Links: 2013-11-06
Markets
How Frothy Is the Nasdaq? – WSJ.com
“The Nasdaq Composite Index is up 38% since last November. “
Bubbles, Bubbles Everywhere | The Big Picture
Federal Reserve
Fed’s Rosengren: Aggressive Policy Needed for Some Time to Come – Real Time Economics – WSJ
Fed Forward Guidance Proves Effective, NY Fed Research Says – Real Time Economics – WSJ
Fed’s Williams: Jobs Growth a Key Question for Bond-Buying Program – Real Time Economics – WSJ
Fed could be about to make a major policy change
“According to an analysis from Jan Hatzius, chief economist at Goldman Sachs, the two Fed papers actually would imply an earlier reduction of QE than planned—perhaps as soon as December—while the zero-bound interest rates could remain in place until 2017 and kept below normal into “the early 2020s.”
“The studies suggest that some of the most senior Fed staffers see strong arguments for a significantly greater amount of monetary stimulus than implied by either a Taylor rule or the current 6.5 percent/2.5 percent threshold guidance,” Hatzius wrote. “Given the structure of theFederal Reserve Board, we believe it is likely that the most senior officials—in particular, Ben Bernanke and (Chair-elect) Janet Yellen—agree with the basic thrust of the analysis.””
Fed Study: Lengthen Low-Rate Guidance to Fix Unemployment Faster – WSJ.com
“Since last year the Fed has said it wouldn’t raise short-term interest rates, which are now near zero, until after the jobless rate drops below 6.5%, as long as inflation doesn’t exceed 2.5%. The unemployment rate was 7.2% in September; the October rate is due to be released Friday.
The research paper—written by William English, the head of the Fed’s monetary-affairs division and two other authors—argues the Fed’s unemployment threshold for rate increases would be more effective if it were lower than 6.5%, possibly as low as 5.5%. “
Economics
The moral case for a one-off wealth tax is compelling | Kenneth Rogoff | Business | theguardian.com
I have written in the past that I saw wealth confiscation as an increasingly viable talking point to help avoid further crisis. And now we are seeing this. My view here
“Should advanced countries implement wealth taxes as a means of stabilising and reducing public debt over the medium term? The normally conservative International Monetary Fund has given the idea surprisingly emphatic support. The IMF calculates that a one-time 10% wealth levy, if introduced quickly and unexpectedly, could return many European countries to pre-crisis public debt/GDP ratios. It is an intriguing idea.”
Rapid population ageing creates investment opportunities – FT.com
This point sticks out for me:
“Over time, there can be little doubt that retirement ages will be raised and promised benefit levels will be cut. Otherwise, those proportionately fewer young skilled workers will tend to emigrate away from ageing societies to ones that pay them better.
This is not some sort of long-term, postponable set of questions. The surprising fall in the euro area inflation rate, for example, presages a deflation that is generated by a decline in working age population. That in turn means we should start now to use lower return assumptions on pensions and savings, not just tighter state budgets. “
North America
The Myth of Americans’ Poor Life Expectancy – Forbes
“what happens if you remove deaths from fatal injuries from the life expectancy tables? Among the 29 members of the OECD, the U.S. vaults from 19th place to…you guessed it…first. Japan, on the same adjustment, drops from first to ninth.”
US public investment falls to lowest level since war – FT.com
ISM – Media Release: October 2013 Non-Manufacturing ISM Report On Business®
“Non-Manufacturing Business Activity Index increased to 59.7 percent, which is 4.6 percentage points higher than the 55.1 percent reported in September, reflecting growth for the 51st consecutive month. The New Orders Index decreased by 2.8 percentage points to 56.8 percent, and the Employment Index increased 3.5 percentage points to 56.2 percent, indicating growth in employment for the 15th consecutive month.”
Colorado Approves Marijuana Sales Tax | TIME.com
Toronto mayor admits to smoking crack in ‘drunken stupor’ – FT.com
Europe
Italian banks near saturation point on government debt | Reuters
Italy’s finance minister urges ECB to ease policy, combat strong euro | Reuters
Italy services sector grows slower in October, 2nd month of expansion: PMI | Reuters
BBC News – UK industrial output beats market forecasts
Euro zone Sept retail sales fall more than expected | Reuters
BBC News – Eurozone data shows fragile economic growth
German private sector expands for sixth month running in October: PMI | Reuters
mainly macro: The real problem with German macroeconomic policy
“The problem with German macroeconomic policy is not that it is acting in the national interest, or otherwise, but that it is based on a discredited and harmful set of ideas. In particular there are three key myths that are leading German policy making astray.”
Bruegel | Blogs review: The deflationary bias of Germany’s current account
“Germany’s current account surplus offers “no reason for concern” fails to convince the economics blogosphere”
Germany is a weight on the world – FT.com
“Export surpluses do not reflect merely competitiveness but also an excess of output over spending. Surplus countries import the demand they do not generate internally. When global demand is buoyant, this need not be a problem provided the money borrowed by deficit countries is invested in activities that can subsequently service the debts they are incurring. Alas, this does not happen often, partly because the deficit countries are pushed by the supply of cheap imports from surplus countries towards investing in non-tradeable activities, which do not support the servicing of international debts. But in current conditions, when short-term official interest rates are close to zero and demand is chronically deficient across the globe, the import of demand by the surplus country is a “beggar-my-neighbour” policy: it exacerbates this global economic weakness. “
Eurozone unemployment stuck until 2015, warns European commission | Business | theguardian.com
European banks cut corporate lending – FT.com
“Europe’s largest banks have ramped up their investment into sovereign debt by more than a quarter in the past two years while cutting back corporate lending as they prepare for stricter global capital rules.”
Spain’s car industry at heart of nascent recovery – FT.com
ekathimerini.com | Greece sells 1.3 bln euros of 6-month T-bills, yield unchanged
6-month paper still sells at an onerous 4.15% level.
ekathimerini.com | EU regional funds can help Greek recovery, says Hahn ahead of visit
EU More Than Doubles U.K.’s 2013 Growth Forecast – WSJ.com
“In its autumn forecast, the European Union’s executive arm said the economy of the U.K.—the largest non-euro-zone country in the EU—would grow 1.3% in 2013, considerably higher than the 0.6% growth it projected in May. “
Asia
China’s Slower Growth Puts a Drag on Western Profits – WSJ.com
“”When a country falls from double-digit growth to 7.5%, there are repercussions.””
Media
Pizza delivery and bins concealed material, hacking trial hears – FT.com
The NYT paywall plugs the hole : Columbia Journalism Review
Technology
Android 4.4 KitKat review: designed by Google, for Google | The Verge
T-Mobile Adds 1 Million Customers in Third Quarter – Ina Fried – Mobile – AllThingsD
Nexus 5 Review: The Best Android Can Offer (Especially For the Price)
T-Mobile USA Subscriber Gains Top Views Amid ‘Uncarrier’ Push – TMUS – Investors.com
I love this because T-Mobile has brought competition back to the US mobile market
Civil Liberties
No Morsel Too Minuscule for All-Consuming N.S.A. – NYTimes.com
“The National Security Agency was founded in 1952, and its surveillance capabilities were limited by legislation in 1978. But with the attacks of September 2001 came a new sense of urgency.”
How we know the NSA had access to internal Google and Yahoo cloud data
“The Washington Post reported last Wednesday that the National Security Agency has been tapping into the private links that connect Google and Yahoo data centers around the world. Today we offer additional background, with new evidence from the source documents and interviews with confidential sources, demonstrating that the NSA accessed data traveling between those centers.”
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