Subject: EconVue Spotlight Peak Davos January 26, 2019
From: "Lyric Hughes Hale" <[email-masked]>
To: "R. Hunter" <[email-masked]>
Date: Sat, 26 Jan 2019 17:38:57 +0000
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Dear R. Hunter,

Predicting The biggest economic conference of the season, the World Economic Forum (https://www.weforum.org/events/world-economic-forum-annual-meeting) , has just wrapped up in Davos. Most of the sessions are now available as they happen, and with the snow piled high here in Chicago, watching them online almost seemed like being there. I’ve included links to some of the best discussions and interviews you might enjoy on this even colder weekend.

Without a doubt however, this week’s geopolitical thunder was stolen by Venezuela. President Trump and President Xi both skipped Davos this year, but they are at opposite ends of the debate over legitimacy of the government of Juan Gerardo Guaidó Márquez, a 35-year old industrial engineer and political activist. Econvue expert Evan Ellis, who specializes in both China and Latin America, has written an analysis of these breaking events.

The recent partial shutdown of the US government is a not an unrelated event. Political conflict in Central and South America created economic dislocations resulting in new migration patterns, contributing to political gridlock in the United States.

All of this has been in play since 1904, when Theodore Roosevelt enunciated the “Roosevelt Corollary” to the Monroe Doctrine, which justified US intervention in Latin America to protect its own interests--some would say with disastrous consequences over the last 115 years. And US technological advances in shale oil production contributed to a fall in the price of oil, certainly a factor in Maduro’s demise.

So while some are saying that in its 49^th year Davos has peaked, and that globalization is passé, we have the melting snows of spring to look forward to: Brexit, US-China trade & technology negotiations, and a new mayor here in Chicago who will hopefully keep the streets well-plowed.
RESEARCH BY ECONVUE EXPERTS

Expect Little Change in FOMC's Balance Sheet Plans Next Week (https://econvue.com/pulse/expect-little-change-fomcs-balance-sheet-plans-next-week)
Michael Lewis (https://econvue.com/experts/michael-lewis)

The Wall Street Journal issued a "bombshell" report about changes to the Fed's plans to "normalize" its balance sheet. The story, FMI contends, delivered far less than it promised.

The Struggle for Control of Occupied Venezuela (https://econvue.com/pulse/struggle-control-occupied-venezuela)
R. Evan Ellis (https://econvue.com/experts/r-evan-ellis)

Dr. Ellis' new work on the struggle between the de facto government of Nicholas Maduro in Venezuela, and the National Assembly, just recognized by U.S. Secretary of State Mike Pompeo as the country's legitimate (de jure) government.

Beijing Blues (https://econvue.com/pulse/beijing-blues)
Karim Pakravan (https://econvue.com/experts/karim-pakravan)

Two years ago at the World Economic Forum, President Xi Jinping presented his globalist views as the counterpart to the newly elected President Trump’s populist/protectionist rhetoric. This year, China will be represented by Vice President Wang Qishan, who is expected to face a tougher crowd.  In the past year, President Xi and the Chinese leadership have faced new challenges despite an unprecedented consolidation of power since the end of the Maoist era.

The Shutdown Poses a Serious Threat to The American Economy (https://econvue.com/pulse/shutdown-poses-serious-threat-american-economy)
Robert Shapiro (https://econvue.com/experts/robert-shapiro)

The government shutdown has produced a serious economic threat that’s hiding in plain sight: The people who collect, analyze and release all the basic data tracking the path of the economy and its principal aspects are on furlough.  So, the shutdown has forced thousands of companies and financial institutions and millions of investors to rely on guesswork instead of data, and each week the problem grows worse.

STORIES IN OUR SPOTLIGHT

** World
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What’s Happening in Venezuela? Davos Experts Explain (https://www.weforum.org/agenda/2019/01/whats-happening-in-venezuela-davos-experts-explain/)
World Economic Forum 1/24/2019

Will the IMF kickstart the Venezuelan economy? I’m wondering if this will involve a default on Chinese debt.

The World Economy Goes Hollywood (https://www.project-syndicate.org/commentary/volatile-financial-markets-despite-fundamentals-by-anatole-kaletsky-2019-01)
Anatole Kaletsky 1/18/2019 Project Syndicate

There’s no mystery about the causes of recent market volatility. There has never been a simultaneous unwinding of QE and rising interest rates-the US got ahead of itself and the pack. And political uncertainty directly affects business.

OECD Chief: “No Deal” No Problem (https://twitter.com/StandUp4Brexit/status/1087789098960588801)
#StandUp4Brexit 1/22/2019 Twitter @StandUp4Brexit Video

Brexit deal or no deal, at the World Economic Forum OECD chief Angel Gurria makes the point that the UK will still be a member of the OECD and that WTO rules will still apply.

The Rise of the Dollar and Fall of the Euro as International Currencies (https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3304862#.XEgFClN_6PY.twitter)
Matteo Maggiori, Brent Neiman, Jesse Schreger 12/23/2018 SSRN

Borrowers and lenders alike might prefer to avoid a currency the value of which – and, even, the mere existence of which – might be in question in the next crisis.

Spanish and Italian Leaders Call For ‘Radical Revision to Bridge Glaring Inequality (https://www.weforum.org/press/2019/01/spanish-and-italian-leaders-call-for-radical-revision-to-bridge-glaring-inequality/)
World Economic Forum 1/23/2019

What Spain, Italy, and Greece really need is to consider exiting the European currency union.

Gold Outlook 2019: Economic Trends and Their Impact On Gold (https://www.gold.org/goldhub/research/outlook-2019)
GoldHub 1/10/2019

World Gold Council 2019 Report is bullish but no mention of cryptocurrencies as alternative assets. @GOLDCOUNCIL

Russia Plans to Tackle US Sanctions With Bitcoin Investment, Says Kremlin Economist (https://www.telegraph.co.uk/technology/2019/01/14/russia-plans-tackle-us-sanctions-bitcoin-investment-says-kremlin/)
Hasan Chowdhury 1/14/2019 Telegraph UK

I doubt that Russia’s is the only central bank studying this possibility.

Outbreak Readiness and Business Impact: Protecting Lives and Livelihoods Across the Global Economy (https://www.weforum.org/whitepapers/outbreak-readiness-and-business-impact-protecting-lives-and-livelihoods-across-the-global-economy)
World Economic Forum 1/18/2019

Epidemics rival climate change in terms of negative economic impact. Are businesses prepared for this threat?

U.S.

White House Plans to Overhaul Housing Finance System, Top Regulator Says (https://www.politico.com/story/2019/01/24/federal-housing-finance-agency-overhaul-1111874)
Victoria Guida, Katy O’Donnell 1/24/2019 Politico

Long overdue- housing finance reform had begun to fossilize in Congress.

1930: First Modern Crisis (https://twitter.com/nberpubs/status/1087009354958528512)
NBER 1/2019 Twitter @nberpubs

US banks created a run on themselves in 1930. Did this form of self-regulation precipitate a +20% decline in industrial production?

The Effect of Minimum Wages on Low-Wage Jobs: Evidence From the United States Using a Bunching Estimator (https://www.nber.org/papers/w25434.pdf)
Arindrajit Dube, Doruk Cengiz, Attila Lindner, Ben Zipperer 1/2019 NBER

“US minimum wages yet to reach a point where there are substantial job losses.” Any estimates of how much wages would have to rise before this happens?

A Brief History of Property Taxes (https://www.iaao.org/uploads/A_Brief_History_of_Property_Tax.pdf)
Richard Henry Carlson 9/1/2004 IAAO

“Tax assessors were highly valued people because of their skills with hieroglyphics and their ability to collect revenue. Often when a king died, the assessor was the only staff person not killed and buried along with the king.” Terrific paper on the history of property taxes.

China

The State Strikes Back (https://twitter.com/AdamPosen/status/1088076449561669633)
Adam Posen 1/6/2019 Twitter @AdamPosen

The State Strikes Back. The book on China's economic slowdown. By the Nicholas Lardy @PIIE (https://twitter.com/PIIE/status/1087770625962315776) Live Webcast Mon 28 Jan 1215 ET.

Xi Jinping’s Turn Away From The Market Puts Chinese Growth at Risk (https://www.ft.com/content/3e37af94-17f8-11e9-b191-175523b59d1d)
Nicholas Lardy 1/15/2019 FT

China's Financial Opening-up Helps to Boost the Health of Its Stock Markets, CSRC Vice Chief Says (https://www.yicaiglobal.com/news/china-financial-opening-up-helps-to-boost-the-health-of-its-stock-markets-csrc-vice-chief-says)
Zhou Ailin 1/23/2019 Yicai Global

Fang Xinghai at Davos: China won't significantly reduce its US debt holdings since US Treasury bonds are still an ideal investment destination.

I’m Concerned the Trade War Will Become a Tech War, Academic Says (https://twitter.com/CNBC/status/1087910793956405248)
CNBC 1/22/2019 Video

Always worth listening to Zhu Min at the World Economic Forum on the Chinese economy.

Data Exaggerate Impact of China Slowdown (https://www.omfif.org/analysis/commentary/2019/january/data-exaggerate-impact-of-china-slowdown/)
James Carrick 1/23/2019 OMFIF

Since 2005, China's share of the world economy has more than tripled to 16% from 5%. This larger share means 6% growth today is equivalent to 15% growth a decade ago.

Chinese Investment Around the World Fell Sharply in 2018 (https://twitter.com/DerekScissors1/status/1087507670054113286)
Derek Scissors 1/7/2019 Twitter @DerekScissors1

Is the explanation limited to caution in drawing down foreign reserves- or a more fundamental policy change?

Engineers of the Soul: Ideology in Xi Jinping’s China (https://nb.sinocism.com/p/engineers-of-the-soul-ideology-in?utm_medium=email&utm_campaign=cta)
John Garnaut 1/16/2019 Sinocism

Terrific issue of Sinocism @niubi with commentary by John Garnaut, who is redefining the Sino-Australian relationship.

Innovation

The Hidden Automation Agenda of the Davos Elite (https://www.nytimes.com/2019/01/25/technology/automation-davos-world-economic-forum.html?smid=tw-nytimes&smtyp=cur)
Kevin Roose 1/25/2019 NYT

The Future of Health Is All About Going Upstream (https://thriveglobal.com/stories/future-of-health-upsteam-microsteps/?utm_source=Newsletter_General&utm_medium=Thrive)
Arianna Huffington 1/15/2019 Thrive Global

By 2026 the US will spend 20% of GDP on health care. That’s $5.7 trillion. And only 3% of that will be spent on preventative care.

Can Insects Compete With Beef, Poultry as Nutritional Powerhouses? (https://jamanetwork.com/journals/jama/fullarticle/2722547?utm_source=twitter&utm_campaign=content-shareicons&utm_content=article_engagement&utm_medium=social&utm_term=011619#.XD_BpuHlToU.twitter)
Rebecca Voelker 1/16/2019 JAMA

Fidget Spinners, Weighted Blankets, and the Rise of Anxiety Consumerism (https://www.vox.com/the-goods/2018/9/10/17826856/fidget-spinners-weighted-blankets-anxiety-products)
Rebecca Jennings 9/10/2018 Vox

Anxiety is big business.

With all best wishes,

Lyric Hughes Hale
Editor-in-Chief
EconVue
[email-masked]
Twitter: @lyrichues

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