The Stash

Apparently there’s a rumor making the rounds in some corners of Wall Street that yesterday’s election results are driving today’s stock market rally—the theory being that the results are a blow to Obama’s agenda, and stopping Obama is good for the market. (I just got a call from a producer at CNBC asking me what I thought about this). The reasons why this theory is utterly ludicrous are almost too numerous to catalogue, but let me give it a quick shot: First, as I write this (around 1:30 pm), the Dow is up about 100 points, or just over 1 percent.

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Is Stanford's John Taylor -- who, according to this measure is the 10th most influential economist in the world -- exhibit A for the corrosion that occurs when politics meets academic economics? In a blog post last week titled "National Accounts Show Stimulus Did Not Fuel GDP Growth," Taylor writes: Along with the news that real GDP growth improved from -0.7 percent in the second quarter to 3.5 percent in the fourth quarter, the Bureau of Economic Analysis (BEA) released detailed National Income and Product Account tables...These tables make it very clear that the $787 billion stimulus packag

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Worth Reading

Dan Gross: Rising U.S. stocks are a sign of growing foreign markets. CBO brief summarizing 28 gov't programs in support of housing. Mark Zandi says small business needs public help. Fed could face pressure from lawmakers to extend housing support. Being sad may be good for you.

In the latest issue of Grant's Interest Rate Observer (not online), the venerable James Grant, with a big assist from his colleague Dan Gertner, makes the case that expectations of a jobless recovery are seriously misplaced, and that the current recovery will end up looking a lot more like the "jobful" recoveries that preceded the 1991 and 2001 recessions/recoveries.

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Looking at the GDP numbers last week, I wondered about possible sources of sustained GDP growth, given that so much of what drove the 3.5% third-quarter figure were one-off boosts like cash-for-clunkers. Well, today's Wall Street Journal has the beginning of an answer: Corporate cash stockpiles. Here's the Journal: In the second quarter, the 500 largest nonfinancial U.S. firms, by total assets, held about $994 billion in cash and short-term investments, or 9.8% of their assets, according a Wall Street Journal analysis of corporate filings.

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Worth Reading

Judging from Jeopardy, economics needs a lot more popularizing. Is America's long-term unemployment problem looking downright European? The 'did Lehman cause the crisis?' debate continues. Roubini says "reckless" U.S. policy will lead to biggest bubble ever. Nate Silver gives 5-to-2 odds that gay marriage in Maine will be affirmed. David Warsh: Carmen Reinhart is the most influential female economist around.

The most intriguing wrinkle in today's news that Ford booked a third-quarter profit was this from the Dow Jones story: The North America unit, which accounts for 42% of Ford's overall vehicle sales, reported pretax operating profit of $357 million compared with a loss of $2.6 billion a year earlier.

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It's a truism that the average investor (i.e. one who doesn't get paid to pick stocks) is better off putting his money into a passive index fund than paying a pro to choose stocks for him.

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When I read just now that Dede Scozzafava, the Republican nominee for that special election in New York's 23rd congressional district, was dropping out, I had the same reaction Nate Silver did: This does not necessarily seal if for the Conservative Party candidate, Doug Hoffman, who basically forced Scozzafava from the race. Here's Silver: Although a majority of Scozzafava's supporters are Republican (about 62 percent, by my reckoning), it is safe to assume that they are mostly rather moderate Republicans, because almost all the conservative Republicans had already gone over to Hoffman.

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Worth Reading

Steve Levitt gets no love from his own school. Top CEOs summoned by the Fed over pay. Krugman and Sumner agree, for once: The GDP numbers need to get a lot higher. Cowen on the foreign-ization of academic economics. Dan Gross: Reports of newspapers' death greatly exaggerated.

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