Good morning, folks. Here are some top reads.
One easy way to determine if it's a bubble.
The Wall Street Journal's Jason Zweig has some sage advice when it comes to asset bubbles. It probably isn't a bubble when everyone worries that it is. The time to get nervous is when folks start making rationalizations about prices that have come untethered from their moorings, as they did during the 1990's tech bubble. Remember when tech CEOs touted "page hits" as a substitute for revenue?
Is income equality really the goal?
President Obama has called income inequality the "defining challenge of our time." The Washington Post's Kathleen Parker wonders if it really is. Not a single American would say, "I'm for income inequality," she says. The opposite -- income equality -- doesn't sell because we all want to be rewarded commensurately for "merit, talent and hard work." What the U.S. has is a growing poverty problem, but "the poor are not poor because Warren Buffett and Bill Gates are rich." So get your terms straight. Stop talking about income inequality and instead focus on "the need for a higher-skilled labor force that pits no American against another and qualifies people for jobs that are actually available: 'Learning for earning.'"
The shadow goes global.
Back in November, I directed your attention to a piece of research on the "shadow funds rate," the rate -- in this case, negative -- that would capture the Fed's unconventional policies. Economist James Hamilton has a post on research on the shadow rates for the ECB and BOE. The ECB's shadow rate turned negative when the bank expanded its longer-term refinancing operations in 2011 and "saw a subsequent drop with ECB President Mario Draghi's July 2012 commitment to do whatever it takes to preserve the euro," Hamilton writes. Uh-oh. That means we're soon going to read about the effect of the Fed's forward guidance on the shadow funds rate.
Bullish on business investment?
Last Friday's employment report for December may have thrown cold water on upbeat economic sentiment, but the outlook for business investment is good, according to the Wall Street Journal's Outlook column. The prices of stocks and real estate are rising, consumers have reduced their debt burdens and Congress is intent on avoiding another government shutdown. That said small business sentiment is still in the dumps, something that should be re-enforced with the release of the NFIB's monthly survey for December tomorrow.
What's in a name?
The recoveries from the 1990-1991 and 2001 recessions were known as "jobless recoveries." Take a look at this graphic. If those two were jobless, what exactly should we call the current recovery?
• Caroline Baum is a Bloomberg View columnist.