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Attention Economy May 20, 2016

  • Trending Topics – On The Media – WNYC 051316
    Bob Garfield : Bob says: "Who cares?!" By asking him about policy flip-flops and speculating about his VP pick, the press is normalizing an abnormal candidate. Instead, they must stay on the real story: his dangerous statements about women, Muslims, and immigrants.
  • Nationalize Facebook – On The Media – WNYC 051316
    From its reach into the lives of over a billion people to the way it blurs the line between breaking news and personal posts, to the scope of its plans to provide global internet access — Facebook’s power is unlike anything we’ve seen before. That is, unless you count Standard Oil and the other great monopolies of the Gilded Age. | Bob talks to progressive author and professor Robert McChesney about the dangers of media consolidation and why economists on both sides of the spectrum have argued in favor of drastic measures when it comes to dealing with companies of Facebook’s size.

Attention Economy May 5, 2016

  • End of Golden Era for Investors Spells Troubles for Millennials – Bloomberg 042716
    Rich Miller : Turning 30 just got a lot scarier. | A coming collapse in investment returns means that people that age today will have to work seven years longer or save almost twice as much to end up with the same nest egg as those of roughly a generation ago. | So says the research arm of McKinsey & Co. in a new report that argues that investors of all ages need to resign themselves to diminished gains. | The consulting company maintains that the last 30 years have been a “golden era” of exceptional inflation-adjusted returns thanks to a confluence of factors that won’t be repeated. They include falling inflation and interest rates, swelling corporate profits and an expanding price-earnings ratio in the stock market. | The next two decades won’t be nearly as lucrative, even on the optimistic assumption that the world economy snaps out of its recent funk and resumes growing at a faster clip, according to the McKinsey Global Institute report titled “Diminishing Returns: Why Investors May Need to Lower Their Expectations.”
  • Don’t Let McKinsey Scare You, Millennials – Bloomberg Gadfly 050416
    Nir Kaissar: Poor millennials. Up to their ears in student debt. Facing stagnant wages. Beset by obscene housing costs in the big cities where they are most likely to land a job – if they can land a job, that is. | And now a high-profile consulting firm, McKinsey & Co., is adding to millennials’ woes with a Debbie Downer report that warns that millennials will have to work seven years longer or save twice as much in order to live as well in retirement as their parents. The reason, according to McKinsey, is that returns for U.S. and Western European stocks and bonds will be far lower over the next 20 years than they were over the previous 30 years.
    Well, take heart Millennial Investors. Your futures are better than McKinsey would have you believe.
  • The Cost of Moving at Sub-Treasury Speed – Bloomberg Gadfly 050416
    Lisa Abramowicz: Treasuries, for example, move rapidly. Corporate bonds, on the other hand, trade about 3,000 times more slowly than U.S. government debt. So it would be much more expensive to quickly liquidate a pool of company debt than it would for Treasuries.
    That’s one of the conclusions of a research paper presented by Albert S. Kyle, a finance professor at the University of Maryland, this week at the Federal Reserve Bank of Atlanta conference in Amelia Island, Fla. He highlighted how time is the main distinguishing factor between different securities and how they trade.
    The paper’s point is critical to anyone who invests in corporate-debt funds because it raises a question about relying on a quick exit from slow-moving securities. While mutual funds promise investors the ability to redeem their capital daily, the underlying securities often move much more slowly.
    So far, this liquidity mismatch hasn’t caused a crisis during market hiccups, even given the billions of dollars of mutual-fund money that has poured into corporate debt markets since 2008. And it seems unlikely to cause a systemic seizure in the near future because fund managers are taking actions to prevent selling debt in a down market, including holding more cash and securing credit lines.
  • Clinton’s Thinking Vs. Trump’s Feelings – Bloomberg View 050416
    Cass R. Sunstein: Donald Trump is an iconic System 1 candidate — more clearly so than any party nominee in at least sixty years. Hillary Clinton is an iconic System 2 candidate — as clearly so as any party nominee in the same period. That distinction may well end up defining the general election. | Let me explain. Psychologists, and most prominently Nobel Prize winner Daniel Kahneman, have distinguished between two ways of thinking — fast and slow. Fast thinking is associated with the brain’s System 1: It is intuitive, quick, and sometimes emotional. When you think that two plus two equals four, and when you immediately recognize a warm, smiling face, you are using System 1. | System 2 is deliberative and reflective. When you multiply 346 times 213, or struggle to fill out your tax forms, you are relying on System 2. If you are engaging in some kind of complex cost-benefit analysis, System 2 will be working hard. | System 1 is what leads people to fall in love. System 2 helps them decide whom to marry.
  • Tesla’s Talk Isn’t Cheap – Bloomberg Gadfly 050416WC
    Liam Denning: Investors should have known this was coming. As I wrote here a month ago, Tesla’s Kickstarter-like down-payment program for the mass-market Model 3 was not only a useful source of interest-free funding. By holding out the promise of huge potential demand, it created a perfect opportunity to open the door to selling more new equity. | Tesla, like any new-ish business with global ambitions, has long relied on the good graces of the capital markets to bridge the gap between voracious up-front spending and future growth.
  • Tesla’s Wild New Forecast Changes the Trajectory of an Entire Industry – Bloomberg 050416
    Tesla just took the most ambitious automotive production timeline since the Ford Model T and moved it up two years.
  • Tesla Powerwalls for Home Energy Storage Hit U.S. Market – Bloomberg 050216
    A year after Elon Musk unveiled the Powerwall at Tesla Motors Inc.’s design studio near Los Angeles, the first wave of residential installations has started in the U.S. The 6.4-kilowatt-hour unit stores electricity from home solar systems and provides backup in the case of a conventional outage. Weighing 214 pounds and standing about 4-feet tall, it retails for around $3,000. But hookup by a trained electrician is required, as is something called a bi-directional inverter that converts direct-current electricity into the kind used by dishwashers and refrigerators. The costs add up quickly — which has fueled skepticism about Musk’s dream of changing the way the world uses energy. | Net-metering policies, which allow residential solar customers to sell their excess solar electricity back to utilities, have limited the appeal of home batteries in many states. But that’s shifting: Net metering is being phased out in some states, making storage more attractive.
  • Billions Are Being Invested in a Robot That Americans Don’t Want – Bloomberg 050416
    The driverless revolution is racing forward, as inventors overcome technical challenges such as navigating at night and regulators craft new rules. Yet the rush to robot cars faces a big roadblock: People aren’t ready to give up the wheel. Recent surveys by J.D. Power, consulting company EY, the Texas A&M Transportation Institute, Canadian Automobile Association, researcher Kelley Blue Book and auto supplier Robert Bosch LLC all show that half to three-quarters of respondents don’t want anything to do with these models.
  • How Americans Blow $1.7 Trillion in Retirement Savings – Bloomberg 042716
    You’re traveling across the desert, feeling parched and looking dirty. You take a long drink of water from your canteen, then wash your face with the rest. As you’ll discover before you die of thirst in a day or two, you just made a huge mistake. | Outside of cartoons, nobody is this stupid. But people make the same kind of mistake all the time, putting their current happiness (vacations, flat screens, new cars) way above their future well-being. | Economists call this kind of irrationality “present bias.” And according to a National Bureau of Economic Research study, it and other biases are holding back millions of Americans from saving enough money for that ultimate future need: retirement. | How much money? Try $1.7 trillion on for size. That’s 12 percent of the $14 trillion in U.S. individual retirement and 401(k) accounts.

Attention Economy May 3, 2016

  • Gold Crosses $1,300 Threshold as Rates Outlook Undermines Dollar – Bloomberg
    After three years of being scorned, gold is making a powerful comeback. Prices briefly pushed above $1,300 an ounce on speculation that the U.S. central bank will be slow to tighten policy further, bolstering the metal’s appeal as the dollar sagged. | Bullion for immediate delivery climbed 0.4 percent to $1,296.20 an ounce at 10:17 a.m. in London. On Monday, prices touched $1,303.82, according to Bloomberg generic pricing. The metal has gained 22 percent this year, rising to the highest since January 2015, as a gauge of the dollar lost 6.3 percent. | Investors piled back into bullion in 2016 after prices sank for three straight years as risks to the global economy prompted the Federal Reserve to signal it will take a slower approach to rate increases. While the metal’s appeal has also been boosted by the spread of negative interest rates in Europe and Japan, gold’s latest push higher came after the Bank of Japan refrained from adding stimulus last week, which hurt the dollar. The spike above $1,300 on Monday came as many financial markets in Asia and Europe were closed.
  • Apple Takes a $4 Billion Bite Out of ETFs as Smart-Beta Shines – Bloomberg 050216
    When Apple has a bad run, it is devastating to many ETF investors. In the past two weeks, Apple has basically erased more than $4 billion in ETF assets during its 16.3 percent decline that was triggered by a disappointing earnings report. It gave the SPDR S&P 500 ETF Trust (SPY) a $1 billion haircut in a matter of days, not to mention wiping out hundreds of millions of dollars out of several other popular ETFs as seen in the table below which sorts ETFs by the size of Apple’s bite.
  • Put Buffett’s Advice Into Action With These Two ETFs – Bloomberg 050216
    Warren Buffett’s advice may now extend beyond the grave: “My advice to the trustee could not be more simple. Put 10% of the cash in short?term government bonds and 90% in a very low?cost S&P 500 index fund. I believe the trust’s long-term results from this policy will be superior to those attained by most investors—whether pension funds, institutions, individuals—who employ high fee managers.”
  • Bloomberg: Smart Beta Investing Awaits Its Advocate 050216
    Smart beta is going through some growing pains, and Rob Arnott, co-founder of smart beta shop Research Affiliates LLC and one of smart beta’s pioneers, is a natural candidate to help lead it past these early hurdles.
  • Bloomberg: The Super Rich Were the First to Bail During the Financial Crisis
    When the going gets rough, the 1 percent start selling. | That’s the finding of a new paper that says people with the highest income bailed from stocks disproportionately on the worst days of the financial crisis. The share of selling by the biggest earners rose “sharply” in days following spikes in volatility, according to data on millions of sales reported to the government in 2008 and 2009. | Mapping selling patterns in periods of tumult is of interest to researchers trying to get at the psychological underpinnings of events such as the financial crisis, when more than $10 trillion was erased from U.S. share values. Their main conclusion, that different people react with varying urgency to signs of trouble, could help identify behavioral biases that feed market meltdowns.
  • Here’s Your Degree. Now Go Defeat Demagogues. – Bloomberg View 043016
    Michael Bloomberg: “As durable as the American system of government has been, democracy is fragile — and demagogues are always lurking. Stopping them starts with placing a premium on open minds, voting, and demanding that politicians offer practical solutions, not scapegoats or pie-in-the-sky promises. | In 1928, Republicans promised a “chicken in every pot and a car in every backyard.” They won control of Congress and the White House, and a year later, instead of a chicken and a car, we got the Great Depression. | Today, when a populist candidate promises free college, free health care and a pony, or another candidate promises to make other countries pay for our needs, remember: Those who promise you a free lunch will invariably eat you for breakfast.
  • President Obama Messaging: The Selling of Obama – POLITICO Magazine May-June 2016
    Michael Grunwald
  • Bloomberg: The Real Hamilton: What’s Not to Love?
    The bipartisan Disneyfication of America’s first Treasury secretary began in earnest last fall when President Barack Obama spoke at a fundraising performance of the hit musical Hamilton and said it “happens to be the only thing Dick Cheney and I agree on.” The real Alexander Hamilton made no effort to be loved by all, as Lin-Manuel Miranda’s brilliant, rap-infused musical makes clear. He was vain and opinionated. He was also usually right. No libertarian, he believed the federal government could and should play a central role in economic development. His arguments deserve fresh consideration for today’s problems—even if taking them seriously will make it harder for everyone to agree on his wonderfulness.
  • You Can’t Escape Data Surveillance In America – The Atlantic 042916
    [Big Brother R Us] Sarah Jeong: In America, surveillance has always played an outsized role in the relationship between creditors and debtors. In the 19th century, credit bureaus pioneered mass-surveillance techniques. Today the American debtor faces remote kill switches in their devices, GPS tracking on their leased cars, and surreptitious webcam recordings from their rent-to-own laptops. And where our buying and borrowing habits were once tracked by shopkeepers, our computers score our creditworthiness without us knowing… We peer into a future where our software spies on us, our data defines us, and our hardware reinforces existing power imbalances. What’s slowing it down are a federal agency whose remedies often feel unsatisfactory, and a cohort of attorneys whose motivations are of course capitalistic. And while it’s tempting to simply call for more federal intervention, paternalistic impulses sometimes harm the most vulnerable among us.
  • How Are the Great-Grandkids of the Richest Gilded-Age Americans Faring? – The Atlantic 092015
    Ester Bloom: According to Time magazine, 90 percent of all rich families, from the Astors to the Ziffs, lose their fortunes by the third generation. This is remarkable, considering how comparatively easy it is to retain wealth once you have it. A recent analysis suggested that Donald Trump, for example, could be similarly wealthy if he had done nothing but put his eight-figure inheritance into the stock market: “If he’d invested the $200 million that Forbes magazine determined he was worth in 1982 into that index fund, it would have grown to more than $8 billion today.” | Conversely, climbing several rungs on the income ladder takes ingenuity, grit, resilience, opportunity, and a heaping tablespoon of luck. Currently, poor children have only a 7.5 percent chance of making it even to the top 20th percentile as adults. Making money is hard; holding onto money when you’re born with it shouldn’t be.
  • Bloomberg: Learning to Love (Tolerate?) Big Government
    Justin Fox: In December, Gallup asked 824 U.S. adults this question: “In your opinion, which of the following will be the biggest threat to the country in the future — big business, big labor or big government?”
  • Bloomberg: Trump Wins Big in Disability Country 042616
    The $150 billion federal disability program is a mess. It almost went broke (Congress had to give it an emergency infusion). It discourages employment and can be gamed. But woe to the office-seeker who tries to fix it.
  • One Easy Way to Make Wikipedia Better – The Atlantic 042216
    Adrienne LaFrance:: “It turns out it’s pretty difficult to fully access key sources on any given Wikipedia page. That’s according to a study from researchers at Dartmouth’s Neukom Institute who assessed the 5,000 most-trafficked Wikipedia pages, analyzing them for verifiability. In other words, they didn’t check to see if Wikipedia pages were accurate; they investigated how easily someone could make that determination for themselves. | Based on the presence of markers like International Standard Book Number and Digital Object Identifiers, which are unique serial codes assigned to books and papers, about 80 percent of book citations and nearly 90 percent of journal references were technically verifiable—meaning you could track down the source material if you wanted to figure out whether a characterization on Wikipedia was right. But practical verifiability was a different story. It might be possible to track down the source material—as in, that source material actually exists and the link to get you there is working—but it might be really difficult or impossible to get to it. Using Google’s API, the researchers wrote a program to classify the accessibility of Google Books citations, for instance, and found that most books (71 percent) cited on Wikipedia are only partially viewable online; while many others (17 percent) are not viewable online at all. (About 12 percent were fully viewable.)”
  • The Rise of Trump Studies – POLITICO Magazine 042216
    As Trump’s surprise candidacy disrupts everything it touches, it is now exploding into the academic realm, launching a yuuuuge new wave of what you might call Trump Studies. From philosophy to law to computer science and history, researchers are finding they can’t look away from Donald J. Trump. For some…. the astonishing popularity of the celebrity real estate developer is the perfect tent pole to hang their existing research on. For others, his candidacy is like an experiment on a national scale, blowing up conventional wisdom about how American politics and society work.