Ed Yardeni’s research from today discusses the financial “super heroes” who have been either rescuing, or ruining, various economies around the world.

It was a big surprise to me that Sweden has implemented such a successful and widely known formula.  Here is an excerpt from today’s research piece from Mr. Yardeni:

Sweden has a couple of true superheroes, the prime minister and the finance minister. Fredrik Reinfeldt became the country’s prime minister in 2006. The 5/11 Investors.com features an article about his success in managing the Swedish economy. It is titled, “Sweden’s Reputation As A Welfare State Is In Trouble.” Sweden fell into recession in 2008 and 2009, along with most developed economies. But it has pulled strongly out of the decline, posting GDP gains of 6.1% in 2010 and 3.9% last year, when it ranked at the top in Europe’s list of fastest-growing economies. Sweden’s government deficit was eliminated last year!

Reinfeldt took office in October 2006, and by January of 2007, he started cutting taxes. The Reinfeldt government also cut welfare spending–a.k.a. austerity–and began to deregulate the economy. Reinfeldt’s sidekick is his finance minister, Anders Borg, who was featured in an article in the 4/14 Spectator.co.uk. The Financial Times recently declared him the most effective finance minister in Europe.

Now we only need our own “super heroes” to follow this model.

In the video below, Will Smith is being interviewed on French television. It’s a little hard to hear due to the translation, but he talks about how fortunate he is and that he wouldn’t mind paying higher taxes. “God Bless America”.

This morning my partner Marilou posted a Tweet about the aging population in Japan. As a result of this demographic shift, there will not be enough young people to replace the older generation as they move into retirement.  One anectdote from an article today in Bloomberg reports that, for the first time, sales of adult diapers exceeded the sales of baby diapers.

Compared to the Japanese fertility rate for women, which is 1.39, the fertility rate in the United States is 1.93.  So, we are barely replacing ourselves.

This will be a critical factor when our government finally decides to take steps to reign in our deficit, and take a hard look at the long term viability of Social Security.

This morning the Labor Department reported that employers had added 115,000 people to their payrolls in April.  This was the second straight month that hiring actually decreased.  And, it confirms that at best, the economy continues to grow very slowly.

Contrasted with the disappointing employment numbers have been the mostly strong corporate earnings reports that have been released for the past quarter.  The divergence may be attributed to strong balance sheets, overseas growth, and some productivity gains.

Until we have a more pro growth agenda, and a solution to the lackluster housing/construction sector, we expect to see a continuation of muted jobs growth, and a slow growth economy.

This is an interesting interview with James Dyson on the engineering of green products.

On Wednesday, April 25th, Caterpillar reported earnings for their first quarter.  Many analysts focused their conference call questions on growth, or the lack thereof, in China.

CAT’s CEO did acknowledge the longer-term slowdown in China’s rate of growth from 10%-15% to a more sustainable 7%-10% growth rate.  He also allowed that China has done a remarkably good job of taming a very high rate of inflation, and a potential real estate bubble, by raising interest rates, and raising the down payment requirements for individuals buying second or third homes.

Many U.S. companies have a stake in seeing China prosper and grow, but that growth must be managed with an eye toward sustainability, not short term goals.  According to Douglas Oberhelman, the CEO of Caterpillar, China is doing a very commendable job in ensuring this outcome.

As Laura noted last week, the economic data remains mixed.  March durable goods were also a big disappointment today at -4.2%.  There seems to be a large disconnect right now between the data and the earnings being reported.  Out of the 188 companies that have reported so far, 77% have beat the estimates.  The S&P 500 earnings growth rate has increased from 1.0% to 6.3% over the past two weeks as earnings have been reported.  More importantly for investors, 30% of the S&P has increased their dividend during the first four months of 2012.  This is the best dividend showing since 2005.

Both Spain and the UK have now entered recession territory.  This is not surprising given the Eurozone’s effort  to deal with its financial and fiscal crisis.  The US is still growing despite the continued high unemployment.  While sentiment is still negative surrounding US growth prospects, a decent increase in employment could lead to even bigger earnings upside surprises.

Following the good performance of the equity markets in the first quarter of this year, the second quarter has gotten off to a bit of a rocky start. It is causing some portfolio managers to have “deja vu all over again”. In 2010 and 2011 the first quarter equity performance was good, followed by second and third quarters that were volatile on the downside.

Yesterday the economic data was disappointing, and called into question the strength of the recovery once again. Existing home sales fell, jobless claims fell less than expected, and the Philly Fed noted a deceleration in manufacturing in its region.

We continue to watch the data as it comes out to see whether some of the positives we have blogged about recently will be overshadowed by the recent spate of disappointing data.

Spanish bonds yields are back at 5 month highs. The ten year yield crossed 6.0% before falling back to 5.91%.  The video below is of Fidelity’s international bond manager discussing Spain’s fiscal problems.