The OECD released a new study on trends in pharmaceutical spending in the developed economies, telling us what we already knew: expenditures on drugs have taken wing.
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MARKET LOGIC
Deciphering the collective mind of the bond market is one of the more challenging tasks in the 21st century, right up there with trying to cure cancer and deciding if the bull-market run in Google’s stock is the Internet bubble reincarnated.
RESEARCH ROOM UPDATE
John Hussman, manager of the Hussman Strategic Growth Fund, weighs the odds of what some say is an approaching recession. He lays out his case in a new essay published earlier this week, and now noted in the CS Research Room.
MONETARY PORNOGRAPHY
Among the various definitions of “neutral” found in the Oxford English Dictionary, one informs: “occupying a middle position with regard to two extremes.”
SEWARD’S FOLLY & AMERICA’S BURDEN
In the late-1970s, Alaska’s oil output was on the rise. The ascent was timely, coming in the wake of the Opec-engineered oil crisis of 1973, which announced to the world (and the U.S. in particular) that the days of counting on cheap, accessible supplies were gone, though not necessarily for geological reasons. By 1978, Alaskan crude production exceeded one million barrels per day on average for the first time, Energy Department numbers recount. That was roughly 14% of America’s domestic oil production in 1978. Alaska’s output eventually doubled in absolute terms, hitting slightly more than two million barrels a day in 1988.
THE JOY OF MOMENTUM
The iShares Lehman 7-10 Year Treasury ETF (Amex: IEF) is sitting on a 10.3% total return for the 12 months through today’s close. That’s a healthy performance edge over the 1.9% rise in that stretch for the iShares Lehman 1-3 Year Treasury ETF (Amex: SHY). There’s nothing inherently peculiar about longer-term maturities outperforming shorter terms. Sometimes it happens, sometimes it doesn’t. But the fact that longer-term Treasuries are besting shorter ones is more than a little out of the ordinary after the Federal Reserve has hiked interest rates for nearly a year.
WAITING FOR A SIGN
The value-stock train has had quite a run, but the momentum has to end sometime. As always, the question is when?
ANOTHER BRICK IN THE WALL OF WORRY
The bond market may be wrong, as so many have charged this week regarding the 10-year Treasury Note’s dip to its lowest in more than a year. But this morning’s jobs report for May isn’t making it any easier for skeptics of the recent rally in debt to deliver a knock-out punch to the forces of fixed-income optimism.
DIVORCE ITALIAN STYLE?
The news doesn’t surprise us. Or does it? In any case, a government official from Italy has suggested the formerly unthinkable in the wake of the French and Dutch rejection of the European constitution, namely: leaving the euro.
GAME THEORY
Game on, says Bob Walters, chief economist for Quicken Loans, in reaction to the latest decline in mortgage rates and the related rise in loan inquiries, reports Bankrate.com. Real estate may be a bubble, as many pundits have charged, but if so then it’s also true that ours is a bubble-friendly climate.