The Independent Market Observer

12/21/12 – Sale of the NYSE Reflects a Changing World

December 21, 2012

I just finished a book on nuclear strategy in the post-Cold War era and have been planning to review it. I will still do so, probably next week, but find myself somewhat overtaken by events, as many of the points the book makes, and that I wanted to highlight, are critical to the just-announced sale of the New York Stock Exchange. Bear with me as I walk through some of them.

Continue reading → Leave a comment

12/20/12 – Goodbye, and Thank You

December 20, 2012

Seeing as the world will be ending tonight, that seems to be the only appropriate headline. I’ve stocked up on champagne this week; if I have to go, I want to go with a nice demi-sec—Veuve Clicquot, to be exact—and my family around me. There’s another couple of bottles in the refrigerator, just in case we have to wait a bit.

On the other hand, if I don’t have to go, I had better get going on the commentary. In this case, I think the markets are, in fact, a good predictor of the future, as they don’t seem to indicate a significant chance of the world ending. Although they were down a bit yesterday, I would expect a bit more of a sell-off, really, if the world were ending.

Continue reading → Leave a comment

12/12/12 – Twilight of the Unions?

December 12, 2012

The primary story today is the imposition of restrictions on unions in Michigan, home of the United Auto Workers and once seen as a mainstay of the union movement. This news hit the front pages of the Wall Street Journal, with “Unions Dealt Blow in UAW’s Home State,” and the New York Times, with “Limits on Unions Pass in Michigan, Once a Mainstay.”

The story is important for the obvious reasons, such as the continuing erosion of worker power, but it is also important for some less obvious ones. Among these is that the erosion of wage bargaining power makes general price inflation less likely. A key driver of the out-of-control inflation in the U.S. during the 1970s was the wage-price spiral. At the time, wages were indexed to increase with prices, largely through union contracts, and the two fed each other in an increasing spiral. Today, as the membership and power of unions erode, wage-price inflation is becoming less of a worry for the economy as a whole.

Continue reading → Leave a comment

12/10/12 – Consumers Start to Get Worried

December 10, 2012

I have written before about the disconnect between consumers, who have been spending as if the fiscal cliff didn’t exist, and business, which has cut back. That disconnect is starting to disappear as consumers become aware of the cliff and what it could mean.

Consumer confidence showed a material drop at the end of last week, due largely to growing public awareness that after-tax incomes will take a hit if the cliff isn’t averted. Other factors included gas prices and the stock market, both of which hit the expectations component. Looking forward, if confidence stays lower, we can expect consumer spending to drop as well—a problem, as it has been a major sustaining element of the recovery. A front-page story in the Wall Street Journal, “Consumer Spending Wobbles,” notes that spending was slower over the summer than previously believed and has continued to weaken into the end of the year.

Continue reading → Leave a comment

12/7/12 – Re-Shoring Gets a High-Profile Win

December 7, 2012

I have been writing about re-shoring for a while—most recently, yesterday. Today, front-page news in the New York Times and Financial Times, and front-business-page news in the Wall Street Journal, supports that theme in a big way. Apple has decided to start moving production of Macs back to the U.S.

The company plans to invest about $100 million to start manufacturing Macs here, beyond the assembly work it already does. Tim Cook, the CEO, explicitly says that he plans to work with partners to manufacture the full range of components in the computers.

Continue reading → Leave a comment

12/4/12 - SEC Gets Serious on Chinese Company Fraud

December 4, 2012

I wrote in the other post today about the fiscal cliff, which is one front-page story. The other is something that would not normally be considered front-page news—corporate audit policy. What makes this important are the systemic, as well as the geopolitical, implications.

The underlying issue is a conflict between U.S. and Chinese law. U.S. law requires foreign public accounting firms to provide the SEC with the paperwork involving U.S.-traded companies. Chinese law prohibits this.

Continue reading → Leave a comment

11/28/12 - A Lot More Good Than Bad

November 28, 2012

Kind of an interesting day, with some good news in the U.S. and a mix of good and bad about equally balanced in Europe. Let’s take one at a time.

The U.S. economy: Housing continues to perform strongly, with house prices up for six months in a row by an average of 3 percent over the past year. Even the worst-hit cities, such as Las Vegas, Phoenix, and even Detroit, have shown price gains. The continued strength in housing hit the front page of the Financial Times (FT) and A3 in the Wall Street Journal (WSJ), and it is a key part of the front-page New York Times (NYT) article, “California Finds Economic Gloom Starting to Lift.” California is often a leading indicator of the rest of the country, so this is particularly good news.

Continue reading → Leave a comment

11/27/12 – Edging Closer to the Cliff

November 27, 2012

The fiscal cliff debate has shifted to some interesting ground. After a good start, with both sides sitting down and announcing that a deal was doable, there has been little visible action between the parties. There has, however, been quite a bit of activity within each party.

Continue reading → Leave a comment

11/21/12 – The Financial World Is a Mess

November 21, 2012

That’s the only conclusion I can draw from today’s headlines.

First, let’s look at the New York Times (NYT). “Insider Inquiry Inching Closer to a Billionaire” discusses the implication of Steve Cohen, one of the rock stars of the hedge fund and investing world, in insider trading. “Hewlett’s Loss: A Folly Unfolds, By the Numbers” is about Hewlett-Packard’s write-off of nearly $9 billion of the $11 billion purchase price of a company that was, apparently, an accounting fraud.

Continue reading → Leave a comment

11/19/12 – The Life and Death of Great American Junk Food

November 19, 2012

Continue reading → Leave a comment

Subscribe via Email

New call-to-action
Crash-Test Investing

Hot Topics



New Call-to-action

Conversations

Archives

see all

Subscribe


Disclosure

The information on this website is intended for informational/educational purposes only and should not be construed as investment advice, a solicitation, or a recommendation to buy or sell any security or investment product. Please contact your financial professional for more information specific to your situation.

Certain sections of this commentary contain forward-looking statements that are based on our reasonable expectations, estimates, projections, and assumptions. Forward-looking statements are not guarantees of future performance and involve certain risks and uncertainties, which are difficult to predict. Past performance is not indicative of future results. Diversification does not assure a profit or protect against loss in declining markets.

The S&P 500 Index is a broad-based measurement of changes in stock market conditions based on the average performance of 500 widely held common stocks. All indices are unmanaged and investors cannot invest directly in an index.

The MSCI EAFE (Europe, Australia, Far East) Index is a free float‐adjusted market capitalization index that is designed to measure the equity market performance of developed markets, excluding the U.S. and Canada. The MSCI EAFE Index consists of 21 developed market country indices.

One basis point (bp) is equal to 1/100th of 1 percent, or 0.01 percent.

The VIX (CBOE Volatility Index) measures the market’s expectation of 30-day volatility across a wide range of S&P 500 options.

The forward price-to-earnings (P/E) ratio divides the current share price of the index by its estimated future earnings.

Third-party links are provided to you as a courtesy. We make no representation as to the completeness or accuracy of information provided on these websites. Information on such sites, including third-party links contained within, should not be construed as an endorsement or adoption by Commonwealth of any kind. You should consult with a financial advisor regarding your specific situation.

Member FINRASIPC

Please review our Terms of Use

Commonwealth Financial Network®