EconVue Spotlight

posted by Lyric Hughes Hale on December 13, 2017 - 9:35am

All eyes are on Chicago this week. On Sunday, the CBOE launched bitcoin futures trading, and all bets are off in terms of what to expect in terms of pricing and volatility. If you would like to follow the action, here is a link to the CBOE site. The CME is launching a similar product next week. 

As unusual fires strafe across Southern California (expected to last through Christmas) the fragility of our planet is once again on display. Of particular concern to me is the effect of climate change on agricultural production. I attended the Chicago Fed’s annual conference on agriculture where I learned how even small changes in trade policies have an enormous, long term effect on agriculture production.

I particularly enjoyed the luncheon presentation by Tom Vilsack, former Secretary of Agriculture and now head of the US Dairy Export Council. I asked a question about an issue central to food production, water. He referred me to Colorado State’s Colorado Water Institute where I found a report on the Ogallala Aquifer that describes a 9-state water project many see as a failure. The evolution of the water-food-energy nexus has a direct effect on global sustainability. How resources such as aquifers are shared was studied by Elinor Ostrom, the only woman to ever win a Nobel prize in economics. She thought that users of resources most effectively cooperate without interference by the government.

The reality that challenges to our food supply abound was brought home to me by a report below from the World Economic Forum, that posits that in ten years there will not be enough food to feed our expanding population, based on measurements in kilocalories rather than weight or value of food products. Prior to reading this I was of the conventional view that Malthus was wrong, and that Amartya Sen, who posited that most famines are due to faulty information rather than supplies, was right. In a hyper connected world with population growth highest in our poorest economies and advances in technology are slowing.

Which brings me to our holiday message. Food insecurity is everywhere, even in America.  Once again, we are sponsoring a campaign to raise both funds and awareness through our partnership with the Chicago Food Depository. Here is a link to our holiday food drive:  

$1 buys 3 meals and all proceeds are used to purchase food. $17.19 buys 9 gallons of milk. We hope you will join us. Happy Holidays!


Honey vs. Vinegar: Value-Based Pricing Wins Customers and Market-Share
David W. Johnson

Since 1999, the cost of a family health insurance policy has increased 550% more than median household incomes. The culprit is excessively-high healthcare treatment costs. Public and private payers are pursuing top-down or bottom-up strategies to normalize healthcare service prices, especially for routine commodity care.

FMI December 2017 Economic & Investment Outlook
Michael Lewis

Real GDP on Track for +2.75% Gain in 17Q4, Should Sustain a Comparable Pace thru Next Year; Core Inflation Rising Above +2% Target by Mid-18 Fed Policy Will Stay on Yellen ‘Auto Pilot’ -- Expect Three Rate Hikes (at Least) in 2018 & 2019.

Data Round-Up: Another Strong JOLTS, Plus This Week's Data Preview
Michael Lewis

FMI’s review of today’s October JOLTS and 18Q1 Manpower Employment Survey results, as well as our Preview of the rest of this week’s major data releases.

Labor Market Back to ‘Normal,’ Continues to Tighten
Michael Lewis

A rate hike at the FOMC meeting next week is a foregone conclusion. FMI is confident that the updated “dot plot” will continue to show gradual tightening, three +25BP hikes/year in both 2018 and 2019.

US Commitment to Latin America Can Foster Regional Stability
R. Evan Ellis

The imperative "not to become another Venezuela" will likely weigh heavily in the electoral contests of the coming year. Yet the appropriate path for development with social justice is one that each country will decide according to its own conditions and experience. The U.S. must be prepared to work with the region with steady commitment and respect, whatever the range of outcomes. 

Russian Engagement in Latin America: An Update
R. Evan Ellis

While the success of Russian advances in the region during the past year has been uneven (with important setbacks in Argentina, Brazil and Venezuela), a series of elections and other events create the conditions for an accelerated Russian advances in 2018, to include possible opportunities for Putin's government in Cuba, El Salvador, Venezuela, Mexico and Chile.

The Payments Elephant
Collin Canright

I moderated a meeting of the Chicago Payments Forum this week to discuss payments developments in 2017 and how they will affect business in 2018 and beyond. In putting together the overview, it occurred to me that right up front we had to address the elephant in the room: bitcoin.

Spare Change
Collin Canright

It looks like incumbent financial institutions in the United States are in for a tax-break windfall. Whether that spare change be used to fix pressing infrastructure problems remains to be seen.

Outlook for the Australian Economy against a Global Economic Backdrop
Saul Eslake

Saul’s PowerPoint presentation to the Association of Corporate Travel Executives Conference on economic influences on business travel.



In 10 years, the world may not be able to feed itself
Abdi Latif Dahir 9/12/2017 WEF

India is hungrier than North Korea
Suneera Tandon 10/23/2017 WeForum

Global meat consumption (kilograms per person)
Spectator Index 12/2017

We cannot support a world in which China and India consume as much meat as the US. Consequences? 

This new strain of salt water rice could feed 200 million people
Brad Bergan 11/7/ 2017 WEF

China has developed a rice that grows in seawater

Like it or not, Africa’s future lies in GM crops
Matt Ridley 11/20/2017 The Times

From a self-professed climate "lukewarmer" threats to Africa's food supply.


Bitcoin Futures Deliver Wild Ride as Debut Brings Rally, Halts
Rob Urban, Camila Russo, Yuji Nakamura Bloomberg 12/10/2017 Video

The CBOE and the CME are located in Chicago, not New York. "Bitcoin just landed on Wall Street, and not (yet) with a bang."

CBOE CEO Edward Tilly on launch of bitcoin futures trading
CNBC 12/5/2017 Video

A whole new generation will learn about futures because of bitcoin. CBOE CEO Edward Tilly on launch of bitcoin futures trading.

Bitcoin Futures Set to Start Trading as Regulator Gives Thumbs Up
Alexander Osipovich  12/1/2017 WSJ

Are bitcoin futures the new subprime mortgage backed securities? Two Chicago exchanges can launch bitcoin contracts. 

Drivers and risks of the cryptocurrency boom
Hannah Murphy 12/2017 FT

Terrific, balanced analysis of the cryptocurrency market.

Bitcoin Bulls And Bears: Who's Hot, Who's Not on Crypto
Bloomberg 12/9/2017

Here's what bitcoin critics and supporters around the world have to say about crypto.

Bitcoin could cost us our clean-energy future
Eric Holthaus  12/5/2017 Grist

"Each bitcoin transaction requires the same amount of energy used to power nine homes in the U.S. for one day."


New IRS Data: Illinois Sees Record Loss of People, Income to Other States
Austin Berg 12/1/2017 Illinois Policy

Two words. Property Taxes.

Why can’t San Francisco’s tech culture solve the city’s social problems?
Tom Braithwaite  12/1/ 2017  FT

Persistent and increasing income inequality- is this where the entire world is heading? Technologists underestimate politics, but in the end, economics rules.

The Dollar General CEO just accidentally made clear how screwed up the economy is
Dylan Scott 12/4/2017 VOX 

Quote of the week: “The economy is continuing to create more of our core customers.”

From Bezos to Walton, Big Investors Back Fund for ‘Flyover’ Start-Ups
Andrew Ross Sorkin 12/4/2017 NY Times

Senate FIFO Proposal Punishes American Investors
Thomas Faust Jr. 12/4/2017 Wealth Management

Will the provisions of the new tax law such as FIFO (first in first out) mean that it is advantageous for many to sell stocks and take profits before year end at lower capital gains rates? Could this trigger a selfoff of cryptocurrencies as well?

Preventative Priorities Survey: 2018
Paul B. Stares 12/11/2017 Council on Foreign Relations

What are the biggest threats next year? Preventive Priorities Survey: 2018