This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Robert Reich (Robert Reich’s Blog): The great disconnect between stocks and jobs, November 18, 2009. How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise. Where is this heading? No place good. Without a major shift in policy - both at the Fed and in the White House - the economics point to a big stock-market correction and a double dip. The politics point to substantial losses for Democrats

...

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Robert Reich (Robert Reich’s Blog): The great disconnect between stocks and jobs, November 18, 2009. How can the stock market hit new highs at the same time unemployment is hitting new highs? Simple. The market is up because corporate earnings are up. Corporate earnings are up because companies are cutting costs. And the biggest single cost they’re cutting is their payrolls. So they let people go and, presto, their balance sheets look better and their stock prices rise. Where is this heading? No place good. Without a major shift in policy - both at the Fed and in the White House - the economics point to a big stock-market correction and a double dip. The politics point to substantial losses for Democrats

...

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.

• John Authers (Financial Times): Triumph of common sense over benchmarks, October 3, 2009. Rather than watch everyone herd towards benchmarks, while charging fees for active management, in future perhaps a lot of money will be managed passively and the rest will be allocated to investors who can show they have skill, and who have the freedom to go wherever they believe they can profit.

• Randall Forsyth (Barron’s): Is this a real bull or “Red Bull” market? October 2, 2009. After the caffeine rush of the third quarter, stocks and Treasuries give way to less stimulating market action.

• Paul Krugman (The New York Times): Mission not accomplished, October 2, 2009. Stocks are up. Ben

...

In the absence of the “Words from the Wise” review while I am traveling, this post provides links to a number of thought-provoking articles I have read over the past few days that you may also find interesting.

• Paul Krugman (The New York Times): How did economists get it so wrong?, September 2, 2009. It’s hard to believe now, but not long ago economists were congratulating themselves over the success of their field. Those successes - or so they believed - were both theoretical and practical, leading to a golden era for the profession. Last year, everything came apart.

• Daniel Gross (Slate): Failure caucus, September 1, 2009. Who is rooting for the economy to tank again?

• Ralph Atkins and Norma Cohen: (Financial Times): G20 plans for stimulus exit, September 3, 2009. World leaders have set out

...

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Bill Gross (Pimco - Investment Outlook): Investment potions, August 2009. A 3% nominal GDP “new normal” means lower profit growth, permanently higher unemployment, capped consumer spending growth rates and an increasing involvement of the government sector, which substantially changes the character of the American capitalistic model. There is no investment potion for this new environment other than steady income-producing bond and equity investments in companies with strong balance sheets and high dividend yields, as well as selectively chosen emerging market commitments where nominal GDP growth prospects are tilted upward as opposed to gravitating to new lower norms.

• Economist.com: After the fall, July 27, 2009. The collapse in world trade has stopped, but there is no sign of a

...

This post provides links to a number of thought-provoking articles I have read over the past few days that you may also find of interest.

• Barry Eichengreen and Kevin O’Rourke: A tale of two depressions, June 4, 2009. This is an update of the authors’ 6 April 2009 column comparing today’s global crisis to the Great Depression. World industrial production, trade, and stock markets are diving faster now than during 1929-30. Fortunately, the policy response to date is much better. The update shows that trade and stock markets have shown some improvement without reversing the overall conclusion - today’s crisis is at least as bad as the Great Depression.

• Martin Wolf (Financial Times): Reform of regulation has to start by altering incentives, June 24, 2009. Bubbles and crises cannot be eliminated from capitalism. Yet it is hard to believe

...

This post provides links to a number of interesting articles I have read over the past few days that you may also enjoy.

• Conor Clarke (The Atlantic): An interview with Paul Samuelson, part one, June 17, 2009.

• Mohamed El-Erian (PIMCO): Beware of the “business as usual” mindset, June 2009. We are facing a world of lower growth and accelerated country realignments. Policy experimentation will remain the norm for much longer than most expect. All of this constitutes an inherent part of the world’s bumpy journey to a new normal. It is a reality that also impacts key elements of successful investment management - in particular, asset allocation, manager selection and risk management. It calls for some critical re-tooling of mindsets, institutions and approaches.

• George Soros (Financial Times): The three steps to financial reform, June 16, 2009. While markets are imperfect,

...

This post provides links to some thought-provoking articles I have read over the past few days that you may also find of interest.

• Randall Forsyth (Barron’s): The market’s formula: a square-root rally, June 4, 2009. After nailing a 40% surge since early March, Doug Kass sees “potholes” in the road ahead.

• Donald Luskin (SmartMoney): Good news has arrived for investors, June 5, 2009. Three months ago, within days of the bottom in stocks, aggregate forward earnings started to turn around. It was less than a ringing endorsement at first. It just meant that the decline in earnings was now expected to get less bad - not that earnings would actually grow. But it was a perfect buy signal. And now aggregate forward earnings are on the verge of forecasting that earnings growth is back. It’s a buy signal. And if the pattern holds,

...

Behold the “negative basis trade,” per John Dizard: “You can own a corporate bond, or emerging market sovereign bond, buy default protection on the paper with CDS, and collect interest payments for taking no risk. That’s right: because CDS prices are depressed, relative to the comparable bonds, you can collect money for taking no risk.” Per Riccardo Barbieri of BofA-Merrill Lynch, “as long as [oil] prices rise only moderately from here – say, revisiting the $80 a barrel level by year-end, this would not pose severe risks for the advanced economies, while the emerging ones would be able to tolerate even higher levels, say, $100, in due course.” David Pilling notes that “Vietnamese exports have been fairly resilient. While economies such as Singapore and Taiwan have seen declines of 30 or 40 per cent in shipments, Vietnam was down a modest 3.7 per cent in the first ...