A Journal of Independent Research, Analysis,
 Opinion and Insight

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Undiscovered No Longer
FPA Links To Queens Road Small Cap, Gets Top-Performing PM
Sometimes — albeit not often — things just work out. If you ask Steve Scruggs what the best thing is about the deal that he and his partners in Bragg Financial Advisors — an independent, fee based, investment advisory business run by his family down in Charlotte, N.C. — inked with the mutual fund heavyweights at First Pacific Advisors last year, the first thing he’ll likely say is that he gets to stay put on his little farm outside of town — while continuing to run the small cap value fund he started in 2002  — his way. Then he’ll pause just a beat or two before adding with barely suppressed glee, but with a lot more assets.

SPAC Shenanigans
Exploring Counterintuitive Rallies In Struggling Companies’ Stocks
10/08/21 8:00 AM
By Dylan Grice
SPACs raise money in public markets to buy private companies. A standard deal will see the SPAC selling units to investors, comprising of ordinary shares (typically priced at $10 per share), and warrants (typically striking at $11.50 a share).

Not All Economists Lame
Dismal Scientists Team Up On Stuff That Matters
10/08/21 7:00 AM
By Philippa Dunne and Doug Henwood
We have referenced Harvard professor Ray Chetty’s work on the connection between family wealth and selective college attendance over the years. Several years ago, Chetty and his team launched Opportunity Insights to contribute targeted big data to policy solutions in order to “empower families throughout the United States to rise out of poverty….” Early in the pandemic OI leveraged their data as Track the Recovery, pretty much an overnight sensation, that allowed all of us to look at a number of crucial metrics — spending, employment, educational outcomes — by high- and low-income zip code, states, sectors, and so on.

Perilous Political Folly
Deadly Serious Dysfunction in Congress’ Game Of Debtor’s Chicken
10/08/21 6:00 AM
By David R Kotok
“Congress is at an all-too-familiar stalemate over raising the federal debt ceiling, worrying bankers and others that the financial markets could take a hit if lawmakers fail to reach a deal in advance of an October deadline.”

(“Why debt limit standoff could be worrisome for banks,” https://www.americanbanker.com/news/why-debt-limit-standoff-could-be-worrisome-for-banks)

Recent stock and bond market turmoil has been blamed on a lot of factors. Today we want to add an obscure but very serious factor to the list.

Going Green
How Investment Funds Can Drive The Green Transition
10/08/21 5:00 AM
By Fabio Natalucci, Felix Suntheim, and Jérôme Vandenbussche
The transition to net-zero greenhouse gas emissions requires unprecedented change by companies and governments, as well as additional investment of as much as $20 trillion over the next two decades. Strong fiscal policies, complemented by a broad range of regulatory and financial policies, will be necessary to facilitate the green transition.

Sinking Comfort Levels
Unease Rising With Stocks, Bonds Houses At Nosebleed Heights
10/08/21 8:20 AM
By Andrew Addison
Robert Shiller penned an excellent article in Sunday’s NY Times business section titled “As 3 Markets Rise, the Comfort Level Sinks.” He noted that the prices of Stocks, Bonds and Residential Real Estate are all extremely high, with all three never this overpriced (simultaneously) in modern history.
His CAPE Ratio is the 2nd-highest since data began in 1881. [More]

Clear As Mud
Market Crosscurrents Persist; Stock Symbol Of The Year
10/08/21 7:20 AM
By Blaze Tankersley
NDX and by extension SPX prices, are at odds with IWM MDY and NYA prices. It is a strange mix out there as XOP moves to breakout and BKX is knocking on the front door while many depressed average type stocks have been showing a recent surge of strength, led by leisure stocks — hotels, airlines and the like — while the big indexes fall. [More]

Sept. 1929: Also-Ran
Pictures Of Insane Overvaluation In U.S. Market
10/08/21 6:20 AM
By Philippa Dunne and Doug Henwood
There are many ways to say the US stock market is insanely overvalued, and here are three graphs making the point. They lead to the sensational projection that that the S&P 500 could lose almost half its real value over the next decade. [More]

Lasting Effects
The Intergenerational Impact Of Early Childhood Education
10/08/21 8:00 AM
Jorge Luis García, James J Heckman and Victor Ronda
This paper demonstrates multiple beneficial impacts of a program promoting intergenerational mobility for disadvantaged African-American children and their children. [More]

Fed Can Target Main St.
Funding For Lending, Tried In 1970s, Boosted Local Economies
10/08/21 7:00 AM
John Kandrac
Modern central bankers confront a challenge of providing economic stimulus even when the policy rate is constrained by a lower bound. [More]

Poking Econ Verities
Fed Staffer’s Cheeky Dissection Of Inflation Expectations
10/08/21 6:00 AM
By Jeremy B Rudd
Economists and economic policymakers believe that households’ and firms’ expectations of future inflation are a key determinant of actual inflation. [More]

Umps Budget Attention
Focus And Decision-Making In Play On Baseball Fields
10/08/21 5:00 AM
By James Archsmith, Anthony Heyes, Matthew Neidell and Bhaven Sampat
Recent theoretical and empirical work characterizes attention as a limited resource that decision-makers strategically allocate. [More]

Evidence From The ACA
Inertia, Market Power And Adverse Selection In Health Insurance
10/08/21 4:00 AM
Evan Saltzman, Ashley Swanson and Daniel Polsky
We study how inertia interacts with market power and adverse selection in managed competition health insurance markets. [More]

Acute Observations, October 8, 2021
Perceptive Commentary from September 17-October 8, 2021
10/08/21 8:00 AM
Rana Foroohar
Many of us are worried about Trump. Or the future of New York. Or whether democracy will prevail.