Around The Net – Monday Edition, March 16, 2015

  1. SwitzerlandIsrael’s Gilded Age – According to Luxembourg Income Study data, the share of Israel’s population living on less than half the country’s median income — a widely accepted definition of relative poverty — more than doubled, to 20.5 percent from 10.2 percent, between 1992 and 2010. The share of children in poverty almost quadrupled, to 27.4 percent from 7.8 percent. Both numbers are the worst in the advanced world, by a large margin.
  2. Krugman Is Told to Read More, Write Less, by Swedish Riksbanker – Yet inside the bank, there was disagreement over how much attention to pay to the housing market. Lars E. O. Svensson, an old Princeton University colleague of Krugman’s and former Federal Reserve Chairman Ben S. Bernanke, spent years criticizing the bank’s reluctance to cut rates while he was a deputy governor. He quit in protest in 2013.
  3. Germans Tired of Greek Demands Want Country to Exit Euro – Mueller’s sentiment is shared by a majority of Germans. A poll published March 13 by public broadcaster ZDF found 52 percent of his countrymen no longer want Greece to remain in Europe’s common currency, up from 41 percent last month. The shift is due to a view held by 80 percent of Germans that Greece’s government “isn’t behaving seriously toward its European partners.”
  4. Your Mutual Funds (Still) Suck – To apply some figures to this, think of it like this. A balanced 50/50 stock/bond portfolio has generated about 9% compound growth over the last 50 years. The average mutual fund charges about 0.75% and the average advisor charges about 1%. So, take your 8-9% and subtract 1.75%. Then send Uncle Same a check for 20% and then account for the average rate of inflation of 3%. Your real, real return then comes out to about 2.5%. Of course, you can’t control all of this, but you can control big chunks of it. You can cut that 1.75% management fee down tremendously. And you can control the taxes you pay by taking a somewhat long-term view (but, of course, not taking an unrealistic “long-term” view).
  5. Monday: Industrial Production, Empire State Mfg, Homebuilder Confidence – the NY Fed Empire State Manufacturing Survey for March. The consensus is for a reading of 7.0, down from 7.8 last month
  6. The End of “Patient” and Questions for Yellen – FOMC meeting with week, with a subsequent press conference with Fed Chair Janet Yellen.  Remember to clear your calendar for this Wednesday. It is widely expected that the Fed will drop the word “patient” from its statement. Too many FOMC participants want the opportunity to debate a rate hike in June, and thus “patient” needs to go. The Fed will not want this to imply that a rate hike is guaranteed at the June meeting, so look for language emphasizing the data-dependent nature of future policy. This will also be stressed in the press conference.
  7. The Billion Prices Project Thinks Inflation May Have Turned a Sharp Corner – The Billion Prices Project, which scrapes the Internet daily to capture changing prices online and has often foreshadowed subsequent changes in official price indexes, shows a sharp turn upward in measures of inflation, albeit from a low starting point.
  8. This is why the euro is collapsing – Robert Frost can help us here. Two monetary policies have diverged in, well, not a wood, and Europe has finally taken the path well traveled by. Specifically, to boost Europe’s extraordinary weak economy, the European Central Bank is buying bonds with newly-printed money, aka quantitative easing, while the Federal Reserve is far enough along that it’s getting ready to raise rates.
  9. China signals fresh moves for economy – Policies unveiled at the annual session of China’s legislature this month called for maintaining a moderately high rate of growth–7%–and outlined further deficit spending to support the goal. Wrapping up the 11-day session at a news conference on Sunday, Premier Li Keqiang said that while the economy faced downward pressure, the government has room to step in and has “more tools in our toolbox” should growth flag and affect employment.
  10. Why investors love Europe and don’t think it’s a crowded trade – Has that leave-America-for-Europe trade become too crowded? No, “ Go with the flow,” said a team of Barclays analysts led by Dennis Jose in a recent note. The shift of “funds from the U.S. to Europe is not at an extreme and could have further to go,” the note said.
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