Saturday, August 31, 2019
Thursday, August 29, 2019
US hit Iran with secret cyberattack to disrupt oil tanker attacks - Business Insider
US hit Iran with secret cyberattack to disrupt oil tanker attacks - Business Insider
The cyberstrike reportedly came the same day President Donald Trump called off military strikes last minute in retaliation for Iran's downing of a US drone. Trump said the strikes would not have been proportionate to the downing of an unmanned aircraft.
Trump had said a cyberoperation was underway, but the New York Times report on Wednesday expanded on the impact of the attack as well as the Trump administration's motives.
The cyberattack "wiped out a critical database" used by the IRGC — a paramilitary force that operates separately from Iran's conventional military — to plan attacks on oil tankers, according to the report.
Fortune No Longer Favors the Bold In Markets: John Authers - btbirkett@gmail.com - Gmail
Fortune No Longer Favors the Bold In Markets: John Authers - btbirkett@gmail.com - Gmail
Less risk = more return
The most basic building block of modern academic finance is arguably that higher returns are a reward for taking greater risk. That is why stocks in the long run generate greater returns than less riskier investments such as corporate bonds, and why small entrepreneurial companies that strike it big deliver far more for shareholders than regulated utilities.
The problem with this theory is that it does not work. As academics sift through the data for persistent anomalies that can predict which stocks will perform best, the clearest is that lower risk stocks tend to outperform in the long run. There is a relationship between risk and return, in other words, but that relationship runs in exactly the opposite direction to the way that we had all supposed.
Since the financial crisis, there has been growing interest in low- or minimum-volatility strategies known as “Betting Against Beta.” The idea has been turned into indexes that underpin a range of different exchange-traded funds, and it is being applied by plenty of active quant managers.
To an extent, as is often the case with anomalies, the attempt to exploit this one started just as it stopped performing as well as it had in the past. This might be causal; if people think there is easy money to be made, they will pile into low-volatility stocks and thereby reduce the returns to be made. The strategy also had evident appeal in the aftermath of a major market bust. On such occasions, it strongly outperforms the rest of the market. When things are healthier, it tends to lag behind, but not by enough to eliminate its accumulated outperformance. The following chart shows the performance of MSCI’s U.S. minimum volatility index relative to the S&P 500 Index on a total return basis, with the CBOE VIX index of volatility on a separate axis:
As might be expected, low-volatility stocks with the least sensitivity to the broader market have their moment of glory when the market as a whole is in a seizure, as happened in 2000 and 2008. And since the worst of the crisis, the MSCI index has performed in line with the S&P 500, with troughs during times of calm and recoveries during market scares.
...But even if low-vol enjoys its best moments at times of turbulence, there does seem to be something persistent there. That is the finding of a new paper availablehere called “The Volatility Effect Revisited,” by David Blitz, Pim van Vliet and Guido Baltussen of the Dutch group Robeco Asset Management. They found high “beta” stocks – or those that are most sensitive to broader moves in the market and most volatile – did worst, while those that opted for the least variable suffered almost no loss of return. As lower volatility makes life far easier, this suggests that low-volatility stocks have powerful attractions. In this chart, based on data from the Kenneth French data library at Dartmouth University’s Tuck School of Business, we can see that over the last 55 years there has been minimal penalty for holding boring stocks, and quite a severe penalty for holding the more volatile ones:
This is not just a U.S. phenomenon. The authors cite the following chart, based on data from AQR, the U.S.-based fund manager, showing that the strategy of “betting against beta,” or choosing the stocks that are least sensitive to the market. The strategy has made money everywhere for which the data has been tested, and in most countries a low-risk strategy has done better than it has done in the U.S.
...And there is even evidence that the behavior of investment institutions, desperate not to look bad compared to their peers, has also tended to strengthen the low-volatility anomaly over time.
So, it turns out, the traditional approach of buying “widows and orphans” stocks in big, boring companies and holding them forever may have been a great idea after all. Who would have thought?
Wednesday, August 28, 2019
The Reversal Interest Rate
https://scholar.princeton.edu/sites/default/files/markus/files/20p_reversalrate.pdf
The “reversal interest rate” is the rate at which accommodative monetary policy
“reverses” its intended effect and becomes contractionary for the economy.
...we argue in this paper that the
effective lower bond is given by the “reversal interest rate”, the rate at which accommodative
monetary policy “reverses” its effect and becomes contractionary for output. Below the “reversal interest rate”, a decrease in the monetary policy rate depresses rather than stimulates
the economy.
Importantly, the reversal interest rate is not (necessarily) zero.
Hence, unlike what some
commentators suggest, negative interest rates are not fundamentally different. In our model,
when the reversal interest rate is positive, say 1 %, then a policy rate cut from 1% to 0.9%
is already contractionary. On the other hand, if the reversal interest rate is -1 %, there is
room to go negative up to that point.
The exact level of the reversal interest rate depends...
...Quantitative easing (QE) increases the reversal interest rate, as it takes fixed income out
of the balance sheets of the banks. In that sense, QE should only employed after interest
rate cuts are exhausted.
... exceedingly long low interest rate
environments can depress lending in this setting.
The “reversal interest rate” is the rate at which accommodative monetary policy
“reverses” its intended effect and becomes contractionary for the economy.
...we argue in this paper that the
effective lower bond is given by the “reversal interest rate”, the rate at which accommodative
monetary policy “reverses” its effect and becomes contractionary for output. Below the “reversal interest rate”, a decrease in the monetary policy rate depresses rather than stimulates
the economy.
Importantly, the reversal interest rate is not (necessarily) zero.
Hence, unlike what some
commentators suggest, negative interest rates are not fundamentally different. In our model,
when the reversal interest rate is positive, say 1 %, then a policy rate cut from 1% to 0.9%
is already contractionary. On the other hand, if the reversal interest rate is -1 %, there is
room to go negative up to that point.
The exact level of the reversal interest rate depends...
...Quantitative easing (QE) increases the reversal interest rate, as it takes fixed income out
of the balance sheets of the banks. In that sense, QE should only employed after interest
rate cuts are exhausted.
... exceedingly long low interest rate
environments can depress lending in this setting.
Cumberland Advisors Market Commentary - Interest Rates, Inflation & Markets - btbirkett@gmail.com - Gmail
Cumberland Advisors Market Commentary - Interest Rates, Inflation & Markets - btbirkett@gmail.com - Gmail
....Per Moody’s, there were no rated muni defaults in 2018.
...Trump should stop bashing Powell and start directing his administration to issue 100 year TIPS. The world would buy a lot of them and the United States could achieve remarkable low cost permanent financing for its many needs and wants. ...
1.... At 30% on all China sourced imports, the federal revenue would grow to about $200 billion annually. The tariffs amount to a sales tax imposed on American consumers and businesses. For a metaphor, This amount would be roughly equal to a national increase in the gasoline tax of about $2 per gallon. That is the trajectory of the present thresholds of Trump-Navarro trade war policy
2. Will Trump use the Exchange Stabilization Fund (ESF) as a supplemental weapon in the trade war? In our opinion this move would significantly undermine the long-term stature of the US and of the US dollar as a world reserve currency. The mere fact that Trump has alluded to using the ESF (and to wanting a weaker dollar) makes it now an unpredictable issue and raises risk premia.
... Any creditworthy borrower can obtain financing easily, and any refinancing is happening or has happened. There is not a lot left to “milk” out of the system.
4. Lastly, there is a developing body of research that estimates how much damage negative rates and even very low rates are doing. Torsten Slok has published a partial list of those papers. Essentially, negative-rate policies and very-low-rate policies eventually become counterproductive and act as contractionary forces. See Brunnermeier and Koby, “The reversal interest rate,” January 30, 2019 (https://www.google.com/url?
AOvVaw2dJTpeNxHCREsdw_ovQtwD).
Quantitative accounts have been defensive for months; they are now redeploying as indicators confirm opportunity and market based prices indicate entry. When the inflation adjusted interest rate is zero or lower, money’s usage is free. This is bullish for many asset prices.
....Per Moody’s, there were no rated muni defaults in 2018.
...Trump should stop bashing Powell and start directing his administration to issue 100 year TIPS. The world would buy a lot of them and the United States could achieve remarkable low cost permanent financing for its many needs and wants. ...
1.... At 30% on all China sourced imports, the federal revenue would grow to about $200 billion annually. The tariffs amount to a sales tax imposed on American consumers and businesses. For a metaphor, This amount would be roughly equal to a national increase in the gasoline tax of about $2 per gallon. That is the trajectory of the present thresholds of Trump-Navarro trade war policy
2. Will Trump use the Exchange Stabilization Fund (ESF) as a supplemental weapon in the trade war? In our opinion this move would significantly undermine the long-term stature of the US and of the US dollar as a world reserve currency. The mere fact that Trump has alluded to using the ESF (and to wanting a weaker dollar) makes it now an unpredictable issue and raises risk premia.
... Any creditworthy borrower can obtain financing easily, and any refinancing is happening or has happened. There is not a lot left to “milk” out of the system.
4. Lastly, there is a developing body of research that estimates how much damage negative rates and even very low rates are doing. Torsten Slok has published a partial list of those papers. Essentially, negative-rate policies and very-low-rate policies eventually become counterproductive and act as contractionary forces. See Brunnermeier and Koby, “The reversal interest rate,” January 30, 2019 (https://www.google.com/url?
AOvVaw2dJTpeNxHCREsdw_ovQtwD).
Quantitative accounts have been defensive for months; they are now redeploying as indicators confirm opportunity and market based prices indicate entry. When the inflation adjusted interest rate is zero or lower, money’s usage is free. This is bullish for many asset prices.
Pentagon report blames Trump for the return of ISIS in Syria and Iraq - Business Insider
Pentagon report blames Trump for the return of ISIS in Syria and Iraq - Business Insider
...A report from the Pentagon inspector general found that President Donald Trump's decision to rapidly pull troops out of Syria and divert attention from diplomacy in Iraq has inadvertently aided the Islamic State's regrouping in Syria and Iraq.
...A report from the Pentagon inspector general found that President Donald Trump's decision to rapidly pull troops out of Syria and divert attention from diplomacy in Iraq has inadvertently aided the Islamic State's regrouping in Syria and Iraq.
The Department of Defense's quarterly report to Congress on the effectiveness of the US Operation Inherent Resolve mission said that "ISIS continued its transition from a territory-holding force to an insurgency in Syria, and it intensified its insurgency in Iraq" — even though Trump said ISIS was defeated and the caliphate quashed,The Wall Street Journal reported.
Many officials and experts have repeatedly warned that a rapid US withdrawal from Syria would enable ISIS to regroup into an insurgency after their battlefield defeats by the US-led coalition.
Facebook ad prices surge_ The Morning Download: Teach Them Cyber; Ex-Google Engineer Charged in Trade-Secret Theft - btbirkett@gmail.com - Gmail
The Morning Download: Teach Them Cyber; Ex-Google Engineer Charged in Trade-Secret Theft - btbirkett@gmail.com - Gmail
Facebook ad prices surge. An advertising spree on Facebook from Democratic presidential hopefuls is pushing up prices for other campaigns and progressive-advocacy groups. (WSJ)
Facebook ad prices surge. An advertising spree on Facebook from Democratic presidential hopefuls is pushing up prices for other campaigns and progressive-advocacy groups. (WSJ)
on WeWork & competitors - Term Sheet: Aug. 26, 2019 - btbirkett@gmail.com - Gmail
Term Sheet: Aug. 26, 2019 - btbirkett@gmail.com - Gmail
...IWG’s current market cap in London is £3.64 billion ($4.5 billion), and if the company pursues this plan, its US business could be worth as much as £3 billion ($3.7 billion) as a standalone franchise. IWG generated about 41% of its $3.4 billion of revenue in the Americas last year, according to data compiled by Bloomberg.
...As I noted on Friday, the co-working market is out of control. There’s Convene, Knotel, Industrious, Spacious, The Yard, The Wing, and Alley — all smaller rivals with plenty of venture capital to go around. I’m not convinced that any of them, including IWG, will challenge WeWork’s business in any real way, but like Dixon said, they all stand to reap the benefits if its IPO goes well.
...IWG’s current market cap in London is £3.64 billion ($4.5 billion), and if the company pursues this plan, its US business could be worth as much as £3 billion ($3.7 billion) as a standalone franchise. IWG generated about 41% of its $3.4 billion of revenue in the Americas last year, according to data compiled by Bloomberg.
Here’s what’s interesting: IWG is larger than WeWork in terms of space. The company has ~60 million square feet (5.6 million square meters) globally, while WeWork had 45 million square feet as of March. WeWork’s largest backer SoftBank has valued the company at $47 billion,
...As I noted on Friday, the co-working market is out of control. There’s Convene, Knotel, Industrious, Spacious, The Yard, The Wing, and Alley — all smaller rivals with plenty of venture capital to go around. I’m not convinced that any of them, including IWG, will challenge WeWork’s business in any real way, but like Dixon said, they all stand to reap the benefits if its IPO goes well.
European firms warned China’s social credit system could be ‘a matter of life or death’ | South China Morning Post
European firms warned China’s social credit system could be ‘a matter of life or death’ | South China Morning Post
“It is no exaggeration to say that the Corporate Social Credit System will be the most comprehensive system created by any government to impose a self-regulating marketplace, nor is it inconceivable that the Corporate Social Credit System could mean life or death for individual companies,” he said.
“It is no exaggeration to say that the Corporate Social Credit System will be the most comprehensive system created by any government to impose a self-regulating marketplace, nor is it inconceivable that the Corporate Social Credit System could mean life or death for individual companies,” he said.
Tuesday, August 27, 2019
Megvii Files for IPO in Hong Kong Amid Protests | Fortune
Megvii Files for IPO in Hong Kong Amid Protests | Fortune
Megvii is the world’s largest provider of third-party authentication software.
Megvii is the world’s largest provider of third-party authentication software.
France and Emmanuel Macron Finally Have an Economy to Crow About - Bloomberg
France and Emmanuel Macron Finally Have an Economy to Crow About - Bloomberg
...France, the second-largest economy in the monetary union, is faring much better than most experts would have assumed. Its economic model – less reliant on exports than Germany – is proving more resilient to the dangers of a U.S.-inspired trade war. At the same time, the government’s decision to embark on some fiscal stimulus at the end of last year to stave off the revolt from the “yellow vests” has proven to be lucky. It provided support just as the European economy was about to slow.
...France has a very slight current account deficit – 0.6% of GDP – while Germany has a whopping 7.3% surplus, and Italy 2.5%.
...in France. The labor market has improved, with unemployment falling to 8.6% in July, the lowest in more than 10 years. Wages are accelerating, putting more money into people’s pockets. Real household income per capita rose at an average rate of nearly 1% in the two quarters around the turn of last year. In Germany it was 0.65% and just above zero in Italy.
...France, the second-largest economy in the monetary union, is faring much better than most experts would have assumed. Its economic model – less reliant on exports than Germany – is proving more resilient to the dangers of a U.S.-inspired trade war. At the same time, the government’s decision to embark on some fiscal stimulus at the end of last year to stave off the revolt from the “yellow vests” has proven to be lucky. It provided support just as the European economy was about to slow.
...France has a very slight current account deficit – 0.6% of GDP – while Germany has a whopping 7.3% surplus, and Italy 2.5%.
...in France. The labor market has improved, with unemployment falling to 8.6% in July, the lowest in more than 10 years. Wages are accelerating, putting more money into people’s pockets. Real household income per capita rose at an average rate of nearly 1% in the two quarters around the turn of last year. In Germany it was 0.65% and just above zero in Italy.
Friday, August 23, 2019
The Fed can’t rescue us from the coming supply-shock recession - MarketWatch
The Fed can’t rescue us from the coming supply-shock recession - MarketWatch
,,,
,,,
Stagflationary effect
All three of these potential shocks would have a stagflationary effect, increasing the price of imported consumer goods, intermediate inputs, technological components, and energy, while reducing output by disrupting global supply chains.
Worse, the Sino-American conflict is already fueling a broader process of deglobalization, because countries and firms can no longer count on the long-term stability of these integrated value chains. As trade in goods, services, capital, labor, information, data, and technology becomes increasingly balkanized, global production costs will rise across all industries.
...HuaweiConsider the case of Huawei, which is currently a global leader in 5G equipment. This technology will soon be the standard form of connectivity for most critical civilian and military infrastructure, not to mention basic consumer goods that are connected through the emerging Internet of Things.
The presence of a 5G chip implies that anything from a toaster to a coffee maker could become a listening device. This means that if Huawei is widely perceived as a national-security threat, so would thousands of Chinese consumer-goods exports.
It is easy to imagine how today’s situation could lead to a full-scale implosion of the open global trading system. The question, then, is whether monetary and fiscal policy makers are prepared for a sustained — or even permanent — negative supply shock.
...U.S. and global corporate capital spending is severely depressed, owing to uncertainties about the likelihood, severity, and persistence of the three potential shocks....The only reason why that hasn’t yet translated into a global slump is that private consumption has remained strong.
...Supply Shocks
...the negative supply shocks from a trade and technology war would be more or less permanent, as would the reduction in potential growth. The same applies to Brexit: leaving the European Union will saddle the United Kingdom with a permanent negative supply shock, and thus permanently lower potential growth.
...Finally, there is an important difference between the 2008 global financial crisis and the negative supply shocks that could hit the global economy today. Because the former was mostly a large negative aggregate demand shock that depressed growth and inflation, it was appropriately met with monetary and fiscal stimulus.
But this time, the world would be confronting sustained negative supply shocks that would require a very different kind of policy response over the medium term. Trying to undo the damage through never-ending monetary and fiscal stimulus will not be a sensible option.
The 10th Man - Bonds and Bond Funds - btbirkett@gmail.com - Gmail
The 10th Man - Bonds and Bond Funds - btbirkett@gmail.com - Gmail
...most ETFs track an index. This is true of bond ETFs.
...most ETFs track an index. This is true of bond ETFs.
But the bond indices have a lot of bonds, and it is impractical for a bond ETF market-maker to own every single bond in the index. So they own a subset of those bonds, and those bonds tend to be quite expensive. You, the retail investor, end up overpaying for bonds, which means you get lower yields.
Compare the yields of bond ETFs to open-end mutual funds—you will see they are much lower.
Sunday, August 18, 2019
When Leninists Overreach - NINA L. KHRUSHCHEVA Aug. 2019
https://www.project-syndicate.org/commentary/xi-putin-authoritarian-overreach-by-nina-l-khrushcheva-2019-08
Nonetheless, the demonstrations have become a poignant sign of Putin’s declining popularity, including among Russian elites, whose views matter in ways that other forms of public opinion do not. For two decades, the Russian elite’s rival factions have generally seen Putin as the ultimate guarantor of their interests – particularly their financial interests. But as Russia’s economy has sunk into sanctions-induced stagnation, Putin’s leadership has started to look like more of a roadblock than a guardrail. Fewer and fewer Russians still accept that “Putin is Russia and Russia is Putin,” a mantra that one heard regularly just five years ago, following the Kremlin’s annexation of Crimea.
... And unlike Putin, Russian elites are deeply worried that alienating the US will make Russia a de facto vassal state vis-Ã -vis China.
...The protests in Hong Kong, which show no sign of abating, are likewise the product of authoritarian overreach. They began with a proposed law that would allow Hong Kong citizens and residents to be extradited to the Chinese mainland. Given how clumsily the legislation was presented by Hong Kong’s Beijing-backed leader, Carrie Lam, it is possible that the Chinese leadership was only dimly aware of it and its potential political impact. Nonetheless, the Chinese government’s response to the protests has been increasingly self-defeating.
...More ominously, Xi may have already decided that the time for “one country, two systems” has passed. China, he might argue, can no longer tolerate a functioning quasi-democracy within its territory, despite the agreement it accepted as a condition of Hong Kong’s return to Chinese sovereignty in 1997. Concerned about Taiwan and its political drift ever further from the mainland, Xi may be thinking that a harsh Hong Kong policy will scare the Taiwanese into line. If so, he has forgotten that bullying Taiwan has only ever yielded the opposite of what China intended.
Nonetheless, the demonstrations have become a poignant sign of Putin’s declining popularity, including among Russian elites, whose views matter in ways that other forms of public opinion do not. For two decades, the Russian elite’s rival factions have generally seen Putin as the ultimate guarantor of their interests – particularly their financial interests. But as Russia’s economy has sunk into sanctions-induced stagnation, Putin’s leadership has started to look like more of a roadblock than a guardrail. Fewer and fewer Russians still accept that “Putin is Russia and Russia is Putin,” a mantra that one heard regularly just five years ago, following the Kremlin’s annexation of Crimea.
... And unlike Putin, Russian elites are deeply worried that alienating the US will make Russia a de facto vassal state vis-Ã -vis China.
...The protests in Hong Kong, which show no sign of abating, are likewise the product of authoritarian overreach. They began with a proposed law that would allow Hong Kong citizens and residents to be extradited to the Chinese mainland. Given how clumsily the legislation was presented by Hong Kong’s Beijing-backed leader, Carrie Lam, it is possible that the Chinese leadership was only dimly aware of it and its potential political impact. Nonetheless, the Chinese government’s response to the protests has been increasingly self-defeating.
For starters, the People’s Liberation Army has been openly threatening to intervene to shut down the protests against Lam’s government. And in cases where pro-government “triad” thugs, most likely based on the mainland, have shown up to assail protesters, the police have been conveniently absent. As everyone in Hong Kong knows, these extrajudicial beatings had to have been sanctioned by Xi’s government.
...More ominously, Xi may have already decided that the time for “one country, two systems” has passed. China, he might argue, can no longer tolerate a functioning quasi-democracy within its territory, despite the agreement it accepted as a condition of Hong Kong’s return to Chinese sovereignty in 1997. Concerned about Taiwan and its political drift ever further from the mainland, Xi may be thinking that a harsh Hong Kong policy will scare the Taiwanese into line. If so, he has forgotten that bullying Taiwan has only ever yielded the opposite of what China intended.
Then again, Xi may be contemplating something even worse. If he has concluded that Trump’s “America First” administration would do nothing to protect Taiwan, he could be considering a lightning military strike on the island to bring it back under the mainland’s control. But this, too, would be a mistake. Given the broader context of Sino-American relations, even the Trump administration would likely respond to Chinese military adventurism in Taiwan. Besides, the US need not engage in an open military confrontation with China to make aggression toward Taiwan more trouble than it is worth. The US Navy still has the capacity to cut off the sea lanes supplying energy and minerals to China, regardless of whether it is actively engaged in the South China Sea.
...Almost all the world’s leading military and economic powers – the European Union, India, Japan, Brazil – maintained pragmatic relations with Xi’s predecessors. But they have since grown increasingly wary of China, with some even moving closer to the US (in the age of Trump, no less).
As in Russia’s case, China’s elite will no doubt have noticed that Xi is turning the country into an international pariah.
Saturday, August 17, 2019
Wealth inequality in the US: A path forward - btbirkett@gmail.com - Gmail
Wealth inequality in the US: A path forward - btbirkett@gmail.com - Gmail
| The good news is that the world has become more equal at the macro level. Middle-income economies, such as Indonesia and Mexico, have attained greater shares of global wealth. But in many advanced countries, such as the United States, wealth and income inequality have been steadily rising since the 1980s. Put another way: poor countries are getting richer, and rich countries are becoming more unequal. |
| Of course, for huge segments of the US population, such as black Americans, the phenomena of wealth and income disparity have long been problems. New research estimates that the racial wealth gap’s dampening effect on consumption and investment will cost the US economy between $1 trillion and $1.5 trillion between 2019 and 2028. |
| Factors other than race are also at play in the widening chasm between haves and have-nots in the United States. Take geography. By most metrics, the state of Georgia is thriving economically. It’s the country’s ninth-largest economy, seventh for its share of woman-owned companies, and third for its share of black-owned companies. While much of this vibrancy originates from Atlanta, which now generates 65 percent of state GDP, the benefits stay in the city too. Economic growth in the rest of the state is constrained by low workforce participation and a lack of access to opportunities in high-growth sectors. A new report, Expanding the economic pie in the Peach State, looks at the sustained, long-term efforts and investments necessary to bridge this divide. |
| And within cities, inequality is becoming increasingly, distressingly evident. Homelessness in the San Francisco Bay Area has reached crisis proportions. The region has the third-largest homeless population in the country, behind New York City and Los Angeles. Long an engine of growth and prosperity, San Francisco has become marked by unaffordability and abject conditions for its most vulnerable residents. |
| The problem is not intractable. The Bay Area is home to intellect, innovation, and substantial resources—as evidenced by the wealth generated there. And it can be home to a solution for this crisis, one that takes a regional, multi-stakeholder approach and holistically supports homeless families across the full journey—from housing insecure to homeless to housed—and integrates resources across the government, not-for-profit, and private sectors. |
| The United States can improve outcomes nationwide by connecting displaced workers with new opportunities, equipping people with the skills they need to succeed, revitalizing distressed areas, and supporting workers in transition. Returning to more inclusive growth will require the combined energy and ingenuity of business leaders, policy makers, educators, and not for profits across the country. Check out The future of work in America: People and places, today and tomorrow, another recent MGI report, to learn more. |
Experts in Pompeii Have Discovered a Female Sorcerer's Mysterious Arsenal of Charms—See Them Here | artnet News
Experts in Pompeii Have Discovered a Female Sorcerer's Mysterious Arsenal of Charms—See Them Here | artnet News
Archaeologists have discovered an incredible array of amulets, gems, and lucky charms in Pompeii. Researchers think that the mysterious trove belonged to a female sorcerer who could have been a victim of the catastrophic eruption of Mount Vesuvius more than 2,000 years ago.
The experts found more than 100 miniature objects in a wooden crate that had all but decomposed except for its bronze hinges. Inside the box was a hoard that includes miniature dolls, phallic amulets, necklace beads, and a tiny skull among other objects made of bone, bronze, glass, and amber. The researchers determined that the amulets would have belonged to a woman, and were likely used for adornment or protection in the years before Mount Vesuvius erupted in AD 79, burying the city and its population in volcanic ash.
“They are objects of everyday life in the female world and are extraordinary because they tell micro-stories and biographies of the inhabitants of the city who tried to escape the eruption,” said Pompeii’s general director, Massimo Osanna, in a statement. In the same house, the team discovered a room containing the bodies of ten victims, which included women and children. Using DNA analysis, archaeologists are trying to establish if the victims were related.
The Portuguese Myth
The Portuguese Myth
...A study by the Observatório das Desigualdades places the real unemployment rate at 17.5 percent — much less than the 28 percent in 2013 but far above the official government numbers (8.5 percent). Almost all the new jobs that have been created are precarious. Public services are crumbling: both health and education are heavily underfunded and on the verge of collapse. The Portuguese banking system is a ticking time bomb, with more banks bailed out with public money but not under public control, leaving it more vulnerable to shifts at the European center than in 2008. The central question of the debt has in fact disappeared from public debate.
...A study by the Observatório das Desigualdades places the real unemployment rate at 17.5 percent — much less than the 28 percent in 2013 but far above the official government numbers (8.5 percent). Almost all the new jobs that have been created are precarious. Public services are crumbling: both health and education are heavily underfunded and on the verge of collapse. The Portuguese banking system is a ticking time bomb, with more banks bailed out with public money but not under public control, leaving it more vulnerable to shifts at the European center than in 2008. The central question of the debt has in fact disappeared from public debate.
HSBC, Donnelly - Notes from Camp Kotok 2019
https://www.cumber.com/pdf/Brent-Donnelly%E2%80%99s-Notes-from-Camp-Kotok-2019.pdf
A future where all rates on every yield curve are below 1% forever
There was a group conversation about what it means to be in a world where global interest
rates stay permanently near zero. In other words, if every point on every yield curve in the
developed world is set to remain permanently below 1% for the rest of our lifetimes… What
are the implications? (Note: The idea wasn’t to argue whether or not this will happen, it
was to assume it happens then discuss the implications).
...This is probably good for bonds (obviously), good for long duration equities and
bad for cyclicals and financials. Look at what happened in Japan and Europe.
Modern banking systems are somewhat reliant on positively-sloping yield curves
(at least most of the time) so banks are likely to struggle if the yield curve is flat
near zero.
The pension fund shortfall situation gets worse. Then much worse
....so a
1 percentage point reduction in the cost of capital is a “biggie.” A quarter
point – not so much.
...The Fed is dribbling
away its “ammo” as we head to the 0 lower bound.”
...“If you could put Mario Draghi under truth serum… And then you asked
him whether or not he thought rates at minus 40 basis points were helping,
he’d say no. If you asked him if cutting rates to minus 50 would help, he
would say no. But then he would say that his job is to do something. And
so that something is to keep stimulating.
He feels pressured or compelled to keep ‘doing something’ which forces
rates more and more negative under the idea that the central bank is
acting and trying to stimulate.
He can NEVER stop and say ‘I've done all I can.’ So he has to keep going,
against his better judgement.”
...Modern Monetary Theory (MMT) and US Fiscal Strategy
First of all, I chuckled when one panelist called MMT: Magic Money Tree. Lolz. Another funny quote after
someone said MMT could be used to fund universal health care and Space Force investments… From Jim
Bianco, channeling John F. Kennedy:
“We choose to go to Mars, not because it’s easy, but because it’s free.”
The debate involved four separate speakers, and was a bit all over the place2
--plus, there were many, many
follow-up conversations—so I will do my best to summarize the whole weekend MMT debate and
conversation in five bullets:
The overall vibe was negative towards MMT but strongly positive towards fiscal stimulus such as
infrastructure, education and student loan reform. The main beef when it comes to MMT is the timing /
methodology of how fiscal stimulus is delivered. On the other hand, some argued that no matter how you
deliver increased fiscal spending, it’s all very similar to MMT anyway, the only question is how fast the
Fed monetizes the new debt.
If you sell a $2T infrastructure bond and then the Fed buys it via QE during the next crisis… Is that really
all that different from MMT where the Fed/Treasury transaction is done on Day 1? All roads seem to lead
to more spending which is eventually purchased by the Fed so the arguments feel a tad semantic /
theoretical to me.
Some felt MMT is inevitable given the weak to negative impact of lower and negative rates and bipartisan
support for larger deficits. With demographics turning bad to very bad in most developed nations and
technology also pushing inflation lower, a few argued that disinflationary forces are so strong that MMT
will not generate inflation for a long time anyway. You can see from the next chart how the rise of the
lower-paying Millenials and the fall of the higher-paid boomers is not offset by Gen-X due to its smaller
size (HT Sam Rines).
https://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/
A lot of the feeling of MMT inevitability also arose from many opinions that the next round of QE cannot
be perceived as “bailing out the banks”. References were made to Corbyn’s “QE for the people” and Sam
Rines called the next QE / MMT policy “Reaganomics for the People”. It is not politically palatable for the
Fed and Treasury to boost stocks and banks or for the Treasury to cut tax rates further. The next stimulus
has to help Main Street or there will be pitchforks.
One strong counter to MMT is that it debases all work done and income earned in the past while punishing
savers and thus it is a potential moral outrage. There was definitely disagreement in the room on whether
debt is a moral or economic issue. I think that is an interesting debate. Mises vs. soft money schools.
Debt is not a problem until it’s a problem. The US has been wringing its hands over the national debt
since at least 1989 when the big ugly debt clock was installed in Times Square. Maybe the problem from
MMT will not be high debt levels, but a supply side shock as MMT-financed projects lead to a dramatic
shortage of skilled workers, cement, steel, etc. and inflation skyrockets thereafter.
A future where all rates on every yield curve are below 1% forever
There was a group conversation about what it means to be in a world where global interest
rates stay permanently near zero. In other words, if every point on every yield curve in the
developed world is set to remain permanently below 1% for the rest of our lifetimes… What
are the implications? (Note: The idea wasn’t to argue whether or not this will happen, it
was to assume it happens then discuss the implications).
...This is probably good for bonds (obviously), good for long duration equities and
bad for cyclicals and financials. Look at what happened in Japan and Europe.
Modern banking systems are somewhat reliant on positively-sloping yield curves
(at least most of the time) so banks are likely to struggle if the yield curve is flat
near zero.
The pension fund shortfall situation gets worse. Then much worse
....so a
1 percentage point reduction in the cost of capital is a “biggie.” A quarter
point – not so much.
...The Fed is dribbling
away its “ammo” as we head to the 0 lower bound.”
...“If you could put Mario Draghi under truth serum… And then you asked
him whether or not he thought rates at minus 40 basis points were helping,
he’d say no. If you asked him if cutting rates to minus 50 would help, he
would say no. But then he would say that his job is to do something. And
so that something is to keep stimulating.
He feels pressured or compelled to keep ‘doing something’ which forces
rates more and more negative under the idea that the central bank is
acting and trying to stimulate.
He can NEVER stop and say ‘I've done all I can.’ So he has to keep going,
against his better judgement.”
...Modern Monetary Theory (MMT) and US Fiscal Strategy
First of all, I chuckled when one panelist called MMT: Magic Money Tree. Lolz. Another funny quote after
someone said MMT could be used to fund universal health care and Space Force investments… From Jim
Bianco, channeling John F. Kennedy:
“We choose to go to Mars, not because it’s easy, but because it’s free.”
The debate involved four separate speakers, and was a bit all over the place2
--plus, there were many, many
follow-up conversations—so I will do my best to summarize the whole weekend MMT debate and
conversation in five bullets:
The overall vibe was negative towards MMT but strongly positive towards fiscal stimulus such as
infrastructure, education and student loan reform. The main beef when it comes to MMT is the timing /
methodology of how fiscal stimulus is delivered. On the other hand, some argued that no matter how you
deliver increased fiscal spending, it’s all very similar to MMT anyway, the only question is how fast the
Fed monetizes the new debt.
If you sell a $2T infrastructure bond and then the Fed buys it via QE during the next crisis… Is that really
all that different from MMT where the Fed/Treasury transaction is done on Day 1? All roads seem to lead
to more spending which is eventually purchased by the Fed so the arguments feel a tad semantic /
theoretical to me.
Some felt MMT is inevitable given the weak to negative impact of lower and negative rates and bipartisan
support for larger deficits. With demographics turning bad to very bad in most developed nations and
technology also pushing inflation lower, a few argued that disinflationary forces are so strong that MMT
will not generate inflation for a long time anyway. You can see from the next chart how the rise of the
lower-paying Millenials and the fall of the higher-paid boomers is not offset by Gen-X due to its smaller
size (HT Sam Rines).
https://www.pewresearch.org/fact-tank/2018/04/11/millennials-largest-generation-us-labor-force/
A lot of the feeling of MMT inevitability also arose from many opinions that the next round of QE cannot
be perceived as “bailing out the banks”. References were made to Corbyn’s “QE for the people” and Sam
Rines called the next QE / MMT policy “Reaganomics for the People”. It is not politically palatable for the
Fed and Treasury to boost stocks and banks or for the Treasury to cut tax rates further. The next stimulus
has to help Main Street or there will be pitchforks.
One strong counter to MMT is that it debases all work done and income earned in the past while punishing
savers and thus it is a potential moral outrage. There was definitely disagreement in the room on whether
debt is a moral or economic issue. I think that is an interesting debate. Mises vs. soft money schools.
Debt is not a problem until it’s a problem. The US has been wringing its hands over the national debt
since at least 1989 when the big ugly debt clock was installed in Times Square. Maybe the problem from
MMT will not be high debt levels, but a supply side shock as MMT-financed projects lead to a dramatic
shortage of skilled workers, cement, steel, etc. and inflation skyrockets thereafter.
Friday, August 16, 2019
The No. 1 job in America with the ‘best career opportunities’ pays $112,000 a year — and it’s not in tech - MarketWatch
The No. 1 job in America with the ‘best career opportunities’ pays $112,000 a year — and it’s not in tech - MarketWatch
...Tax managers have the strongest career opportunities rating, according to employees in this position. They had a median base salary of $112,021 a year and 4,803 job openings on Glassdoor as of July 5. With the infiltration of technology into financial services, there’s a renewed emphasis for tax managers to build closer client relationships, the report’s authors said.
...Tax managers have the strongest career opportunities rating, according to employees in this position. They had a median base salary of $112,021 a year and 4,803 job openings on Glassdoor as of July 5. With the infiltration of technology into financial services, there’s a renewed emphasis for tax managers to build closer client relationships, the report’s authors said.
The report used the following criteria: a median base salary over the past year of $80,000 a year or higher, well above the June 2019 U.S. median annual pay of $53,411, and at least 2,000 job openings as of July 5 on Glassdoor. Employees rated their job on a scale of 1 to 5, with 5 being the highest level of advancement. Tax manager had a rating of 4.1 compared to the average rating of 3.0 across all jobs on the Glassdoor website. Here’s a list of the top 25.
Tax managers were followed by Salesforce developers ($81,721 a year with 3,193 job openings), product designers ($102,054 a year and 2,045 openings), strategy managers ($142,328 a year and 3,131 openings), HR managers ($84,700 a year and 4,351 openings), audit managers ($102,521 a year and 3,050 openings) and data scientists ($110,160 a year and 6,789 openings).
Thursday, August 15, 2019
The Market Finally Has Its Inversion. Now What? - btbirkett@gmail.com - Gmail
The Market Finally Has Its Inversion. Now What? - btbirkett@gmail.com - Gmail
Falling yields make it harder for pension funds to guarantee an income. Many around the world are now obligated by regulators to buy bonds to be sure that they can meet their liabilities, which helps to create a vicious circle. Lower yields mean that the funds need to buy more bonds, which pushes down yields further, meaning that they need to buy still more bonds to generate the same interest income. Further, much of the current buying is part of a straight “carry trade,” as investors desperately try to find a positive yield somewhere.
... Banks make their money by borrowing for the short-term from depositors and lending at higher rates for the longer term. When those rates invert (or merely flatten), it becomes far harder for them to make profits. They have less incentive to lend, and they have less capital with which to withstand any risks. The inverted yield curve has quite rationally spurred a tumble for bank stocks in the U.S. and particularly in the euro zone. Banks are arguably less important to the U.S. economy than they were a generation ago; they are still central to the European economy, and further problems for European banks will create problems for the U.S.
;... And at present, the differential between the yields available in the U.S. and Europe is so wide that it puts huge upward pressure on the dollar, something that Trump wants to avoid.
Falling yields make it harder for pension funds to guarantee an income. Many around the world are now obligated by regulators to buy bonds to be sure that they can meet their liabilities, which helps to create a vicious circle. Lower yields mean that the funds need to buy more bonds, which pushes down yields further, meaning that they need to buy still more bonds to generate the same interest income. Further, much of the current buying is part of a straight “carry trade,” as investors desperately try to find a positive yield somewhere.
... Banks make their money by borrowing for the short-term from depositors and lending at higher rates for the longer term. When those rates invert (or merely flatten), it becomes far harder for them to make profits. They have less incentive to lend, and they have less capital with which to withstand any risks. The inverted yield curve has quite rationally spurred a tumble for bank stocks in the U.S. and particularly in the euro zone. Banks are arguably less important to the U.S. economy than they were a generation ago; they are still central to the European economy, and further problems for European banks will create problems for the U.S.
;... And at present, the differential between the yields available in the U.S. and Europe is so wide that it puts huge upward pressure on the dollar, something that Trump wants to avoid.
A Rich Life - Blink, Blink, Zoom: Welcome to the Future of Contact Lenses - btbirkett@gmail.com - Gmail
A Rich Life - Blink, Blink, Zoom: Welcome to the Future of Contact Lenses - btbirkett@gmail.com - Gmail
Blink, Blink, Zoom: Welcome to the Future of Contact Lenses
By Chris Wood | Aug 12, 2019
Blink twice and your contact lens zooms in on what you’re looking at. Sounds futuristic, but it’s not as far down the road as you might think.
Scientists have been making contact lenses do all kinds of cool stuff recently.
For example, South Korean researchers have developed a “smart” contact lens that can monitor blood sugar levels in diabetics. It uses built-in wireless sensors to measure sugar levels in the wearer’s tears, which correspond directly to levels in the blood.
These researchers aren’t the first to make such a lens. But they say this new lens is better than previous models because it feels more comfortable and won’t hurt the eye. They achieved this by using highly stretchable, see-through nanomaterials.
Reliably measuring blood sugar levels continuously like this, without the painful pin pricks, would be a huge win for diabetics.
Unfortunately, the lens hasn’t been tested on humans yet, so it’ll be a while before it’s available to the public.
That’s not the case for the next contact lens, which is already for sale in Asia.
In 2018, Swiss company Sensimed announced that its Triggerfish sensor and monitoring system for glaucoma patients had been registered as a medical device in Japan.
Glaucoma puts pressure on the optic nerve through fluid build-up. Highly sensitive platinum strain gauges in the Triggerfish record changes in the curvature of the cornea, which corresponds directly to the pressure inside the eye.
This disposable soft contact lens is worn just once, for a 24-hour period. The patient repeats the process once or twice a year.
The point is to let doctors know what time of day each patient should take his or her glaucoma medication, because the timing of these drugs is very important and varies from patient to patient.
Another new contact lens innovation, one that all of us could use, comes from a research team at the University of California, San Diego: They have created a robotic soft contact lens that lets you zoom in and out by blinking twice.
The lens is controlled by electro-oculographic signals—in other words, the eye movement of the wearer.
These electrical signals enable the lens, which is made out of stretchy, electro-active polymer films, to expand and change focal length and motion.
The idea is to make the lens so sensitive that it can discern subtle changes in eye movement and translate them into action: blink twice to zoom in, look down to focus on nearby objects, and so forth.
In their paper in the journal Advanced Functional Materials, the researchers write that “the system developed in the current study has the potential to be used in visual prostheses, adjustable glasses, and remotely operated robotics in the future.”
One medical application for the zoom lens would be a device for patients with age-related macular degeneration (AMD), one of the biggest causes of blindness in older people.
As with the blood sugar-measuring lens, this one will take some years before it’s on the market as well... so there’s no immediate investment potential.
However, there is one company that is making progress in the field that you may want to look at. Caveat: It’s a high-risk, potentially high-reward opportunity, so tread carefully and do your own due diligence in addition to what I’m about to tell you.
Second Sight Medical Products (EYES) is a tiny $99 million market cap company that’s developed a system called Argus II to help people with a condition called retinitis pigmentosa see again.
Retinitis pigmentosa is a rare, inherited eye disease that causes blindness.
Argus II is made up of a retinal implant, a miniature video camera housed in the patient’s glasses, and a small, patient-worn computer. The system stimulates the retina electrically to help patients “see” some of what’s around them.
Using the system, patients can recognize outlines of people and basic shapes, perceive movement, distinguish light patterns, and move through the world more independently.
Argus II user Lisa says the system improves her everyday life by helping her be more mobile. She says that when she’s walking down the street, she can now see “where the asphalt is compared to the grass because of the contrast. Or if there’s an obstacle in your way like a trash can or a car parked in the driveway, you can see that you’re coming up to something.”
Lisa also says: “Socially, it’s great. I can be around a bunch of people and not feel like I’m just there. I can look around the room and see, not necessarily who it is, but that there are people there, and I feel more a part of the conversation.”
That’s really cool.
But as great as Argus II has been for many retinitis pigmentosa patients, these patients only make up a tiny portion of the blind population.
So Second Sight is developing a new system, called Orion, which could provide a new form of vision to millions of individuals who are blind due to a wide range of causes.
If the company is successful, it would grow from a tiny $99 million market cap company into a multi-billion-dollar behemoth in short order.
That’s a big “if,” though. Second Sight has a lot of hurdles to overcome before it realizes its vision.
Then again, the stock is trading for less than $1 these days. So it might be worth buying a few shares. Your call.
For in-depth analysis and ongoing guidance on the best healthcare stocks in the sector, give my newsletter, Healthy Returns, a try. It’s only $9.95, billed monthly, so you’re not taking much of a risk by checking it out.
Best,
Chris Wood
Editor, A Rich Life
Editor, A Rich Life
In a World of Surplus Goods, Buyers Are King - Bloomberg
In a World of Surplus Goods, Buyers Are King - Bloomberg
By
Economics
In a World of Surplus Goods, Buyers Are King
The U.S.’s role as the world’s primary consumer gives it the edge in the trade war with China.
Subscribe to:
Posts (Atom)
