Jonathan H. Todd

Finance, Investing, Economics

Tag: investing (page 1 of 4)

Corporate profits surged in Q4 2016. What does that mean for stocks?

Last week’s GDP report caught headlines for the weak economic growth in Q1. But a less-discussed part of the report was the surge in corporate profits in the fourth quarter of 2016.

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Americans might be too optimistic about the U.S. economy. For now.

Where GDP goes, consumers follow.

Yesterday the Commerce Department reported that the U.S. economy grew at a 0.7% annualized rate in Q1, below estimates of 0.9%. There were some positive underlying trends within the report, but the market took this as a disappointment.

The bigger worry is that the GDP report and the University of Michigan’s Consumer Sentiment – which measures how people feel about the prospects of economic growth and their own budgets – track each other.

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What the real fed funds rate says about the U.S. economy

The real fed funds rate has sat below zero since the Financial Crisis. What does this mean for the U.S. economy?

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Morning Minutes: December 19, 2016

The president’s Council of Economic Advisers releases its annual report. Apple probably owes a lot in taxes, to nobody’s surprise. And how have technology companies impacted the social and political landscape of the United States?

Here’s what you need to know this morning.

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To Infuriate ISIS, Support Infrastructure Investment

Global terrorism and weak economic growth are two key themes in this election cycle. While these could seem like two totally separate issue, could managing both simultaneously could come in one neat, tidy package?

There is a 100% chance of a terrorism attack on a U.S. city in the future, Gillian Tett wrote in her piece, Resilience in a time of crises. She argues that there is no way to eradicate ISIS, but we can minimize the damage they can do. Tett notes, “‘The classic city today has one big water purification and distribution system, and one power station,’ Kilcullen told me. While this pattern might look efficient, it is disastrous if the water or power is compromised; in a crisis you need a second, back-up system, which is disconnected from the main platform.”

The idea that Tett is arguing is that by passing a large infrastructure investment bill, we can minimize the disruption and damage ISIS or any other terrorist group can inflict on our physical environment. By duplicating existing systems that deliver our water, power, or other vital utilities, we would be able to better manage any disruptions that a terror group could inflict. Destroy a part of the electrical grid? No problem, it’s been rebuilt as a nodal network so service is unaffected.

Source: American Society of Civil Engineers

Source: American Society of Civil Engineers

Terrorism is a huge motivator to the electorate these days, and – call me cynical – it just happens to be a good excuse to cut through the the partisanship. But whether or not we want to use ISIS as the catalyst for making this kind of investment happen, it needs to happen no matter what. In its 2013 Report Card for America’s Infrastructure, the American Society of Civil Engineers says that the U.S. will need to invest $3.6 trillion by 2020 to modernize our national infrastructure. Over four years (and we’ll call it four years, because nothing would happen until a new administration takes office in 2017), that’s $900 billion a year, or about 5% of GDP.

That’s a hefty price, but “Invest in America, defeat ISIS” is not a difficult political sales pitch. A large, multiyear infrastructure investment bill would immediately create a huge number of jobs and inject a huge amount of money into an economy that has suffered from a persistent output gap since the Great Recession. That is the kind of demand-side action many economists have been wanting for years, and it just happens to present itself at a moment when the candidates of both major parties are interested in both infrastructure spending and fighting terrorism.

Populism and Globalization: Short-run, Long-run, and Also-Ran

Use all the macroeconomic models to point out the flaws of anti-globalization you’d like, it’s only going to add fuel to the fire.

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Calling A Private Equity Manager To Fix A Leaky Pipe: How Financialization Is Skewing The Housing Market

The financialization of real estate have been a winner for investors, but what does it mean for the long-term health of the economy?
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The Puerto Rico Debt Default Probably Doesn’t Hurt Your Portfolio, But Don’t Ignore It

Investors may not take a hit directly from the Puerto Rico debt default, but there are still lessons to be drawn.
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Slow and Low: Why Is Productivity Growth Flatlining?

Productivity growth has stalled – are we measuring it wrong? Or can we really do less with more? The service economy and inequality might be to blame.

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Private Equity, Mitt Romeny, and Donald Trump: Lessons in Inconsistency

Watch any given night of coverage leading up to the Iowa Caucus, and you wish for those halcyon days of the Romney/Ryan tickets: two clearly smart people with quite different, yet relevant, skill sets, running as the GOP ticket. While one day Mitt’s dangerous streak was on full display – he could get pinpoint his message with full detail without seeming pedantic or professorial, like Obama – the next day, he seemed to have all the grace of a three year old petting a puppy.

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