Whew, what a week!

Whew, what a week!

Whew, what a week!

What a week. Janet Yellin keeps up with the plan to take away the punch bowl. Some negative U.S. economic data comes in. The bond market loses its collective mind and throws another “taper tantrum. This week bond markets suffered a flash crash when US 10-year treasury yields dropped from a high of 2.17 per cent to a low of 1.86 per cent in just over an hour in the wake of the release of some negative economic news. Simply amazing. As Ron Burgundy put it, “…well, that escalated quickly.

Yields did recover by the end of the mid-week session. One likes to think it’s a GOOD thing that the Fed is going ahead with the plan to end quantitative easing—markets could start functioning again as they are supposed to, that is, reacting to real events, not just Fed decisions. Of course, we’ll see next week whether QE really is winding down. One report points out that, “St. Louis Fed President James Bullard said the central bank should consider delaying the end of its bond purchase program.” So next week all eyes will be on Yellin. Until then, let’s go into the weekend considering some of the good news from the week that was…

- According to CBC Marketwatch, “Initial claims for jobless benefits dropped to the lowest weekly tally in more than 14 years, showing that employers are laying off very few workers, a good sign for the labor market, according to government data released Thursday.” The number of people who applied for U.S. jobless benefits tumbled by 23,000 to 264,000, the lowest level since April 2000.

- Researchers say they are a decade away from a “car-sized” fusion energy generator. So maybe we can leave the bulk of the hydrocarbons left in the ground. Which, interestingly enough, was something former Bank of Canada governor and current UK central banker, Marc Carney said this week.  

Some overlooked positive news from Canada…

According to GE Capital, mid-sized Canadian companies are outperforming.

CIBC finds that Canadians, in contrast to assumptions about over-indebtedness, are actually paying down mortgages faster than thought

A couple more random notes:

For those worried about the current direction of markets, Russell Investments offers up some defensive strategies…  

Germany recently announced one heck of a smart economic plan: The country is going to offer free university education not just to its own population but to anyone looking for a post-secondary education. For North Americans suffering insane levels of tuition and textbook fees this is great news. For Germany this makes perfect sense. The country’s population is aging and shrinking. Some towns are dwindling in population. Sixty years of post-war infrastructure is set to be abandoned in some parts of the country. Why not let those who want to use what was built come in? Foreign students will bring money and demand to areas suffering demographic deflation. The country will be stocked with smart, university-educated people. In a world now over-built in terms of infrastructure (in some sectors) this is smart. This is how to manage the general economic deflation in an aging West. Hopefully North America won’t be too slow to react in a similar manner.

Story here and here.