A Journal of Independent Research, Analysis,
 Opinion and Insight

An Alternative Way To View Or Print The Entire Current Issue As A Single Document
Attention Paid-Up Subscribers: To read or print the entire current issue as a single document, use the "easyprint" feature in the "Nav bar" to the right to open it, or any of WOWS' individual features, as an Adobe PDF file, and then print it. Alternatively, you can click "more" at the bottom of this paragraph and then click the red Adobe icon that appears. Your second click will download the full issue .pdf file of WOWS' latest issue to your computer, a process that -- depending on the file size and your connection speed -- might take more than the blink of an eye. Then, depending on preferences you've set on your device, it will either open automatically or show up in your downloads folder, waiting to be opened. [More]
Value on a Global Scale
IVA's Chuck de Lardemelle on Finding Value Where ETFs & AI Fail
It’s not at all the fault of Charles “Chuck” de Lardemelle that 2020’s first issue of WOWS is hitting your inbox at a painfully late hour on this Friday — however much his puckish smile in the adjacent photo may tempt you to surmise otherwise.

For how could I possibly blame Chuck, a founding partner, co-CIO and portfolio manager at Manhattan-based IVA Funds, for the innately charming and urbane French accent he was born to? No, I simply failed to find transcriptionists who could competently handle the simultaneous translation challenge with which I tasked them. I should have known better. When financialese often proves a bridge too far for my crew, what was I smoking to expect anything but hash when it combined with the vocal rhythms of Paris?

But enough! [More]
A Squandered Recovery
“We Have Met The Enemy And He Is Us,” As Pogo Knew...
1/17/20 8:00 AM
By Philippa Dunne and Doug Henwood
We know this isn’t very happy new year, but Harvard Business School (HBS) has just released another installment in their US competitiveness series. Back titles included, Prosperity at Risk, (2011); Competitiveness at a Crossroads (2012); An Economy Doing Half its Job (2013–2014); The Challenge of Shared Prosperity (2015); and Problems Unsolved and a Nation Divided (2016). [More]

Active Versus Passive
Investors, Seek Cover In A Portfolio of Index Orphans
1/17/20 7:00 AM
By Charles Gave
Back in 2003, low interest rates were creating problems for pension funds and insurance companies which could not find enough high-quality bonds offering a decent interest rate. Not to worry, said Wall Street banks, which began to package up real estate-based bonds of varying quality; the best tranches got a triple-A stamp from the credit rating agencies, yet they miraculously offered a higher yield than other top-notch bonds. [More]

Blast From The Past?
After 1999 Set Tone For Last Decade, Complacency Greets Next
1/17/20 6:00 AM
By Doug Ramsey
It was during the very first days of the great 2019 market rally that we noted its similarities to the bubbliest of all the bubble years — 1999. Wow. [More]

Super Cycles Happen
Amid Dizzying Valuations, 30-Year Patterns Offer Hope For More
1/17/20 5:00 AM
By James Paulsen
Including those who are bullish for this year, few expect stocks to continue delivering superior returns during the next decade. The economic expansion and bull market are simply too long in the tooth, and valuations too extended, to produce another decade of solid results. [More]

Economic Outlook
Two Risks To The Forecast That Are Worth Watching
1/17/20 4:00 AM
By Eric S Rosengren
Good morning, it is a pleasure to be with you today. Participating in the CBIA’s outlook event is always a great way to start the new year. [More]

Health Care
Studies Probe Why We Are Paying Much More; Getting Much Less
1/17/20 3:00 AM
By Jonathon Gruber
The rise of the US health-care sector over the past several decades has been remarkable. As Figure 1 shows, in 1970, the country devoted slightly more than 6 percent of GDP to health care, about 1 percent more than other nations. [More]

A Comeback For Value?
Time To Reset: Valuation Disparity Topped Only In Tech Bubble
1/17/20 2:00 AM
By Brian Krawez
Growth stocks have outperformed their value counterparts in all but three years since the financial crisis, as measured by calendar-year returns of the Russell 1000 Growth and Value indices. We believe the enthusiasm has gotten out of hand: The growth universe recently traded at 21 times forward earnings per share, while value earned a multiple of just 14. [More]

Jobs Disappointment
Why Growth Beats Value; A Sell on Freight
1/17/20 8:20 AM
By Andrew Addison
December’s jobs report released on Friday was disappointing for a few reasons. Not only was the 145,000 gain in non-farm payrolls lower than expected, but October and November jobs were revised down (14,000). [More]

Look Out Below
Model Calls To Sell And Short Financials
1/17/20 7:20 AM
By Michael Belkin
The S&P500 financial sector/S&P500 ratio peaked on December 12th (one month ago) and has -3% alpha since then (XLF/S&P500). Banks are ground zero in the developing financial selloff. [More]

Climate Change Real
And Measures Of Its Economic Costs Lag Behind The Science
1/17/20 8:00 AM
By Pierpaolo Grippa, Jochen Schmittmann, and Felix Suntheim
Climate change is already a reality. [More]

A Pre-Mortem Analysis
Cyber Risk And The U.S. Financial System
1/17/20 7:00 AM
By Thomas M Eisenbach, Anna Kovner, and Michael Junho Lee
We model how a cyber attack may be amplified through the US financial system, focusing on the wholesale payments network. [More]

Whales To The Rescue?
Sea Giants Are Carbon Capture Champions
1/17/20 6:00 AM
By Ralph Chami, Thomas Cosimano, Connel Fullenkamp, and Sena Oztosun
When it comes to saving the planet, one whale is worth thousands of trees. [More]

New Food Stamp Rules
Trump Moves Will Limit Govt. Ability To Combat Recessions
1/17/20 5:00 AM
By Lauren Bauer, Jana Parsons, and Jay Shambaugh
On December 4th, the US Department of Agriculture (USDA) released a final rule on work requirement waivers to the Supplemental Nutrition Assistance Program (SNAP; formerly the Food Stamp Program). [More]

Intellectual War Spoils
How Defense-Related R&D Spending Boosts Productivity Growth
1/17/20 4:00 AM
By Enrico Moretti Claudia Steinwender and John Van Reenen
In the US and many other OECD countries, expenditures for defense-related R&D represent a key policy channel through which governments shape innovation, and dwarf all other public subsidies for innovation. [More]

Acute Observations, January 17, 2020
Perceptive Commentary from January 1-17, 2020
1/17/20 8:00 AM
David E Rovella
The “phase one” deal signed Wednesday — aimed at rolling back hostilities in President Donald Trump’s trade war with China — brings with it a level of socialist-style central planning that may have been anathema to previous U.S. administrations. While American trade pacts traditionally leave the particulars of commerce to markets, this one includes a classified annex detailing $200 billion in Chinese purchases. [More]