Wall Street was in for a rough start this week as selling pressures had the S&P breaking below the 1,500 level and the Dow declining more than 200 points on Monday. Sparking the selloff was investors’ heightened concerns over Italy’s parliamentary elections, which produced no clear winner. Given that Italy is the eurozone’s third largest economy, the country’s instability has led many to understandably question whether or not the currency bloc will be able to stem its financial crisis [see Visual History Of The S&P 500].
Equities, however, managed to recover from the worst-one day drop in 2013, as Fed Chairman Ben Bernanke signaled that the central bank would continue its stimulus policies, quelling fears that the Fed would wind down or scale back its bond-buying program earlier than expected. Further bolstering investor confidence, U.S. new homes sales logged in its biggest monthly jump in almost two decades. Meanwhile, investors still remain concerned about a bundle of automatic government spending cuts that will take effect March 1 [see 3 Economic Charts Bears Love To Ignore].
Below we outline seven insightful articles circulating around the financial space this week:
- Nature Abhors an Output Gap at the Federal Reserve Bank of Atlanta
As many can attest to, economic forecasting is by no means an exact science. In this article, Executive Vice President and Research Director of the Atlanta Fed Dave Atlig shares his insights on forecasting and modeling GDP growth.
- Will the Sequester Be An Economic Disaster? at The Becker-Posner Blog
While Washington was narrowly able to avoid the fiscal cliff, investors remain quite leery of whether or not policymakers will be able to come together on a crucial issue: budget talks. University of Chicago Economics Professor Gary Becker discusses his views of how the sequester will impact our economy.
- Yen Depreciation and the Scope for Expenditure Switching at Econbrowser
Last week, Japanese Prime Minister Shinzo Abe announced his plans to nominate Haruhiko Kuroda, a proponent of easy monetary policy, as the next governor of the Bank of Japan. In this article, University of Wisconsin Economics Professor Menzie Chinn gives us her insights on the new governer’s policy style and what that could mean for the yen.
- My Theory of Asset Pricing at The Aleph Blog
While financial and economic theories certainly look good on paper, they do not always perfectly translate into the real world. In this article, David Merkel outlines his views on one of the most widely used finanical models: the theory of asset pricing.
- Why I Love Dividend Achievers at Sizemore Insights
When it comes to dividend investing, perhaps one of the most popular strategies is to target stocks of companies that have a long history of raising their dividends. Charles Lewis Sizemore explains his views on the virtues of “dividend achievers” and even lists some of his favorite picks.
- 12 Market Wisdoms from Gerald Loeb at Ivanhoff Capital
Gerald M. Loeb was a founding partner of renowned stock brokerage firm E.F. Hutton & Co., and is regarded as one of the most legendary traders on Wall Street. In this article, Ivan Hoff pays tribute to Gerald Loeb, highlighting 12 noteworthy quotes all investors should pay close attention to.
- The Dollar Index is Waking Up at Dragonfly Capital
While the yen and euro have certainly made headlines in recent weeks, the dollar has been rather quiet, trading in a narrow three-point range over the last six months. Seasoned trader Gregory Harmon, however, points out the greenback’s most recent price actions and gives his views on where he thinks the currency will go next.
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Disclosure: No positions at time of writing.