Archive for the “RealClearMarkets” Category

Articles from RealClearMarkets.

As a Minnesota Vikings fan, I was glad to see the Atlanta Falcons knock off the Green Bay Packers on Sunday night, September 17, by a score of 34-23. The Falcons also opened their impressive new stadium Mercedes-Benz Stadium that night.
In fact, 2017 is the year for new stadiums in the Atlanta area. At the start of the baseball season, the Braves also moved out of Turner Field in the city and into a new ballpark SunTrust Park in Cobb County.
The sports fan in me is intrigued by new stadiums. But both taxpayer and economist in me are simply disgusted. After all, theres no…

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As an early-stage investor in technology companies, Im used to many kinds of risk. Does the new technology actually work? Is there a market for the new product, the new device, the new drug, the new process? Is there a business model to get a return on the investment needed to bring the product to market? Is there an entrepreneur and a team in place that can actually make the business plan happen?
To those four tough questions every investor might ask, Congress has added a fifth: will the good new idea be able to get and use a patent before its competitors, or worse, financial speculators,…

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Canadian Prime Minister Justin Trudeau appears to be having an identity crisis. He seems to think he is Prime Minister of the Montreal-based transportation giant Bombardier. At least in the minds of Canadian governments, the link between Canada and Bombardier has become so tight as to make them indivisible. But are the interests of a country and a company ever truly identical?
Channeling his inner Donald Trump, Trudeau on Monday threatened the Canadian government would not contract to Boeing as long as it pursues a trade dispute with Bombardier, saying: We wont do business with a…

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With the emergence of the Graham-Cassidy bill to repeal Obamacare, I’ve been getting questions about what it means for portfolios. Some have said that the bill is likely to pass and that its passage makes tax reform before the end of the year more likely. The implicit assumption is that the passage of tax reform will impact markets as higher growth is factored in. I really don’t have any insight into the various bills the Senate is considering but for investors that matters less than one might think. The key word in the previous sentence is “investors”. Shifting your portfolio in anticipation…

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You deserve all the finest things in the world, a young Homer Simpson once wrote to his beloved Marge, and although I can give them to you, they will be repossessed. Senator Bernie Sanders Medicare for All Act of 2017 (MFA) makes similarly sweeping promises while relegating financing to a Post-It note, affixed to our national refrigerator: To do: design and implement the single largest tax increase in human history.
To his credit, Homer Simpson understood where his generosity would lead.
MFA promises doctor visits, hospitalizations, drugs, home visits, mental-health care,…

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Perhaps the most important factor driving forward a countrys ability to create wealth is not its advantages, but its disadvantages. Its not the cards youre dealt, its how you play em. Economic disadvantages can force a country to play its cards well.
The United States has enormous natural advantages, including the second-largest bounty of natural resources in the world. But it has become wealthy to some extent because of its disadvantages. To settle a large interior, Americans had to build the worlds most extensive railroad system, encourage labor mobility, and generally…

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It is widely accepted that America is more divided than ever – economically, culturally, and politically. What is less well-understood is what is driving our growing disunity. Is the rising wage gap between the college-educated and everyone else to blame? Are the “coastal liberal elites” and residents of the “heartland” living in increasingly isolated social media bubbles? Is the divisive rhetoric of our nation’s political leaders rubbing off on the electorate? All of these are likely contributors, but one explanation that has received notable empirical attention recently is the…

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The middle class is back or so it seems.
Thats the message from the Census Bureaus latest report on Income and Poverty in the United States. The news is mostly good. The income of the median household (the one exactly in the middle) rose to a record $59,039; the two-year increase was a strong 8.5 percent. Meanwhile, 2.5million fewer Americans were living beneath the governments poverty line ($24,563 for a family of four). The poverty rate fell from 13.5 percent of the population in 2015 to 12.7 percent in 2016.
The Census Bureau report reinforces Gallup polls …

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Financial markets and most media pundits are missing the new writing on the wall. For a variety of reasons surrounding shrewd moves by President Trump, the chances for significant tax cuts in the next ten weeks have risen sharply.
Since the Charlottesville blow-up in mid August, when the presidents fortunes were at low ebb — and Ill repeat my view that theres not a white-supremacist, racist, hateful bone in Trumps body — weve witnessed a dramatic executive turnaround. Trump beautifully handled the hurricane emergencies. His bipartisan political pivot to Charlie and…

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In 2006 Warren Buffett invested $4.5 billion in Iscar, an Israel-based machine-tools maker. Notable is that Iscar was within easy distance of the enemy rockets that exist as a constant threat to the small country, its businesses, and most important of all, its people. For that reason, the investment puzzled some of Buffetts admiring watchers.
But it turns out the Nebraskan wasnt fazed in the least by the risk of having a substantial asset so close to enemy fire. As Buffett biographer Alice Schroeder explained it, if Iscars facilities are bombed, it can go build another…

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In some respects, there is no such thing as a natural resource. Even the most costly such as oil have no inherent value but for the use that human beings and the marketplace are able to make of them. An episode of the television series the Twilight Zone illustrated that fact.
The episode, entitled Of Late I Think of Cliffordville, featured Albert Salmi as William J. Feathersmith, a mean-spirited tycoon at the height of financial success. At his desk late one night he confesses to his office janitor, who by coincidence came from the same hometown, that he longed for the…

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In April 2009 during the absolute worst economic circumstances of at least four generations, the new Obama administration announced that its stimulus plans were coming along. Keenly aware of Republican criticisms about profligacy, the President assured the country that projects were ahead of schedule and under budget. Economists like Paul Krugman were distressed, particularly about the second half of the pronouncement.
As Dr. Krugman wrote for the New York Times, Yay but boo. You can see his point. There is nothing wrong with under budget on its own accord, but…

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There were several surprises today.  They began in Asia Pacific with strong Australian jobs data and disappointing Chinese data.  But Australian employment data is volatile, and many had already come to appreciate that the Chinese economy lost some momentum.  The surprisingly hawkish guidance from the Bank of England and firmer than expected US CPI may have farther reaching implications than the Australian and Chinese developments.  Sterling posted its third largest advance of the year, rallying about 1.8% against the dollar, following a hawkish hold by the Bank of England.  The 7-2…

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Adam Smith and Karl Marx disagreed about almost everything. The invisible hand of the market versus public ownership of the means of production, the free exchange of goods and labor versus dictatorship of the proletariat. It would be difficult to think of a wider philosophic gap than the chasm that separated their thinking.
But they agreed on at least one thing: The risk that constant repetition of mundane tasks common to old-style manufacturing could lead to deep worker alienation and intellectual stultification. The human need for constant mental stimulation that they both recognized is…

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Has the notion that the seeds for the 2008 Great Recession were sowed with the scrapping of the Glass-Steagall Acts firewall between commercial banks and securities activities become entrenched as an accepted part of conventional wisdom? The popular misconception may become more than just a debating point for those who favor increased regulation of financial markets. By setting the stage for restoring the Glass-Steagall wall, this myth could end up undermining Wall Streets place as the leader in world finance. And with that, damage the U.S. economy.
Financial columnist Jonathon Trugman…

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