Opinion

James Saft

Europe, not election, the driver: James Saft

Nov 7, 2012 20:15 UTC

Nov 7 (Reuters) – Obsess exclusively over the fiscal and
monetary impact of the U.S. election at your peril: the real
news may be coming out of the euro zone.

An election producing a split Congress and a second Barack
Obama term was greeted on Wednesday with a sharp divergence in
financial markets, with stocks falling and Treasuries and the
dollar rallying sharply.

Since most of us in the U.S. have spent nearly every waking
hour in recent weeks being bombarded by news, advertisements,
images, lies, statistics and still more lies it is no wonder
that most analysis of the market is attributing the moves to the
election’s implications.

The news out of Europe, where European Central Bank chief
Mario Draghi was decidedly downbeat and where a key Greek vote
over an austerity plan may not pass, could prove the true
drivers.

To be fair, the election-market links are there. A split
U.S. Congress seems unlikely to reach a growth-friendly grand
bargain on fiscal policy, making it more likely that whatever
half-measures are agreed in the looming lame duck session only
serve to highlight the real economic drag of the spending cuts
and tax rises to come. There is a possibility that a
Republican-controlled House plays hardball, potentially making
the process disorderly as well as dysfunctional.

Europe needs a weak euro: James Saft

Nov 6, 2012 05:00 UTC

Nov 6 (Reuters) – While the world is transfixed by the
outcome of the U.S. elections, the euro zone is busily imploding
economically.

And this time the difficulty isn’t so much being driven by
the troubles in Greece, Spain and elsewhere but is reflecting a
stark underlying weakness which will complicate already thorny
structural problems. Recent data on bank lending – still central
to the European economy – shows an old-fashioned, flat-out
recession deepening, with banks and borrowers both backing away
from credit as quickly as their little legs will carry them.

The situation cries out for action to weaken the euro from
the European Central Bank, which is widely expected to do
exactly nothing at its policy meeting this Thursday. Perhaps the
only good news is that the markets, recognizing the issues, are
trading the value of the euro lower, making some slight
difference in competitiveness and external demand.

Rod, the Yankees and a lesson in sunk costs

Nov 1, 2012 20:55 UTC

By James Saft

(Reuters) – The New York Yankees and their aging and highly paid third baseman Alex Rodriguez illustrate a problem all investors face and few completely conquer: sunk costs.

You too, like the Yankees, probably own a security you paid more for than it is now worth, and you too may well find it perplexingly hard to sell and accept your loss.

Rodriguez, for those of you who don’t follow baseball, is a likely hall of famer whose skills, at least based on the statistical record, have slipped sadly recently. Things came to a head in the baseball playoffs when the Yankees benched Rodriguez, the man they will pay $29 million in 2012.

SAFT ON WEALTH:A-Rod, the Yankees and a lesson in sunk costs

Nov 1, 2012 20:36 UTC

Nov 1 (Reuters) – - The New York Yankees and their aging and
highly paid third baseman Alex Rodriguez illustrate a problem
all investors face and few completely conquer: sunk costs.

You too, like the Yankees, probably own a security you paid
more for than it is now worth, and you too may well find it
perplexingly hard to sell and accept your loss.

Rodriguez, for those of you who don’t follow baseball, is a
likely hall of famer whose skills, at least based on the
statistical record, have slipped sadly recently. Things came to
a head in the baseball playoffs when the Yankees benched
Rodriguez, the man they will pay $29 million in 2012.

Sandy shows liquidity may be over-rated: James Saft

Oct 31, 2012 18:36 UTC

Oct 31 (Reuters) – Maybe liquidity isn’t all it’s cracked up
to be.

Trading in U.S.-traded stocks re-opened on Wednesday after a
rare two-day hiatus, as exchanges struggled to cope with the
aftermath of Hurricane Sandy.

Given the fact that everyone was prevented unexpectedly for
two trading sessions from turning their stocks into cash, much
less into other stocks, trading was amazingly tepid and calm.

Is China making the consumption transition?: James Saft

Oct 30, 2012 12:00 UTC

(James Saft is a Reuters columnist. The opinions expressed are his own)

By James Saft

(Reuters) – Consumption is increasingly driving China’s economy, perhaps marking the country’s much-needed transition to a more sustainable model.

But even if China is moving away, slowly, from its old model based on saving, investing, building and exporting, it is important to realize that the change brings with it new uncertainty, risks and the potential for disappointing growth.

China’s economy grew 7.4 percent in the third quarter, down from 7.6 percent in the preceding three months and marking the seventh consecutive quarterly slowing in growth. Underlying figures, however, gave some cause for optimism, particularly a 14.2 percent rise in September retail sales, a rise of a full point from the month before.

Earnings and revenues can’t diverge forever: James Saft

Oct 25, 2012 21:01 UTC

By James Saft

(Reuters) – Corporate earnings and revenues can’t, as they are doing this earnings season, diverge forever.

Just about halfway through the U.S. third-quarter corporate reporting season and we find that 59 percent of S&P 500 companies have beaten their earnings estimates, down a bit from last quarter but still an upbeat number.

And yet about 60 percent have missed their sales targets, meaning that corporate America is somehow extracting more profit than promised despite bringing less money into the tills than expected.

Bernanke, the election and risk assets: James Saft

Oct 24, 2012 19:48 UTC

By James Saft

(Reuters) – Now we have the pre-election Federal Reserve meeting out of the way, we can go back to worrying about the real issue.

Not who will be president, but who that president will slot in to park in Ben Bernanke’s parking spot when his term as Federal Reserve Chairman runs out in January 2014.

The New York Times this week reported Bernanke telling friends he is unlikely to stand for a third term as Fed chief, opening up the likelihood of a new person in the role in 2014 no matter who is elected president.

Living through de-globalization: James Saft

Oct 23, 2012 04:00 UTC

Oct 23 (Reuters) – What was that you were saying about
globalization being inexorable?

A quick look at a series of under-appreciated recent stories
- a Sino-Japanese territorial spat’s real economic consequences
and a drop in both global trade and cross-border lending – shows
a world becoming less tightly integrated and a lot more
economically unpredictable.

The idea that the world will continue to become more
economically integrated, with an ever more complex global supply
chain and increasingly international corporations and banks,
lies at the heart of most mainstream economic thinking.

Black Monday and the Greenspan put: James Saft

Oct 19, 2012 19:11 UTC

By James Saft

(Reuters) – The big milestone this week is not the 25th anniversary of the Black Monday crash but falls a day later when we mark the far darker advent of the Greenspan put.

The Greenspan put, the now long-established policy of easing and appeasing when markets go cold, arguably created the world in which we live – one of low growth, bubbles and, every once in a while, huge busts.

On Monday, October 19, 1987, the U.S. stock market crashed, along with falls in Asia and Europe, culminating in a 22 percent tumble in the Dow.

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