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Monthly Archives: May 2013

Summer Rentals

Memorial Day weekend kicks off the summer season in sunny destinations across the country as city dwellers and others seek to escape the heat and enjoy some natural beauty and relaxation. But like unwanted guests crowding a cabin or a cottage, a lot of unwelcome events that impact the markets can really ruin a summer vacation. So far, however, the calendar for investors appears…

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Summer Rentals

What’s Broken in Europe?

Last week (May 13 – 17), markets digested reports on gross domestic product (GDP) growth in the Eurozone during the first quarter of 2013 (please see “The Big Picture” for details about the Eurozone’s structure). Overall real GDP in the Eurozone contracted by 0.2% in the first quarter of 2013, following the 0.6% drop in the fourth quarter of 2012. The Eurozone’s economic contraction in the first quarter of 2013 was its sixth consecutive quarter of decline, dating back to the fourth quarter of 2011. Among the larger economies in Europe, only…

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What’s Broken in Europe?

Buyers & Sellers

We devote this commentary each week to assessing the many reasons markets may rise or fall. But at the heart of it, all markets come down to just one thing: buyers and sellers. Taking a look at who is buying and who is selling can tell us something about the durability of the market’s performance and what may lie ahead…

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Buyers & Sellers

Listening to the Leaders

The April Index of Leading Economic Indicators (LEI), due out on Friday, May 17, 2013, caps off a busy week for economic reports in the United States. This week includes reports on…

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Listening to the Leaders

The Rally Is Getting Old, but a New Trend May Be Emerging

Will stocks have a pullback? Eventually sure — but when? This past Friday, May 10, 2013 marked 176 days since a 5%+ pullback in the S&P 500, tying the record for stretches without a pullback in this 50-month-old bull market…

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The Rally Is Getting Old, but a New Trend May Be Emerging

Clearing Up Confusion on Common Queries

In this week’s commentary we attempt to clear up some of the confusion around some of the most common questions we encounter regularly, including:

  1. The Federal Reserve (Fed), its balance sheet, its role in the economy, and its impact on inflation;
  2. The federal budget deficit;
  3. The federal debt outstanding, and the debt-to-GDP ratio; and
  4. The trade deficit and a related topic, the US dollar.

In many ways, the items above are related. But oftentimes, pundits, politicians, newsletter writers, bloggers, Tweeters, and even the “traditional media” will confuse or conflate one or more of these issues, and that’s…

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Clearing Up Confusion on Common Queries

Borrowing for the Future

A recently detected error in a study by Harvard economists Reinhart & Rogoff has garnered much attention in the financial press lately. The study had initially concluded that once a country exceeded a 90% debt-to-gross domestic product (GDP) ratio, the pace of economic growth slowed sharply. The corrected data reveal that growth slows as debt-to-GDP rises, but at a pace not meaningfully different than at other round numbers. The study raised the issue of whether large amounts of debt are really bad. After waging a war on debt for the past several years…

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Borrowing for the Future