The global equity market has cast a long influence on regional stock markets in recent years. Whether it was a bull market on steroids or the opposite effect, the gravitational pull of a broad-minded definition of the world’s equity market has been a major force in moving narrower slices of stocks. Is the long shadow of equity beta now in the process of transition? It’s a little easier to answer “yes” if we consider year-to-date total returns for the primary equity regions around the world.
Author Archives: James Picerno
A FED HEAD’S SOBERING ANALYSIS OF THE LABOR MARKET
We’ve heard this before but we need to hear it again. Today the message comes from Charles Evans, president of the Chicago Federal Reserve Bank. “A number of labor market issues… lead me to think this accommodation will likely be appropriate for some time,” he said in prepared remarks delivered at a speech in Washington. In other words, the central bank will keep interest rates low for the foreseeable future. The lack of job growth is the main catalyst. How long will the easy money last? “I think six months is a good time period to say I think we’ll have accommodative policy like we have today.”
COMBINATION FORECASTS
There is a long history in financial economics of documenting some degree of predictability in asset returns. So why aren’t investors doing a better job of earning a risk premium? Is it because the prediction variables aren’t so useful after all? Or maybe the evidence showing support of earning higher risk premiums requires looking at longer periods than is the norm. Another possibility is that investors overall are incapable of mustering the emotional discipline required for exploiting forecasting opportunities.
A DEEPER SHADE OF RED FROM THE CBO
It’s all about deficits these days. The challenge is figuring out what it all means for the markets, the economy, the man on the street and for politics in Washington. What’s crystal clear at the moment is that there’s a bull market in red ink. That’s hardly a surprise, although the debt estimates continue to creep higher. That latest example comes from the Congressional Budget Office, which published a new analysis on Friday of President Obama’s budget outlook. The CBO concludes that the projected deficit for the decade ahead will be $1.2 trillion more than the White House predicts.
IS A NEW ERA DAWNING FOR CHINA’S CURRENCY POLICY?
Is China’s undervalued currency set to rise? That depends on how you interpret yesterday’s comments from the governor of China’s central bank.
FAMA, MARKET EFFICIENCY, AND THE LATEST RECAP
Debate about market efficiency is forever. That includes the ocassional commentary from the man who started it all, or at least played a pivotal role in bringing the idea to the financial fore, starting in the 1960s. What’s it all about? You could spend the better part of a year reviewing the academic literature, and the remainder of the decade catching up on the various threads of discussion–pro, con and everything in between. For the short, short, short recap, a line from Peter Bernstein’s classic Capital Ideas
INCLEMENT WEATHER FOR JOBS
It’s the weather, they say. The loss of 36,000 jobs in last month’s nonfarm payroll count may have been a victim of the snow, the Labor Department advises with this morning’s release of the February employment report. The unemployment rate, at least, was unchanged last month, albeit at a high 9.7%.
THE CHINA SYNDROME
Big deficits and rising mountains of public debt. Is it a nightmare? No, it’s the fiscal profile du jour of these United States. Or is it both? In any case, assuming Congress keeps current laws and policies intact, the federal budget deficit, as a share of the economy, is on track for fiscal 2010 to be the second highest since World War Two, the CBO projects.
THE PLOT THICKENS IN THE LABOR MARKET
Today’s weekly update on new jobless claims offers a reprieve on the darker visions conjured on these pages in recent weeks, including here. New filings for unemployment benefits dropped last week to by 29,000 to 469,000. Whew, that was a close one! But the risk for this series that we’ve been discussing lately is still with us, even if the latest report offers some breathing room for thinking positively.
MORE OF THE SAME: A SLOWDOWN IN JOB LOSSES
Two new private-sector reviews of last month’s labor market show that the economy is still shedding jobs. The only good news is that the rate of loss continues to slow. But a loss is still a loss at this late date in the economic cycle, and today’s numbers suggest that Friday’s monthly update on jobs from the government may suffer another round of red ink, albeit in relatively mild form.