This means the U.S. must either reduce investment or borrow savings from abroad. Both courses hurt growth. Other headwinds to growth include Trump’s trade war, impediments to immigration, and higher real rates as the U.S. Treasury tries to attract buyers for the $10 trillion of new debt it must sell in the decade to come.
These specific headwinds are of recent vintage and come on top of the pre-existing secular stagnation due to demographics, deleveraging, and declining productivity.
The world has now seen its first death by driverless car, in Tempe, Arizona, as a pedestrian was struck down by an Uber vehicle. This is a big news story, even though about 40,000 Americans die from motor vehicle accidents each year. We’re learning that this technological age, which seemed to start with the pretty innocuous act of emailing, has evolved to play into our more primal fears about feeling out of control.
Some funds, like Hawaii’s pension fund, went even further and dabbled in the incredibly risky strategy of selling put options. By selling a put, you collect a small premium if markets stay calm or rise. But you’re exposed to unlimited losses if markets crash – like they did when the Dow fell 2,400 points in a week last month.
At the end of last year, equities made up nearly 54% of public pension fund portfolios. The $209 billion New York State Common Retirement Fund has over 58% of its assets in stocks. Kentucky’s $20 billion pension for teachers is 62% in stocks.
Cutting ‘Old Heads’ At IBM (jdargis)
IBM declined requests for the numbers or age breakdown of its job cuts. ProPublica provided the company with a 10-page summary of its findings and the evidence on which they were based. IBM spokesman Edward Barbini said that to respond the company needed to see copies of all documents cited in the story, a request ProPublica could not fulfill without breaking faith with its sources. Instead, ProPublica provided IBM with detailed descriptions of the paperwork. Barbini declined to address the documents or answer specific questions about the firm’s policies and practices, and instead issued the following statement:
As I mentioned last Wednesday, Trump’s new steel and aluminum tariffs are part of a larger, escalating battle between the US and China.
China is rapidly displacing the US as the dominant global power. This shift is inevitable. China’s economy will be twice as large as the US economy by 2030.
Oil Is Screaming “Buy Me!” Again (Tiffany D.)
According to a newly released report from the U.S. Energy Information Administration, U.S. production of crude oil rose 5% last year. We hit 10 million barrels a day worth of production for the final two months of 2017.
That’s huge — a monthly record has not seen on U.S. shores since 1970.
Germany’s Pivot From Russian Gas Will Be Costly (Michael S.)
Germany, for its part, is Europe’s largest gas consumer. In 2015, the country consumed 7.2 billion cubic feet per day (Bcf/d) of natural gas, according to U.S. Energy Information Administration (EIA) data. According to the German energy research group, AG Energiebilanzen, imports account for about 90 percent of Germany’s total natural gas supply, while most imports come from three countries: Russia (40 percent of total imports in 2015), Norway (21 percent) and the Netherlands (29 percent).
Courage Before the Thaw (jdargis)
The bad news is relentless. Moose-killing ticks are roving north toward Alaska from the Lower 48 and Canada as a result of milder conditions. The Eklutna Glacier, the primary drinking water source for Anchorage—the state’s population center—could melt away in as little as 50 years. And Denali National Park is trying to prepare for the landslides, floods, and wildfire smoke that climate change is likely to deliver.
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