● Brandes on Value: The Independent Investor
By Charles Brandes
Review via Reading The Markets
Brandes on Value: The Independent Investor (McGraw-Hill) is a paean to the “practicality and universal application of Graham-and-Dodd principles.” Charles H. Brandes became a convert to value investing through a most unlikely encounter. In 1971, three years out of college and a broker/analyst in San Diego, he was taking his turn keeping an eye out for the admittedly rare walk-in brokerage customer “when an elderly, unassuming man walked through the door.” That man was Benjamin Graham—yes, the Benjamin Graham. Graham was spending his winters in La Jolla and wanted to open an account so he could buy a stock he had been tracking for months. Well, one thing led to another, and soon enough Brandes was hooked. In 1974, a year that most investors would have considered inauspicious but Graham called “an excellent time to launch a venture of this sort,” Brandes opened his own firm. Forty years later he remains convinced that “the fundamentals of value investing [make] total practical sense for long-term investors.” (p. xiv)
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The Federal Reserve may start raising interest rates next year for the first time in nearly a decade, but the focus at the moment is on deflation risk, or so it seems by way of the market’s softer inflation forecast via a closely followed yield spread in Treasuries. The implied outlook for inflation slumped to a three-year low of 1.82% on Nov. 26, based on the difference for the nominal 10-year yield less its inflation-indexed counterpart. This market-based estimate is down sharply from the recent peak of 2.29% as of this past July 30. It’s unclear how much of the market’s focus on deflation risk is tied to worries about the macro outlook in Europe and Asia vs. the US. This much is clear: if Mr. Market continues to lower his inflation estimate, it’s going to be tougher to argue that the US economy is immune to the macro troubles that are bubbling elsewhere in the world.
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● German Retail Sales Rise Most In 3-1/2 Years | RTT
● EMU Inflation Back To Five-Year Low Amid Oil Price Declines | Euro Insight
● Saudis block OPEC output cut, sending oil price plunging | Reuters
● France Consumer Spending Fall Most In 9 Months As Jobless Hit Record High | RTT
● More signs of life from Eurozone as lower euro kicks in | Fortune

The celebration on the fourth Thursday of November resonates deeply in the American psyche, but the historical source of Thanksgiving’s legacy across the centuries rests on a surprisingly thin slice of documentation. In fact, “the only surviving first-hand account of a celebration in 1621 comes from the pen of Edward Winslow,” historian Robert Tracy McKenzie explains in The First Thanksgiving. This concise missive is short on details, but long on atmosphere — Thanksgiving atmosphere of the Pilgrim persuasion. Have a great holiday! But first, a brief message from the 17th century…
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Personal income and spending posted modest gains in today’s October update from the US Bureau of Economic Analysis (BEA), albeit at monthly rates (+0.2% on both counts) that fell short of the crowd’s expectations. The usual suspects will fuss over the monthly comparisons and try to spin context out of noise with the data, but there’s more than one way to slice and dice the numbers. As an antidote to the standard routine, let’s focus on the annual trend for what is arguably the more relevant data set in today’s report: private-sector wages, which continue to rise at an encouraging and stable rate of roughly 5%.
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Clarity is a virtue when it comes to the business cycle. It’s also unusual. The US is an exception, or at least it has been, according to Scott Sumner, an economist at Bentley University and a prolific blogger on macro matters. “The US has a really weird economy,” he writes. “All our recessions are 100% clear-cut. Either we have a recession or we don’t. Normal countries have borderline recessions. Not us.” But this uncommon trait “is about to end, and very soon we’ll have debatable recessions,” Sumner advises. If he’s right, macro analysis—looking for signs of major shifts in the economic trend in particular—will be a lot tougher.
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● US GDP grows at better-than-expected 3.9% pace in third quarter | LA Times
● UK GDP growth confirmed at 0.7% for Q3 | Marketwatch
● Bank of England will raise rates despite euro gloom, says Mark Carney | Telegraph
● Saudis signal no push for oil cut as market to ‘stabilize itself’ | Reuters
● France Consumer Confidence Posts Unexpected Rise | MNI
● Italy’s consumer confidence continues decline | Marketwatch
● U.S. (Mostly) Wins With Strong Dollar | Bloomberg
● Emg Mkt Portfolio Inflows Rebound in November | IIF

US personal consumption spending for October is projected to rise 0.3% vs. the previous month in tomorrow’s update (Nov. 26), based on The Capital Spectator’s median point forecast for several econometric estimates. The prediction reflects a moderate rebound in growth relative to September’s 0.2% decline.
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US economic growth is on track to decelerate in this year’s fourth quarter, based on The Capital Spectator’s median point forecast for several econometric estimates. Today’s initial GDP estimate for the final three months of 2014 anticipates an increase of 2.1% (real seasonally adjusted rate) — a substantially lower rate vs. the 3.5% pace in the previous quarter, according to the Q3 report published by the Bureau of Economic Analysis (BEA) last month.
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● Violence erupts after Ferguson grand jury announcement | USA Today
● Private consumption spike helps Germany avoid recession in Q3 | Reuters
● Global business confidence slumps to 5-year survey low | Markit
● US Services Sectors Growth Slows To 7-Month Low | Markit
● Italy retail sales post fifth consecutive monthly fall in September | Reuters
● Dallas Fed: Texas Mfg. activity grew at a slower pace in Nov | Dallas News
● Global growth to get $200bn kick from oil price crash | Telegraph