Retail “Challenges”

The news whacked Wall Street and set off a slide of 1.4%.  WalMart, the biggest retailer, reported slow growth and earnings below expectations for the second quarter.  “The retail environment remains challenging in the U.S. and our international markets, as customers are cautious in their spending,” according to Chief Financial Officer Charles Holley.  Should we be worried about it?

Probably not.  While a turnaround consumer spending would be the quickest and easiest way to goose the economy and put people back to work, it shouldn’t come at the expense of fundamentals such as repairing household finances.  A little caution now could make for a stronger economy in the long run – and that picture is continuing to look a bit brighter.

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Fundamentalism

Another cycle of violence between angry mobs representing the majority religion flares up in another nation.  What could be truly “new” in this news?  This week it was in Sri Lanka, but there was a difference.  The mob were Buddhists and their victims were the Moslem minority at prayer in a mosque.  It seems to be a spillover from the much more violent confrontations in Myanmar where hundreds have been killed at the hands of “Radical Buddhists” who destroyed the homes of over 400 Moslem families.  Has the world gone completely mad?

The short answer is yes, the whole world is going mad.  But the apparent rise of violent Buddhist radicals and fundamentalists has to be seen in a larger context of the rise of fundamentalism generally.  There is a growing backlash against pluralism, tolerance, and globalism itself.  Groups everywhere are being pitted against each other in a desperate bid to preserve the old ways and forge a sense of social cohesiveness.  That includes the USofA – and indeed frames the recent legislative battles in Texas and North Carolina in a way that makes a twisted sense of the whole mess.  And it doesn’t seem likely to end soon.

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Chair(wo)man of the Fed

Who will succeed Ben Bernanke as Chairman of the Federal Reserve?  It’s come down to two people as far as anyone can tell, Larry Summers and Janet Yellen.  Or, sometimes more accurately, Larry Summers and not Larry Summers.   This is a terrible shame because no person has done more to earn the post than Yellen.

Yet Summers seems to remain Obama’s choice for the job despite growing opposition.   On the other side, support is growing in the popular press for Yellen as an opportunity to break the glass ceiling for women.  It’s heating up as a battle that Obama may avoid by picking a third candidate that no one is concentrating on now, but the loss would be terrible if Yellen doesn’t get the nod.  Here’s why.

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What is Employment?

There’s been a lot of good economic news lately, the second year in a row that July uncharacteristically surged ahead.   The “ISM Index” poll of manufacturers looked more positive than it has since 2008, even with a strong US Dollar.  Initial claims for unemployment fell to 326k last week, another low since 2008.  US GDP grew at 1.7% in 2Q13, not exactly great news but far better than expected (and accompanied upward revisions to previous quarters).  The ADP employment report showed a net gain of 200k jobs, the rosiest figure of them all.  Only 82k of those came from small businesses, with large companies gaining a new high of 60k jobs added – meaning that for the first time since 2008 big companies are in a hiring mood.

By the time you read this, the official Bureau of Labor Statistics (BLS) employment report for July should have come out, and it should be roughly in line with the more smooth ADP figure.  Now that we are really turning a corner, as Barataria expected in 2013, it’s time to take an in-depth look at what “employment” means and why there’s still so very far to go.

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Convergence

The big story of the last 20 years has been a tale of two worlds coming together.  While the developed world experienced a decade of growth in the 1990s followed by stagnation and decline in the 2000s, the developing world saw nothing but growth.  The two phenomena are related in the tremendous expansion of credit and general money supply over this time, and are now starting to come together.   The developing world is feeling the pinch the same as the developed world.

This story first appeared in Barataria back in September 2012, but it’s now quite fashionable to talk of the end of the great boom in “Emerging Markets” (EM).  They have, simply, started to either mature or fall back.  And investors are trying to find the next wave of fantastic growth stories to invest in.

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