Saturday, August 18, 2018

Tariffs, Uncertainty, Investment, and U.S. Trade Deficit

Tariffs increase uncertainty domestically and internationally. decrease corporate investment, and will not decrease the U. S. trade deficit.

From Marc to Market "Tariffs will not Reduce the U.S. Trade Deficit"
"The US trade deficit is likely to widen due to growth differentials and the impact of taxes on imports." 

 From the New York Fed --- "Do Import Tariffs Help Reduce Trade Deficits?"
"... what seems clear from our analysis is that import tariffs will reduce both imports and exports."

Thursday, August 16, 2018

Turkey is Harvesting the Risks of Its Foreign Denominated Debt

Noah Smith has hit the nail on the head when he writes that Turkey's currency crisis is the direct result, as many emerging nations have experienced, of issuing debt denominated in foreign currencies rather than its own currency.

It is just bad economics for any nation to issue debt in a foreign currency.  I wrote about this in relation to Argentina in 2010 and Argentina still, today, has the problems associated with foreign

Saturday, August 11, 2018

When Government Serves Only Some People --- Video

In Illinois there are over 1400 (1429-1431 depending on who you ask) and 25 townships in Sangamon County which cost County residents $6,461,080 in 2017 property taxes which works out to $84.42 in administrative expenses for each $100 of services, which is not just grossly inefficient, it is obscene.  In fact the administrative expenses may be even higher because some expenditures,

Friday, August 10, 2018

Tariffs and Trade Wars

Markets do not like tariffs.  They react negatively and add to markets dislike of economic and political uncertainty.  Trade wars only intensify economic and political uncertainty.  The United States not only imports, it exports.  Both imports and exports result in jobs.  In a trade war, job losses

Thursday, August 9, 2018

The Flattening Yield Curve as a Sign of Economic Strength

The economist, Tim Duy, has written another article on the flattening yield curve in which he details how, given our current economy and economic data, the current flattening yield curve is most likely an all clear signal of economic strength. He concludes, "The thing to fear is when inflationary

Saturday, July 21, 2018

When is a Flattening Yield Curve Inversion Really Significant?

Tim Duy has written an excellent article on the recession significance of a flattening yield curve inversion in which he concludes it is not likely to result in a recession until the Federal Reserve continues hiking rates after the inversion.  I think he is correct.

There has been a lot of alarmist speculation on yield curve inversions signaling recession without a thorough look at history and the differences with the past that a long flattening of the yield curve in a

Thursday, June 28, 2018

The Path to Pension Reform in Illinois is not Pretty

The Chicago Federal Reserve Bank and the Civic Federation held a conference in April to assess the State's options with respect to its pension systems liabilities.

A copy of "Navigating Pension Reform in Illinois" can be found here.

Basically, the report says what we all know that the State has ignored its funding mandates, that

Sunday, April 1, 2018

What Is The Aggregate Real Rate of Return of Risky and Safe Investments In The Economy?

 About four weeks ago in my Weekly Research links provided on a daily basis to subscribers, I linked to a NBER study through an ungated earlier version, because NBER paywalls the general public.  The title is "The Rate of Return on Everything, 1870–2015" by Jorda, Knoll, Kuvshinov, Schularick, and Taylor.  The paper asks "What is the aggregate real rate of return in the economy? Is it higher than the growth rate of the economy and, if so, by how much? Is there a tendency for returns to fall in

Sunday, March 25, 2018

Tax Software Exposes Users to Phishing

 When you get email that requests you use a link, you need to ignore it, check the sender source embedded in the mail, and if you think you should take action you do so my going (by entering in your browser) to the known real website and accessing your account.  There are all kinds of tax season and IRS phishing scams.  Be suspicious.  Know the IRS never contacts you be email or phone; they use US mail only.  Most recently users of popular tax software programs have been subject to phishing attacks.


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Emerging Market ETFs and Global Risk

 A recent paper studied investor flow into and out of emerging market ETFs and found they amplified global risks and ignored local conditions unlike market indexes and and mutual funds which did not.

I recommend reading the paper, because it suggests to me that investors ignore what is going on with the actual holdings of the ETF within a more comprehensive macroeconomic assessment.  This exposes those local markets to an exaggerated global financial risk and increases market volatility.

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Thursday, February 1, 2018

Exchange Traded Funds 101

I have written some short articles on ETFs trying to discuss potential liquidity problems, some inappropriate structures, and trading costs (as opposed to buying and holding) and I have some more articles planned as I have time to write.

The newest edition of the Journal of Economic Perspectives has an interesting article, which is linked in my Daily Research Links available to subscribers, entitled "Exchange-Traded Funds 101 for Economists".  While the article addresses structure and types of funds, liquidity, trading implications,

Estimating Potential GDP and Output Gap

 I have been very interested  in output gap estimating and researching the issue, because there are economic theory conflicts which muddy what governmental fiscal policy should be.  While I have not had the time to pull my research together in an article, I continue to follow the subject and add to my research.

The CBPP has a new paper out entitled "Real-Time Estimates of Potential GDP: Should the Fed

Monday, January 15, 2018

2018 Employer Withhholding May Turn and Bite You

The New IRS withholding calculator will not be available until February, the old W4's will continue to be used despite no longer reflecting the new tax law and 2018 employer withholding may result in under withholding  resulting in higher taxes owed at year end and possible tax penalties, particularly if there is more than one income in the family, you work at more than one job during the year, and/or you have multiple jobs at the same time.

You will need to proactively monitor and review your withholding, including using the new

Friday, January 5, 2018

2018 Tax Facts and Dates

 Morningstar has published a very succinct listing of 2018 tax facts, as a result of the new tax law, and important tax dates in the link above. The Pursuit of Financial Happiness(TM) has always been about information.  Some people, when reading our articles, do not read or dismiss the embedded links which provide not only pro but

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