Briefly Noted for 2020-08-21

I do confess that I am flummoxed by self-identified positively-valenced “white supremacy” as a thing.

My WASPy view was always that America was an America of ethnicities underpinned by the dominant myth-message: “people coming from elsewhere to build a utopia in which we all could live better lives”. This mosaic worked, with cultural influences flowing every which way, with the ideas and cultural orientations of WASPy Massachusetts Puritans, Virginia libertarians, and Kentucky pioneers serving as the first layer of the cultural matrix. The exchange in the 2006 movie The Good Shepherd between Joe Pesci and Matt Damon grossly overstates the case, but is in the right direction:

Joe Pesci: “Let me ask you something…. We Italians, we got our families, and we got the church; the Irish, they have the homeland, Jews their tradition; even the n——, they got their music. What about you people, Mr. Wilson, what do you have?”

Matt Damon: “The United States of America…”

Yes, African-Americans were always at the bottom, but there was no monolithic “whiteness” in the mosaic anywhere. Remember: when I was at Harvard in the 1980s, when an Italian-American Catholic married an Irish-American Catholic in Boston, it was a “mixed marriage”, and people would shrug their shoulders and say it was unlikely to last.

I look at how somebody by the name of Mark Krikorian can raise the alarm on behalf of “whiteness” against the idea of “Hispanics now hav[ing] their own pizza chain…. [It] may well reflect a kind of cultural secession…” Mark Krikorian finds it alarming that an Italian-Lebanese-American born in Columbus, OH sees a market for Hispanic-inflected pizza in Dallas and moves to satisfy it. And then I think: this was always a grift, this is the fascist playbook—create the bigotry against a despised other, and then use that bigotry to create a volk:

Sean Illing: Why Rev. William Barber Thinks We Need a Moral Revolution in America ‘“Racism may target Black people, but it damns a democracy and it damns humanity”’…


This is why retail businesses need large permanent financial transfers now. We do not want retail businesses that are not coronavirus transmission hotspots from receiving erroneous “shut down“ signals from the market. And yet that is what is happening when we do not make them whole from the effects of the crisis of March and April:

Jason Del Rey: Amazon, Walmart, & Target Reap þe Rewards of Covid Restrictions ‘Some feared the pandemic would widen the gap between the haves and have-nots of retail. That fear is now reality…


Not that Isaac Asimov’s 1950s novel The Naked Sun Is either a great mystery novel or a great science fiction novel. But it is a place to start in thinking about how this next upward leap in interacting with each other via symbols and screens is going to work. What personality types are going to do well? What personality types are going to do badly? In in-person interactions, a great deal of the information channels our bids and offers about authority because rapidly reaching consensus about what the group was going to do trumped reaching the best decision at the price of maybe reaching no decision at all. But those channels do not operate through screens, as anyone who has ever participated in a flamewar Or watched trolls destroy an online discussion knows very well:

Sean Gallagher: Respawn Point: þe Inevitable Reincarnation of þe Corporate Office ‘Stanford Institute for Economic Research figures in June showed only 42 percent of the US workforce working from home full-time—the fact remains that people’s relationship with their workplace has been dramatically restructured, perhaps permanently…


Publius Aelius Aristides Theodorus (155): The Roman Oration

Wikipedia: Wrought Iron | Cast Iron | Bessemer Process | Steel

Boichik Bagels

Constance Hunter (2020-08-19): Riding the Covid-Coaster

Casey Johnston: How to Fit in a Real Workout When You Have Only 20 Minutes ‘[Randi Zuckerberg takes] a slightly more aggressive line here with her “pick three” rule: “Work. Sleep. Family. Friends. Fitness. Pick Three.” But I often see this rule separated from Zuckerberg’s follow-up clarification: “I can pick a different three tomorrow, and a different three the following day. But today, I can only pick three. As long as I wind up picking everything over the long run, then I’m balancing my imbalance”…

Jim Wendler: How to Fit in a Real Workout When You Have Only 20 Minutes ‘This is my favorite. I don’t recommend it, but it’s useful for non-beginners who have limited time to train. The I’m Not Doing Jack Shit program entails walking into the weight room, doing the big lift for the day (bench, squat, military or deadlift), and then walking out… I’ve made this deal with myself many times before I’ve trained: If I do X weight for X amount of reps, I’m leaving…

2020 Democratic Party Platform

Wikipedia: Titus Aurelius Fulvus Boionius Arrius Antoninus Pius

Wikipedia: Faustina the Elder—Annia Galeria Faustina



FRED: COVID Dashboard Initial Claims, Continued Claims, Real Personal Income, Real Personal Consumption Expenditures…

.#brieflynoted #highlighted #noted #2020-08-21

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Deviations vs. Shortfalls | Econbrowser

The Fed’s new framework, as described by Chairman Powell, mentions “shortfalls” (particularly in employment), instead of deviations of the natural rate. The output analog of this shift is moving from the deviation of output from potential (i.e., output gap) to an output slack measure. If we interpret this as requiring a focus on a Friedman-esque plucking model of maximal output, rather than potential GDP as described in most textbooks, what does this mean for where we are right now? I’d say for the short run, we are still in for a world of pain, economically speaking…

Following the description in this post (see also this post), I implement a Delong-Summers (BPEA, 1988) measure of maximal output.

Figure 1: GDP (bold black), August Survey of Professional Forecasters mean forecast (light blue), CBO potential GDP (gray), pseudo-Delong-Summers (k=5) using actual data and CBO projections of GDP to 2030 (red). NBER recession dates shaded gray; assumes latest recession ends 2020Q2. Source: BEA, CBO An Update of the Economic Outlook (July 2020), NBER, and author’s calculations.

The formula used is given by recursive application of  Delong and Summers (1988) equation 17:


Where y* is potential GDP, and k=3 to 5. I calculate using annual data, then interpolate using quadratic match to quarterly frequency.

This implies the following for (log) output gap or shortfall:

Figure 2: Log output gap using potential GDP (gray), or log shortfall pseudo-Delong-Summers (k=5) using actual data and CBO projections of GDP to 2030 (red). Q3 data uses August Survey of Professional Forecasters mean forecast. NBER recession dates shaded gray; assumes latest recession ends 2020Q2. Source: BEA, CBO An Update of the Economic Outlook (July 2020), NBER, and author’s calculations.

For the moment, economic activity looks very down regardless of measure. In Q2, it’s 10.5% vs 12% (conventional gap vs shortfall). Even after a forecasted jump in Q3, it’ll still be 6.9% vs. 8.4%

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Multiple Jobholders: Who Are They and How Are They Impacted by the Pandemic?

According to the Current Population Survey (CPS), 8.1 million employees worked one or more additional jobs in a typical week in 2019. As the figure below shows, the number of these “employee multiple jobholders” had been trending upward since 2013 before the pandemic hit. (We use the term “employee multiple jobholders” here because, as we discuss further below, the CPS does not capture “nonemployee multiple jobholders”.) Over the same period, the percentage of all employees who are multiple jobholders has been stable (at about 5 percent of all employees), so the increase in the number of employee multiple jobholders before the pandemic was driven by the underlying increase in employment.

Since the pandemic, the number of employee multiple jobholders has fallen precipitously. In April 2020, 5.4 million employees reported working one or more additional jobs, a decline of 2.7 million, or 33 percent, since 2019. In June 2020, the number of employee multiple jobholders rebounded slightly to 6.1 million employees (4.3 percent) but remains far below the pre-pandemic level. 


There are two other surveys that offer insights into multiple jobholders that ask roughly the same questions as the CPS: the American Time Use Survey (ATUS) and the National Health Interview Survey (NHIS). Both have consistently reported somewhat higher levels of employee multiple jobholding (about 9 to 10 percent between 2013–2018) than the CPS (about 5 percent during the same period). 

While the CPS is the primary official source of labor market statistics in the United States, there are some reasons to think that the ATUS and NHIS provide a more accurate count of employee multiple jobholding than the CPS, including differences in the survey reference period. (We discuss the strengths and weaknesses of these and several other surveys for estimating multiple jobholding in a forthcoming paper.) 

If we assume that 9 percent of employees hold two or more jobs, then the actual number of employee multiple jobholders in 2019 was 14.2 million. If they lost jobs (no longer held one or more jobs) at the same rate as in the CPS, then approximately 4.7 million of them now hold only one job. This is without taking into account multiple jobholders who lost all of their jobs.

These numbers do not include multiple self-employed people who are not employees of anyone, but operate two separate businesses or perform additional “gig work” or informal side jobs in addition to their main self-employment activity. Thus, someone who operates a lawn maintenance business and a food truck is not counted as a multiple jobholder in the CPS, ATUS, or NHIS. Similarly, someone who works as an independent contractor for a tech company while also working as a hired driver, such as with Uber or Lyft, would not be counted as a multiple jobholder in these surveys.

It’s difficult to estimate how many employee and nonemployee multiple jobholders have lost one or more of their jobs over the last several months, but we can make a very rough estimate using the Survey of Household Economics and Decision Making (SHED), a nationally representative household survey sponsored by the Federal Reserve Board. The SHED uses a more inclusive set of questions about jobs and individual economic activities that better capture nonemployee multiple jobholding than the CPS. 

In 2019, 26.5 million (16.4 percent of workers) in the SHED were multiple jobholders. Unfortunately, we don’t have 2020 data from the SHED on multiple jobholding, but if the 2019 data accurately captures multiple jobholding, and the number of SHED multiple jobholders has fallen by nearly 17 percent, half the rate as in the CPS for a conservative estimate, that would mean almost 4.3 million previous multiple jobholders have lost one or more jobs. 

At least some significant share of multiple jobholders in the SHED are engaged in informal work and other seemingly minor economic activities. But as Katherine Abraham and Susan Houseman have documented, “[i]nformal work plays a particularly important role in the household finances of minorities, the unemployed, and those who report financial hardship.” Abraham and Houseman also find that, “[t]hose most likely to hold side jobs to supplement income, in turn, are the least likely to have critical benefits such as sick pay, health insurance, and retirement plans in their main job.” 

Similarly, while income from online platform work is “not replacing traditional sources of family income,” researchers have found that, “[a]mong those who have participated in the Online Platform Economy at any point in a year, average platform earnings represent roughly 20 percent of total observed take-home income in any month of that year.”

Given the recent rise in COVID-19 cases, most people who can not work from home are safer not working. This includes many people who previously held more than one job, especially those multiple jobholders whose jobs involved close contact with others and/or multiple workplaces. Not working in one or more of these jobs, however, means a reduction in income from work, and, to the extent available, lost health insurance and other benefits tied to work. 

The temporary Unemployment Insurance (UI) expansions included in the CARES Act have likely played a major role in stabilizing the economic security of previous multiple jobholders who have lost one or all of their jobs. In most states, regular UI replaced less than half of lost wages on average before the pandemic, but the CARES Act provides $600 per week in additional UI benefits. Regular UI also excludes many multiple jobholders with at least one self-employed or informal side job because it is limited to W-2 employees who meet certain work history and other requirements. The CARES Act established a Pandemic Unemployment Assistance (PUA) for certain workers who are ineligible for regular UI, including self-employed workers and others. PUA benefits are equal to one-half of state average benefits, so they vary by state and are relatively low compared to average state benefits.

Unfortunately, the $600 bonus expires at the end of July and PUA expires at the end of the year. Congress should act quickly to extend both. Additional improvements need to be made to both the structure and administration of PUA to ensure that it provides sufficient income without undue administrative burdens for multiple jobholders who have lost one or more jobs. 

The CARES Act also includes new, temporary paid sick and family leave benefits for many employees who are unable to work due to their own illness, or because they have to care for a family member who is ill, or a child whose school is closed because of the coronavirus. The Act also provides similar benefits to self-employed people, but the mechanism for claiming them, a refundable tax credit applied to the 2020 tax return filed by the self-employed, means that these benefits are not available to self-employed people until next year. 

While these and other measures in the pandemic-related legislation passed to date help millions of workers with multiple work arrangements, they remain insufficient and difficult to navigate. Policy discussions going forward should carefully consider how the current jobs crisis may affect these workers. Finally, federal statistical agencies need to improve the measurement of both employee and nonemployee multiple jobholding.

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2:00PM Water Cooler 6/29/2020 | naked capitalism

By Lambert Strether of Corrente.
At reader request, I’ve added this daily chart. The data is the Johns Hopkins CSSE data. Here is the site. The United States as a whole:

Second verse, same as the first. (OK, I grant the two slopes aren’t exactly the same.)
“Analysis: Governing in reaction mode, and always a beat or two behind” [Texas Monthly]. “The Texas resurgence was predictable. Local officials who wanted stronger rules on masks and crowds and social distancing — in both big and small Texas cities and counties — were right after all. And Abbott, who blocked local governments from acting on their concerns about the coronavirus, waited until case numbers, infection rates and hospitalizations jumped. You can get ready when a storm is coming or wait until it blows your roof off. Abbott, who’s been reinstalling some of the regulatory safeguards he dismantled in May, dithered until the wind was blowing…. Maybe people have to see it to believe it. The state’s restrictions were working pretty well. After a month, the governor — hoping to revive the state’s economy — began easing up, slowly and then rapidly. The coronavirus made its comeback, slowly and then rapidly — probably a mix of opening the state’s businesses and other institutions and of people gathering in restaurants, demonstrations, parks and beaches. Every step of this has been more reaction than part of a plan. The rise of the disease led to restrictions. The fall of the economy led to reopening. And here we are again, reacting to the pandemic that never left. All that changed was the response.”

“But what is government itself, but the greatest of all reflections on human nature?” –James Madison, Federalist 51
“They had one weapon left and both knew it: treachery.” –Frank Herbert, Dune
“They had learned nothing, and forgotten nothing.” –Charles Maurice de Talleyrand-Périgord
The electoral map. As of June 25: Lots of new polls. And yet so far the consensus (aggregating ten organizations) remains the same.

So, taking the consensus as a given, 270 (total) – 204 (Trump’s) = 66. Trump must win 66 from the states in play: AZ (11), FL (29), MI (16), NC (15), PA (20), and WI (10) plus 1 to win not tie = 102. 102 – 66 = 36. So if Trump wins FL, MI, NC, and PA (29 + 16 + 15 + 20 = 80), he wins. That’s a heavy lift. I think I’ve got the math right this time!

Biden (D)(1): “What Americans Don’t Know About Joe Biden” [The Atlantic]. “Voters’ vague sense of Biden doesn’t seem to be hurting his poll numbers. But the polls are more a measure of how many Americans are rejecting Donald Trump. With a little over four months until the election, most voters don’t know what Biden stands for—except for not Trump. Still, perpetually anxious top Biden supporters say that he is unprepared for another seismic event in a year that’s already been full of them. ‘There is some awareness that he is a longtime politician, but there is little substance or specificity behind the impressions,’ consultants associated with the pro-Biden super PAC Unite the Country warned in an April memo about swing-voter focus groups they had conducted. When told a little bit about Biden, though, participants in the groups were inclined to support him, because they saw him as decent and his biography left an impression on them. ‘People feel good about Joe Biden, and it doesn’t take a lot to make them feel really good about Joe Biden—but this is the time when voters need that information,’ says Lily Adams, Unite the Country’s communications director. Other focus groups have revealed similar data. The word young voters most associate with Biden is old, followed by good, and then roughly by creepy, Democrat, and smart, according to a focus group conducted over the past few weeks for NextGen America, a political organization that focuses on increasing youth turnout. Mixed in are leader, great, nice, experienced, okay, and cool, but also senile and dementia.”
Trump (R)(1): “Trump Is in a Deep Hole. Can He Dig Himself Out Before November?” [Amy Walter, Cook Political Report]. ” And, for those of us who covered the 2016 campaign, we feel as if we’ve been here before. After all, back in June of 2016, Hillary Clinton led Trump by anywhere from 4 to 10 points. Trump was deeply unpopular back then and still won. So, can Trump to turn things around this year like he did in 2016?… The biggest challenge for Trump is that he’s not the outsider anymore. He’s in charge… [Trump could try to drive up Biden’s unfavorables but], one of the biggest impediments to driving up Biden’s unfavorable ratings is the president himself. Trump is unable to take himself out of the spotlight, even when it would benefit him. In fact, we may all look back next year and point to two unnecessary public appearances — the one in front of St. John’s church that required the military to clear peaceful protesters in front of the White House and the rally in Tulsa in the middle of a spike in COVID infections — that sealed his political fate. The Trump campaign and GOPers know that they can’t afford this election to be a referendum on Trump. But, the president himself can’t help but ensure that it is.”
Trump (R)(2): “Fox’s Gasparino: GOP operatives raising possibility Trump ‘could drop out of race’ if polls don’t rebound” [The Hill]. “A Fox News report on Sunday says that “GOP operatives are for the first time raising the possibility” that President Trump could drop out of the 2020 presidential race “if his poll numbers don’t rebound” against presumptive Democratic presidential nominee Joe Biden. The report by Fox Business Network senior correspondent Charlie Gasparino, political reporter Andrew O’Reilly and producer Lydia Moynihan comes as the former vice president leads the Republican incumbent by 9.2 points in the RealClearPolitics index of major polls…. “It’s too early, but if the polls continue to worsen, you can see a scenario where he drops out,” a GOP operative who asked to remain anonymous told Fox News. Gasparino also reported that one “major player” within the Republican Party described “Trump’s current psyche as ‘fragile.’” • I should, I suppose be following the polls more closely. If I could be sure they weren’t all push polls, or advocacy. I hate to sound foily, but see here.

Stats Watch
At reader request, I added some business stats back in. Please give Econintersect click-throughs; they’re a good, old-school blog that covers more than stats. If anybody knows of other aggregators, please contact me at the email address below.
Manufacturing: “June 2020 Texas Manufacturing Improves” [Econintersect]. “Of the five Federal Reserve districts which have released their June manufacturing surveys – two in expansion, two in contraction, and one is at zero…. Important subindices new orders improved (remains in expansion) and unfilled orders also improved (remains in contraction). This should be considered a better report relative to last month. It will be interesting to see what the Federal Reserve’s industrial production is this month with such a split of results from the various federal reserve districts.”
Housing: “May 2020 Pending Home Sales Record Comeback” [Econintersect]. “The National Association of Realtors (NAR) seasonally adjusted pending home sales index had a record recovery from coronavirus shutdown – but the index remains in contraction…. The year-over-year growth is in NEGATIVE territory. I believe the housing industry will reset due to the coronavirus – and I suspect housing will slow after this initial recovery.”
Retail: “Men’s Makeup Goes Mainstream With CVS Rollout” [Bloomberg]. “Men’s makeup is going mainstream in America. CVS, the country’s largest drugstore chain, is making the biggest bet on the category in the U.S. yet, by adding a cosmetics line from Stryx, a brand launched last year, to 2,000 stores (about a quarter of its total). The retailer is giving more legitimacy to a small, but growing, group of products that had mainly been sold through high-end stores. With this move, CVS likely has potential customers such as Max Belovol in mind. The 23-year-old grew up wearing dazzling eyeshadows and foundation for figure-skating competitions, but didn’t become truly comfortable with wearing makeup during work until the coronavirus lockdown. ‘It’s a Zoom effect,’ said Belovol, a law student based in Atlanta, who prefers concealer and its subtle look. ‘People don’t have to worry about how they look at work. You can paint your nails, and nobody on the Zoom call is going to know.”” • So it’s not that you look better on Zoom; it’s that Zoom’s resolution is crappy?
Concentration: “Break Up Google” [Tim Bray]. “Why break it up? · There are specific problems; I list a few below. But here’s the big one: For many years, the astonishing torrent of money thrown off by Google’s Web-search monopoly has fueled invasions of multiple other segments, enabling Google to bat aside rivals who might have brought better experiences to billions of lives…. Financially, I think Google’s whole is worth less than the sum of its parts. So a breakup might be a win for shareholders. This is a reasonable assumption if only because the fountain of money thrown off by Web-search advertising leaves a lot of room for laziness and mistakes in other sectors of the business.” • Well worth a read, and from a solid and well-respected tech insider.
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Today’s Fear & Greed Index: 48 Neutral (previous close: 46 Neutral;) [CNN]. One week ago: 52 (Neutral). (0 is Extreme Fear; 100 is Extreme Greed). Last updated Jun 29 at 12:20pm.
Rapture Index: Closes up one on Earthquakes. “Massive quake strikes southern Mexico” [Rapture Ready]. Record High, October 10, 2016: 189. Current: 185. Remember that bringing on the rapture is a good thing. I feel apocalyptic. Why don’t these guys?
The Biosphere
“Why are plants green?” [Science Daily]. • Read it twice. This is the best I can find: “Our model shows that by absorbing only very specific colors of light, photosynthetic organisms may automatically protect themselves against sudden changes — or ‘noise’ — in solar energy, resulting in remarkably efficient power conversion,’ said Gabor, an associate professor of physics and astronomy, who led the study appearing today in the journal Science. ‘Green plants appear green and purple bacteria appear purple because only specific regions of the spectrum from which they absorb are suited for protection against rapidly changing solar energy.’”
Health Care
“School Children Don’t Spread Coronavirus, French Study Shows” [Bloomberg]. “Scientists at Institut Pasteur studied 1,340 people in Crepy-en-Valois, a town northeast of Paris that suffered an outbreak in February and March, including 510 students from six primary schools. They found three probable cases among kids that didn’t lead to more infections among other pupils or teachers. The study confirms that children appear to show fewer telltale symptoms than adults and be less contagious, providing a justification for school reopenings in countries from Denmark to Switzerland. The researchers found that 61% of the parents of infected kids had the coronavirus, compared with about 7% of parents of healthy ones, suggesting it was the parents who had infected their offspring rather than the other way around.”
“Universal Health Care Supports Thailand’s Coronavirus Strategy” [NPR]. “While the pandemic has raged in the U.S. and Europe, Thailand has been able to control its epidemic with a caseload among the lowest in the world – just 58 deaths. Thai epidemiologists say the country’s universal health care system played a major role…. Dr. Pongpirul says the fact that the taxi driver sought medical attention early on, that he wasn’t put off by having to pay for something he couldn’t have afforded, made a huge difference in helping them control the virus.” • Say, since we’re a First World country, maybe we could set up a system of tax credits for COVID-19 Testing Savings Accounts…. That way, risking $1,000 for testing woudn’t seem like such an insuperable obstacle. Granted, costs, random and opaque as usual, don’t generally reach that level. But still.
Black Injustice Tipping Point
“How Planes, Trains and Automobiles Worsened America’s Racial Divide” [Politico]. “This is not just an obscure social critique: It’s a finding endorsed by economists at the Federal Reserve Bank of Philadelphia. In a 2019 research paper that examined the reasons and impact of the Freeway Revolts against urban highway construction, the researchers concluded that the American history of road development systematically shifted prosperity from inner cities to suburbs: ‘Freeways caused slower growth in population, income, and land values in central areas, but faster growth in outlying area. These patterns suggest that in central areas, freeway disamenity effects exceeded small access benefits.’ In other words: Cutting through communities helped spur suburban growth but destroyed urban communities.”
Police State Watch
CHOP shootings:
“One Dead, One in Critical Condition After Shooting at CHOP at 2:20 am” [The Stranger]. “Early Saturday morning citizen journalist Omari Salisbury reported two people shot near or on the borders of the Capitol Hill Protest Area (CHOP), one dead and one wounded…. [His] video [(included)]also shows protesters confronting a phalanx of cops who entered the zone with guns out and shields raised on a mission to retrieve the victims. Cops say they were ‘later’ told that the victims had already been transported to Harborview before they arrived, but video shows the protesters telling the cops that at least one of the victims had already been driven to the hospital, though there was confusion over ‘a second body.’”
“At least two shot as camp reportedly opens fire on jeep after Capitol Hill protest zone drivebys — UPDATE: One dead” [Capitol Hill Seattle Blog]. “At least two people were reported shot in a chaotic scene of frightened campers, security volunteers, and heavily armed private security early Monday morning on the edge of the Capitol Hill protest zone…. 911 callers reported a person shooting into a vehicle… A group of heavily armed private security was seen taking position in the area of the Car Tender [a luxury car repair shop] lot at 12th and E Olive St where the group has been deployed in recent days…. The white Jeep Cherokee involved in the shooting was reported empty of occupants by police near 12th and Pine, pointed north where it crashed through a barrier near where the core group of occupying protesters has set up camp outside the emptied East Precinct. It was not clear if both people reported shot were in the vehicle or if there were any victims from the camp.” • Normally, I wouldn’t post this tweet, but since it shows a White Cherokee, here it is:

2 guys in a stolen SUV shot up #CHOP tonight. They came through and fired ~15 shots, then maybe 15 mins later, drove across Cal Anderson field and opened fire again…and got fucking MURKED by security on the ground.
This is the SUV they were driving. Beautiful shot placement.
— Malice ⛧ Antifa Superstripper ⛧ (@MaliceBD) June 29, 2020

Sanders was the compromise….
* * *
“Gun-Swinging Lawyers Confront Protesters in Central West End” [Riverfront Times]. “As hundreds of protesters marched toward Mayor Lyda Krewson’s house this evening they were met by a surprising sight — a gun-swinging couple on the lawn of their Central West End mansion. The couple, personal injury attorneys Mark and Patricia McCloskey, shouted at marchers who seemed to be just passing through the gated community. A video recorded by freelance photographer Theo Welling for the Riverfront Times shows Mark, dressed in a pastel pink polo shirt and khakis, brandishing a rifle with an extended clip while Patricia, wearing black-and-white-striped top with capri pants, casually holds a small handgun.” • For copycats:

Ken and Karen fashion for the apocalypse🦙🔫St. Louis👕AR-15 💥
— Valerie🌺 (@swampgyrl) June 29, 2020

The interior of the McCloskey’s house:

St. Louis AR-15 guy is an absolute baller
— Caleb Hull (@CalebJHull) June 29, 2020

Hilariously, St. Louis Mayor Lyda Krewson lives in a gared community:

Nah, this is a private neighborhood, the residents own & pay to maintain the streets & walkways themselves. There are signs in plain view, private street no trespassing So, when the “whose streets, our streets” clowns set foot inside they were actually on privately owned streets
— nonyaB (@shimie1) June 29, 2020

* * *
“Minneapolis Council members get private security after threats” [FOX9]. • Private security forces are one obvious outcome of defunding the police.
Our Famously Free Press

Imagine if we had a national network of journalists experienced in covering protest, systemic injustice and (what used to be called) radicalism, who could document, centralize + contextualize this moment + connect dots for the new generation? I can. They were called alt-weeklies.
— Camille Dodero (@camilledodero) June 5, 2020

Can this be true?

Nothing anywhere I can find, as of this writing. (Riley, who I remember from Occupy Oakland, directed “Sorry to Bother You,” among other ventures.

News of the Wired
Machine learning:

In a new @CBC documentary, @remixmanifesto and his (adorbs!) young daughter explore the environmental cost of machine learning. We focus a lot on the privacy issues of the #InternetOfShit, but they’re also a climate dumpster-fire.
— Cory Doctorow #BLM (@doctorow) May 19, 2020

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Readers, feel free to contact me at lambert [UNDERSCORE] strether [DOT] corrente [AT] yahoo [DOT] com, with (a) links, and even better (b) sources I should curate regularly, (c) how to send me a check if you are allergic to PayPal, and (d) to find out how to send me images of plants. Vegetables are fine! Fungi and coral are deemed to be honorary plants! If you want your handle to appear as a credit, please place it at the start of your mail in parentheses: (thus). Otherwise, I will anonymize by using your initials. See the previous Water Cooler (with plant) here. Today’s plant (WB):

WB writes: “Vinca and Columbine; finally some color in MN.” Columbines! One of my favorites!
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The Re-Education of Jeremy Siegel

Can an esteemed professor of finance ever escape his reputation as a “perma-bull?”
That was the question running through my mind during a long conversation with Jeremy Siegel, professor of finance at the Wharton School. We discussed stock valuations, bonds, government rescues, inflation — even gold. It was our first in depth conversation in 5 years and probably the 10th such conversation since the mid-2000s.
He ably defends his reputation — in television appearances, in Wharton’s classrooms, but most especially in books – by making use of his deep research into market history. “Stocks for the Long Run” was first released in 1994, as a data-rich scholarly work on markets. It sold more than 300 thousand copies, a solid number for this sort of book.
The data marshaled within the book explains much of Siegel’s philosophy: his research shows no other liquid asset class can generate the long-term returns of equities. The revised and updated 6th edition of SFTLR (as the Bogleheads call the book) is due out sometime next year.
The 2020 edition of Jeremy Siegel is similarly revised and updated. His thinking on equities has (surprisingly) progressed. A little more moderate than before, showing less of the perma-bull thinking that so many critics – present company included – have asserted. Siegel demonstrates not so much as a break from prior beliefs as an evolution; he evaluates equities within a world that is ever-changing. He still advocates investors need to own stocks for the long run, but he is very aware that real world events, from the dot com collapse in the 2000s, to the Great Financial Crisis of 2007-09, and most recently, the 2020 Covid-19 crash, impact how stocks behave. Not only stocks, but how he thinks about them as well.
The perma-bull label is a touch unfair. Siegel points to his Wall Street Journal column titled “Big-Cap Tech Stocks Are a Sucker Bet.” The timing was exquisite, published March 14, 2000, within days of the 1990s bull market’s top. His admonition to investors was both prescient and timely: “Many of today’s investors are unfazed by history — and by the failure of any large-cap stock ever to justify, by its subsequent record, a P/E ratio anywhere near 100.” Over the next 3 years, the tech-heavy Nasdaq market collapsed 80%.
That was the finance professor grinding through his data in 2000, while so many investors were caught up in the euphoria. But “valuation” still impacts Siegel’s views about equities; this time, it is driven by the relative change in bond prices, and their potential; for further capital appreciation.
For much the past 40 years, fixed income as an asset has been in a robust bull market. Inflation peaked around 14.7% in 1980; it was tamed and brought under control by then Federal Reserve Chairman Paul Volcker.  Ever since then, it has been a neck and neck race between stocks and bonds. Over the long run, equities are supposed to trounce bonds, according to Siegel’s research. Yet over the past 20 years, it has been Treasuries and Corporates that have thoroughly thrashed stocks. Since March 2000, the annualized returns for the S&P 500 (as calculated by Dimensional Funds) has been 5.87% versus 8.32% for long-term corporate bonds, and 8.34% for long term government bonds. That compounds to a thorough whupping of stocks since 2000, with total returns of 215.6% for the S&P500, 401.2% for corporates and 402.9% for Treasuries.
The broader and shorter duration Bloomberg Barclays US Aggregate Bond index averaged an annualized 5.20% return over the last two decades (versus 5.87% for the S&P 500). Are all of the drawdowns, risk and volatility of stocks worth it for less than a percent?
Siegel says it is. According to his analysis, the great bond bull market that began in 1982 is officially dead. He pushes back hard on the “Bonds for the long run” thesis, expecting mean reversion to play a large part. The bond outperformance for the past two decades is a function of an aberrational era, caused by an unusual spike in inflation in the 1970s. That led to a crash in bonds and a massive long term recovery. Congress and Federal Reserve actions during each of the last three crises – 2000, 2008-09, and 2020 – have driven yields to such low levels, they have nowhere left to go but up. (Siegel is not a fan of negative rates). “Bonds are going to do worse than inflation” Siegel said in our recent interview.  The recent nadir in interest rates mark a “low in yields for a generation, and maybe forever,” he adds.
The end of the bull market for bonds leads Siegel down some surprising roads. He believes that as all of the massive stimulus of Congress and the Fed work its way through the economy, it will (eventually) send inflation higher. Nothing like the 1970s, but we should expect rising consumer prices for a few years.
In light of this, he is making some rather startling recommendations for investors to make to their portfolios:
“75/25 is the new 60/40.” Lower expected returns for bonds, combined with higher life expectancies, are going to reduce the levels of bonds needed as ballast to offset stock volatility in portfolios. He expects bonds to deliver negative real returns. This is why he wants portfolios to hold even more stocks.
“Lower your return expectations for equities.” Stocks are at elevated valuations, and if yields go higher, stocks will look even pricier. He does not expect the same 6-7% returns stocks have delivered over the past two centuries. Looking forward into the next century, he expects U.S. equity returns to be closer to 5-6%;
Stimulus: The government response today is very different than what we experienced in 2008-09: In addition to zero interest rates + $3 trillion in Fed liquidity, this time, there was more than $3 trillion in fiscal stimulus – with another trillion likely before the election. Under lockdown, savings rates have risen to double digit levels; Consumers have been stuck at home for months, building a mighty pool of pent up demand. Once a treatment and vaccine are available, Siegel sees a giant surge in consumer spending.
Inflation: Siegel was invited to participate in the 2010 Open Letter to Bernanke warning of hyper-inflation and the collapse of the U.S. dollar – and politely refused. His view in 2010 was all of  the Fed’s monetary actions merely made banks’ excess reserves bigger. It was neither lent out nor circulated, and that’s why there was no inflation post financial crisis.
The current situation has stimulus going directly into consumers’ bank accounts. He sees a big — but temporary — move up in consumer prices, with inflation rising to 3-5% over the next few years. Nothing like the 1970s, but a big change from the past decade. “Besides,” he adds, almost unable to help himself, “I think stocks are really good as a moderate inflation hedge.”
“Buy a small slice of gold.” For the first time in his career, Siegel is recommending investors have “a small slice” of gold in their portfolios as an inflation hedge. He advises on several WisdomTree portfolios which uses his model recommendations. The SIEGEL-WisdomTree Longevity model, for example has a 3% weighting in Gold.

That Siegel remains bullish on equities is hardly a surprise. However, his thoughts have evolved over time. The investing environment has clearly changed, and with it, he has become more flexible.
This may be due in part to his work with Wisdom Tree, which manages over $40 billion in client assets. Real world feedback from actual portfolios creates a very different experience than academic research does. Perhaps that has added some nuance to how he sees the world.
Regardless, Siegel is the rare academic market theorist who came to the public’s attention for his core philosophical principles, but  seems willing to change his views as facts change. He still is bullish on stocks for the long run, but he has moderated his expectations of future returns.
Intellectual flexibility is all too rare in the worlds of academia and investing. It should be noted and applauded in those rare instances when found. Siegel, the academic and practitioner, is one of those rare birds whose thinking continues to evolve along with the markets.

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