The first update email from SIC 2018 - btbirkett@gmail.com - Gmail

David Rosenberg

...On the macroeconomic level, Rosenberg said that long-term deflationary trends such as adverse demographics and high debt levels are stronger than ever. Given these trends, he thinks that the current uptick in inflation is little more than a transitory spurt and will soon fade away.

Finally, Rosenberg said that Gluskin Sheff, which has $9 billion in assets under management, recently moved to 25% cash across all their portfolios.

Louis Gave

Up next was Louis Gave, CEO of Hong-Kong based Gavekal. Gave has consistently been one of the highest-rated speakers at the SIC, and he didn’t disappoint with some unique insights into what is happening in China.

Gave pointed out that China is currently going through a huge economic paradigm shift, one which has profound investment implications.

For the past few decades, the incentive in China has been to grow as quickly as possible. But going forward, China’s incentives will be based around what President Xi Jinping has called a “Beautiful China.”

This means a more sustainable growth model with less use of materials such as concrete and coal.

...investors should be looking at Chinese financial and consumer stocks, plus countries that will benefit from the One Belt, One Road infrastructure build-out.

California Parking Regulations Are a Big Part of Its Housing Crisis - Bloomberg

California Parking Regulations Are a Big Part of Its Housing Crisis - Bloomberg

How Rich Professionals Can Exploit a Tax Break for Farms and Small Firms - Bloomberg

How Rich Professionals Can Exploit a Tax Break for Farms and Small Firms - Bloomberg



...A cooperative is a worker-owned, worker-run enterprise whose members earn salaries and share profits paid out as so-called patronage dividends. Members then pay ordinary rates on them. The dividends are deductible to the cooperative, which pays the corporate rate on anything retained for reinvestment in the business. Employees who aren’t members typically receive regular wages.



...The new law lowers the top individual rate to 37 percent from 39.6 percent. With the new 20 percent deduction, pass-through owners taxed at the top rate can now get their rates as low as 29.6 percent.

Critics say this creates an incentive for top earners to recast themselves as independent contractors and funnel wages taxed at ordinary rates through a pass-through entity.

Gross Income

Now, tax advisers are exploring another move: to recast a pass-through as a cooperative, because the new law lets cooperatives apply the deduction to their gross income.

...Adopting cooperative status could be as simple as changing your bylaws to reflect the three pillars of being a cooperative: control of capital by the owners, who are also called members; giving each owner one vote; and distributing profits to owners.

Steel History Shows How America Lost Ground to Europe - Bloomberg

Steel History Shows How America Lost Ground to Europe - Bloomberg



...American companies continued to add completely inefficient open-hearth furnaces to their shop floors, doubling down on an obsolescent technology....



...As soon as prices began to rise so that the steel companies began to be profitable, they stopped modernizing,”...

Sachs_Will Economic Illiteracy Trigger a Trade War?

Project Syndicate
https://www.project-syndicate.org/commentary/trump-economic-illiteracy-trade-war-by-jeffrey-d-sachs-2017-04?utm_source=Project%20Syndicate%20Newsletter&utm_campaign=c1427ae595-sunday_newsletter_4_3_2018&utm_medium=email&utm_term=0_73bad5b7d8-c1427ae595-93854061&barrier=accessreg


...The current-account balance, measuring the balance of trade in goods, services, net factor income, and transfer payments from abroad, is equal to national saving minus domestic investment. That’s not a theory. It’s an identity, save for any statistical discrepancy between gross national product (GDP) and gross national income (GNI). It’s true whether you are liberal or conservative, populist or mainstream, a Keynesian or a supply-sider. Even Trump and all his deal making can’t change that. Yet he is threatening a trade war because of deficits that reflect America’s own saving-investment imbalance.

A country runs a current-account deficit if investment exceeds national saving, and runs a surplus when investment is less than national saving. For a country with a balanced current account, a deficit can arise if its investment rate rises, its saving rate falls, or some combination of the two occurs.

EL-ERIAN _ Working Toward the Next Economic Paradigm

https://www.project-syndicate.org/commentary/economic-paradigm-after-washington-consensus-by-mohamed-a--el-erian-2018-02?utm_source=Project+Syndicate+Newsletter&utm_campaign=c1427ae595-sunday_newsletter_4_3_2018&utm_medium=email&utm_term=0_73bad5b7d8-c1427ae595-93854061

For decades, the Western world put its faith in a well-defined and broadly accepted economic paradigm with applications at both the national and global levels. But, against a background of declining confidence in the ability of “experts” to explain, let alone predict, economic developments, that faith has deteriorated. With a new paradigm having yet to emerge, the world economy faces a heightened risk of fragmentation, with already-vulnerable countries being left even further behind.

...

Trump Tariffs Are Gift OPEC Russia Not US Shale Oil Gas Pipelines - Bloomberg

Trump Tariffs Are Gift OPEC Russia Not US Shale Oil Gas Pipelines - Bloomberg



...A study conducted by consultants ICT International on behalf of five pipeline industry bodies found that approximately 77 percent of the steel used in line pipe in recent years was imported, either in the form of finished pipe or the raw material used to fabricate it in the U.S. (The report also noted that while the U.S. imports $2.2 billion of steel products related to line pipe from 29 countries, it exports steel and steel products worth five times as much to those same 29 nations).



...A 25 percent increase in the cost of imported line pipe, fittings and valves would raise the cost of a 280-mile oil pipeline -- typical of those needed to carry shale oil from the Permian Basin to the Gulf coast -- by $76 million. For a mega-project, like the Dakota Access pipeline, also championed by President Trump, the cost increase could be as much as $300 million.



...The shale industry is already facing the prospect of pipeline bottlenecks hampering output growth. Further obstacles to pipeline construction would hurt jobs in the oil patch, too.



But it's easy to see one result -- U.S. oil output growth will slow. ...