News: 2013-11-12

By Edward Harrison On Nov 12, 2013

OECD Indicators Point to Pickup in China, Euro Zone, U.K. – WSJ.com

“But while the leading indicators suggest that growth is set to pick up in many major economies, the rate of expansion will be modest by historical standards. With figures released by the OECD earlier this month pointing to an easing of inflationary pressure across the globe as energy price rises ease, central banks are likely to keep their monetary policies stimulative for an extended period.”

Markets

Are We in a Bubble? – Crossing Wall Street

“I think there’s a natural tendency to reverse engineer a narrative that the world was enthralled to greed and everyone bought stocks without thought. That describes the feeling about Tech stocks in 1999, but it’s not an accurate description of today’s environment.”

Morgan Stanley downgrades view of internet stocks, citing overvaluation | South China Morning Post

“Shares of Facebook and LinkedIn have more than doubled in the last year and trade at 44 times and 97 times forward earnings, respectively, according to Thomson Reuters data. Google’s shares have risen 56 per cent in the same period and trade at almost 20 times earnings.

Morgan Stanley analysts said the rise in the valuation of internet stocks has been due to investors looking at the total addressable market (TAM) opportunity, with minimal focus on risks.”

I will be wrong on house prices | Business Spectator

Help to Buy has raised risk of house price bubble, economist warns – Telegraph

Norwegian Housing Bubble Seen by Shiller Deflating: Mortgages – Bloomberg

North America

Macro and Other Market Musings: Endogenous Aggregate Supply

Andrew Huszar: Confessions of a Quantitative Easer – WSJ.com

“Even when acknowledging QE’s shortcomings, Chairman Bernanke argues that some action by the Fed is better than none (a position that his likely successor, Fed Vice Chairwoman Janet Yellen, also embraces). The implication is that the Fed is dutifully compensating for the rest of Washington’s dysfunction. But the Fed is at the center of that dysfunction. Case in point: It has allowed QE to become Wall Street’s new “too big to fail” policy.”

Calculated Risk: Update: When will payroll employment exceed the pre-recession peak?

Greenspan’s dilemma revived | FT Alphaville

Izabella Kaminska’s technology-oriented thesis:

“the intangible value added to the economy by technological efficiency in the computer era disrupted the old economy’s profit potential. The system was propped up for as long as the state was able to provide low enough interest rates to support wealth distributive private-sector credit creation and dotcom equity wealth.

When rates were raised, this stifled the potential for growth by intangible efficiency because credit could no longer compensate for the concentration of wealth amongst capital owners, who — now afraid of the new economy equity and credit markets — withdrew to the tangible world of collateralised rent-based returns. In this way capital also found itself redirected back to old economy equity, where profitability was increasingly dependent on regressing or stifling efficiency at home, expansive international growth, or the squeezing of markets directly — straining resources in the process.”

Europe

Jordbruk över jobb i EU-budget | Näringsliv | SvD

The EU budget is ready for approval. Outlays are being reduced from 144.2 billion euros last year to 135.5 billion this year. This article shows some detail in Swedish.

Germany’s €19bn trade surplus set for EC probe – Independent.ie

“t’s been claimed that this reliance is having an impact on the wider European and global economy.

Mr Rehn said that removing the “bottlenecks” to Germany’s domestic demand would lead to a reduction in the country’s trade surplus.”

Germany’s Surplus Isn’t the Problem – WSJ.com

I don’t agree with this analysis by Simon Nixon but it is worth reading to see a view on Europe that says current account surpluses are not a problem.

Nowotny: “Gibt keine Spaltung in der EZB” – EZB – derStandard.at › Wirtschaft

According to the Austrian central bank head, there is no split at the ECB

Marktbericht Devisen: Euro fällt unter 1,34 Dollar – n-tv.de

The euro fell to below 1.33 to the USD after Asmussen said that more easing was in the pipeline.

Zinssenkung: Italien zahlt niedrigsten Zins seit Euro-Einführung – Börse + Märkte – Finanzen – Handelsblatt

Italy is paying the lowest rate on one-year paper since the euro began. The interest ate has now fallen to 0.688%. A month ago, the rate was 0.999%

Don’t blame Germany for the eurozone’s travails, blame the euro itself – Telegraph

French President Francois Hollande booed during ceremony to mark end of WWI | Toronto Star

Asia

MacroMania: QE in Japan: Past and Present

Japanese Households Without Savings Climb to Most Since ’63 – Bloomberg

(Still) fretting about Abenomics | FT Alphaville

” the growth strategy part of Abenomics, as currently articulated, does not appear credible, relative to what it is ostensibly trying to achieve.”

China: sending record number of students to the US | beyondbrics

“In less than a decade, the number of Chinese studying in the US has quadrupled, from a little over 60,000 in 2004, to almost 240,000 in 2013, a report from the Institution for International Education shows. China now accounts for almost one in every three international students in the US, a historic high for any country.”

Technology

Hacker Attack on Adobe Sends Ripples Across Web – WSJ.com

“Internet users, despite repeated warnings, often use the same password on many different websites. So, even if Facebook wasn’t hit by the latest cyberattack, the Adobe hackers still might be able to break into Facebook user accounts with recycled passwords.”

“It’s Just A Big iPod Touch” | TechCrunch

Good review on why tablets have taken share from PCs.

An iPhone user’s guide to experimenting with a Nexus 5 | Ars Technica