A Journal of Independent Research, Analysis,
 Opinion and Insight

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Spoiling For A Debate
Andrew Smithers Makes Case That Bonus Culture Crushes Investment
Andrew Smithers, the now officially retired but still indefatigable founder of London’s Smithers & Co. has written another of his insistently provocative and unerringly timely books on the often unhappy intersection between sharp financial practices  and too-fuzzy-for-our-own good economic conceits. 

This time, Andrew tackles the lackluster pace economic growth that’s increasingly fueling populist rumblings against Western capitalism. Characteristically, he pulls no punches — after meticulously putting all his data ducks in a row. [More]
Invest Like A Chameleon
Change Your Colors As The Environment Changes
9/20/19 8:00 AM
By Richard Bernstein
RBA’s portfolios are sometimes included in alternative asset allocations because of our “go anywhere” macro strategy. However, we differ greatly from traditional alternative managers in that our fees are typically much lower and investors’ liquidity is on demand. [More]

A Shift In Leadership?
Not Away From Growth, But It Might Not Be Too Late For Cyclicals
9/20/19 7:00 AM
By James Paulsen
In the last couple weeks, the stock market has undergone a significant shift in leadership. Perhaps it is the long-awaited swing from “growth” to “value,” but so far it appears more like a shift from “defensive” to “cyclical.” Although most “growth sectors” have stopped outpacing (e.g., Technology and Communications), they have not drastically underperformed. [More]

Growing More Slowly
No Immediate Recession, But Political, Speculative Risks Abound
9/20/19 6:00 AM
By Albert M Wojnilower
The US economy is continuing along the upward path it has been following for some time — but a bit more slowly. Monthly payroll increases, while less outsized than before, remain well above trend. [More]

Crude’s Wild Ride Begins
With Negative Implications for Global Economy, Interest Rates
9/20/19 8:20 AM
By Michael Belkin
The energy sector is by far the most depressed and despised S&P sector. Before Monday, the energy sector had minus 42% negative alpha since 2016 (see chart). [More]

Initial Crude Reaction
9/16 Spike In Brent In Aftermath Of Attack On Saudi Facilities
9/20/19 7:20 AM
By David Sheppard, Anjli Raval and Demetri Sevastopulo
Oil prices spiked as much as 20 percent on fears of prolonged supply disruption following attacks in Saudi Arabia that knocked out more than half of the kingdom’s production. Brent crude prices posted their biggest percentage gain since Saddam Hussein invaded Kuwait as traders fretted that production in the world’s biggest oil exporter would stay below maximum capacity for an extended period. [More]

The Repo Trauma
It Merely Describes a Momentum Trade That’s Starting To Blow Up
9/20/19 6:20 AM
By Blaze Tankersley
I am going to put up the UST10S chart today (September 18), you can see it’s a bit of a mirror with ITB, now itself knocking on the minor Fib door from the other direction. It seems like an important juncture in rates here and now. [More]

Dollar Crunch
Rates Surge In Repo Market As Short-Term Liquidity Dries Up
9/20/19 5:20 AM
By Izabella Kaminska
That’s a relatively wild spike in US general collateral repo rates to as much as 8.25 percent at the open, at a bid/offer spread of 9.0%/7.50%. This is seismic stuff — and possibly indicative of a real dollar crunch — not least because it’s not even the quarter’s end (the usual time funding squeezes emerge). [More]
The Smithers NTV Model For Total Factor Productivity
9/20/19 8:00 AM
By Andrew Smithers
This paper revises and extends my previous one on TFP * in which I proposed that the NTV model should be preferred to those which follow the current consensus approach. [More]

Wealth Taxation
How To Make A Progressive Tax Work In The U.S.
9/20/19 7:00 AM
By Emmanuel Saez and Gabriel Zucman
This paper discusses the progressive taxation of household wealth. [More]

Use It Or Lose It
Efficiency Gains From Wealth Taxation
9/20/19 6:00 AM
By Fatih Guvenen, Gueorgui Kambourov, Burhanettin Kuruscu, Sergio Ocampo-Diaz, Daphne Chen
 How does wealth taxation differ from capital income taxation? When the return on investment is equal across individuals, a well-known result is that the two tax systems are equivalent. [More]

Man With A Mission
Princeton Prof Sees Excess Borrowing As A Credit Addiction
9/20/19 5:00 AM
By Hyun-Sung Khang
Everyone knows someone who buys more than he or she can afford. [More]

Opioid Crisis
Veterans Of Wars Without End Are Victims At Its Epicenter
9/20/19 4:00 AM
By Resul Cesur, Joseph J Sabia and W David Bradford
Grim national statistics about the US opioid crisis are increasingly well known to the American public. [More]

Great Financial Crisis
Assessing Its Lingering Effects, A Decade Later
9/20/19 3:00 AM
By Wenjie Chen, Mico Mrkaic, and Malhar Nabar
This paper takes stock of the global economic recovery a decade after the 2008 financial crisis. [More]

Acute Observations, September 20, 2019
Perceptive Commentary from September 1-20, 2019
9/20/19 8:00 AM
Lim Chow Kiat
“When faced with uncertainties, it is advisable to have optionality. Tactically, that may be raising some cash as dry powder.”
as quoted by David Ramli
One of the World’s Top Investors Just Rang the Alarm, Again
September 19, 2019

Gail Dudack
The unprecedented drone bombing of a Saudi Arabian energy complex on September 15 has dominated news in recent days, overshadowing both the first auto strike in 12 years and the report indicating Chinese industrial production fell to its lowest level in over 17 years. August’s 4.4% YOY rise in Chinese factory activity fell well short of the 5.2% YOY expectation. [More]