver Muller, Seeking Alpha, 09/22/2011|
MarketMinder's View: In our view, this assessment ignores some important facts. Like the fact that to date, global leaders have taken the steps necessary to prevent eurozone implosion, and monetary policymakers have done what they think necessary to support economic growth. Volatility is inarguably high, but that needn’t presage markets’ impending doom.
|By Editors, Bloomberg, 09/22/2011|
MarketMinder's View: Ignore the title, which isn’t much related to the overall argument that bank rules aren’t stringent enough. We’d disagree and suggest onerous regulations frequently have unintended consequences—as FAS 157 did. For more, see our 07/28/2010 cover story, “Basel III Takes Shape.”
|By Paul Krugman, New York Times, 09/22/2011|
MarketMinder's View: It seems this is based on an inaccurate reading of the graph cited—which indicates 40% of taxpayers with incomes between $30-40K actually pay 6.0% in income and payroll taxes, while 25% of taxpayers with incomes over $1mm pay 12.6% . . . that sounds like more to us. But thosequibbles aside, there are different IRS data available thatlead to very different conclusions.
|By Stelios Bouras and Alkman Granitsas, The Wall Street Journal, 09/22/2011|
MarketMinder's View: No doubt Greece has a ways to go—but continued measures like these, especially ones indicating incremental steps toward a less government-dominated economy, are headed in the right direction. For more, see our 09/19/2011 cover story, “The Greek Shuffle.”
|By Staff, The Wall Street Journal, 09/22/2011|
MarketMinder's View: Now here’s a piece of legislation we canget behind! Relieving companies of onerous regulations like Sarbanes-Oxley would likely spur small business. And while we’d actually prefer a broader repeal of SarbOx, this is undoubtedly a step in the right direction. For more, see our 08/24/2011 cover story, “Regulating Regulators’ Regulations.”
|By Kyle Smith, Forbes, 09/22/2011|
MarketMinder's View: We agree with just about everything here—folks in the US across income levels are living longer, richer lives and have achieved higher living standards than ever before. It’s important to dig beneath the surface of a median or headline figure to find the true story the numbers tell—and when it comes to income, they just don’t tell a story of stagnation.
|By David Cottle, The Wall Street Journal, 09/22/2011|
MarketMinder's View: Here’s a look beyond GDP data at improving conditions in Ireland.
|By Staff, EUbusiness, 09/22/2011|
MarketMinder's View: Irish GDP grew for the second consecutive quarter in Q2 2011. Not too long ago, folks were bemoaning the possibility Ireland would require further assistance or could even default. Turns out they’ve recovered faster than most thought possible—highlighting the fact problems facing struggling peripheral eurozone countries vary widely. For more, see our 09/20/2011 cover story, “Eyeing Ireland.”
|By Ben Chu, The Independent, 09/21/2011|
MarketMinder's View: Though the IMF is predicting weaker global growth, their forecast is still positive both this year and next. A 4% growth rate may not be gangbusters, but we’d argue it isn’t too shabby either. And while the IMF is certainly a fallible forecaster, it’s not known for being biased toward optimism. For more, see today’s cover story, “Italy and the IMF.”
|By Alan Beattie, The Financial Times, 09/21/2011|
MarketMinder's View: We’d argue officials’ gradual resolution of Greece’s debt troubles is more helpful than not. The alternative of a sudden, messy conclusion could be disruptive, but a slower pace, in our view, seems to allow Greece time to reform its economy and markets time to digest the outcome piece by piece. For more, see our 09/19/2011 cover story, “The Greek Shuffle.”
|By Staff, CNBC, 09/21/2011|
MarketMinder's View: It’s premature, in our view, to say how banks—or any industry—will fare over the very long term. The future likely depends on many unknown, unpredictable variables.
|By William L. Watts, MarketWatch, 09/21/2011|
MarketMinder's View: Whether in Germany, the US or elsewhere, sentiment surveys tend not to predict future stock returns.
|By Jonathan Anderson, The Wall Street Journal, 09/21/2011|
MarketMinder's View: Despite China’s recent strong economic growth, several structural barriers mean it’s unlikely to develop into a true global financial giant anytime soon. It’s too closed to foreign capital, lacks deep domestic financial markets and private property rights are almost nonexistent, to name but a few. We’d quibble with the author’s long-term forecasts (awfully difficult to make accurately) of both GDP growth and that China won’t reform. However, we agree with the view China is far from parity with the US financially.
|By Staff, Reuters, 09/21/2011|
MarketMinder's View: It’s still early, but this adds to other data from recent months showing housing may be turning a corner. Plus, keep in mind the economy doesn’t need a strong housing rebound to grow—housing has been very weak since 2009 while the economy has grown and stocks have nearly doubled.
|By Staff, Associated Press, 09/21/2011|
MarketMinder's View: Japan’s economic recovery from the March earthquake and tsunami continues.
|By Staff, Reuters, 09/21/2011|
MarketMinder's View: In another attempt to spur faster economic growth, the Bank of England announced more monetary action Tuesday.
|By Staff, Associated Press, 09/20/2011|
MarketMinder's View: Economies expand (and contract) unevenly. And though the IMF lowered their growth projections for the US, they still forecast growth ahead—which likely few truly appreciate.
|By Chrystia Freeland, The New York Times, 09/20/2011|
MarketMinder's View: The wealth gap (or income gap) is an entirely political invention with little economic meaning. First, most meaningful aspects of life (life expectancy, infant mortality, etc) for Americans are better than they were in past decades (the whole bell curve has shifted right). Second, a relative comparison of incomes or wealth is not how consumers make decisions. (It would be highly unusual for a person to not purchase a new TV because Warren Buffett is richer than them.) Third, there is a high degree of mobility between income groups in the US. Finally, we’ve had progressive income taxes since 1913 and some argue the wealth gap not only still exists, but is wider. So what exactly is the fix? We could all be poor, like North Koreans, if you feel that’s more just. But that justice seems counterproductive.
|By John Melloy, CNBC, 09/20/2011|
MarketMinder's View: Eurozone leaders have shown they are unwilling to allow Greece to default on their debt in a disorderly manner (although terms for a selective default already exist in the July bailout agreement). And although politicians in Greece are working at a snail’s pace to reform the country’s fiscal situation—the slow, measured (and highly publicized) approach isn’t necessarily a bad thing for markets right now. For more, see our 09/19/2011 cover story, “The Greek Shuffle.”
|By Blake Ellis, CNN Money, 09/20/2011|
MarketMinder's View: In a widely expected move, S&P lowered Italy’s credit rating one notch. As we’ve said many times, ratings agencies opinions aren’t infallible and the report issued along with the rating change wasn’t exactly new news. That there is heated debate in Italy over austerity and slow economic growth was already widely known.
|By Maria Petrakis and Natalie Weeks, Bloomberg, 09/20/2011|
MarketMinder's View: The pattern on Greece talks continues. A verbal show of confidence, an incremental step forward,—then, a politically motivated incremental step back. For more, see our 09/19/2011 cover story, “The Greek Shuffle.”
|By David Bier and Ivan Osorio, Forbes, 09/20/2011|
MarketMinder's View: “Imports, as much as exports, are good for American jobs and prosperity.” This is a spot on take of the trade deficit. For more, see our 09/15/2011 column at The Street, “Trade Gap Irrelevant for US Economic Growth.”
|By Robert L. Bradley Jr., Forbes, 09/20/2011|
MarketMinder's View: We are not opposed to alternative energy in theory, but a rational analysis shows major problems remain in attempting to implement such sources on a meaningful scale today. This article details quite a few.
|By Staff, Taiwan News, 09/20/2011|
MarketMinder's View: Here’s a recent example of the positive impacts of freer trade.
|By Andrew Frye, Bloomberg, 09/20/2011|
MarketMinder's View: The sensible aspect here is simplifying byzantine tax codes to promote increased tax revenue (as opposed to trying to do so by increasing taxes on the wealthy and corporations—which never seems to have the direct outcome politicians hope for).
|By Alan Tonelson, Bloomberg, 09/19/2011|
MarketMinder's View: “At the moment, the specific mix of new rules matters less than simply coming to a decision to act forcefully. The trade deficit is so large and growing so rapidly that, if unaddressed, it will eventually reduce living standards for all Americans. It’s best that the US move quickly, while it can still assert its advantage.” This assumes a trade deficit is bad and that the total of trade doesn’t matter. For more, please see our 09/09/2011 cover story, “Trade Deficit Trifles.”
|By Steven C. Johnson, Reuters, 09/19/2011|
MarketMinder's View: This is confusing because US GDP is near all-time highs, whereas Japan still hasn’t surpassed its past production peak. What’s more, expectations are for continued US growth.
|By Ambrose Evans-Pritchard, The Telegraph, 09/19/2011|
MarketMinder's View: "There is an even bigger threat than a global double dip, and that is a prolonged recession with no growth and very limited policies to fight it. We are already in it." We are confused by this. Aren’t these the same things? Further, we are not in a global recession—the global economy has grown for eight straight quarters, and expectations are that growth will continue.
|By Christine Benz, Morningstar, 09/19/2011|
MarketMinder's View: From an interview with Meir Statman: “Investors should focus on what they can control to sidestep emotional and cognitive mistakes in extreme markets.”
|By Gavin Hewitt, BBC, 09/19/2011|
MarketMinder's View: Maybe both. Either way, Greece must act, and they know it.
|By Gary Becker, The Becker-Posner Blog, 09/19/2011|
MarketMinder's View: ”Government actions sometimes not only fail to overcome market failure but rather worsen the failure.”
|By Daniel Yergin, The Wall Street Journal, 09/19/2011|
MarketMinder's View: A sensible look at a frequently hot topic: Whether the world will shortly run out of oil. Odds are the folks predicting our oil supplies are quickly drying up will be wrong again this time—as they’ve been every other time they’ve predicted it.
|By Nikhil Kumar, The Independent, 09/16/2011|
MarketMinder's View: “Could” is the operative word in this piece—it implies possibility. But anything is possible. In investing, it’s probabilities that matter, and an orderly default by a tiny eurozone member is unlikely to create major macroeconomic problems or a bear market.
|By Michelle Hirsch, The Fiscal Times, 09/16/2011|
MarketMinder's View: This discussion relies almost exclusively on unemployment (a lagging indicator) and regional manufacturing surveys to attempt to make its case. But what about the US services industry, which accelerated, expanded and beat estimates in August? Or July international trade? We could go on. In our view, the whole package indicates a recession isn’t likely in the near future.
|By Robert Samuelson, Washington Post, 09/16/2011|
MarketMinder's View: This piece attempts to draw parallels between the 2008 financial crisis and Europe’s ongoing peripheral debt woes’ effects on banks. But it does not take into account the actual improvement in bank capital and quality of capital, the removal of fair value accounting standards and the bizarre government steps that drove 2008’s financial panic. Or the fact Europe’s problems are playing out under a bright spotlight, so the surprise factor is rather muted. For more, see our 09/15/2011 cover story, “Dawn After Darkness.”
|By Staff, EU Business, 09/16/2011|
MarketMinder's View: Eurozone leaders continue to drag their feet on Greece as political posturing persists. In this case, they seem to want more Greek austerity measures to show the public their demands are being met, lest they appear to hand Greece a free lunch. But ultimately, as has happened several times in the recent past, it’s likely they follow through and release the funds.
|By Steve Conover, The American, 09/16/2011|
MarketMinder's View: Here’s a very sensible look at how data can mislead—deeper analysis of median income shows a very different result than what’s widely discussed. One point we’d add: As the author indicates, “middle class” is an undefined economic term. But in addition, the individuals in each income bracket frequently change over time.
|By Mark J. Perry, Seeking Alpha, 09/16/2011|
|By Staff, Reuters, 09/16/2011|
MarketMinder's View: Another bank adapting to new regulations (like Dodd-Frank’s Durbin Amendment) by charging more fees—a clear example of unintended consequences.
|By Michael Schuman, Time, 09/15/2011|
MarketMinder's View: Briefly, no, not likely—for a few hugely important reasons: While fear surrounding subprime contributed somewhat to 2008’s financial panic, bigger factors were FAS 157 and the confused government response that followed. And even if eurozone bonds are the new subprime, that’s likely not as impactful as many expect absent the aforementioned, more impactful drivers.
|By Peter Coy, Bloomberg Businessweek, 09/15/2011|
MarketMinder's View: This starts off well enough but quickly descends from there. To suggest the unemployed are becoming some “’industrial reserve army’” keeping downward pressure on wages is to misunderstand the nature of recession and recovery—during which employment has historically always lagged. And the suggestion what we need is more government involvement to attempt to smooth capitalism’s ride is more than a bit off base. The reality is capitalism and democracy have produced the wealthiest and freest societies in the world’s history—and they’re not likely to crumble anytime soon.
|By Jonathan Weil, Bloomberg, 09/15/2011|
MarketMinder's View: This misses the mark, in our view—the reality is, FAS 157 was implemented just prior to the market’s 2007 peak and repealed within days of its bottom. Now, FAS 157 wasn’t the sole driver of 2008’s bear market, but it was a hugely important component—an often overlooked point. Make no mistake, the repeal of FAS 157 and return to accounting practices more resembling those existing for decades before 2007 was a huge positive for financial institutions. In our view, its absence is highly unlikely to be a source of impending disaster. For more, see our 05/16/2011 cover story, “Marking to Footnote.”
|By Tom Fairless, Todd Buell and William Launder, The Wall Street Journal, 09/15/2011|
MarketMinder's View: Globally, central bankers continue to do what’s necessary to reassure markets and take measures to aid credit markets. This seems a largely appropriate step to us.
|By Fisher Investments Editorial Staff, The Street, 09/15/2011|
MarketMinder's View: Our latest contribution to The Street.
|By Thomas Sowell, Investor’s Business Daily, 09/15/2011|
MarketMinder's View: “The grand myth that’s been taught to whole generations is that the government is ‘forced’ to intervene when there is a downturn that leaves millions of people suffering. The classic example is the Great Depression of the 1930s. What most people are unaware of is there was no Great Depression until after politicians started meddling in the economy.” In our view, that’s largely true—but we also agree politicians on both sides are more motivated by their desire for reelection, so the chances they heed any such advice are slim to none.
|By Alex Barker, Financial Times, 09/15/2011|
MarketMinder's View: “By maintaining the existing rules, governments will continue to have considerable leeway in choosing tools to prop-up financial institutions that are facing difficulties.” More positive news on the eurozone finance front.
|By Emese Bartha, The Wall Street Journal, 09/15/2011|
MarketMinder's View: Spain continues to distance itself from other struggling peripheral eurozone countries—a positive sign for continued progress and an indication it’s important European officials continue tackling challenges country by country. A one-size-fits-all solution likely doesn’t fit the bill.
|By James Glassman, Forbes, 09/15/2011|
MarketMinder's View: We couldn’t agree more. Freeing the private sector to invest in infrastructure projects—especially those essentially awaiting only a government green light—would provide an economic boost. And would undoubtedly result in more efficiently supplied infrastructure.
|By Staff, EU Business, 09/14/2011|
MarketMinder's View: Moody’s downgrade of two large French banks likely isn’t a game-changer in the wider EU sovereign debt saga. Rather, the decision seems to factor in information already widely known, like the impact of potential Greek debt haircuts. For more on the risks of a Greek default, see our 09/13/2011 cover story, “From Whispers to Murmurs.”
|By John Prestbo, MarketWatch, 09/14/2011|
MarketMinder's View: That September has the lowest aggregate historical return of any month, in our view, is an interesting observation but not really indicative of anything. We’d argue markets don’t much care what month it is—forward-looking factors have a much greater influence on returns.
|By Patrick Allen, CNBC, 09/14/2011|
MarketMinder's View: Recession is always possible, but we have a different view of US consumer health. Aggregate leverage is lower than in the recent past, household cash balances are higher and incomes and lending are resurgent. Not to mention, consumer spending is already above its pre-recession peak. For more, see our 08/23/2011 Research column, “A Discussion on Consumer Credit Trends.”
|By Staff, EU Business, 09/14/2011|
MarketMinder's View: Belgium has existed sans government for 458 days, and its economy has grown all the while. The PM’s potential resignation likely doesn’t much change the ongoing deadlock between parties from Wallonia and Flanders—a new caretaker leader should be able to step in more or less seamlessly.
|By Staff, BBC News, 09/14/2011|
MarketMinder's View: One month’s data—for only one segment of the economy—in our view, doesn’t necessarily portend a longer-term, overall slowdown.
|By Conor Dougherty, The Wall Street Journal, 09/14/2011|
MarketMinder's View: A measured take on the Census Bureau’s findings that US poverty is at its highest since the early 1990s. The metric they used—a family of four with annual income below $22,314—could both overestimate (by not including government assistance) and underestimate (by not factoring in high-cost essentials, like childcare) the number of truly impoverished people. That some folks have been negatively affected by the recession that ended in 2009 and still haven’t recovered is an unfortunate fact. But the Census Bureau’s measurement has many flaws making it less than fully informative.
|By Ben Casselman, The Wall Street Journal, 09/14/2011|
|By Staff, Reuters, 09/14/2011|
MarketMinder's View: Incremental progress continues in Italy.
|By Philip Aldrick, The Telegraph, 09/14/2011|
MarketMinder's View: As Britain debates future tax policy, this study highlights the counter-productiveness of the UK’s 50% rate for high earners: Tax folks at an onerous marginal rate, and they’ll probably find a way to make less taxable income, quite likely lowering the government’s revenue. Not the most effective way to narrow a budget gap.
|By Cyrus Sanati, CNN Money, 09/13/2011|
MarketMinder's View: This article assumes a default would be disorderly. But in our view, what is more likely is a highly managed debt restructuring—like the plan that’s already been agreed to. Further, the idea Greek debt investors likely get a haircut is already widely known. For more, see today’s cover story, “From Whispers to Murmurs.”
|By James Glynn, Dow Jones Newswires, 09/13/2011|
MarketMinder's View: No one wants to see higher unemployment. But a factor here is higher productivity, which allows firms to produce more with fewer workers.
|By John Lyons, The Wall Street Journal, 09/13/2011|
MarketMinder's View: This piece is heavily skewed towards the negative and ignores myriad positives. Brazil’s growing economy has provided its people with higher incomes and better living standards. Yes, there are negatives in Brazil, as there are everywhere. But those are vastly outweighed by the good economic development has brought.
|By Staff, EU Business, 09/13/2011|
MarketMinder's View: To be sure, the situation in Europe is fluid (at best), and politicians have a litany of issues to work out. However, in our view, one thing is certain: Eurozone nations have a strong incentive to maintain the union in the near term and prevent a disorderly breakup. And they know it. For more, see our 08/30/2011 cover story, “Politicking and Progress in Europe.”
|By Mark J. Perry, Carpe Diem, 09/13/2011|
MarketMinder's View: Rumors of the demise of US manufacturing have been widely exaggerated. Case in point—after-tax profits of US manufacturers reached a record high $159.7 billion in Q2 2011.
|By Editors, The Wall Street Journal, 09/13/2011|
MarketMinder's View: Even the best-intentioned regulation has unintended consequences. Here, it appears to be the loss of 30,000 jobs—so far. For more, see our 08/24/2011 cover story, “Regulating Regulators’ Regulations.”
|By Amity Shlaes, Bloomberg, 09/13/2011|
MarketMinder's View: The basic functioning of capitalism never really changes. Nor does that of politicians. A look at the impact of French philosopher Frederic Bastiat.
|By Luca Di Leo, The Wall Street Journal, 09/12/2011|
MarketMinder's View: And yet, broadly, they all still expect ongoing growth! In 2011 and 2012.
|By Louise Story and Graham Bowley, New York Times, 09/12/2011|
MarketMinder's View: Yes, stocks have been volatile of late. But volatility is itself volatile—periods of above-average and below-average volatility have happened all through history, and there’s no reliable pattern of predictiveness to steeper volatility.
|By Jonathan Laing, Barron’s, 09/12/2011|
MarketMinder's View: We’re not sure how QE3 could make such a dent since QE2 was largely ineffectual. In that sense, another round of QE likely doesn’t do much harm, but it also likely doesn’t have the big positive impact many hope for.
|By Patrick Allen, CNBC, 09/12/2011|
MarketMinder's View: With many developed world bond rates at or near historic lows, it’s hard to argue there’s evidence of contagion at this point.
|By Liam Denning, The Wall Street Journal , 09/12/2011|
MarketMinder's View: Many overlook supply and demand drivers for gold—the two forces that underpin price movement. What’s more, central bankers’ track record on trading gold is less than stellar. Gold simply isn’t a sure-fire bet as a hedge against monetary policy errors. For more, read our story from The Street, In Trivial Pursuit of Gold.
|By Natalie Weeks and Maria Petrakis, Bloomberg, 09/12/2011|
MarketMinder's View: Greece faces a steep uphill road to continue qualifying for bailout funds—but officials seem dedicated to meeting key benchmarks.
|By Staff, Bloomberg, 09/12/2011|
MarketMinder's View: Record imports indicate strong domestic demand despite concerns of a global economic slowdown.
|By Fisher Investments Editorial Staff, Real Clear Markets, 09/12/2011|
MarketMinder's View: Our latest contribution to Real Clear Markets.
|By Douglas Irwin, Vox, 09/12/2011|
MarketMinder's View: It’s likely more than one factor drove 1937’s recession, but this is an interesting review of factors other than the standard Keynesian citation that slowing government spending solely explains 1937.
|By Editorial Staff, The Wall Street Journal, 09/09/2011|
MarketMinder's View: We don’t think the plan presented by the president was a sure-fire way to create jobs—but nor do we agree you must focus on job creation to get faster economic growth. Jobs follow growth. If politicians and policymakers want faster growth, they should focus on removing hurdles to entrepreneurship.
|By Tom Barkley and Andrew Ackermann, The Wall Street Journal, 09/09/2011|
MarketMinder's View: The data in this article are perfectly fine. But we have a bone to pick with the interpretation. The article states, “US wholesalers stockpiled inventories in July as sales were flat, an indication that companies are growing increasingly cautious about the economic outlook.” But given just-in-time ordering, why would US wholesalers stockpile if they actually were increasingly cautious? Isn’t it more likely they’d do what they did in late 2008 and early 2009—slash inventories and cut ordering? The fact inventory growth boosted GDP in Q1 2011 and detracted in Q2 2011 is also mentioned. So shouldn’t this been seen as potentially additive to GDP?
|By Jeff Cox, CNBC, 09/09/2011|
MarketMinder's View: Stocks simply aren’t serially correlated—which means whatever happens in the first week of a month has no bearing on what happens next. And wherever we are on the calendar is highly unlikely to dictate anything about market direction. For more, see our 05/02/2011 cover story, “April Showers Bring May Myths.”
|By Robin Bromby, The Australian, 09/09/2011|
MarketMinder's View: The claim gold will never fall below $1000/ounce in the future because people seem to really want it is backward and wrong. Gold’s price is currently being driven by demand—and demand swings can be sudden and huge. Sure, gold could stay above $1000. But demand on this commodity can just as easily crash as it has many times in the past.
|By Landon Thomas Jr., The New York Times, 09/09/2011|
MarketMinder's View: While it’s true the global economy has slowed from previous quarters, economic growth typically happen in fits and starts, and a slower period is typical a year or two into a new expansion—just where we are now. Plus, the importance of government action, be it bold or incremental, is frequently overstated.
|By Don Boudreaux, Café Hayek, 09/09/2011|
MarketMinder's View: “Businesses aren’t investing because Congress and, especially, the administration exhibit a ceaseless fetish for top-down, command-and-control, debt-financed ‘governance’ of the economy—an enterprise quashing recipe.” An example of regulations’ unintended consequences.
|By Peggy Noonan, The Wall Street Journal, 09/09/2011|
MarketMinder's View: An eloquent and fitting tribute to a day Americans shouldn’t and likely won’t soon forget.
|By Larry Ribstein, Truth on the Market, 09/09/2011|
MarketMinder's View: The principal take-away from this story? Capitalism is amazingly adaptive. The article discusses a surge in business for law firms that use new technology to disseminate regulatory information regarding Dodd-Frank. But it also raises the question of whether this is the best use of private businesses’ capital. Said differently, how else would this money be spent in the absence of constant regulatory changes?
|By Staff, EUbusiness, 09/09/2011|
MarketMinder's View: More evidence eurozone leaders ultimately will do what’s necessary to support the monetary union.
|By Andreas Framke and Alexander Hubner, Reuters, 09/09/2011|
MarketMinder's View: The debates surrounding many eurozone measures—like the ECB’s PIIGS bond-buying—continue to be heated. And we expect debate to continue since issues prompting the ECB to buy bonds (like Greek competitiveness) don’t have an overnight fix. That said, while an official’s leaving could contribute to short-term volatility, it shouldn’t necessarily impede long-term progress.
|By David Leonhardt, The New York Times, 09/08/2011|
MarketMinder's View: Jobs aren’t a leading indicator—they never have been—so however you smooth that data, it doesn’t change the fundamental point. The suggestion high unemployment creates a “vicious cycle” of lower spending and thus, economic woe is simply a longstanding myth recycled.
|By Kelly Evans, The Wall Street Journal, 09/08/2011|
MarketMinder's View: We’d argue the supply side plays a much more important role in generating economic growth, an aspect largely unexplored here. But aside from that, the argument itself is contradictory. Consider: If leverage is bad, then deleveraging should be good, right? No! The argument here is deleveraging is bad too because it means less demand, increasing recession risk. But you just can’t have it both ways.
|By Derek Thompson, The Atlantic, 09/08/2011|
MarketMinder's View: We find a lot to disagree with here, but we’ll limit ourselves to this: We can’t be in a “Great Recession” because the world has been growing for eight consecutive quarters. Also, increasing productivity is a net benefit, not an inherent cause of slower growth. For more, see our 11/09/2010 column, “The Ever-Evolving Economic Engine.”
|By Tim Geithner, Financial Times, 09/08/2011|
MarketMinder's View: We’d argue governments should actuallylikely do less, not more, to encourage faster global growth—like remove barriers potentially hampering entrepreneurship, decrease corporate tax rates and dramatically slash (if not altogether eliminate) trade barriers. Such measures would be a true start down the road to increased global economic growth.
|By Staff, Associated Press, 09/08/2011|
MarketMinder's View: What’s interesting here isn’t so much the trade deficit decrease (in our view, a wonky way to view trade), but the strong growth in exports and total trade—good signs of strong global demand. For more, see our 04/12/2011 cover story, “The Totality of Trade.”
|By Fisher Investments MarketMinder Editorial Staff, The Street, 09/08/2011|
MarketMinder's View: Our latest contribution to The Street.
|By Diana Furchtgott-Roth, Real Clear Markets, 09/08/2011|
MarketMinder's View: Politics aside, we agree many regulations have unintended consequences that likely hamper economic growth, and thus, job growth. And this we couldn’t agree more with: “The president could create jobs with one simple sentence tonight: ‘I hereby announce a moratorium on all new federal regulations during the remainder of my term in office.’” For more, see our 08/24/2011 cover story, “Regulating Regulators’ Regulations.”
|By David Indiviglio, The Atlantic, 09/08/2011|
MarketMinder's View: We’d nitpick over a few points but overall, a sensible look at extant data and what they are (or maybe more importantly, aren’t) saying about the US economy’s current state. For more, see our 08/31/2011 cover story, “Incremental Positives.”
|By Nathania Zevi, The Wall Street Journal, 09/08/2011|
MarketMinder's View: Despite political struggles, Italy continues to make progress on debt dealings.
|By Stelios Bouras and Costas Paris, The Wall Street Journal, 09/08/2011|
MarketMinder's View: An interesting look at Greece’s domestic struggle to rein in public spending. And a good example of what could wind up a big positive few are discussing: Greece (and other European nations) would be well-served by reducing socialist policies—and this is a potential step in that direction.
|By Phillip Inman, The Guardian, 09/07/2011|
MarketMinder's View: At some point, we will see another recession—always true. But in our view, growth rate volatility is normal. Economic growth typically slows a year or two into expansion.
|By John D. McKinnon, The Wall Street Journal, 09/07/2011|
MarketMinder's View: We agree revising the US corporate tax code to allow repatriation of foreign cash would be a positive. But in our view, tying it to the theoretical creation of 2.9 million jobs is a bit of a stretch.
|By John Heilprin, Yahoo Finance, 09/07/2011|
MarketMinder's View: Well, we’re not sure how people’s feelings about politicians have any predictive power on long-term competitiveness.
|By Staff, EU Business, 09/07/2011|
MarketMinder's View: Incremental progress on the EFSF expansion continues, and there’s now seemingly one less hurdle for a more permanent framework for the eurozone to deal with fiscally weaker members. For more, see our 08/30/2011 cover story, “Politicking and Progress in Europe.”
|By Jana Randow, Bloomberg, 09/07/2011|
MarketMinder's View: More evidence things aren’t nearly as dire as many presume.
|By Associated Press, Moneywatch, 09/07/2011|
MarketMinder's View: More signs employment metrics continue to improve, albeit slowly. But slow employment gains are typical early in a new expansion.
|By Louise Watt, Taiwan News, 09/07/2011|
MarketMinder's View: Chinahas grown rapidly and made great strides in recent decades. But to truly remain competitive long term, they need some major structural changes—like stronger private property protections, for one. “In China, nothing belongs to you. Like buying a house. You buy it but it will belong to the country 70 years later.”
|By Stephen Gandel, Time, 09/06/2011|
MarketMinder's View: To be sure, jobs growth has been disappointing. But historically, this is often the case following deep recessions and before picking up again. For more, see today’s cover story, “Politics and Pigskins.”
|By Ben Rooney, CNN Money, 09/06/2011|
MarketMinder's View: Although often at the last minute, European politicians have largely shown a willingness to resolve their differences to ensure the euro’s posterity—at least for the next few years. For more, see our 08/30/2011 cover story, “Politicking and Progress in Europe.”
|By Kelly Evans, The Wall Street Journal, 09/06/2011|
MarketMinder's View: Some developed nations have slowed—normal at this stage in a recovery. But growth metrics overall remain expansionary, and expectations are broadly for growth to continue globally this year. For more, see our 08/29/2011 cover story, “Resetting Expectations.”
|By Jack Hough, SmartMoney, 09/06/2011|
MarketMinder's View: The fear September brings negative stock market performance is common but misguided. While it's true on average, September has been the worst-performing month for the S&P 500, it's not negative every year—far from it. Adages like this are typically grounded in myopia and cherry-picked data.
|By Kathleen Madigan, The Wall Street Journal, 09/06/2011|
MarketMinder's View: The service sector accounts for nearly 80% of US economic activity. That the August index showed acceleration is more evidence all is not as dire as most presume.
|By Donna Borak, Financial Planning, 09/06/2011|
MarketMinder's View: And . . . more delays on implementation of Dodd-Frank rules. Which is what happens when rule-making gets punted to “exploratory” committees. This drags out uncertainty (which isn’t great) but increases the odds many of these rules are watered down or simply never written—likely an incremental positive.
|By Adam Bold, US News, 09/06/2011|
MarketMinder's View: As this article points out, “Timing the market is much like catching a falling knife. If you don’t do it perfectly, there’s a good chance you’ll get hurt.”
|By Felix Salmon, Seeking Alpha, 09/02/2011|
MarketMinder's View: Job growth, like economic growth, hardly ever happens in a straight line. And though most would prefer faster improvement, one month’s showing needn’t portend economic doom or a return to recession.
|By Alejandro Lazo, Los Angeles Times, 09/02/2011|
MarketMinder's View: As we’ve said, though a housing recovery would provide a nice tailwind, it isn’t necessary for continued economic growth—after all, it’s just one economic factor of many. We think it unlikely a decline in new-home sales alone is sufficient to hold back future economic growth.
|By Andrea Chang, Los Angeles Times, 09/02/2011|
MarketMinder's View: Despite dour consumer sentiment surveys, retail sales continue to be positive—remember, watch what people do, not what they say. For more, see our 08/31/2011 cover story, “Incremental Positives.”
|By Staff, EUbusiness, 09/02/2011|
MarketMinder's View: Spain continues to take the necessary steps to contain its debt issues.
|By Staff, Fox Business, 09/02/2011|
MarketMinder's View: An update on the situation in Greece.
|By Zeke Faux and Jody Shenn, Bloomberg BusinessWeek, 09/02/2011|
MarketMinder's View: As we’ve said, ratings agencies’ opinions are seemingly influencing investors less. Take S&P’s downgrade of the US: Despite the downgrade, investors have continued buying US Treasurys in droves. For more, see our 08/09/2011 cover story, “After the Downgrade.”
|By Martin Wolf, Financial Times, 09/01/2011|
MarketMinder's View: Global economies have been growing—albeit slower than many would like—and have largely left recession behind. Which doesn’t prevent a return to recession down the road, but we think that unlikely in the near term.
|By George Magnus, Foreign Policy, 09/01/2011|
MarketMinder's View: This overstates the case, in our view—global economies are facing some challenges, but that hardly need spell the end of US economic leadership or capitalism. Throughout history, capitalism has proven one of the best systems for promoting overall prosperity—and that likely doesn’t change anytime soon.
|By Ambrose Evans-Pritchard, The Telegraph, 09/01/2011|
MarketMinder's View: When not evaluated in the right context, absolute debt figures globally may seem big. But we’d argue countries’ continuing abilities to finance debt are more important than absolute debt levels. For now, debt interest payments are mostly manageable—and thus far, appropriate measures have been taken to backstop eurozone nations struggling with them. For more, see our 08/30/2011 cover story, “Politicking and Progress in Europe.”
|By Julia Kollewe, The Guardian, 09/01/2011|
MarketMinder's View: Growth is growth—whether slower or faster—and it’s important to remember improvement hardly ever happens in a straight line.
|By Alex Kowalski, Bloomberg, 09/01/2011|
MarketMinder's View: “Manufacturing in the US unexpectedly expanded in August, allaying concern the world’s largest economy is headed for another recession.”
|By Todd Moss, Bloomberg Businessweek, 09/01/2011|
MarketMinder's View: We’d quibble with a few points, but by and large, a sensible look at debt’s value and power in promoting economic growth.
|By Niklas Magnusson, Bloomberg, 09/01/2011|
MarketMinder's View: Robust shipping volume likely points to increased international trade—an overall positive amid generally gloomy recent European news.
|By Harry Wilson, Philip Aldrick and Helia Ebrahimi, The Telegraph, 09/01/2011|
MarketMinder's View: UKbanking regulation developments bear watching. Onerous regulations could have unintended consequences and further stymie what’s already been a fairly sluggish UK recovery. For more, see our 02/10/2011 cover story, “Merlin’s Unintended Magic.”