WSJ: Real Interest Rates Explained

By SIMON CONSTABLE

There are interest rates. Then there are "real" interest rates.Looking at real rates can help you determine how much your purchasing power may grow, says Mihir Worah, head of the real-return portfolio management team at Pacific Investment Management Co., or Pimco.

Many of the savviest investors suggest paying closer attention to the latter. To determine the real rate, you need to start with the rate quoted for holdings in bank accounts, bonds and the like—it is known as the nominal rate—and then adjust it for inflation. Read original here.

Barrons: Rice Prices Getting Set to Pop

By SIMON CONSTABLE

Bad news: That cheap bowl of rice you were counting on to stretch your paycheck may soon get pricey. Good news: You'll be able to profit off the coming move, although you'll need to be nimble.

It's happening because Western Hemisphere farmers are cultivating less rice while inventories are set to plummet. "Stocks are running low now, and rice prices do not go down when acreage goes down," writes Milo Hamilton, in a recent edition of his newsletter, The Firstgrain Rice Market Strategist. "Never [has that happened] in any year that we have traded rice, which is for over 30 years."

In short, prices are going higher. See original story here.

Rice Paddy

Photo by Joel Vodell on Unsplash

Reynolds Center: The many paths for finding a job in business journalism

By Meena Thiruvengadam 

As if being at the center of the biggest story in recent years isn’t enough, business journalists also tend to earn more than the average reporter. The hours may not always be better, but the jobs are there. And there are lots of ways to get them.

Wall Street Journal reporter Simon Constable, host of the Journal’s afternoon News Hub, got his start in business journalism with an internship. After years of working in the business sector, Constable attended New York University and earned a master’s degree in business and economics reporting. He then signed up for an internship with TheStreet.com, which quickly led to a full-time job. Read more here.

Barrons: Why Fertilizer Prices Remain Stubbornly High

By SIMON CONSTABLE

Here's a puzzle: How is it that fertilizer prices are so stubbornly high while the production cost has plunged?

The answer lies in the Corn Belt—and it will boost fertilizer equities for the foreseeable future.

Anhydrous ammonia, a nitrogen-based plant food, now sells for nearly $700 a ton. That's off from the highs of $800 late last year. But the biggest variable cost in making fertilizer, natural gas, has seen its price collapse. It's off over half from $4.50 a million British thermal units in mid-2011. Natural gas for May delivery closed at $1.927 on the New York Mercantile Exchange Friday, down 2.7% for the week. See the original post here.

Photo by Etienne Girardet on Unsplash

Constable: Stimulus Not the Solution to Jobs Bust

FRIDAY’S DISAPPOINTING JOBS NUMBERS SHOULD HAVE THE WHITE HOUSE AND THE CONGRESSIONAL DEMOCRATS PANICKED. THE PROBLEM IS THAT OUR LEADERS ARE LIKELY TO DO EXACTLY THE WRONG THING TO FIX THINGS. THEY’LL PROBABLY WANT TO SPEND MORE GOVERNMENT MONEY.

THE PROBLEM EVERYONE SEES IS THAT THE 120,000 JOBS CREATED IN THE U.S. DURING MARCH IS JUST WOEFULLY INADEQUATE TO KEEP UP WITH POPULATION GROWTH, LET ALONE MAKE A DENT IN THE BACKLOG OF THE MILLIONS OF LONG TERM UNEMPLOYED.

THE SOLUTION THE GOVERNMENT OPTED FOR IN THE DEPTHS OF THE FINANCIAL CRISIS WAS MASSIVE GOVERNMENT STIMULUS AND BAILOUTS OF NEAR-DEAD COMPANIES. IT WAS AT A COST OF HUNDREDS OF BILLIONS OF DOLLARS.

BUT NEW RESEARCH SHOWS THAT THIS SORT OF MASS SPENDING DOES LITTLE TO HELP.

A PAPER PUBLISHED IN THIS MONTH FROM THE MERCATUS CENTER AT GEORGE MASON UNIVERSITY STATES:  “…the data exhibit no evidence of stimulus spending having any effect on economic growth.’

IN FACT THE AUTHORS GO EVEN FURTHER, THEY SAY THE EFFECT OF STIMULUS LOOKING OVER A VARIETY OF TIME HORIZONS IS “ALWAYS STATISTICALLY ZERO.”

OR PUT ANOTHER WAY, THAT’S HUNDREDS OF BILLIONS OF DOLLARS WASTED.

I HOPE SENSE PREVAILS ENOUGH IN CONGRESS TO KEEP THE CHECK BOOK CLOSED, BUT I FEAR NOT.

I’M SIMON CONSTABLE

WSJ: Why Your Mutual Funds Won't Beat the Market

By SIMON CONSTABLE

Good news: The Standard & Poor's 500-stock index is up 12.6% (including dividends) for the year, one of the best first quarters in a long, long time. Many stock analysts are projecting a banner year for stocks, as investors pile into the market to counter today's low interest rates and fears that bond prices may be soon tumbling.

 Bad news: Some of the biggest funds just aren't keeping up. The $59 billion large-cap American Funds Investment Co. of America Fund (AIVSX) was up 11% for the quarter. The story's similar for the $54 billion American Funds Washington Mutual (AWSHX), up just 7.7%, and the $37 billion Vanguard Windsor II fund (VWNFX), up 12.4%. See original post here.

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WSJ: What Short Interest Means to You

By SIMON CONSTABLE

Short sellers do things differently. Unlike most investors, they want to see the securities they've selected decline in value.

Specifically, they borrow stocks or bonds and sell them, hoping to buy them back later at a lower price for profit. The short-seller maxim is "sell high, buy low." See the original here.

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