Subject: EconVue Spotlight February 20, 2018
From: "Lyric Hughes Hale" <[email-masked]>
To: "R. Hunter Biden" <[email-masked]>
Date: Tue, 20 Feb 2018 11:32:35 -0800 (PST)

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EconVue Spotlight

Dear R. Hunter,

In my last newsletter, I said that global economic fundamentals seem to 
be positive, and in spite of market turmoil in the interim I am going to 
reiterate that statement. Volatility has returned, which will bring 
opportunities for those who are not faint of heart. This is an exciting 
time, never dull, never boring.

In the past week, I attended three diverse conferences, one virtually. 
Alan Greenspan appeared on the stage of the American Enterprise 
Institute, and although his speech has slowed, the audience hung on 
every word. The title of the conference was (full video here) The Bubble 
Economy Is This Time Different?

http://www.aei.org/events/the-bubble-economy-is-this-time-different/

Greenspan's behaviorialist answer: "No, it never is, if you're dealing 
fundamentally with human nature." I especially enjoyed the comments of 
Vincent Reinhardt and Adam Posen, which smoothed out the discussion.

At the Chicago Mercantile Exchange, I was privileged to attend the 
CME/MSRI event

http://www.msri.org/general_events/23006

which awards an annual prize for innovative quantitative applications in 
economics. The winner was Stanford economist Paul Milgrom, who was 
introduced by his former Northwestern colleague Roger Myerson. He was 
honored for his work which began with the creation of FCC spectrum 
auctions in 1993. The program featured thought-provoking presentations 
by his students of their research on creating fair auctions. One key 
conclusion was that time-based auctions, such as high frequency trading, 
create inefficient allocations. However, real world exchanges such as 
the CME derive income from collocation of servers by HF traders. It is 
hard to see widespread adoption of alternative frequent batch auctions, 
absent regulatory intervention. One of the most intriguing presentations 
was about creating a market for human organs, now mostly a priceless 
auction with huge and devastating inefficiencies. Blockchain is 
certainly something that could be utilized in all of these use cases.

The CME conference was pretty much all academics and a sprinkling of 
traders, but the 14-hour Fintank Blockchain/Cryptocon conference

http://www.fintank.org/blockchain/cryptocon/

was full of the animal spirits that Greenspan described. My biggest 
takeaway is that if you think that bitcoin blockchain is a fad, you are 
wrong-bitcoin is a technology, not a currency but the two are 
inextricably linked. Adoption could take place not in ten or twenty 
years, but in two or three, opening up opportunities for massive 
creative destruction. Just a few examples: the end of counterparty risk, 
the Internet of devices that do not just communicate but transact with 
each other, a new insurance industry to protect private keys, crypto 
lending and the disintermediation of banks. And just to mention, the 
banner on the venerable CME website

http://www.cmegroup.com/

is now the price of bitcoin.

I hope you enjoy the articles below by our EconVue experts and others 
that piqued our interest.

RESEARCH BY ECONVUE EXPERTS

Round-Up: 17Q4 Real GDP Growth Likely to Stay at +2.6% in Second Report; 
Budget Deal Approved

https://econvue.com/pulse/round-17q4-real-gdp-growth-likely-stay-26-second-report-budget-deal-approved

Michael Lewis

https://econvue.com/experts/michael-lewis

With the government open for business as usual this morning, 
book-valuewholesale inventories were reported up +0.4% in December. 
Including revisions, these data were in-line with BEA's estimates in the 
Advance Report of 17Q4 GDP. FMI is still tracking no net change to 
17Q4's +2.6% real GDP growth in the Second Report on February 28.

BlackRock Fink's Bully Pulpit: Accelerating Stakeholder Interests

https://econvue.com/pulse/blackrock-fink%E2%80%99s-bully-pulpit-accelerating-stakeholder-interests

Marsha Vande Berg

https://econvue.com/experts/marsha-vande-berg

If you have a bully pulpit, use it. That's precisely what BlackRock's 
CEO Larry Fink did when he championed corporates' engagement with 
purpose to staunch the pace of climate change and embrace the 
preservation of the public commons together with its specific 
stakeholders.

Chinese Engagement in Latin America and the US Response: "Taking Off the 
Gloves"

https://econvue.com/pulse/chinese-engagement-latin-america-and-us-response-taking-gloves

R. Evan Ellis

https://econvue.com/experts/r-evan-ellis

Dr. Ellis' new editorial that examines the PRC's expanding, increasingly 
self-confident engagement with Latin America and the Caribbean, as 
manifested in the recent China-CELAC summit in Santiago Chile. The work 
notes China's growing pursuit of political and security engagement with 
the hemisphere, as well as its surprising willingness to acknowledge its 
intention to move the region away from its relationships with the US and 
other "great powers."

The State and Cryptocurrency

https://econvue.com/pulse/state-and-cryptocurrency

Collin Canright

https://econvue.com/experts/collin-canright

Expect state government agencies and legislators to move most quickly on 
providing regulatory clarity on FinTech regulation in the United States. 
U.S. federal regulatory agencies have initiated enforcement actions 
against some of the most egregious cryptocurrency investment practices 
and are watching the industry closely.

STORIES IN OUR SPOTLIGHT

The bubble economy — Is this time different?

http://www.aei.org/events/the-bubble-economy-is-this-time-different/

2/14/2018 AEI

The panic of 1918 marked a transition in the US economy. Do rapid boom 
and bust cycles in credit and equities signify adjustment to larger 
changes?

Slowing down

https://twitter.com/lyrichues

( @simongerman600

https://twitter.com/simongerman600

)

2/13/2018 gatesnotes.com

The world's population has grown rapidly over the past century. But the 
rate of growth is slowing down. We may never reach 12 billion people.

IRS paid private debt collectors $20 million to recoup $6.7 million from 
low-income Americans

https://thinkprogress.org/irs-private-debt-collectors-47da9d18ab06/

Luke Barnes 1/10/2018 ThinkProgress

Math does not appear to be their strong suit.

Euro hoarding on the increase, Bundesbank says

https://www.ft.com/content/3427b652-116e-11e8-8cb6-b9ccc4c4dbbb

Olaf Storbeck 2/14/2018 Financial Times

Zero bound behavior.

The shift in dynamics between the RMB and USDX

https://twitter.com/BaldingsWorld/status/962925263024660480

in the past week is enormously important. Not sure if the PBOC on 
vacation but longer it persists you have to think the PBOC has 
informally ended the basket. @BaldingsWorld

Someone is wrong on the Internet, wages and the stock market edition

https://ftalphaville.ft.com/2018/02/07/2198503/someone-is-wrong-on-the-internet-wages-and-the-stock-market-edition/

2/10/2018 Financial Times

Someone is wrong on wage inflation and that matters for financial 
markets. Take a closer look and wages have actually weakened, especially 
for non-managerial positions and jobs outside the financial sector.

Few things are as dangerous as economists with physics envy

https://aeon.co/ideas/few-things-are-as-dangerous-as-economists-with-physics-envy

John Rapley 2/9/2018 Aeon

The macroeconomic effects of student debt cancellation

http://www.levyinstitute.org/publications/the-macroeconomic-effects-of-student-debt-cancellation

2/2018 Levy Economics Institute

Student debt cancellation: best US stimulus idea ever. Debt forgiveness 
has been part of the ebb and flow of economic history since money was 
first lent. Time to hit the reset button.

Cryptocurrencies Surging in Africa as Alternatives to Traditional 
Banking

https://www.newsbtc.com/2018/02/18/cryptocurrencies-surging-in-africa-as-alternatives-to-traditional-banking/

Thomas Delahunty 2/18/2018 News BTC Blockchain Proof-of-Work Is a 
Decentralized Clock

https://grisha.org/blog/2018/01/23/explaining-proof-of-work/

Gregory Trubetskoy 1/23/2018 Grisha.org It's about time: is bitcoin 
block chain technology really a distributed and decentralized clock? 
Elegant and fascinating explanation of "proof of work". @humblehack

https://twitter.com/humblehack

The Quantum Internet Has Arrived (And It Hasn't)

https://www.nature.com/articles/d41586-018-01835-3

Davide Castelvecchi 2/14/2018&nbsp; Nature.com Entanglement and 
teleported information - quantum computing seems mind-boggling Diane 
Coyle @dianecoyle1859

Instead of Selling Natural Gas, This Canadian Company will Mine Bitcoin

https://btcmanager.com/instead-selling-natural-gas-canadian-company-will-mine-bitcoin/

Priyeshu Garg 2/14/2018 BTC Manager

One of Canada's largest oil and gas companies, has announced that 
instead of selling natural gas at stubbornly low prices, it will utilize 
a part of its production to generate electricity and use the same to 
operate a bitcoin mining facility.

With all best wishes,

Lyric Hughes Hale

Editor-in-Chief

Econvue.com
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