Weekend Reads for Global Investors: The Missing Recovery
At the recent CFA Institute China Investment Conference held in Shanghai, Goldman Sachs economist Jiming Ha painted a not-so-rosy picture of China’s economic growth outlook. He believes government spending has already become stretched in recent months and is simply not able to keep the economy on the current growth trajectory. The latest data released all indicate that the risk of an economic slowdown is on the rise.
— Larry Cao, CFA (@LarryCaoHK) August 6, 2014
The real headline news for this past week, however, came from Japan. Japanese GDP took a sharp dive in the latest quarter, something we have not seen in a major industrialized country for a while. Although the contraction was mostly caused by the increase in sales tax, it still injected more uncertainty into the outlook for Japan’s economic recovery.
The Bank of Korea was probably not encouraged either by its neighbors’ poor showing, or Korea’s own anemic growth picture, for that matter. On Thursday, it announced a 0.25% cut in its benchmark interest rate.
Stock markets, however, decided to take it in stride. Investors apparently believe in not fighting the central banks, as they all seem ready to step back in again like the Bank of Korea to save the world from another recession.
Investors may want to pause and ask themselves: Is it really wise to pump more money into the stock markets while economic recovery is still “missing”?
While the missing economic recovery is affecting the lifestyle of millions, the passing of comedian Robin Williams was the truly tragic story of the week. The talented actor who brought laughter to so many people was not able to recover from severe depression. We have attached a heart-warming story of his friendship with Christopher Reeve.
Indeed. R.I.P. RT @ArtsMic: R.I.P. pic.twitter.com/GWn9etriDj
— Lauren Foster (@laurenfosternyc) August 11, 2014
Global Markets Reaching New Highs on Poor Economic News
- “China’s July Economic Data Points to Further Softness” (Reuters)
- “Why Japan’s GDP Plunge Isn’t as Bad as It Seems” (Businessweek)
- The Bank of Korea cuts interest rates, and economists’ debt concerns rise. (The Wall Street Journal)
- “Hang Seng Ends at 45 Month High” (Hong Kong Standard)
- “Goldman Sachs: The US Expansion Ain’t Dead. It’s Not Even Old” (Businessweek)
- “We’re About To See Just How Bad Europe’s Failure Really Is” (Business Insider)
- Jim O’Shaughnessy on factor-based research and investing. (What Works on Wall Street)
- “Finding Smart Beta in the Factor Zoo” (Research Affiliates)
- One chart shows just how badly average investor lags — even in cash. (MarketWatch)
- “How to Make 43% Profit in China with No Idea What You Bought” (Bloomberg)
- Last October, Marc Seidner, CFA, shared his views about a weaker-than-expected US recovery with delegates at the CFA Institute Fixed-Income Management conference, and this week he was profiled in Reuters for outperforming Bill Gross’s Pimco Total Return Fund because of his counter-intuitive views. (Reuters)
- “Robin Williams and Christopher Reeve’s Epic Friendship and the Greatest Williams Story Ever Told” (The Daily Beast)
Making and Spending Money
- “The 10 Best-Paying Jobs of 2014” (The Wall Street Journal)
- “Apple iPhone 6 vs Samsung Galaxy Alpha: 2014’s Biggest Smartphone Fight” (Forbes)
- “23 of the Bluest, Clearest Waters on the Planet” (Matador Network)
And Now for Some Truly Weekend Reading
Please note that the content of this site should not be construed as investment advice, nor do the opinions expressed necessarily reflect the views of CFA Institute.
Photo credit: ©iStockphoto.com/temmuzcan