Best Of The Web
“What executive isn’t challenged by the daily barrage of conflicting economic reports attempting to clarify the question of the hour: will the global recovery build or lapse into another recession? Indeed, executives around the world are evenly split on the topic. And while the savviest executives and investors know better than to get caught up in the short-term fluctuations of the economy, many others, looking for evidence of longer-term trends, still fixate on movements in the equity markets.
They shouldn’t. The fact is that those markets, well analyzed as they are, don’t predict downturns effectively. Credit markets are a better place to look for signs of impending trouble, in no small part because they have been at the core of most financial crises and recessions for hundreds of years. Parsing the credit markets isn’t easy—there’s no single number remotely like a share price to monitor, and there are many moving parts. But for executives willing to take the time to understand the relationship between the financial and real economies, the credit markets can provide clearer indicators that a recession is on the horizon.
Subscribers to the theory that markets process all information efficiently would argue that equity investors should be in very good shape to recognize early indications of a looming downturn. If that were indeed the case, current market valuations might inspire confidence. Our model of the equity markets suggests that their current levels in Europe and the United States are reasonably consistent with the intrinsic value of equities, given long-term profit trends and current rates of interest and inflation. And since equity markets do a reasonably good job of tracking long-term economic fundamentals,1 investors can expect longer-term returns—dividends and share price appreciation—that are in line with historical real returns, in the range of 6 to 7 percent.”
JJ Editor's Daily Picks
"President Trump’s Iran policy over the weekend was both erratic and masterful. Doves and isolationists, panicked by what they see as the administration’s inexorable drift toward war, rejoiced when Mr. Trump announced that a military strike had..."
"This is the photo that encapsulates the cruelty of the Trump era: a father and daughter lying dead on the banks of the Rio Grande river, her tiny arm draped around his neck, drowned after an attempt to cross onto American soil and seek asylum..."
"Several months ago, a Palestine Liberation Organization body published an official document on the conflict. In its 37 pages, the organization put forth its views, with some readers seeing this as a clear endorsement of the two-state solution..."
"The first season of Big Little Lies was a clever trap. The show took what would have otherwise been an easily satirized narrative about affluent women and complicated it with their trauma; The Week's Lili Loofbourow succinctly called it "a kind..."
"There’s a story we like to tell about American capitalism. Ours is a country that prizes merit, rewards risk and stands apart in its commitment to the collective success of open markets and the free flow of capital. We are a nation of strivers..."
""IN THESE DAYS of anti-tech ire, it’s a popular cocktail hour topic: How much is Facebook making off my data? Last year, I spent a month trying to find out, hawking my personal data on blockchain-based marketplaces. I came away with $0.003. On..."
""At the end of May, TIAA, the financial services and investing giant, rolled out new gender-identity awareness guidelines for its client-facing consultants. The guidance included: “Never assume someone’s gender identity” and “Be aware that a..."
"An old saying goes that people become more conservative as they age. George Will’s new book, “The Conservative Sensibility,” shows that the opposite can be true. This book is not so much a brief for conservatism as it is a learned and lengthy..."
"Imagine if the dishes stopped getting done. Imagine if no one did the laundry, and it piled up, stained and mildewing in hampers and in piles on the floor. Imagine if no one fed the baby, or changed her, and imagine if no one made dinner..."
"In Japanese culture, kintsugi is the labor-intensive method of repairing broken pottery by reattaching pieces using a lacquer mixed with gold. The reconstructed item, glistening with golden “seams,” is in many ways more beautiful than it was..."
"The U.S. is currently experiencing the largest outbreak of measles since 1992. According to the Centers for Disease Control and Prevention, there have been more than 1,000 confirmed cases since January. Scientific research overwhelmingly support..."
"Among those participating was Jason Greenblatt, Washington’s Mideast mediator and one of the architects of the “Peace to Prosperity” workshop taking place here. Aryeh Lightsone, a top aid to US Ambassador to Israel David Friedman, gave a brief..."