Links for Aug 22 2016

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“There are a number of things that just seem odd,” says Jim Paulsen, the chief investment strategist and economist at Wells Capital Management. Let’s start with an alternative economic yardstick, called gross domestic income (GDI). Instead of measuring production (which is the job of GDP), GDI measures national income. It does so by summing wages, rents, interest and profits. Over the long haul, GDI tends to track GDP. But during the “weak” first quarter — the weak quarter that energized the gloom-and-doom crowd — those two measures diverged sharply. Real GDP (after inflation) was a mere 1.1%. But real GDI was a much more solid 2.9%. Which one is right? Given the preponderance of other robust economic indicators out there, I’m betting that GDI at nearly 3% is the right one.

Six myths about the U.S. economy that are just plain wrong - MarketWatch

But there’s just one little problem here. The “stagnant wage” claim is just not true. Wage gains in this recovery have been some of the biggest in the past 50 years. There are many ways to gauge wage trends. Just about all of them point to robust gains.

Six myths about the U.S. economy that are just plain wrong - MarketWatch

"Unless interest rates are going to move 150 to 200 basis points quickly, I actually think that the flow will maintain some relative performance here," despite "blown-out" valuations, Tim Seymour of Triogem Asset Management said Wednesday on CNBC's "Power Lunch." He was referring to high-dividend stocks like Kellogg's, Coca Cola, Clorox and General Mills.

Fed, shmed! This red-hot trade could keep working — no matter what the Fed does

In dramatic contrast to the rest of the developed world, the rate of women dying because of complications with pregnancy or childbirth rose in the United States by 27 percent between 2000 and 2014. During the same time period, according to a study that will be published in the September issue of Obstetrics and Gynecology, 157 other countries reported a decrease in their maternal mortality rates.

American Women Are Still Dying in Childbirth at Alarming Rates | Mother Jones

Perhaps you’ve heard of the mysterious, microscopic animals that can survive being crushed, frozen, boiled and subjected to the vacuum of outer space. Tardigrades, better known as water bears, are tiny, nearly indestructible creatures with eight pudgy legs and snouts. They’re found around the globe, swimming in pockets of wet moss or in the capillary water between grains of sand. When the water dries up, they retreat into a semi-animate state – a survival mechanism that amazes scientists.

BBC - Travel - Hawaii’s mysterious water bears

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As the U.S. stock market moved higher Monday, experts differed on the right move for investors to make. For John Stoltzfus, chief investment strategist at Oppenheimer Asset Management, cyclicals are the place to be, noting that defensives have been overvalued for quite a while. "The economy is doing better, the Federal Reserve is showing remarkable sensitivity — we expect they're going to raise once this year just to keep animal spirits in check, and that will probably happen in December — so we want to own cyclicals," he said in an interview with CNBC's "Power Lunch."

With market highs, here's where experts are putting their money

The second-longest bull market in history has driven stock valuations sky high. High valuations present a challenge for investors concerned about risk: Should they stick to their plan, change their investment strategy or sit on the sidelines in cash? A Goldman Sachs analysis, for example, found that the median stock trades in the 99th percentile of its historical valuation.

Portfolio management in the time of record highs

I switch browsers a lot. In the past few years, I’ve bugged friends about the joys of switching to Chrome, Firefox, and Safari. I briefly sang the praises of Edge, though I may have been drunk. I think I even tried Opera at some point. Every time I switch, I say the same thing. “It’s so much faster! The speed usually lasts about a week. This change happens so slowly that I don’t even notice, until a few months later, I reach a new breaking point. A crashed tab. A hung page. Then I’ll try another browser. “It’s so much faster!” I’ll tell myself, and repeat the cycle again.  I need to stop doing this. The truth is, every browser sucks eventually. And it’s not necessarily the browsers’ fault. It’s mine. It’s yours. Our browsers suck, and it’s our fault.

Every Web Browser Sucks Eventually, And It's Your Fault | Digital Trends

During late August here in the United States, it can start to feel like everything is moving a little bit slower. In the case of your apps, that may actually be the case. Earlier this year, a San Francisco company called Apteligent released a report based on internal data that suggests app performance slows by 15 percent in the summer. The report identifies humidity as the culprit, though the company can’t say for sure based on their data why the extra delay occurs.

Are Your Apps Sluggish? Blame Summer - IEEE Spectrum

The crazy thing is, even though these images come from a time when technology was barely able to fake the on-screen action, we are now on the cusp of the real thing. We’re entering an age that will enhance who we are as humans in ways that go well beyond these cultural clichés. Here’s where the art and science of human augmentation is today, and a tantalizing peek at where it’s going in the not-too-distant future.

DT10 The Human Body | Digital Trends

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As the U.S. stock market rallies to fresh record highs every few days, most investors will be hard-pressed to find incentives to sell out of the market. Yet, Bank of America Merrill Lynch has decided to take on the role of Wall Street’s Debbie Downer, warning of an impending correction. Savita Subramanian, equity and quantitative strategist at Bank of America, has been the consistent voice of caution this year even as the S&P 500 SPX, +0.20%  is poised for a six-month winning streak — the longest since 2013. On Tuesday, she cited 10 reasons why she believes the market is ripe for a selloff, framing her bearish outlook in a series of charts.

10 charts show why market may be ripe for a correction - MarketWatch

According to Vamvakidis, Sinha, and Chen, the number of people selling volatility in this way has reached an all-time record. Commodities Futures Trading Commission "positioning data reveals the shortest speculative positioning in VIX futures of all time, both confirming this trend and raising a red flag," their note said.

BAML: Investor complacency will seriously 'shock' the stock market - Business Insider

The S&P 500 index is trading fewer than 20-points below its all-time high, lifting the majority of components in steady rally waves that have reached multimonth or multiyear highs. Relative strength tends to hit overbought levels in these trending markets and then stay glued to those levels while adding to gains. As a result, index leaders that do the opposite; i.e., drop toward oversold, signal divergences that may translate into lower-risk buying opportunities.

Buy Weakness On These S&P 500 Leaders (RRC, DG) | Investopedia

Traders are most upbeat in the hours before the stock market opens and after it has closed, according to a study by StockTwits, a social network for active investors. The company’s chart below shows how sentiment turns more bearish with the approach of the market open at 9:30 a.m. Eastern Time. It then hits its lowest point right around the closing bell at 4 p.m.

How traders are most bullish when the market isn’t actually open, in one chart - MarketWatch

Inflation isn't dead; it just might not be where you think it is. To find significant price increases, you need only look in the right places. There are many goods and services with rising prices, as well as those without. Together, they tell a fascinating tale about the modern global economy. Understanding the forces driving prices higher -- or not -- is crucial to investors and policy makers alike. Given that the Federal Reserve has been trying to generate inflation for much of the past decade, the significance of the distribution is both important and telling. Why some prices are rising at twice the median rate of general inflation is worth delving into.

Why Gauging Inflation Is So Hard - Bloomberg View

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A fisherman in the Philippines is happy as a clam after discovering that a mammoth pearl he stashed away for 10 years under his bed is worth a cool $100 million. The lucky angler, who has not been identified, discovered the 75-pound pearl — believed to be the biggest ever — in the sea off Palawan Island, the Mirror of the U.K. reported.

Fisherman scoops up $100 million pearl — but keeps it under the bed for 10 years - MarketWatch

Earlier this year we highlighted data from Vanguard which showed money parked in funds seeking to meet, rather than beat, a benchmark index had risen to $4 trillion in 2015 from $11 million 40 years ago. Analysts at Bernstein led by Inigo Fraser-Jenkins, however, argue forcefully in a new note to clients that the rise of passive investing presents some seriously dangerous real-world barriers to the efficient allocation of capital in the economy.

Bernstein: Marxism is better than the rise of passive investing - Business Insider

Everyone knows staying home from work when you have the flu helps protect your co-workers from getting sick. Unfortunately, not everyone does it. A new National Bureau of Economic Research paper argues that one reason for that is access to paid sick leave. The paper by Stefan Pichler and Nicolas R. Ziebarth argues that the general flu rate “decreases significantly” when employees have access to paid time off due to illness. It also found that more people play hooky, or stay home when they aren’t actually contagious.

Paid Sick Leave Reduces the Flu Rate ‘Significantly,’ Paper Says - Real Time Economics - WSJ

It’s plain there’s been a slowdown in this growth rate since the early 2000s. That’s part of why people are now taking the stagnationist argument so seriously. But as Vollrath shows -- in the first post with algebra, in the second using plain English -- there’s at least one kind of measurement error that could be dragging this number down. If companies are collecting more economic rent -- meaning, profits from not producing anything -- but statisticians don’t pick up on this, it gives the appearance that businesses are over-consuming capital. That in turn makes it look as if they’re less efficient than they really are. In other words, if companies are sucking up more rents, it makes measured productivity lag behind true technological progress, and gives the appearance of a more severe stagnation than actually exists. So what lets companies suck more rent out of the economy? Lack of competition. If the government grants too much intellectual-property protection, for example, that can help incumbent companies keep out newcomers and preserve fat profit margins at the economy’s expense. If new technology allows companies to create natural monopolies, that can have a similar effect. Lax antitrust regulation, changes in the financial system, overregulation and simple cronyism could all have similar effects. And the fact is, industrial concentration is rising. Market power is increasing.

The Illusion of Lagging Productivity - Bloomberg View

The answer? Absolutely. Our analysis (with professor David Kryscynski of Brigham Young University) of Tesla’s improvement in cost per vehicle shows Tesla is making money on the Model S and will likely make solid profits on the Model 3. Let us explain. One of the tools of any strategist is a scale (or experience) curve. A scale curve calculates how rapidly the cost per unit (in this case, vehicle) decreases with every doubling of unit volume.[1] This analysis is useful for projecting how Tesla’s costs per unit will change going forward based upon its history.

Tesla's Innovations Are Transforming The Auto Industry - Forbes

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By any measure, Shanghai is one of the world's biggest cities. It's home to more than 24 million people. Its subway system is the longest ever built, extending to its rural limits. Crowds are so thick that burly "shovers" get paid to help pack the trains. Now the local government is saying enough is enough: Documents released this week reveal that Shanghai intends to admit a mere 800,000 new residents over the next 24 years, on its way to becoming an "excellent global city." Housing in Shanghai and Beijing has become so expensive that non-wealthy residents have been pushed to the furthest reaches of the suburbs, where commuters often face extended waits just to enter a subway station -- let alone actually get on a train. The result is a large labor force that can't be put to work by employers, largely defeating the purpose of urbanization.

How Big Can China's Cities Get? - Bloomberg View

This is the “health halo” that has surrounded the alcohol industry for decades, allowing it to operate under the guise of being medically beneficial, and avoid such scrutiny like the tobacco industry faced in the 90s. However, in January, the United Kingdom’s Chief Medical Officer Sally Davies said, “there is no safe level of drinking,” in a move aimed at tightening recommended alcohol use. The U.K. has lowered the threshold for what is deemed moderate alcohol use, at least for men, from 21 “units” down to 14. Women already were recommended 14 units, and guidelines did not change for them. Mark Bellis, a public health official in Wales, said new science, being able to effectively isolate alcohol’s effects from other factors like diet and exercise, had shown there is a correlation between “cancer and alcohol,” The Wall Street Journal reports. The alcohol industry is planning on fighting back against these new claims. “We can’t let them gain traction,” Beer Institute President Jim McGreevy said in an April conference about alcohol critics.

World Health Agencies Deny Decades-Old Science Alcohol | The Daily Caller

When Rodrigo Duterte, the Philippines' president, took office in June, he announced a sweeping crackdown on drug trafficking in the island nation. In the seven weeks since, nearly 1,800 suspected drug dealers have been killed. Under Duterte, 712 drug suspects had been killed in police operations since July 1, while 1,067 killings were carried out by vigilante groups during the same time frame, National Police Chief Ronald dela Rosa, told a Philippines Senate committee on Monday, according to The New York Times.... Approximately 600,000 suspected drug dealers or users have surrendered to the police since Duterte's drug crackdown began, Philippines' authorities said, according to The Times.

Philippines' Duterte's drug war has killed nearly 1,800 people - Business Insider

Much of the plastic packaging we see in the grocery store can be recycled, from egg containers, to milk jugs, to butter tubs. But what about that thin plastic film stretched around wedges of manchego in the cheese bin or the 16-ounce rib-eye in the chiller case? It turns out that kind of plastic is tougher to recycle and might even be adding harmful chemicals to your food. Oh, and it’s not even good at doing what it’s supposed to do: prevent food spoilage. Luckily, researchers are investigating alternative forms of food packaging—the kind you can eat.

Milk, Not Plastic, Will Protect Food in the Future - Bloomberg

Hedge fund managers seem to be waiting for the world to change. It's well known at this point that these funds are having a tough time of it. They've returned about 3% this year on average, according to Goldman Sachs, while the S&P 500 is up by about 7%.

Hedge fund managers are waiting for the world to change

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After decades of red ink, U.S. airlines have gotten their financial houses in significantly better order. And while this new wherewithal certainly won’t mean more legroom or free checked bags, some carriers are exploring inexpensive ways to make flying economy class a smidge less arduous. Free meals and booze are returning on some long domestic flights, and gratis snacks are common again. A few airlines are even dropping fees for streaming audio and video: American Airlines Group Inc. just matched its two-largest domestic peers by offering cattle class free access to its full menu of in-flight entertainment.

Airlines Bring Free Sandwiches and Streaming Back to Coach - Bloomberg

JPMorgan has gone short the dollar against the euro and the yen, but don't blame the greenback. "It is a view around risks concerning both the ECB and the Bank of Japan next month," Sally Auld, a fixed income and foreign-exchange strategist at JPMorgan, told CNBC's "Street Signs" on Tuesday. "We broadly see the U.S. dollar as a range trade for the rest of the year." Auld noted that while JPMorgan's economists expected both the BOJ and the European Central Bank would ease at their policy meetings next month, both central bank decisions posed market risks.

JPMorgan FX strategist Sally Auld says the dollar could fall more if European Central Bank, Bank of Japan ease less

The problem is that steel demand isn't coming back in the US, and Macquarie blamed "tariff-induced higher prices" for this, even though the US economy is stable. "While output has been carefully managed by US producers to help maintain the tariff-driven price premium over other regions, apparent demand is clearly not good at -10% YoY over 2016 to date," analysts wrote. "While destocking can explain part of this, we would reiterate our concern that higher steel prices are hurting US manufacturing competitiveness (and thus steel demand). As our recent note showed, the US is the biggest negative drag on global industrial production at the present time."

Steel tariffs hamper demand in US as global demand rises - Business Insider

For years, France has been considered to have the most efficient, functional healthcare system in the world by many, including the World Health Organization. They use a combination of private and public coverage, and nearly everyone in France has health insurance. Most people in France have additional private insurance, and almost all medical bills in France are covered by the government. France has one of the top rankings when it comes to efficiency in spending on medical care, which allows the government to pay around seventy percent of all medical bills. Perhaps the most telling statistic is that France is reported to have the lowest amount of deaths that could have been prevented with basic medical insurance of any country. France spends more on healthcare than any other European country, but they still spend less than the US does.

Top 10 Countries with the Best Health Care in 2016 - The Gazette Review

Ever since I decided to try out the guided-meditation app Headspace last December after hearing about it on Tim Ferriss' podcast, I've been much more aware of my thoughts and emotions, and with a few exceptions (including a rough day at the airport) I've been much calmer and more collected in times of stress. I've dealt with occasionally intense anxiety since I was 11 years old, so that's an accomplishment.

What it's like to use the Headspace meditation app - Business Insider

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But a closer look at the rollouts of Kalydeco and Zaltrap reveals startling differences in how companies value a drug and justify its price. It also provides a preview of a likely future in which extremely costly drugs are common. Because of medical insurance, co-pay reductions, and expanded access programs for the uninsured, relatively few Americans pay more than a few thousand dollars per year for even the most expensive drugs. The primary customers in the United States are not patients or even individual physicians, although physicians can drive demand for a drug; rather, the customers are the government (through Medicare and Medicaid) and private insurance companies. And since the insurer or government is picking up the check, companies can and do set prices that few individuals could pay. In the jargon of economics, the demand for therapeutic drugs is “price inelastic”

A Tale of Two Drugs

A year of profit stagnation has left the S&P 500 Index’s price-earnings ratio flirting with some of its its highest readings since the Internet bubble. Judged against bonds, though, stocks remain stubbornly cheap. Plotting the index’s per-share earnings against the yield on the 10-year Treasury note, a technique sometimes referred to as the Fed Model, shows the S&P 500 is still less expensive than any time during the 2002 to 2007 bull market. Stock valuations are held down in the comparison by some of the lowest bond payouts ever.

The S&P 500 Valuation Tool That Shows 2007 Peak a Long Way Away - Bloomberg

"What I think is very interesting about this phenomenon is we call it 'binge watching,' which is a social pejorative," she says."We don't say we're binge reading if we tuck ourselves away with a Dickens novel, but we call it binge watching because we couldn't do this before. ... There are actually lots of positives in watching media. It allows you to experience emotions, it can be cathartic and it allow you to see models of different sorts of behaviors." But the number of experts and studies arguing the opposite position is bigger, as is often the case in the early days of an emerging trend. And they can be fairly alarming. Here's a look at some of the reported downsides facing people who take binge watching too far.

Depression, disease, and no sex are some dangers of binge watching

AT THE height of the euro crisis, with government-bond yields soaring in several southern European countries and defaults looming, the European Central Bank and the healthier members of the currency club fended off disaster by offering bail-outs. But these came with conditions, most notably strict fiscal discipline, intended to put government finances back on a sustainable footing. Some economists argued that painful budget cuts were an unfortunate necessity. Others said that the cuts might well prove counterproductive, by lowering growth and therefore government revenues, leaving the affected countries even poorer and more indebted. In 2013 economists at the IMF rendered their verdict on these austerity programmes: they had done far more economic damage than had been initially predicted, including by the fund itself. What had the IMF got wrong when it made its earlier, more sanguine forecasts? It had dramatically underestimated the fiscal multiplier.

Where does the buck stop? | The Economist

A majority of patients at the clinic falsely believed that SPF 30 was twice as protective as SPF 15. That does seem like it should be true. But it’s nowhere close, according to the American Academy of Dermatology. SPF 30 is roughly four percent more protective than SPF 15—SPF 15 filters out around 93 percent of UV-B rays, and SPF 30 filters out around 97 percent.  That difference is not nothing, but it is so small that lower SPF values may even be more effective in the long run, once behavioral psychology comes into play. Because the real factors that determine how well a sunscreen works is how much we use and how often we reapply. When we feel very well protected, we’re less likely to reapply frequently and to seek shade. It’s the same effect that led researchers at the National Bureau of Economic Research to warn that the overall safety benefit of bike helmets can sometimes be mitigated if helmeted bikers, feeling protected, ride less cautiously.

One of our main systems of preventing cancer is misleading and misunderstood - Business Insider