Wall Street Journal (June 15)
The yield on 10-year German bunds turned negative, a new low. “This is good for governments that want to finance spending on the cheap, but it’s not so good for the private risk-taking that drives economic growth. Negative interest rates reflect a lack of confidence in options for private investment. They also discourage savings that can be invested in profitable ventures. A negative 10-year bond is less a sign of monetary wizardry than of economic policy failure.”
Tags: Bunds, Confidence, Finance, Germany, Governments, Growth, Investment, Negative interest, Options, Risk-taking, Savings, Spending, Yield
Wall Street Journal (February 5)
“The January jobs report wasn’t as bad as the markets seemed to take it… But then it wasn’t stellar either.” New jobs didn’t rise as much as expected, but there were wage gains and the labor participation rate rose as well. “We’ll hope for the best,” though the “overriding problem continues to be a lack of business confidence and investment.” This “leads to slower growth, which gives the U.S. economy a lower margin for absorbing growth shocks from around the world.”
Tags: Confidence, Growth, Investment, Jobs report, Labor participation, Markets, Shocks, U.S., Wage gains
Bloomberg (November 1)
“China should dethrone its GDP target.” While many expect the Government to lower its GDP target to around 6.5% in the coming five-year plan, it would be better to scrap the target altogether. “The government should do all it can to promote rapid sustainable growth— but now that China is a semicapitalist economy, what that number turns out to be is beyond official control.” Suggesting otherwise, ultimately undercuts Government’s authority with wasteful local investment and data fudging. “Scrapping the GDP target outright would be best.”
Tags: Authority, China, Data fudging, Economy, GDP, Government, Growth, Investment, Official control, Semicapitalist, Target, Waste
Wall Street Journal (October 7)
“Nine and a half of every 10 of the world’s consumers resides somewhere other than America, so arrangements like the TPP that break down obstacles to trade and investment are crucial to prosperity at home. The question is whether this TPP is the best the U.S. can do.”
Tags: Consumers, Investment, Obstacles, Prosperity, TPP, Trade, U.S.
The Economist (September 26)
“With China’s “decades-old investment boom fast dwindling, it needs consumption to kick in as a new driver of growth.” Fortunately, rebalancing is progressing with retail sales increasing “by 10.5% in real terms this year, well ahead of economic growth.” Amid industrial downturn, “China’s consumer boom is real. But do not count on it to lift the global economy.” This great consumer rebalancing is even less likely to benefit “commodity-exporting countries whose fortunes have hinged on China.”
Tags: China, Commodities, Consumption, Growth, Industrial downturn, Investment, Rebalancing, Retail sales
Institutional Investor (August 27)
Gold is losing “its luster as an asset class.” Long considered a “hedge against inflation, currency volatility and geopolitical turmoil,” many experts are now questioning gold’s status as a legitimate investment. “Gold has failed to benefit from global economic and political turbulence recently…. Given that gold offers investors no yield, if it doesn’t rise in value during episodes like these, investors don’t have many reasons to hold it.”
Tags: Asset class, Currency volatility, Geopolitical turmoil, Gold, Hedge, Inflation, Investment, Investors, Turbulence, Value, Yield
Financial Times (July 27)
“Ending the tyranny of quarterly earnings is an idea that is on the march. The case for reforming shareholder capitalism is strong.” An “investment drought” is resulting from the focus on short-termism. “With healthy profits and a near zero cost of capital, now ought to be the time to lay down plans for the future. Today’s investments yield tomorrow’s dividends. But listed companies are almost uniformly opting for dividends today.” In the U.S., leading listed companies are, on average, investing only one dollar for every $8-$9 they return to shareholders.
Tags: Cost of capital, Drought, Future. Dividends, Investment, Profits, Quarterly earnings, Shareholder capitalism, Shareholders, Short-termism, U.S.
Institutional Investor (May 5)
“The long-lasting oil price slump is reverberating through macroeconomic data points and this earnings season.” Oil and gas exploration companies are getting hammered. And “the impact of lower investment and employment in the energy sector was also reflected in disappointing first-quarter U.S. GDP data.”
Tags: Earnings, Employment, Energy, Exploration, GDP, Investment, Macroeconomic, Oil price, Reverberating, Slump, U.S.
Washington Post (April 8)
A recent study from the International Monetary Fund (IMF) “confirms that the investment bust is a global phenomenon. It’s not just the United States but also Europe, Japan and most advanced countries. As important, the main cause of the investment slump is clear-cut: Businesses aren’t expanding because they can already meet most demand with existing capacity.”
Tags: Businesses, Demand, Europe, Existing capacity, Expanding, IMF, Investment, Japan, Slump, U.S.
Washington Post (March 5)
There has been a “great shift in what U.S. corporations have done with their money.” Companies once invested 40% of “every dollar that a corporation either borrowed or realized in net earnings.” This “went into investment in its facilities, research or new hires. Since the ’80s, however, just 10 cents of those dollars have gone to investment…. The money that once went to expansion and new ventures has gone instead into shareholders’ pockets.”
Tags: Corporations, Earnings, Expansion, Facilities, Investment, Research, Shareholders, Shift, U.S.
