The Markets - March 16, 2015
Franklin D. Roosevelt's first inaugural address was delivered in 1933 in the midst of the Great Depression. He said, "This great Nation will endure as it has endured, will revive and will prosper. So, first of all, let me assert my firm belief that the only thing we have to fear is fear itself - nameless, unreasoning, unjustified terror which paralyzes needed efforts to convert retreat into advance."
The Markets - March 9, 2015
If you looked at last week from the perspective of the children's book, If You Give a Mouse a Cookie, it might have gone like this:
If you give the United States a positive employment report,
Investors are going to ask whether interest rates will move higher.
When they conclude the Federal Reserve may increase rates sooner rather than later,
American stock markets may dip lower...
The Markets - March 2, 2015
"Well, I never heard it before," said the Mock Turtle; "but it sounds uncommon nonsense."
It was an Alice in Wonderland week. European countries, companies, and entrepreneurs were getting paid to borrow money, and ordinary Joes with money in some European banks got letters saying the banks would be charging to hold their money.
The Markets - February 23, 2015
It was all Greek to investors.
Last Thursday, things weren't looking so good for Greece. Barron's explained:
"...Germany scotched Greece's request for a six-month extension to its existing aid package. Athens had sought more time to renegotiate the Draconian austerity package imposed on the land of Pericles, to keep from going bust and, perhaps, being kicked out of the euro zone."
The Markets - February 17, 2015
Animal spirits were improving last week, according to Barron's.
The idea of animal spirits was introduced to the dismal science (a.k.a. economics) in the late1930s, courtesy of John Maynard Keynes. In The General Theory of Employment, Interest and Money (a dreary title that surely could have benefitted from an injection of animal spirits), he wrote:
"...a large portion of our positive activities depend on spontaneous optimism rather than on a mathematical expectation, whether moral or hedonistic or economic. Most, probably, of our decisions to do something positive, the full consequences of which will be drawn out over many days to come, can only be taken as the result of animal spirits - a spontaneous urge to action rather than inaction, and not as the outcome of a weighted average of quantitative benefits multiplied by quantitative probabilities."
The Markets - February 9, 2015
What's in an employment report?
Last week, the U.S. Bureau of Labor Statistics' Employment Situation Summary was full of encouraging data. Employment numbers for last November and December were revised higher which made 2014 the strongest year for job growth since 1999. However, 2015 isn't off to a shabby start. The economy added just over a quarter of a million jobs in January.
The Markets - February 2, 2015
It's true. January did not turn out to be the best month for U.S. stock markets. At the end of the month, the Standard & Poor's 500 Index (S&P 500) was down about 3.1 percent. Before you start listening to pithy observations - the saying 'as goes January, so goes the year' has been making the rounds - think back to January 2014. The S&P 500 finished the month down 3.6 percent and still managed to deliver positive performance (up 11.4 percent) for the year.
The Markets - January 26, 2015
There may be potential for a reality television program starring central bankers and the making of economic policy. It could be called, 'The Real Central Bankers of the European Economic Community.' Just imagine the last two weeks' episodes. Two weeks ago, the Swiss National Bank shocked markets by unpegging its currency and sending the value of the Swiss franc skyward.
The Markets - January 20, 2015
Central banks have been full of surprises lately, but not too many people saw this one coming. For aficionados of the board game Clue, here's the gist of it: Thomas Jordan did it in Switzerland with monetary policy.
Last week, Swiss National Bank (SNB) Chairman Thomas Jordan told the world the SNB would no longer cap the value of the Swiss franc at 1.2 per euro because the policy was no longer needed. The decision triggered an exceptional response.