Econvue Weekly Spotlight

posted by Lyric Hughes Hale on September 12, 2016 - 9:03am

After an eerily quiet post-Brexit summer, volatility has returned to the markets. On Monday, the attention of the financial world will be riveted on Chicago, on Federal Reserve Governor Lael Brainard’s speech to the Chicago Council on Global Affairs. Contrary to popular opinion and market reaction on Friday, her luncheon talk was announced by the Chicago Council on August 30th.  This is not a pop up speech. Live stream begins at 12:20 PM CDT:

Also here in Chicago on Monday, September 26th, we are pleased to announce a Seminar in Chicago: “The Vital Role of Director Training in Japan’s Corporate Governance Reforms” a half-day seminar on corporate governance in Japan. Nicholas Benes, a long time resident of Japan and and EconVue expert, is an opinion leader in Japan’s corporate transformation. Of vital interest to anyone who invests in Japanese companies, and easier than a trip to Tokyo to gain first-hand knowledge of the critical path of the Japanese economy.

Finally, for an up-close view on what the US economy will look like post-election, don’t miss EconVue expert Robert Shapiro’s report in our Spotlight below.


Our focus this week is on central banks, China, energy, technology, and an end-of summer postcard from Greece.

1.  Bank of Japan’s errors threaten lasting scar for central banks
John Plender 9/6/16 FT 

John Plender at the FT  can always be counted on for lucid analysis , in this case on the plight of central banks  following in the path of the BOJ. "...equity prices have already been dragged up in the slipstream of a big bond-buying programme." Unwinding these positions will certainly be a painful process, unless Japan decides to nationalize its stock market indefinitely  which is certainly a possibility.

2.  Does infrastructure investment lead to economic growth or economic fragility? Evidence from China 
Atif Ansar, Bent Flyvbjerg, Alexander Budzier, and Daniel Lunn 2016 Oxford Review of Economic Policy 

We conclude that poorly managed infrastructure investments are a main explanation of surfacing economic and nancial problems in China. We predict that, unless China shifts to a lower level of higher-quality infrastructure investments, the country is headed for an infra- structure-led national financial and economic crisis, which is likely also to be a crisis for the international economy. China’s infrastructure investment model is not one to follow for other countries but one to avoid.

Chicago-based economist Mark Zoff comments: 

The authors make a strong case that infrastructure projects suffer from poor financial returns due to cost overruns (which, as they acknowledge, is also true of most major public and private construction projects), but they don't seem to make a strong empirical argument outside of traffic flows as to the economic impact.

The idea that China is over-investing, has a debt problem, and could suffer growth consequences in the future is not a particularly controversial claim, but the idea that China's anomalous investment behavior is representative of infrastructure investment's economic impact in general is dubious, to say the least.

3.  China’s ‘Supply Side’ Is a Far Cry From Reagan’s
Dexter Roberts  9/8/16 Bloomberg

To understand policymaking in China, pay attention to the buzz phrases. The country’s favorite economic slogan, 'supply-side structural reform,' just got its most international exposure so far, at the Group of 20 summit in Hangzhou.

4.  Data: All China’s new power demand met by wind and solar last year
Joe Sandler Clarke 9/8/16 EnergyDesk @ Greenpeace

After the G20 meeting where the two major players, China and the US, signed on to the Paris agreement, expect the growth of carbon trade worldwide.

5.   Biofuel Takes Off With Airplane Travel
Daisy Simmons 9/9/16 Yale

Yale Climate Connections reports that United and other airlines are moving to biofuel, which decreases jet CO2 emissions by 60%.

6.   Robots, Growth, and Inequality
IMF Podcasts 9/1/16 

Will robots take over the global economy? Listen to the podcast to learn more.

7.  Video killed the radio star
Erik Hurst 9/1/16 Chicago Booth Review

Shines a new light on the link between labor and technology. 15 years ago, 10% of young men In their twenties had been unemployed for more than 12 months. That figure is now 22%. And what are they doing with their additional leisure time? Read this article by a Chicago Booth professor. Working is a choice for them, not necessary to sustain life.

8. PDF icon Postcard - Greece - 9 September 2016
Russell Jones 09/09/16 (with permission from Llewelyn Consulting)

Economic and financial crises have frequently intervened − over thousands of years − to deliver setbacks to Greek civilisation. What is so galling is that Greece's latest economic catastrophe, unlike many before it, was avoidable. 


The Economic Outlook for the Election and Beyond, and How Who Wins Could Change It
Robert Shapiro 09/07/16

EconVue expert and Clinton supporter Robert Shapiro believes that a Clinton win at the election will help fund governmental investment in infrastructure projects, boost productivity and eventually stimulate economic growth in the U.S.

Data Round-Up: JOLTS Confirms a Solid Pulse in Labor Market
Michael Lewis 09/08/16 

In-line with the strong July payroll results, key JOLTS indicators improved nicely. Job openings set a new record high. The quit rate also set a cycle high, signaling clearly ‘normal’ conditions.

TPP on the Ropes  Part 1   Part 2
Richard Katz 09/05/16 

With leaders like Ryan, Boustany, Hensarling and others opposing the TPP as negotiated, and other TPP countries refusing so far to write the “side-letters” demanded by the GOPers in Congress, it is hard to imagine a scenario in which TPP gets passed either under Obama or the next President.  

Rankings and Reactions: CMS Launches Star Ratings for Hospitals
David W. Johnson 09/08/16

Due to different rating methodologies, different areas of focus and different criteria weighting, the result of hospital ratings from the four rating systems is confusing and difficult for consumers to use. On the contrary, consumer focused Yelp ratings may provide a better picture that patients value.

Free Lunch: Where did all the productivity go? - My Comment
Nicholas Benes 09/06/16


September 26, 2016 One-Day “Director Boot Camp” Program in Chicago with Nicholas Benes

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