Category Archives: Economics in Brief

Signaling Equity Performance Shifts by Size and Style

Mr. Richard Rush is a Vice President at PNC. He has over 24 years of financial services experience including serving as managing director at Wi Trust; divisional director at Alliance Bernstein; portfolio manager and director of research at Fox Asset Management; and national director of institutional consulting at Prudential Securities. Richard currently serves a Investment Advisor at PNC Wealth Management. He is an invited contributor at The Business Thinker, llc.

Leadership does change. Whether it’s in a car race, in a classroom or even in a country — whoever or whatever leads — eventually changes.  That’s history.

In this context, it is easy to understand then, that changes or shifts occur in all things.  By virtue of this certainty, and the ability to exploit that change, does it not warrant some important considerations in investing behaviors as well? For example, the premise that there aresignificant and sustained leadership changes in the stock market’s three primary equity capitalization groups called: Large, Medium and Small Capitalization stocks, is a given. That’s also history.  Each capitalization group has led the market, and each has trailed the market, in sustained fashion but always in random rotation.  Clearly, fertile territory exists within which to exploit this certain but random change. Continue reading Signaling Equity Performance Shifts by Size and Style

GIULIO TREMONTI: In the “Eye” of the Market and of Berlusconi. (a commentary on the Italian financial situation).

Ms. Katerina Kapernarakou is a journalist for the Greek newspaper “Kathimerini”, and a contributor to the BusinessThinker.com covering the international business, economic, and financial issues.

Giulio Tremonti seems to have received multiple attacks, finding himself in “the eye of the storm.” The Finance Minister of Italy has to handle the rising borrowing costs of the country and all the questions that the markets raise in their usual compelling manner; these questions refer to the ability of Italy to respond to its debt and fiscal deficit obligations. At the same time, Tremonti’s relations with Silvio Berlusconi, the Prime Minister, are strained, as the latter accuses him of “lack of teamwork” in his already fragmented government. Also, he has to oversee the promotion of the austerity measures he has prepared in order to prevent the bad scenario about an Italy’s bailout. Although most of the measures have been put off until after the 2013 elections, he may have to implement them hastingly in advance because of the pressures of the market. Moreover, Giulio Tremonti should face another challenge.

Italy’s Finance Minister is considered by the international financial community as the guardian of fiscal discipline in the country and is identified as the shield against Berlusconian populism and extreme expenses. However, he made an error incompatible with his overall political stance, according to which he has strongly affirmed his intention to crack down on tax evasion. Marco Milanese, Tremonti’s former close associate who is investigated on alleged corruption, has testified he had provided Tremonti a luxurious apartment in Rome on 1,000 euros rent per week.

Continue reading GIULIO TREMONTI: In the “Eye” of the Market and of Berlusconi. (a commentary on the Italian financial situation).

August Jobs Report is Discouraging

H. Nejat Seyhun, contributing writer to The BusinessThinker magazine, is the Jerome B. & Eilene M. York Professor of Business Administration and professor of finance, Ross School of Business, University of Michigan. He is an internationally recognized authority on financial issues and Derivatives.

The Bureau of Labor Statistics announced last Friday that on a seasonally adjusted basis, total private employment increased by 154,000 while the overall total nonfarm employment increased by 117,000 in July (expectations were for an increase of 75,000).   Similarly, the overall unemployment rate went down to 9.1% from 9.2%.  Expectations were for no change from June.  Since both figures were better than expected, the stock market increased by about 150 points inreaction prior to the opening bell.

On closer inspection, however, there is a lot not to like in the August report.  First, the civilian non-institutional population increased by 182,000 from June to July, while the overall number of employed actually went down by 38,000.  Since the overall working-age population growth has been about 1.8 million over the past year, the economy on average needs to add about 140,000 new jobs to prevent the unemployment rate from increasing.  The net additional payroll figure of 117,000 increase is certainly not satisfactory from this perspective.

Continue reading August Jobs Report is Discouraging