The Mess That Greenspan Made - Part 4

Robert Shiller on Stock Market Valuations

After yesterday’s decline and if stock trading today follows what futures are indicating, my guess is that Yale Economist and Nobel laureate Robert Shiller is going to be getting a few more interview requests to talk about the same thing he did yesterday for CNBC.

Not surprisingly, Federal Reserve officials this morning are already running away from the WSJ/Hilsenrath trial balloon of dropping the “considerable time” pledge for the start of interest rate hikes as detailed in Fed Aims to Signal Shift on Low Rates.

Given the difficulties in the rest of the world and how super-sensitive U.S. stocks have become to Fed moves, I’d bet that we won’t see any rate increases in 2015.

Tuesday Morning Links

MUST READS
Fed Aims to Signal Shift on Low Rates – WSJ
Fed could drop ‘considerable time’ pledge – MarketWatch
Shanghai stocks plunge 5.4 percent – Channel News Asia
Merkel condemns Russia ‘interfering’ in Eastern Europe – BBC
Spending slashed in oilpatch shockwave – Financial Post
Crude Rebounds Amid Shale-Oil Spending Curbs – Businessweek
Security Heightened at US Embassies Ahead of CIA Torture Report – Vice News
Fannie Mae, Freddie Mac to offer 3% down-payment mortgages – LA Times
Treasury: This Financial Creature Could Sink the System – Wolf Street
Light-Speed Treasury Trading Governed by Rules Dating to 1998 – Bloomberg
More than 150 arrested in California during police killing protests – Reuters
‘A Universe Beneath Our Feet’: Life In Beijing’s Underground – NPR

MARKETS/INVESTING
Market fall led by sharp drops in China, Greece – AP
VIX Spike Sends Shot Across the Bow – Barron’s
China’s stock mania decouples from economic reality – Telegraph
Jeremy Siegel predicts stock correction in 2015 – CNBC
Treasuries Advance on Refuge Demand as Global Stocks Decline – Bloomberg
Gold strengthens above $1,200/oz as dollar, shares slip – Reuters
Gold Sees Safe-Haven Demand as World Stock Markets Sell Off – Kitco
China Net Gold Import 1,212t Jan – Nov – BullionStar
7 Questions Gold Bears Must Answer – Casey Research
Belgium Central Bank Looking At Repatriating Gold – Kitco

ECONOMY/WORLD/HOUSING/BANKING
Income inequality hurts economic growth – CNN/Money
Economists Don’t Even Know What Prosperity Is – Alhambra Partners
Job Market Growth Near 2-Year Lows, Fed’s Labor Market Index Shows – Zero Hedge
Indian Current-Account Gap Widens to Largest in a Year – Bloomberg
Crisis returns to Greece as PM gambles on bailout endgame – Fortune
U.K. Manufacturing Unexpectedly Posts First Drop Since May – Bloomberg
Housing Bubble Ahead? Some U.S. Markets Might Be Ready to Pop – Main Street
The Fed ignores external developments at its peril – The Hill
What a Reserve Currency Should Look Like – Mises
Fed Updates Ahead of FOMC Meeting – Fed Watch

 

Worse than the Great Depression (in Europe)

From this story at Forbes by Neil Howe (of The Fourth Turning fame) comes the rather surprising chart below showing how the post-financial crisis economic recovery in Europe is trailing the recovery after the Great Depression some eight decades ago.

Here in the U.S., we’re ahead of the 1930s pace (and that chart is interesting as well)  but that has a lot to do with how severe the decline was after the 1929 stock market crash. One often overlooked statistic from that era is that the U.S. economy grew at an average annual rate of 8 percent starting in 1933, another reminder of just how severe the decline was.

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Monday Morning Links

MUST READS
Shale oil: In a bind – Economist
Oil drops $2 to five-year low on oversupply – Reuters
Japan’s recession deeper than initially thought – Japan Times
Ruble’s Rout Is Tale of Failed Threats, Missteps – Bloomberg
Reckless Congress ‘Declares War’ on Russia – Ron Paul Institute
Draghi’s authority drains away as half ECB board joins mutiny – Telegraph
People have lost faith with companies and governments – Washington Post
LA Cops Shoot Man Holding Pocketknife at Protest Site – Vice News
The Police in America Are Becoming Illegitimate – Taibbi, Rolling Stone
The Unavoidable Peril of Financial Sphere Bubble – Prudent Bear
The Chinese Century – Vanity Fair
Peaking Process – Hussman Funds

MARKETS/INVESTING
Markets weighed down by Asia growth concerns – AP
China’s stockmarket: Super-bull on the rampage – Economist
Dow 18,000 beckons, but a bottom in oil prices does not – MarketWatch
Rising Dollar: Good News, Bad News – Alhambra Partners
Bank for International Settlements warns of market fragility despite bullish mood – ET
Even The BIS Is Shocked At How Broken Markets Have Become – Zero Hedge
One Hundred Years of Bond History Means Bears Fated to Lose – Bloomberg
Gold firms as shares fall, steadier dollar caps upside – Reuters
Belgium Investigating To Repatriate All Gold Reserves – BullionStar
Gold recovers from post-jobs beating – MarketWatch

ECONOMY/WORLD/HOUSING/BANKING
Are We Reliving The 1930s? – Forbes
Recovery at Last? – Krugman, NY Times
Two big competing narratives about the job market – Vox
India Set to Outpace China in 2016, Says Goldman – WSJ
China announces record trade surplus of $54B, helped by weak oil price – ET
Delhi’s government just found out what Uber is—then banned it – Quartz
Canadians’ debt at ‘unsustainable’ level to keep pace with home prices – Globe & Mail
Global Asset Prices and the Taper Tantrum Revisited – NY Fed
Keep the monetary pedal pressed to the floor – Financial Times
The Fed’s policy trajectory is tied to global recovery – Sober Look

 
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