China has gained massive market share in manufacturing over the last 15 years. Cheap labor and a managed currency helped China become the world’s go-to factory. But as the FT reports, China has now lost its edge in labor. Wages in China are now higher than they are in Brazil, Argentina, and Mexico. What happens to the low-cost producer when it loses its edge on cost? China could either try to regain competitiveness by devaluing the yuan (a bad choice) or attempt to move up the value chain (a better choice). Whichever direction the country takes, the global economic landscape is likely to … [Read more...]
Taxes Undermine, Exploit and Punish the Productive
Cato Institute's Dan Mitchell details the results of a European Policy Information Center study on how non-income based taxes, like consumption taxes and payroll taxes, affect high income earners. He begins: Back in 2014, I shared some data from the Tax Foundation that measured the degree to which various developed nations punished high-income earners. This measure of relative “progressivity” focused on personal income taxes. And that’s important because that levy often is the most onerous for highly productive residents of a nation. But there are other taxes that also create a gap … [Read more...]
How Much Surprise are You Looking for in Retirement?
Your answer to this question is probably not a whole lot, at least in terms of your investment portfolio. Some surprises may be great, like if you've saved more than you needed, but you could also be devastated by not planning for things like medical expenses. In The Wall Street Journal Glenn Ruffenach writes that retirees often find themselves in surprising situations, whether for better or worse. The surprises ran the gamut, from the wonderful to the devastating. Many readers told us they were surprised that their savings are holding up just fine, although several said that household … [Read more...]
What is Gold Saying about the Market Now?
After selling-off as interest rates spiked following the election, gold has made something of a comeback in 2017. Gold is up over 9% YTD compared to about a 6% gain in the S&P 500. The rally in gold seems at odds with the prevailing sentiment in the stock market. Stock market investors are bullish. The Dow has been up for ten consecutive days. Gold and stocks don't often rise in tandem like they have over the last two months. Is gold trying to tell us something? Is calamity on the horizon? Are rising gold prices a signal that goods inflation is about the rear its ugly head? Is the … [Read more...]
Do Farmers Fear a New Surge of Foreign Organics?
Just exactly where does the flour for that organic bread you've been making your sandwiches with come from? And are the standards there the same as they are in the United States? I've written before that even USDA organic standards are pretty low for anyone looking for the healthiest food. Now American organic farmers are facing a wave of competition from places like Turkey and Ukraine, from which so-called organic grains are pouring in to meet American demand. Jacob Bunge writes in The Wall Street Journal that American farmers are calling the looser standards on overseas organics … [Read more...]
Is Nascar’s Stunning Decline Now Irreversible?: Part II
Yesterday I wrote about the decline of Nascar: Lot's to think about in terms of why there has been such a huge decline in Nascar's ratings as we enter Daytona 500 weekend. Reporters at The Wall Street Journal analyze Nascar's decline. Nascar threw a bash at Kansas Speedway in October to thank Sprint Corp. for being stock-car racing’s top sponsor for 13 years. More than 800 Sprint employees received hot dogs, burgers and seats to a nail-biting race. One thing was missing: a new sponsor. Despite knowing for two years that Sprint was leaving, Nascar didn’t announce a replacement until … [Read more...]
The Stunning Collapse of the Economy in China’s Liaoning Province
Analysts who have followed China closely over the years have always had a difficult time believing the official numbers that come out of the country. To many, China's growth always seemed too smooth and too close to government targets to be believable. But there was never hard evidence that the data was being manipulated. Now there is. The FT reports that growth in Liaoning Province shrank 23% last year partly as a result of officials' attempts to undo the effects of previous over-reporting. Economic output in China’s northeastern industrial province of Liaoning shrank by 23 per cent in … [Read more...]
New Jobs and Growth in Not-so-Isolated Gulf City
The explosion of new oil and gas being produced in America's shale basins is unleashing growth and expansion in cities from Pennsylvania to the Permian Basin of Texas and beyond. Along the Gulf of Mexico, oil towns are growing and connecting as jobs and industry find their way to the coast. ExxonMobil's Energy Factor details the changes happening in Baytown, Texas. The small Gulf Coast city, however, is very much connected and not just to nearby Houston. Baytown boasts a thriving petrochemical and manufacturing hub that is linked to a larger set of communities dotting the Gulf Coast. It’s an … [Read more...]
Is Nascar’s Stunning Decline Now Irreversible?
Lot's to think about in terms of why there has been such a huge decline in Nascar's ratings as we enter Daytona 500 weekend. Reporters at The Wall Street Journal analyze Nascar's decline. Nascar threw a bash at Kansas Speedway in October to thank Sprint Corp. for being stock-car racing’s top sponsor for 13 years. More than 800 Sprint employees received hot dogs, burgers and seats to a nail-biting race. One thing was missing: a new sponsor. Despite knowing for two years that Sprint was leaving, Nascar didn’t announce a replacement until December, when it said energy-drink maker Monster … [Read more...]
You Don’t Want to Ignore the Risk of a Euro Collapse
The melt-up in U.S. stock prices in February has been nothing short of spectacular. Of the 14 trading days this month, stocks have increased on twelve. The average increase in the S&P 500 on up-days in February has been 0.33%. A third of a percent may not sound like a big number, but if you compound that out over just 60 trading days, you are looking at a return of more than 20%. For novice investors, the relentless rise in stock prices may have led some to believe there is little risk in the market today. That would of course, be a mistake. Because while U.S. shares show few signs … [Read more...]
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