|By Gillian Tett, Financial Times, 12/30/2011|
MarketMinder's View: Could another “flash crash” happen? Sure. But trying to predict this seems an effort in futility. Experts can look at past data and try to build models, but considering 2010’s flash crash didn’t really impact longer-term returns, predicting the next one is likely a solution in search of a problem.
|By Staff, Reuters, 12/30/2011|
MarketMinder's View: China’s economy indeed slowed in 2011, but we think this was likely a necessary, planned precursor to higher growth in 2012—an “election” year when the Communist Party announces a new set of rulers. Typically, Chinese officials speed growth in election years to limit potential civil unrest during the planned transition, and that requires a bit of slowing the year before to keep inflation in check. For more, see our 10/19/2011 cover story, “No Chinese Hard Landing.”
|By Paul Krugman, The New York Times, 12/30/2011|
MarketMinder's View: Setting aside the specifics, we’d quibble with the rhetorical approach here, which seems grounded in ideology rather than data. And perhaps that’s because there isn’t much of a way to entirely prove Keynes was right or wrong, since there are many ways to assess inputs going into economic outcomes—and there’s no control group compare to.
|By Armin Mahler, Der Spiegel, 12/30/2011|
MarketMinder's View: So far, European politicians have done what’s necessary to keep the eurozone intact. And it’s better, in our view, that they’ve taken the slow and steady approach rather than making hasty decisions.
|By Mark J. Perry, Seeking Alpha, 12/30/2011|
|By Staff, The Economist, 12/30/2011|
MarketMinder's View: The US’s “flexible labor market and culture of enterprise” has helped firms make great productivity strides over the past few years, fueling higher profits. And as this piece shows, innovation can help firms continue becoming more efficient over time, even if productivity growth doesn’t continue at recent high rates.
|By Staff, EUbusiness, 12/30/2011|
MarketMinder's View: Despite needing financial help, Hungary thumbed its nose at potential benefactors by adopting central bank reforms opposed by the EU and IMF. The new laws remove central bank independence, which officials have said is a bailout deal breaker. Whether Hungary’s dire financial straits force a policy reversal is something to keep an eye on when negotiations resume.
|By Staff, EUbusiness, 12/30/2011|
MarketMinder's View: Though Spain didn’t meet its 2011 deficit goal, the new government has already taken several steps to get on track in 2012, and Prime Minister Mariano Rajoy appears dedicated to making tough budget cuts. We shall see. For more on Spain’s debt, see our 12/15/2011 research analysis, “In Depth: PIIGS Debt.”
|By Editorial Staff, Bloomberg, 12/29/2011|
MarketMinder's View: As we noted earlier this week, the deal inked between China and Japan should benefit them as it simplifies cross-border trade. But extrapolating this to mean the yuan will “inevitably” become a global reserve currency alongside the dollar, euro and yen is quite a leap. China’s financial system likely needs significant reform for that to happen, and whether China takes seemingly necessary steps—opening markets more, liberalizing currency policy and more—remains to be seen.
|By James Livingston, The Christian Science Monitor, 12/29/2011|
MarketMinder's View: Considering consumer spending and retail sales are at all-time highs, it doesn’t seem to us America has an aggregate demand problem. We wonder what the ant might say to the grasshopper if those little facts were included in the fable.
|By Chris Isidore, CNNMoney, 12/29/2011|
MarketMinder's View: Yes, Thursday’s auction was a bit of a mixed bag. But this piece spreads the illusion there’s some magic level of yields at which they’re automatically and instantly unsustainable. For more, see our 11/10/2011 cover story, “Italian Debt Perspective.”
|By Chris Nelder, Slate, 12/29/2011|
MarketMinder's View: All long-term estimates of gas supply are just that—estimates. So sure, probable and unproven reserves mean exact knowledge doesn’t exist. The same applies to demand. Ultimately, the fact shale gas has massively boosted production in the past few years is beyond doubt—and is reflected in ultra-low US natural gas prices. Looking forward, it isn’t terribly relevant whether we’ve currently proven 21 or 100 years of gas supply—innovation can easily find more or different sources of energy.
|By Matthew Yglesias, Slate, 12/29/2011|
MarketMinder's View: In our view, investing yourself allows you the opportunity to fund the kind of retirement you envision, not what the government thinks you need.
|By Mark J. Perry, Carpe Diem, 12/29/2011|
MarketMinder's View: Quite an interesting collection of charts focusing on various influences of shale development.
|By Tim Bawden, The Independent, 12/29/2011|
MarketMinder's View: This article does a decent job of highlighting ongoing debate in Britain regarding cuts to solar subsidies—a trend common in several parts of Europe. While it may overstate the case a bit, the article does help describe the risk to heavily subsidized industries presented by shifting government policy.
|By Bob Willis, Bloomberg, 12/29/2011|
|By Alistair Barr and Jessica Wohl, Reuters, 12/29/2011|
MarketMinder's View: As the holiday shopping season comes to a close, by many measures it seems to have been a good one. This, combined with other data, alludes to a stronger US economy as we close the year.
|By William Pesek, The Washington Post, 12/28/2011|
MarketMinder's View: The factors stated in this piece read like a grab bag of already widely understood risks to the global economy in 2012.
|By Staff, BBC News, 12/28/2011|
MarketMinder's View: True, industrial output dipped by 4% last month, but that’s hardly telling of Japan’s whole situation, which shows recovery from March’s earthquake continues. For more, see today’s cover story, “Talking Tokyo.”
|By Adam Davidson, The New York Times, 12/28/2011|
MarketMinder's View: Yes, research and development are core to developing new competitive advantages for any company. However, the presumption in this piece is that the size of the economic pie is fixed and China (or some other country) developing new technologies happens at the expense of US innovation or economic growth. A flawed premise, considering the world’s economy is an expanding pie and a growing China doesn’t detract from the US—instead, it provides opportunities.
|By Valentina Za, Reuters, 12/28/2011|
MarketMinder's View: Italy auctioned €10.7 billion of six-month and two-year debt Wednesday, finding higher demand and lower yields than a month ago. In fact, six-month yields fell from 6.5% November 25 to 3.25% today, and two-year yields fell similarly. Recent strong results aren’t an all-clear signal—another, longer-term bond auction is slated for tomorrow. What will be more telling is yield movement over a longer period than two days, a week or a month—logic that applies whether yields are rising or falling.
|By Michael Schuman, Time, 12/28/2011|
MarketMinder's View: An engaging look at the Banda Islands and how they relate to comparative advantages between countries (like the United States and China) today.
|By Bill Flax, Forbes, 12/28/2011|
MarketMinder's View: “Much can be learned from Korea’s competing economic visions. This should not suggest that American politicians infringing property rights, markets and freedom seek anything akin to the totalitarian oppression embodied by Pyongyang, but Korea offers certainty that markets far surpass state economies in providing for people’s needs.” For more see our 12/20/2011 cover story, “Darkness and Light.”
|By Jeff Bater, The Wall Street Journal, 12/28/2011|
MarketMinder's View: The debt ceiling is back in the news. However, thanks to terms in the August agreement to raise the ceiling, this time it seems an even more feckless political machination.
|By Nancy Folbre, The New York Times, 12/27/2011|
MarketMinder's View: We disagree with the notion capitalism creates “perverse incentives.” Sure, some individuals have less than pure aims, but overall capitalism aims to make society wealthier one individual at a time, through the pursuit of their own interests. And in our view, that’s a mighty noble, sensible goal.
|By Jared Bernstein, The Christian Science Monitor, 12/27/2011|
MarketMinder's View: Innovations—even big ones—happen all the time in private industry. Assuming they cannot in energy or elsewhere is quite a stretch. So yes, the government had a hand in the development of some pieces of technology that turned out to be one of fracking’s great-grandparents. But it took decades of private-sector innovation and application to turn that technology into a means of productive energy extraction. On balance, private enterprise, not government subsidies, tends to drive profitable (read: economically sustainable) innovation.
|By Staff, MSNBC.com, 12/27/2011|
MarketMinder's View: While it’s certainly nice to see folks are feeling a bit better about the economy, consumer confidence isn’t very predictive of behavior, stocks or even itself. Consider: October 2011’s confidence reading was sharply lower, but holiday spending appears to have been good and consumer confidence has now rebounded.
|By Szu Ping Chan, The Telegraph, 12/27/2011|
MarketMinder's View: It seems a good chunk of the funds banks borrowed from the ECB last week ended up back at the central bank as excess reserves. As we recently wrote, this is one possible means for banks to finance liquidity needs for 2012 funding. That some eurozone banks might think 0.75% is a fair price to pay for maintaining liquidity in the very short term is notable, but to us it seems premature to say this portends a liquidity crisis.
|By Staff, Taiwan News, 12/27/2011|
MarketMinder's View: Closer financial and economic ties between China and Japan could benefit both countries. Establishing a direct yen-yuan exchange potentially facilitates increased bilateral trade and amounts to one more incremental liberalization of China’s financial system.
|By Richard Tyler, The Telegraph, 12/27/2011|
MarketMinder's View: Cutting red tape can help governments run more cheaply and efficiently over time. Both Britain and the US have tackled some of the more silly regulations this year, though there’s still plenty more tape to cut. For more, see our 8/24/2011 cover story, “Regulating Regulators’ Regulations.”
|By Staff, BBC News, 12/27/2011|
MarketMinder's View: Communist Cuba seems to be slowly realizing the benefits of private enterprise. Cubans can now secure private business loans and buy and sell homes, and the government is privatizing more retail services. Though we wouldn’t expect an overnight capitalist revolution, these are important steps forward for Cuban citizens.
|By Staff, The Local, 12/27/2011|
MarketMinder's View: Happy 10th birthday to the euro! As this piece shows, though peripheral Europe’s sovereign debt troubles have stolen folks’ attention the past few years, the euro has helped bring several positive developments thus far. Improved cross-border trade is but one example.
|By James R. Hagerty, The Wall Street Journal, 12/27/2011|
MarketMinder's View: The US’s shale gas developments have created opportunities—and the benefits haven’t been limited to just those directly employed in the industry. Consider: “Low US electricity and natural gas costs were a factor in the decision by Brazil’s Santana Textiles to build a $180 million denim plant now under construction in Edinburg, Texas. Santana initially considered putting the factory in Mexico, but found that electricity costs would be 30% lower in Texas.”
|By Marc Jones, International Business Times, 12/23/2011|
MarketMinder's View: We aren’t much surprised S&P is standing behind its downgrade threat. Nor is a downgrade particularly surprising. As such, nor does it alter risk much looking forward. In our view, credit raters continue to deliver Johnny-come-lately opinions already largely absorbed by markets.
|By Staff, Reuters, 12/23/2011|
MarketMinder's View: US Q3 growth wasn’t robust, but it was an acceleration—and consumer spending continues growing and is at all-time highs.
|By Robert Holmes, The Street, 12/23/2011|
MarketMinder's View: Well . . . define “no one.” It seems Europe and her woes have been largely front and center in the media and investors’ minds for nearly three years now.
|By Siobhan Hughes, The Wall Street Journal, 12/23/2011|
MarketMinder's View: After much political back-and-forth (as per the norm of late), Congress agreed to a two-month extension of the payroll tax cut. Expect more politicking when this comes up again next year. Either way, small, time-limited tax cuts like these aren’t nearly as impactful on the economy overall as folks hope.
|By Mark J. Perry, Carpe Diem, 12/23/2011|
MarketMinder's View: The “decline in spending over time on manufactured goods…is really a testament to the remarkable productivity of the manufacturing sector, which leads to declining prices relative to income and services, and increases our standard of living dramatically over time.” Agreed!
|By Staff, BBC News, 12/23/2011|
MarketMinder's View: More evidence the economy is on much surer footing than many surmise. For more, read our 12/23/2011 cover story, “(Growth) Dashing Through the Year.”
|By Art Carden, Mises Economics Blog, 12/23/2011|
MarketMinder's View: A good look at how innovations have raised standards of living around the world.
|By Simon Rabinovitch, Financial Times, 12/22/2011|
MarketMinder's View: While we think the chances of a global trade war resulting from the EU’s carbon tax are fairly slim, this is worth watching—heightened global protectionism would undoubtedly be a step in the wrong direction.
|By Staff, Reuters, 12/22/2011|
MarketMinder's View: Breaking news from August 2011…ratings agencies seem primarily concerned about the political atmosphere surrounding US debt levels and the tax code. But now, as then, politicians are likely to do what’s necessary to avert (primarily political) catastrophe.
|By Matthew Yglesias, Slate, 12/22/2011|
MarketMinder's View: We’re not sure how the included chart indicates the US is in recession—particularly when the US has been growing for nearly three years now. Yes, employment’s lagged, but as we’ve said before, that’s hardly surprising and likely continues improving as the economy continues growing.
|By Annie Lowrey, The New York Times, 12/22/2011|
MarketMinder's View: Could the US economy slow again? Maybe—but that’s always the case. At this point, most data seemingly point to continued US growth.
|By Timothy Homan, Bloomberg, 12/22/2011|
MarketMinder's View: “The Conference Board’s gauge of the outlook for the next three to six months rose 0.5 percent after a 0.9 percent October increase, the New York-based research group said today.”
|By Don Boudreaux, Café Hayek, 12/22/2011|
MarketMinder's View: “But we must never lose sight of this important asymmetry: complete or near-complete state control of the economy has proven to be a sure recipe for deep impoverishment and brutal tyranny, while historical periods that have been close to laissez faire … have produced nothing remotely of the sort.” Here, here!
|By Staff, The Globe and Mail, 12/22/2011|
MarketMinder's View: Despite some unpopularity due to its severity, Italy’s budget has received the final stamp of approval from the senate—yet another sign most in the eurozone are willing to take whatever steps necessary to prevent wider contagion or collapse.
|By Paul Glader, Der Spiegel, 12/22/2011|
MarketMinder's View: Though this is still mostly in the planning stage, the fact Greece is looking to expand private enterprise in the energy industry is a positive sign—and if it moves forward, it would likely be a significant plus for a nation that’s been more public sector than private for too long.
|By Mark J. Perry, Carpe Diem, 12/22/2011|
MarketMinder's View: “For a consumer or household spending $750 in 1964, all they would have been able to afford was a console color TV from the Sears Christmas catalog. A consumer or household spending that same amount of inflation-adjusted dollars today (about $5,500) would be able to furnish their entire kitchen with 8 brand-new appliances … and buy 9 state-of-the-art electronic items.” Meaning those who suggest most folks aren’t better off today are slightly off in their assessment.
|By Robert Guest, The Wall Street Journal, 12/22/2011|
MarketMinder's View: An interesting look at why freer markets in just about everything—including labor—benefit participants not just domestically, but globally as well.
|By Chris Isidore, CNNMoney, 12/21/2011|
MarketMinder's View: Extending the payroll tax cut would be an incremental positive for American workers, but it’s tough to imagine a two percentage point tax increase having the magnitude of consequences this piece suggests. The ongoing strength in personal consumption is likely driven by more than the cut alone.
|By Paul Vieira, The Wall Street Journal, 12/21/2011|
MarketMinder's View: That Canada’s productivity losses coincided with higher GDP, incomes and living standards is an interesting observation. But we rather doubt there’s a causal relationship, considering it doesn’t square with what we’ve observed in other countries with productivity issues. Over time, we believe productivity gains can fuel higher growth and profits, which generally drive job creation and wage increases.
|By Stephen Lunn, The Australian, 12/21/2011|
MarketMinder's View: Now, a housing shortage could negatively impact some on the income spectrum’s lower-end temporarily. But from a broader, macroeconomic level, Adam Smith correctly identified the solution in 1776: The invisible hand. Prices act as a conduit matching supply and demand. And as they rise, so does the likelihood of profit—incentivizing companies to increase supply in an effort to reap the increased reward. So in essence, a housing shortage is very unlikely to “hurt” Australia’s economy. Rather, it’s a lot more likely if a housing shortage actually exists, it’d buoy the construction sector—perhaps creating jobs and higher wages for many Australians. That doesn’t seem so bad to us.
|By Paul La Monica, CNNMoney, 12/21/2011|
MarketMinder's View: It might indeed, given the tear the ratings agencies have been on lately. However, in our view, any downgrade would likely say more about ratings agencies’ wonky methodology than France’s ability to service its debt over time. Plus, the ECB’s recently relaxed collateral rating requirements seemingly further blunt a downgrade’s influence. For more, see our 12/17/2011 cover story, “Differentiate Before You Downgrade.”
|By Staff, EUbusiness, 12/21/2011|
MarketMinder's View: The ECB’s new three-year lending facility likely isn’t an instant fix for all that ails the eurozone, but it does appear to have added liquidity at a time many believe it’s needed, and it could help ease the pressure on banks to shrink their balance sheets. For more, see today’s cover story, “Bonds and Banks.”
|By Jennifer Ryan, Bloomberg, 12/21/2011|
MarketMinder's View: The UK has been in a long-term deficit reduction program since 2009, and November’s results suggest Britain’s fiscal plans are on track for now.
|By Alkman Granitsas, The Wall Street Journal, 12/21/2011|
MarketMinder's View: Greece appears close to a deal with private-sector creditors on voluntary debt haircuts—an important step in Greece’s seemingly orderly (so far) debt-restructuring process.
|By Cullen Roche, Seeking Alpha, 12/21/2011|
MarketMinder's View: The National Bureau of Economic Research, the official agency dating US business cycles, tracks data back to 1855. And over that entire period, the US economy has been in recession roughly 30% of the time. But in more recent decades, the US economy “has been in expansion 83.8% of the time since 1945, 85.4% of the time since 1980 and 81.7% since 2000.” While we’d quibble with some of the article’s statements about the economy’s current state, this interesting article is worth a read.
|By Jim Brunsden, Bloomberg, 12/21/2011|
MarketMinder's View: New rules could complicate banks’ efforts to meet increased capital requirements set forth in last year’s Basel III guidelines. But while that may be the case, it’s important to recall those higher requirements phase in slowly over a period of years. Thus, it seems unlikely these policies could cause lending to freeze. But this is worth watching for future developments.
|By Paul R. LaMonica, CNN Money, 12/20/2011|
MarketMinder's View: There have always been (and always will be) big, scary things happening in the world. Geopolitical tension is a constant. However, a more likely investor mistake is to overstate geopolitical risk rather than ignore it.
|By Charles Roxburgh and Susan Lund, The Wall Street Journal, 12/20/2011|
MarketMinder's View: This is all predicated on very long-term forecasts of both supply and demand, which are near impossible to make. Stock prices in 2020 will have much more to do with supply pressures in 2017, 2018 and 2019, which, at this point, no one we’re aware of has any power to predict with accuracy.
|By Nick Cawley, The Wall Street Journal, 12/20/2011|
MarketMinder's View: Although the ECB and banks may be participating in a sort of “carry trade,” it doesn’t necessarily mean banks are taking on more risk. In fact, the ECB’s collateral requirements have been loosened to accept a wider variety of debt from banks. Thus, this doesn’t necessarily run counter to regulators’ efforts to de-risk the region’s banks. For more, see our 12/09/2011 cover story, “Lowering the Euro Curve.”
|By Alexandra Hudson, Portfolio.com, 12/20/2011|
MarketMinder's View: That German business sentiment rose is nice, but we caution against extrapolating much else from it. Sentiment and confidence surveys are backward-looking and have little predictive power on future market direction.
|By Angeline Benoit, Bloomberg, 12/20/2011|
MarketMinder's View: This continues a series of successful debt auctions for Spain. Rates in today’s auctions were much lower than they had been just a month ago. For more, see our 12/16/2011 cover story, “A Busy Day Around the Web.”
|By Staff, EUbusiness, 12/20/2011|
MarketMinder's View: In our view, a central bank’s independence from political fracas and dithering is critical to its ability to swiftly and effectively govern monetary policy. We’re not sure we see the benefit here for Hungary.
|By Jerry Taylor and Peter Van Doren, Forbes, 12/20/2011|
MarketMinder's View: “The argument for allowing the construction of the Keystone pipeline to go forward is simple but, perhaps, not politically all that sexy; the federal government should not needlessly frustrate markets and the gains from trade that go to market participants; firms, consumers, and labor.” Well put.
|By Ian Ayres and Aaron S. Edlin, The New York Times, 12/19/2011|
MarketMinder's View: The reality is the wealth gap—or income gap—is a political construct with very little economic meaning. The entire “solution” proposed here hinges on a view of total US personal income being a fixed pie—a point that’s never been true historically. Having politicians play Robin Hood might sound romantic, but the reality is such policies can easily carry undesirable economic consequences. For more, see our 09/29/2011 commentary on Real Clear Markets, “The Wealth Gap Is an Entirely Political Invention.”
|By Paul Krugman, The New York Times, 12/19/2011|
MarketMinder's View: In our view, the likelihood is far greater China loosens monetary policy in an effort to spur its economy. No, Chinese leaders aren’t perfect economic geniuses, but they seemingly get this: When you’re a totalitarian society in a year of political turnover, chances are you don’t want a recession angering the populace. And China’s economy is much more centrally controlled than many other economies, so leaders’ intentions matter more there.
|By Gideon Spanier, The Independent, 12/19/2011|
MarketMinder's View: A handful of tech companies going public does not a bubble make. For more, see our 05/20/2011 cover story, “What Bubble Hunters Miss.”
|By John Rosenthal, Bloomberg, 12/19/2011|
MarketMinder's View: Whether or not high-speed rail is built, this much is clear: It won’t push the US economy into recovery. You see, US GDP has already recouped the ground lost in recession plus a bit—so recovery is over; we’re in expansion. Moreover, this overstates the likely economic return of such a project.
|By Sarah Turner, The Australian, 12/19/2011|
MarketMinder's View: Sure, there are many unanswered questions regarding new North Korean leader Kim Jong Un. But we’re not totally sure Kim Jong Il was such a stabilizing source of certainty in the world, either.
|By Donald Marron Blog, 12/19/2011|
MarketMinder's View: This picture says 1,000 words. Or more.
|By Staff, Central News Agency, 12/19/2011|
MarketMinder's View: “As a result, based on previous experience, Chen said he only took such ratings as references, and he would rather do his own homework and research than fully trust the credit agencies.” Wise. For more, see our 12/07/2011 cover story, “Differentiate Before You Downgrade.”
|By Staff, EUbusiness, 12/19/2011|
MarketMinder's View: Spain’s new prime minister, Mariano Rajoy, has been aggressive in introducing new austerity measures since his election. And perhaps partly as a result, Spanish bond auctions have seen strong demand and lower yields lately—quite a bit better than many expected.
|By Larry Ribstein, Truth on the Market, 12/19/2011|
MarketMinder's View: This is a sensible look at Sarbanes-Oxley section 404, raising the question: Does the return to the investment community (if there’s actually one) justify SarbOx’s heavy compliance costs?
|By James Hamilton, Econbrowser, 12/19/2011|
MarketMinder's View: The currently stalled development of the proposed Keystone XL oil pipeline, designed to bring crude from Canada’s oil sands to the US, has been the subject of heated political debate of late. This article is a sensible breakdown of both sides of the issue, and we agree with the conclusion: The benefits outweigh the costs.
|By Larry Elliott, Heather Stewart and Nicholas Watt, The Guardian, 12/16/2011|
MarketMinder's View: There are many differences between now and the 1930s: Freer trade, accommodative central banks globally, no gold standard, a growing global economy and more. Plus, European political leaders have been imperfectly working together to prevent a widespread economic crisis. So while the eurozone crisis isn’t ideal, it’s also likely not going to drag down the world economy either.
|By Keith B. Richburg, The Washington Post, 12/16/2011|
MarketMinder's View: Here’s the latest example of why protectionism tends to hurt more than help. And this time, the battle pits chicken feet against tires.
|By Stephen Gandel, Time, 12/16/2011|
MarketMinder's View: There is a tendency to take the fact the world is global a bit too far. Recent data show the US economy growing at a healthy clip, even accelerating in some ways in recent months. The eurozone’s been weak, though not officially in recession as of yet. We’d like to see a strongly growing eurozone too—but even if there’s a recession, that doesn’t necessitate a US recession. For more, see our 12/02/2011 research analysis, “If Europe Faces Recession, Can the US Economy Still Continue to Grow?”
|By Padraic Halpin and Conor Humphries, Reuters, 12/16/2011|
MarketMinder's View: Much of the weakness in Irish Q3 GDP seems the result of austerity measures—and as we’ve said, they certainly can complicate things in the short term. But also, like almost all economic data, GDP numbers fluctuate—and one quarter’s negative growth doesn’t necessarily portend economic doom.
|By Staff, Reuters, 12/16/2011|
MarketMinder's View: The “increased challenges” these downgrades are based on have been existing (and known) for a while now. So it seems once again, a credit ratings agency is late to the game—and once again, we wonder why people continue to pay them any attention.
|By Janet Hook and Naftali Bendavid, The Wall Street Journal, 12/16/2011|
MarketMinder's View: It’s been a common theme of late: Congress hemming and hawing until the last possible minute—and then, a deal (this one to fund a bunch of government agencies through September 2012). This year has certainly seen its fair share of potential shutdowns, which could be frustrating to many. And there could be more. But perspective can be helpful here: Government shutdowns (threatened or actually occurring) aren’t unique historically. And they generally haven’t had much economic or market impact. For more, see today’s cover story, “A Busy Day Around the Web.”
|By Philip Pullella, International Business Times, 12/16/2011|
MarketMinder's View: Italy’s parliament passed new Prime Minister Mario Monti’s recent package of austerity measures—and by a wide margin, no less. This is another step showing the commitment to take desirable—albeit difficult—steps to address the ongoing debt woes. For more, see our 12/13/2011 cover story, “Weighing Italy’s Debt.”
|By Geir Moulson, Associated Press, 12/16/2011|
MarketMinder's View: Despite political saber-rattling in Germany, the government continues to support the €500 billion European Stability Mechanism, the bailout facility due to eventually replace the EFSF in backstopping troubled eurozone governments.
|By Staff, BBC News, 12/16/2011|
MarketMinder's View: The longstanding Russian effort to joint the World Trade Organization met a fruitful end Friday. A plus for trade as this adds greater structure to the resolution of trade disputes and rules involving the nation.
|By Nouriel Roubini, Project Syndicate, 12/15/2011|
|By Simon Johnson, The New York Times, 12/15/2011|
MarketMinder's View: In our view, you can’t simply blame “bad loans” for the 2008 credit crisis. Therefore, further regulating banks isn’t a panacea to preventing future financial crises. Rather, it’s clear the downside risk of unintended consequences frequently outweighs the benefit of legislation like Dodd-Frank or the Volcker Rule.
|By Mike Pienciak, The Motley Fool, 12/15/2011|
MarketMinder's View: That the World Gold Council’s study finds gold is a worthy investment should hardly be a surprise, considering it has an interest in promoting gold as an investment. And what’s with the seemingly arbitrary dates selected in the study? The reality is since gold became freely traded in the early 1970s, gold’s annualized returns are lower than stocks, and its standard deviation—a measure of volatility—is higher. In other words, gold has historically seen more price swinging and compensated investors less for it. For more, see our 02/12/2010 cover story, “Gold’s Safety Blanket Myth.”
|By David Magee, International Business Times, 12/15/2011|
MarketMinder's View: Aside from a dearth of data supporting its claims (particularly that “one of two Americans are [sic] living in poverty”), this places an inordinate amount of faith in the government in fearing catastrophic consequences of a shutdown. On the contrary, the government’s shut down before without much downside—and Belgium just ended nearly two years without a federal government, highlighting capitalism’s resilience. For more, see our 12/08/2011 cover story, “Pearls of Resilience and Wisdom.”
|By Kathleen Madigan, The Wall Street Journal, 12/15/2011|
MarketMinder's View: “Within the New York Fed’s Empire State Survey, the business conditions index jumped to 9.53 this month from 0.61 last month. The December reading was the highest since May. The Philadelphia Fed said its own factory index of general business activity rose to 10.3 in December from 3.6 in November.”
|By Shobhana Chandra and Bob Willis, Bloomberg, 12/15/2011|
MarketMinder's View: The US job market continues to make slow, steady progress—which doesn’t indicate straight-line growth from here but is a positive sign nonetheless. We caution against using this as a forward-looking indicator of economic health—employment typically lags. But it is confirmation growth has contributed to hiring demand.
|By Staff, Associated Press, 12/15/2011|
MarketMinder's View: Spain continues to hold decent debt auctions despite widespread concerns about peripheral Europe—another indication there’s seemingly a good amount of divergence among the PIIGS. For more, see today’s Research post, “In Depth: PIIGS Debt.”
|By Tom Fowler, The Wall Street Journal, 12/15/2011|
MarketMinder's View: Demand for drilling leases in the Gulf of Mexico was strong, showing a sharp rebound following the government’s drilling moratorium in the wake of 2010’s Macondo oil spill. A testament to the private sector’s resilience and a positive sign for a possible boost in regional business and hiring.
|By Staff, Reuters, 12/15/2011|
MarketMinder's View: An excellent illustration of some of the challenges faced by Greece’s government in overcoming its debt woes. Without the ability to reliably collect tax revenues, it’s understandable why the government has a difficult time planning future spending (or more to the point, spending cuts). For more, see our 07/21/2010 cover story, “Dear Prudence.”
|By Fisher Investments Editorial Staff, The Street, 12/15/2011|
MarketMinder's View: Our latest column for The Street.
|By Mark J. Perry, Carpe Diem, 12/15/2011|
MarketMinder's View: Households have deleveraged pretty significantly recently—an indication they’re possibly in better shape than is widely feared. And a sign they may continue their recent healthy spending patterns through the holidays.
|By Matthew Lynn, MarketWatch, 12/14/2011|
MarketMinder's View: Parallels between today and the 1870s are an interesting observation, but we don’t see much evidence suggesting they provide a blueprint for the next 20 years. As we often say, long-term forecasts are fraught with peril due to all the as-yet unknown variables that will affect economies and capital markets over time.
|By Erik McCurdy, Seeking Alpha, 12/14/2011|
MarketMinder's View: It seems misguided to use federal tax withholding receipts as a forward-looking indicator considering they’re backward-looking, reflecting income already earned. Plus, the withholding decline described here began in early 2011—around the time the payroll tax cut took effect. It’s important to consider all contributors to a data point before drawing conclusions.
|By Staff, The Telegraph, 12/14/2011|
MarketMinder's View: We agree Ireland (and other EU states) likely would feel some knock-on effects of the EU’s planned financial transactions tax—but we’d argue that should motivate the entire union to drop that misguided measure. Ireland, which rightly refused to raise its favorable corporate tax rate earlier this year, should know better than anyone that handicapping competitive member states won’t strengthen the EU economically. For more, see our 11/17/2011 cover story, “Taxation and Competitiveness 101.”
|By Elaine Kurtenbach, Associated Press, 12/14/2011|
MarketMinder's View: The latest volley in China and the US’s ongoing trade spat—a fight not worth fighting, in our view. While the measures imposed here aren’t of huge size and likely amount to a minor negative, China’s tariffs largely decrease choice and increase prices for Chinese consumers, likely making them worse off than they’d be if trade were freer. This story is worth watching for potential developments down the line.
|By Elaine Kurtenbach, Associated Press, 12/14/2011|
MarketMinder's View: Now that Chinese officials have wrapped their annual economic conference, we’ll likely get a sense of next year’s loan quotas. Though these aren’t officially announced, references to boosting domestic demand through “proactive” fiscal and monetary policy suggest looser quotas are in the works in an effort to boost economic growth ahead of next year’s leadership transition. For more, see our 10/19/2011 cover story, “No Chinese Hard Landing.”
|By Harsh Joshi, The Wall Street Journal, 12/14/2011|
MarketMinder's View: “Where it could have helped inspire more confidence, India’s government has instead hurt its cause. A withdrawn proposal to allow greater foreign investment in the retail sector is only the most egregious example of short-term politics overriding the development of India’s markets.” For more, see our 12/13/2011 commentary on Real Clear Markets, “India’s Unfortunate Political and Economic U-Turn.”
|By Roya Wolverson, Time, 12/14/2011|
MarketMinder's View: A sensible take on why UK Prime Minister David Cameron’s veto of Lisbon Treaty amendments likely doesn’t change much for Britain or the broader EU. Given the UK’s litany of EU treaty opt-outs (the euro, the Charter of Fundamental Rights and agreements on cross-border travel, to name a few), a two-speed Europe has long existed, and both sides have economic incentives to keep that status quo.
|By Staff, Der Spiegel, 12/14/2011|
MarketMinder's View: A lesson in the law of unintended consequences: Complying with a new US law requiring foreign banks to report American citizens’ large accounts to the IRS may cost some institutions as much as $100 million, so many are simply refusing to serve US customers. Often, even well-intentioned regulations (this one aimed to decrease tax evasion) don’t work out as planned.
|By David Weidner, MarketWatch, 12/13/2011|
MarketMinder's View: We agree the financial system is globally interconnected, and a panic in the eurozone could create problems in the US. However, in our view, that outcome is highly unlikely. US banks have themselves shown them to be better capitalized than ever before—precisely to avoid a Lehman-style credit freeze. European banks have boosted liquidity and strengthened their balance sheets the last few years. And globally, central banks have taken appropriate steps to backstop banks and continue to indicate that they intend to keep doing so as long as necessary. For more, see our 11/23/2011 commentary on Real Clear Markets, “The US Economy Can Weather Euro Storm.”
|By Philip Stephens, Financial Times, 12/13/2011|
MarketMinder's View: We quibble with the presumption David Cameron vetoing last week’s EU fiscal compact amounts to the UK metaphorically stumbling out of Europe. In fact, the UK has always been in a bit of a different situation than other EU nations—the UK maintains its own currency, central bank and, sensibly, refuses to enact a tax on its large finance sector.
|By Conor Dougherty, The Wall Street Journal, 12/13/2011|
MarketMinder's View: Risks are virtually omnipresent in economics, so that they exist today isn’t terribly unique or different. Now, the degree to which those risks are appreciated certainly varies. But generally speaking, it’s when risks aren’t widely known that they’re most potent. Absent a material, shocking new development, it appears unlikely to us the eurozone situation triggers a global recession.
|By Ike Brannon and Matt Thoman, The American, 12/13/2011|
MarketMinder's View: First and foremost, this piece highlights the inherent wonkiness of the unemployment rate—it can’t ever factor in the numerous variables at play with employment. But no matter which unemployment statistic you use, this fact remains: Hiring follows growth—and typically by a long time period. So to use the unemployment rate—and whatever factors may be making it more or less wonky at the time—to draw forward-looking macroeconomic conclusions is getting cause and effect a bit reversed. For more, see our 12/02/2011 cover story, “Unemployment, Overall and on Average.”
|By Christopher Rugaber, Associated Press, 12/13/2011|
MarketMinder's View: The sixth consecutive month of rising retail sales accentuates what we believe to be a disconnect between dour consumer sentiment and what consumers are actually doing. For more, see our 11/29/2011 cover story, “Red Hot Black Friday.”
|By Fisher Investments Editorial Staff, Real Clear Markets, 12/13/2011|
MarketMinder's View: Our latest, on Real Clear Markets.
|By Matina Stevis and Frances Robinson, The Wall Street Journal, 12/13/2011|
MarketMinder's View: This article highlights the legal challenges to enacting last week’s EU deal, which aren’t insurmountable, but won’t be easy either. For more, see our 12/12/2011 cover story, “The Battle of the (Budget) Bulge.”
|By Pierpaolo Barbieri, The New Republic , 12/13/2011|
MarketMinder's View: This is a sensible look behind the scenes at European politics that helps illustrate why a sudden breakup of the eurozone isn’t a likely outcome. For more, see our 11/30/2011 cover story, “Is the Euro a Relic in the Making?”
|By Staff, Associated Press, 12/13/2011|
MarketMinder's View: Spain sold 12-month treasury bills at auction this morning and the results were strong. Yields were nearly 100 basis points lower than November’s 12-month auction, the government sold more than its target amount of bonds and investor demand was high. For more, see our 12/07/2011 cover story, “Differentiate Before You Downgrade.”
|By Ben Casselman, The Wall Street Journal, 12/12/2011|
MarketMinder's View: The only new thing about this article is the holiday theme—for several years, many folks have expected unemployment and slow-growing personal incomes would cause consumers to retrench. They haven’t, so now the speculation is consumers are irrational. But while all this handwringing over consumer spending has gone on, US retail sales have reached record levels. Simultaneously, US consumers, on average, have become more liquid. That doesn’t seem too irrational or unsustainable to us.
|By Edward Luce, Financial Times, 12/12/2011|
MarketMinder's View: A lot to quibble with here, but we’ll stick to the central point: The theory currently elevated US unemployment is due to long-term, structural shifts in the global economy. Our question: If this is so true, was the structure very fundamentally different in 2007? Because prior to the cyclical downturn in the global economy, US unemployment was less than 5%.
|By Esme Deprez and Timothy Homan, Bloomberg, 12/12/2011|
MarketMinder's View: Is there a gap between rich and poor in the US? Yes. Would Connecticut have one too? No doubt. But that Connecticut has some very well-to-do people doesn’t sentence those at the bottom end to a life of poverty. The US economy—and Connecticut’s—aren’t fixed pies. So what people earn relative to one another has little true economic meaning. Oh, one more thing: Using a convicted felon as an example of someone hurt by the income gap is curious.
|By Robert L. Wolke, Pittsburgh Post-Gazette, 12/12/2011|
MarketMinder's View: In our opinion, a better allegory from children’s tales to describe the realities of high-frequency trading would be the tortoise and the hare. The lesson there: Focusing on speed alone doesn’t tell you much about the outcome. Similarly, high-frequency trading doesn’t guarantee the trades are in the right direction—which means, users can simply make or lose money very, very quickly. Moreover, the thought that algorithms ensure profitability is a fantasy.
|By The Wall Street Journal, 12/12/2011|
MarketMinder's View: Credit raters have a long history of groupthink and logging their opinions after markets have already weighed in, which seems to be mostly what’s at work here. Given the spotty track record of ratings agencies, we think this is a story worthy of a yawn.
|By Charles Forelle, The Wall Street Journal, 12/12/2011|
MarketMinder's View: This is a pretty good synopsis of the new European deal announced late last week. As we discussed in today’s cover story, “The Battle of the (Budget) Bulge,” this is unlikely to be a cure-all. But agreeing to partially surrender sovereignty over national budgeting seemingly does demonstrate the lengths eurozone leaders are willing to go to back the euro.
|By Staff, Associated Press, 12/12/2011|
MarketMinder's View: American consumers have been clicking in force this holiday season, and they’re not just browsing. “US online sales in the holiday season to date are up 15 percent to $24.6 billion, according to comScore.” For more, see our 11/29/2011 cover story, “Red Hot Black Friday.”
|By Guy Dinmore, Financial Times, 12/12/2011|
MarketMinder's View: “Italy’s borrowing costs fell slightly on Monday as the Treasury sold €7bn of one-year bills to yield 5.952 per cent with demand nearly double the amount on offer.”
|By Gary Fields and John R. Emshwiller, The Wall Street Journal, 12/12/2011|
MarketMinder's View: We’ve often written of the perils of America’s complicated web of regulations, many of which carry unintended consequences on a macroeconomic or sector level. But the law of unintended consequences doesn’t just apply at this level—it can easily extend to individuals. And the problem isn’t just the volume of rules, but also the quality and enforcement of said rules. Think we need more government regulation? Give this a close read.
|By Annalynn Censky, CNN Money, 12/09/2011|
MarketMinder's View: Though China’s overall growth is slowing slightly, inflation is also moderating, mitigating fears of a Chinese hard/crash landing. If history is any indication, China’s leaders will once again bolster policies to increase lending when transitioning to the new government, which will likely spur the economy once again.
|By Felix Salmon, Seeking Alpha, 12/09/2011|
MarketMinder's View: This article is long on speculation, and very short on facts. Fact is, many have been expecting a dramatic event to suddenly either fix or destroy the euro for about two years. Yet neither have happened, nor do they seem very likely to any time soon. And presuming the lack of a sudden fix to all eurozone ills means disaster is quite a stretch indeed.
|By Leila Abboud and Christian Plumb, Reuters, 12/09/2011|
MarketMinder's View: Another day, another ratings cut that confirms what most folks already know. Credit ratings agencies are frequently late to the game and, increasingly, their ratings don’t seem to matter much anymore. For more, see today’s cover story, “Lowering the Euro Curve.”
|By Dan Beucke, Businessweek, 12/09/2011|
MarketMinder's View: This seems like a solution in search of an economic problem. Fact is, the wealth gap isn’t really much of an economic problem, it’s a political invention. Plus, high federal taxes don’t really redistribute wealth from rich to poor—they redistribute from individuals and businesses to government. And the former spend and invest far more effectively than the latter, in our view (Google “Solyndra”).
|By Catherine Rampell, The New York Times, 12/09/2011|
MarketMinder's View: Numbers like this fluctuate quarter to quarter, month to month and even day to day—and tell little to nothing about the future direction of stocks or the economy.
|By Matthew Dalton and Frances Robinson, The Wall Street Journal, 12/09/2011|
MarketMinder's View: EU leaders have announced a broad new agreement providing additional funding for the IMF, amending parts of the ESM (the bailout fund due to replace the EFSF) and agreeing to tighter fiscal rules. Details remain to be ironed out, but this is another display of eurozone politicians’ willingness to back the euro.
|By Catherine Rampell, The New York Times, 12/09/2011|
MarketMinder's View: Many feared the fiscal condition of US states entering 2011—and some still do. This interesting article and embedded graphic have some perspective to share on that subject—namely, tax receipts are on the rise because the economy is improving.
|By Fisher Investments MarketMinder Editorial Staff, The Street, 12/09/2011|
MarketMinder's View: Our latest contribution to The Street.
|By Kelly Evans, The Wall Street Journal, 12/08/2011|
MarketMinder's View: Comparing absolute debt levels to GDP tells you little about the US’s relative ability to finance that debt—and there, the differences between the US and Greece are stark. While the US currently pays a historically low interest rate to finance its debt, Greece’s rates have done nothing but increase over the last 18 or so months. So to conflate the two situations is more than a bit misleading.
|By Jeremy Warner, The Telegraph, 12/08/2011|
MarketMinder's View: On the contrary, we’d argue globalization and increasingly free trade have rewarded all participants—particularly those in more developed countries, who’ve as a result been able to focus on more efficient uses of human and physical capital. And contrary to the suggestion “the world needs urgently to embrace new forms of multilateralism and co-operation if it is not to slip back into an age of protectionist infighting,” the world’s actually seen a raft of increasingly free trade in 2011. For more, see our 10/20/2011 column, “That (Non-Existent) Giant Sucking Sound.”
|By Joan Solsman, The Wall Street Journal, 12/08/2011|
MarketMinder's View: S&P added European local and regional governments and public-finance entities to its list of potential downgrade targets. Which shouldn’t really be much of a shockwave to anyone—the ratings agencies have developed quite the reputation by now, and, in our view, should be paid little heed.
|By Paul La Monica, CNN Money, 12/08/2011|
MarketMinder's View: We’d agree with Casey Stengel’s response to his baseball team’s performance, but we certainly wouldn’t apply it to markets. In our view, this takes entirely too dour an outlook on global markets and economies and extrapolates further doom from there. Making it not terribly useful for forming forward-looking expectations.
|By Margit Feher and Geoffrey Smith, The Wall Street Journal, 12/08/2011|
MarketMinder's View: The ECB’s taken further steps to ease eurozone liquidity—which doesn’t necessarily cure myriad underlying issues, but likely helps prevent a sudden credit squeeze. The ECB’s also indicated it’ll accept “asset-backed securities with at least two ratings of single-A-minus”—steps seemingly aimed at sidestepping any deleterious consequences of threatened downgrades. For more, see our 12/07/2011 cover story, “Differentiate Before You Downgrade.”
|By Staff, Associated Press, 12/08/2011|
MarketMinder's View: “Wholesale companies increased their stockpiles of autos, paper, and other goods in October by the most in five months, a sign they expect consumer demand to rise.”
|By Scott Grannis, Seeking Alpha, 12/08/2011|
MarketMinder's View: Consumers are seemingly in much better overall shape than many in the media opine—as evidenced partly by rapidly rising income tax receipts.
|By Robin Sidel, The Wall Street Journal, 12/08/2011|
MarketMinder's View: Another of Dodd-Frank’s unintended consequences. This time, though, it turns out the law’s most hurting those it was intended to help: small businesses where folks typically spend small amounts. As we’ve said, it’s hard to foresee every single implication of even the most well-intentioned regulation.
|By Bertrand Marotte, The Globe and Mail, 12/08/2011|
The free trade wave rolls on, in various ways—Canada and the US reduced some unnecessary post-9/11 regulatory requirements that weigh on cross-border trade. No doubt security is important, but there are also plenty of times where the benefits (if any) are miniscule, and the drawbacks are far greater.
|By Ravi Nessman and Erika Kinetz, Associated Press, 12/07/2011|
MarketMinder's View: Allowing foreign retailers into India would likely have been a net positive for Indian society—for example, the influx of foreign capital would have funded much-needed improvements to food storage and transportation infrastructure, potentially increasing food supply and lowering prices over time. That political posturing got in the way is disappointing—and another example of the Indian government’s difficulty passing economic reforms.
|By Vicky Buffery and Daniel Flynn, Reuters, 12/07/2011|
MarketMinder's View: Perhaps France does lose its gold-plated AAA rating, but in our view, that shouldn’t merit more than a shrug. We continue to wonder why anyone gives much thought to ratings agencies’ ratings. For more, see today’s cover story, “Differentiate Before You Downgrade.”
|By Rana Foroohar, Time, 12/07/2011|
MarketMinder's View: Peripheral Europe’s debt troubles aren’t the catalyst this piece suggests, in our opinion. Bonds have always carried risk. And high dividend-paying stocks aren’t inherently any safer or riskier than sovereign debt. Both are subject to price movement (volatility), dividends can be cut at any time and debt haircuts are always possible.
|By Steve Hargreaves, CNNMoney, 12/07/2011|
MarketMinder's View: Actually, data show OPEC and non-OPEC supply has been tightening recently—in our view, this is a far likelier culprit for higher prices than futures trading. “Speculation” is oft blamed for price distortions, but futures trading actually tends to promote more efficient pricing over time.
|By Scott Cendrowski, Fortune, 12/07/2011|
MarketMinder's View: We’d quibble with the notion the Fed has “bailed out stock markets” for two decades. Moreover, on a forward-looking basis, we’re highly skeptical of any 10-year market forecasts, good or bad. There are too many unknown variables for anyone to accurately predict how markets will behave through 2021.
|By Jeffrey Fear, Bloomberg, 12/07/2011|
MarketMinder's View: This look at Germany’s Weimar-era hyperinflation offers insight into why the Bundesbank opposes heavy ECB intervention in eurozone debt markets. A highly recommended, enlightening read.
|By James Hamilton, Econbrowser, 12/07/2011|
MarketMinder's View: A sensible, mathematical debunking of the recent rumor the Fed lent $7.7 trillion to troubled banks—and a good example of why generalized, eye-popping “statistics” should be taken with a healthy dose of skepticism.
|By Staff, EUbusiness, 12/07/2011|
MarketMinder's View: Perhaps pessimism isn’t the right word, but we’d suggest keeping tempered expectations for this week’s EU summit. Officials’ previous grand plans haven’t proved instant fixes, and we find it difficult to imagine a cure-all emerging on Friday—nor does one need to. Most likely, in our view, the slow, uneven march toward a longer-term eurozone solution continues.
|By Staff, Associated Press, 12/07/2011|
MarketMinder's View: Today’s successful auction is a good sign the weak demand at last month’s offering wasn’t the gloomy turning point some feared.
|By Tom Steinert-Threlkeld, Financial Planning, 12/06/2011|
MarketMinder's View: We disagree with nearly all of this. First, we’re not sure how setting a nominal growth target helps ensure we get there or suggests what policies accomplish it. And it seemingly overstates the Fed’s influence in spurring faster economic and jobs growth. But we’re also not convinced the US is suffering much from a demand problem—considering consumer spending is at all-time highs, as is real GDP.
|By Ben Levisohn, The Wall Street Journal, 12/06/2011|
MarketMinder's View: The assertion that “dividend stocks tend to be much less volatile on the upside, as well as on the downside” is a common belief regarding dividends. But is it accurate? Consider 2007-2009: Financials, automakers and REITS—three of the highest-yielding sectors entering the bear market—were three of the hardest hit in the market downturn. For more, see our 08/06/2010 column, “Sometimes True.”
|By Satyajit Das, MarketWatch, 12/06/2011|
MarketMinder's View: While we’d agree European summits have mostly failed to produce a one-time solution to all the eurozone’s woes, we’re not convinced that’s either possible or necessarily totally desirable. Barring a new, surprising and powerfully negative shock, it seems unlikely to us a eurozone recession (if one occurs) spreads globally. For more, see our 12/02/2011 research analysis, ”If Europe Faces Recession, Can the US Economy Still Continue to Grow?”
|By Matt Phillips, The Wall Street Journal, 12/06/2011|
MarketMinder's View: We’ve said it before and we’ll say it again—we don’t understand why anyone pays much attention to the ratings agencies. Their track record is less than stellar, and in this case, the market was largely already ahead of them.
|By Erin McLaughlin and Laura Perez Maestro, CNN, 12/06/2011|
MarketMinder's View: Little of consequence came of Belgium’s 589 days without a government. In fact, as the article points out, a country without a government has its benefits—it can’t introduce new taxes or sweeping regulatory changes.
|By Kenneth Rapoza, Forbes, 12/06/2011|
MarketMinder's View: This is a mostly sensible piece on common debt misunderstandings perpetuated by the media.
|By Shawn Pagatchnik, Associated Press, 12/06/2011|
MarketMinder's View: Politicians in Ireland continue to take necessary steps to enact new austerity. More proof the PIIGS, despite the moniker, aren’t all in the same boat.
|By Erika Kinetz, Associated Press, 12/05/2011|
MarketMinder's View: India’s Prime Minister Manmohan Singh backtracked on an earlier announcement the country planned to open its retail sector more to foreign businesses. It's possible the opening may still happen and this is a temporary setback. But all in all, the idea of delaying a sensible economic decision in the name of obtaining political consensus seems misguided to us, to say the least. Here’s hoping India’s leaders backtrack on their backtracking.
|By Marilyn Geewax, NPR, 12/05/2011|
MarketMinder's View: It’s possible the eurozone’s troubles negatively impact the globe and US. But barring a big, shocking development, it doesn’t seem very likely. For all the talk of economic correlation, recent data don’t agree—as we illustrate in our 12/2/2011 research analysis, “If Europe Faces Recession, Can the US Economy Still Continue to Grow?”
|By David Uren, The Australian, 12/05/2011|
MarketMinder's View: “Westpac's tracking of data releases around the world shows that just 24 per cent of economic releases out of China in the past eight weeks has been better than the previous outcome.” That doesn’t seem like a big shocker to us, just perfectly normal growth-rate volatility—illustrated well by recently accelerating US data, as referenced. That very same US data showed decelerating growth earlier this year.
|By Paul Hannon, The Wall Street Journal, 12/05/2011|
MarketMinder's View: The reality is the US has had higher tax rates on the wealthy since 1913—sometimes at much higher marginal rates than today. Yet the wealth gap has grown over time, not shrunk. Moreover, the wealth gap is, in our view, a thorny political issue. But the economic impacts of income inequality are negligible at best. For more, see our 9/29/2011 column on Real Clear Markets, “The Wealth Gap Is an Entirely Political Invention.”
|By Larry Elliott, The Guardian, 12/05/2011|
MarketMinder's View: It seems to us this entangles economic theory with economic reality too much and misses a few critical points: One, the fact the global economy has now grown since mid-2009 doesn’t seemingly support this article’s dramatic point of view. And two, the US economy hasn’t had “false dawns galore since the financial system froze in 2007.” There was a recession—then the US began growing in Q2 2009, and it’s grown ever since. So yes, the eurozone has some serious issues, but that needn’t spell global economic doom.
|By Jonathan Blitzer, The New Republic, 12/05/2011|
MarketMinder's View: It’s probably a bit premature to attempt to answer the headline's question, but this is an interesting read about the political angle of peripheral Europe’s sovereign debt woes.
|By Joshua M. Brown, The Christian Science Monitor, 12/05/2011|
MarketMinder's View: It’s certainly true Friday’s unemployment rate reduction was partly a function of the fact it’s a bizarrely calculated statistic. But it is also true hiring increased in the US. For more, see today’s cover story, “Unemployment, Overall and On Average.”
|By Martin Strydom, The Telegraph, 12/05/2011|
MarketMinder's View: French and German leaders continue their discussions on a eurozone pact creating more budget oversight and other unity measures for the euro bloc ahead of the upcoming summit. In our view, details and developments in this story are worthy of attention.
|By Guy Chazan, The Wall Street Journal, 12/05/2011|
MarketMinder's View: This offers an interesting twist to the unconventional oil exploration and production story, detailing that many oil companies are increasing their presence in Western countries—like the US. Now, it seems unlikely Middle Eastern oil ceases playing an important role on the global stage anytime soon, but should its degree of importance continue shifting, it could decrease OPEC nations’ role in the Energy market.
|By John Schoen, MSNBC, 12/02/2011|
MarketMinder's View: Well, we’re not quite certain how to define "quality jobs." And in our view, job growth is job growth—and a sign overall economic recovery has presaged employment recovery, as we’d largely expect.
|By Paul Krugman, The New York Times, 12/02/2011|
MarketMinder's View: We disagree too little spending is Europe’s problem. Rather, we’d suggest broadly speaking, many of the struggling nations’ problems stem from too-high-for-too-long socialism-to-capitalism ratios. Increase free market forces and, over time, we’d expect to see most of Europe recover just fine.
|By Floyd Norris, The New York Times, 12/02/2011|
MarketMinder's View: Yes, the housing market’s still weak by historical standards. But to consequently suggest government action’s necessary to correct a “current imbalance in supply and demand for homes” is off-base, in our view. In a market economy, prices balance the market—so if there’s excess supply, prices fall to achieve that. Maybe higher prices would be better, but that’s different from suggesting there’s some imbalance to be corrected.
|By Michael Moran, Slate, 12/02/2011|
MarketMinder's View: This vastly overstates the case, in our view. Though European leaders as a whole have moved very deliberately throughout the recent debt crisis—Merkel included—that doesn’t mean there’s some insidious plot afoot to dominate Europe.
|By Emese Bartha, Neelabh Chaturvedi and Nick Cawley, The Wall Street Journal, 12/02/2011|
MarketMinder's View: France and Spain held solid debt auctions Thursday, instilling a bit more confidence in eurozone bond markets.
|By Mark J. Perry, The American, 12/02/2011|
MarketMinder's View: An interesting argument from Dr. Perry that China’s currency manipulation is actually "a form of generous foreign aid to Americans"—and one with which we’d overall agree.
|By Mark J. Perry, The American, 12/02/2011|
MarketMinder's View: An interesting argument from Dr. Perry that China’s currency manipulation is actually “a form of generous foreign aid to Americans”—and one with which we’d overall agree.
|By Helen Pidd, The Guardian, 12/02/2011|
MarketMinder's View: Though likely frustrating in their somewhat plodding pace, the Germans continue to take steps indicating support for the EU and eurozone. And slow, incremental changes are likely better in the long run than sudden change for either better or worse.
|By Phil Izzo , The Wall Street Journal, 12/02/2011|
MarketMinder's View: An interesting look at the wonkiness of various employment statistics and what’s behind November’s improvement.
|By Brian Milner, The Globe and Mail, 12/01/2011|
MarketMinder's View: “The central bank moves—along with a surprise Chinese decision to reduce bank reserve requirements—plainly signal the situation has gone from bad to worse.” We disagree—the coordinated central bank intervention has more to do with having something in place should the funds be needed than a sign the eurozone is in a “worse” situation.
|By Nicholas Winning, Ainsley Thomson and Alex Brittain, The Wall Street Journal , 12/01/2011|
MarketMinder's View: While we don’t disagree a sudden, disorderly eurozone breakup would likely carry rather large negatives, we’d also point out it seems highly unlikely. For more, see our 11/30/2011 cover story, “Fisher Investments: Is the Euro a Relic in the Making?”
|By Tim Iacono, Seeking Alpha, 12/01/2011|
MarketMinder's View: Our title for this would be slightly different in words, but a whole lot different in meaning: “Market Volatility Is Normal.” A review of more than three years of history shows that periodically, volatility is above average. Until it isn’t. Remember, market volatility is not directional, predictive of future market direction or predictive of future market volatility.
|By Morgan Housel, The Motley Fool, 12/01/2011|
MarketMinder's View: We don’t quibble with this article’s discussion of the fact corporate earnings have risen partly due to solidly positive profit margins, or its assertion that may not evaporate as fast as some fear. Our issue here is the article essentially argues those high profit margins are solely responsible for earnings growth, since US GDP growth rates haven’t been nearly as high. What about revenues, overseas business activity and the fact GDP isn’t a perfect reflection of economic health? All those things matter a lot. For more, see our 11/21/2011 cover story, “Earnings and Implications.”
|By Ralph Atkins, Financial Times, 12/01/2011|
MarketMinder's View: The ECB’s level of involvement in providing support for peripheral European nations has been the source of much debate recently. While some call for increased purchases of sovereign debt on a grand scale, others note the potential moral hazard in sending the message the ECB will backstop nations perceived as profligate. Today, ECB president Mario Draghi stated what’s being interpreted as commentary more supportive of a broader ECB role—if the eurozone’s fiscal governance becomes structurally tighter. Talks are far from done on either aspect, but this is clearly worthy of attention.
|By Stephanie Clifford, The New York Times, 12/01/2011|
MarketMinder's View: Further evidence the economy is doing better than most expect and consumers’ actions are more meaningful than sentiment surveys’ attempts to tally their feelings.
|By Bob Willis, Bloomberg, 12/01/2011|
MarketMinder's View: The Institute of Supply Management’s US manufacturing gauge expanded again in November, accelerating from October and beating analysts’ estimates—more evidence of a likely continuation of US economic expansion.
|By Staff, EUbusiness, 12/01/2011|
MarketMinder's View: This is a great example of how onerous regulation and trade restrictions can hurt a country’s economy—firms will typically look elsewhere where it’s easier and cheaper to run a business.