Archive for December, 2018

Celebrate !

December 31, 2018

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Merry Christmas … 45 Lessons in Life

December 24, 2018

Merry Christmas, Happy Hanukkah and HAPPY NEW YEAR to all !

This short video was sent to me by a friend a couple of years ago

It really resonated with me, so continuing a tradition,  I like to share it at Christmas time.

back with you after the New Year

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         click to view  (best with audio on)
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Nums: A world of battling algorithms…

December 24, 2018

Many pundits say that the recent stock market volatility and steep decline are at least partially attributable to algorithmic trading … complex analytical models with decision rules executed in real time by computers … think: flash trading.

The current relevance prompted me to flashback to a very cool 15 minute TED Talk … my all time favorite.

In the talk, tech entrepreneur Kevin Slavin tells how algorithms have reached across industries and into every day life.

A couple of lines caught my attention:

  • There are more than 2,000 physicists working on Wall Street developing operational algorithms
  • Massive scale speed trading is dependent on millisecond read & respond rates …
  • So, firms are physically literally locating right next to internet routing hubs to cut transmission times … or, setting up shop right at the exchanges.
  • And, of course, there isn’t time for human intervention and control
  • “We may be building whole worlds we don’t really understand, and can’t control.”

Obviously, Slavin comes down on the side of the quants.

It’s worth listening to this pitch … a very engaging geek who may be onto something big.

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Alert: About the recent increase in interest rates…

December 21, 2018

Like most investors, I’ve started paying closer attention to interest rates.

The initial motivation: came this summer via my trusty mortgage ARM — which hovered around 3% for a decade or so — jumped to 4% last year and is being reset to 5% this year.

Ouch.

Now, with the Fed “normalizing” interest rates, i.e. jacking rates up, I’m on full alert.


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All of this got me wondering about the impact of rising rates on the Federal budget…

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Fed says: Stock market be damned.

December 20, 2018

… and, the market responds predictably.
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Yesterday, Fed Chairman Jerome Powell took a meat ax to the market.

As expected, the Fed inched interest rates up a notch — as planned, and as expected.

That’s OK … the economy need to be weaned off of near-zero interest rates.

But, despite indicators of an economic slowdown, Powell said there are still more interest rate boosts on the table for next year … count on ’em.

Pundits expected a more wiggle-roomed statement that the Fed would be watching what happens and be driven by the data.

Then, he deliver the coup de grace, saying “financial markets and the Fed’s balance sheet don’t matter.”

Au contraire, Mr. Powell.

The financial markets matter to folks holding financial assets … and the Fed’s balance sheet – a correlate to the supply of money in the economy – is a major determinant of financial markets’ strength.

Need proof?

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Let’s start by taking a stroll down memory lane ….

Over 40 years ago, an economist-wannabe co-authored a study in the Journal of Finance titled “The Supply of Money and Common Stock Prices”.

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The article summarized an econometric study (think: big, hairy financial model) that demonstrated a tight link between the amount of money floating around and, on a slightly time-delayed basis, the price of stocks.

That is, when the Fed adds liquidity into the market (think: “quantitative easing”), much of money flows into the stock market – rocket-boosting stock prices.

And the opposite is true. When the Fed tightens, stock prices fall back into earth orbit.

OK, fast forward to today.

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Americans are “Eatin’ Mor Chikin”

December 19, 2018

And, Chick-fil-A is leapfrogging rivals.

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Last week, we posted that Costco – which sells almost 1 million chickens each day –  is opening its own mega chicken farm to partially satisfy its needs.

See How many chickens does Costco buy & sell each year?

A beneficiary of the trend – or, make that “the driving force” behind it – is Chick-fil-A .

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I thought the long lines were a local phenomenon, but data indicates that it’s a national occurrence.

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You can’t control everything that happens to you but …

December 18, 2018

… you can control the way you respond to everything that happens to you.

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That’s one of the admonitions from my adios lecture to my MBA students.

I was amped when Condi Rice used a version of the line in one of her speeches

Other snippets from her speech that caught my eye are below  …

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The world is a chaotic and dangerous place. 

The U.S. has since the end of World War II had an answer – we stand for free peoples and free markets, we are willing to support and defend them – we will sustain a balance of power that favors freedom.

Our friends and allies must be able to trust us. From Israel to Poland to the Philippines to Colombia and across the world — they must know that we are reliable and consistent and determined.  And our adversaries must have no reason to doubt our resolve — because peace really does come through strength.

When the world looks at us today they see an American government that cannot live within its means.  They see a government that continues to borrow money, mortgaging the future of generations to come.  The world knows that when a nation loses control of its finances, it eventually loses control of its destiny.  That is not the America that has inspired others to follow our lead.

The essence of America – that which really unites us — is not ethnicity, or nationality or religion – it is an idea — and what an idea it is:  That you can come from humble circumstances and do great things.  That it doesn’t matter where you came from but where you are going.

Ours has never been a narrative of grievance and entitlement.  We have not believed that I am doing poorly because you are doing well.

We have been successful too because Americans have known that one’s status at birth was not a permanent station in life.  You might not be able to control your circumstances but you could control your response to your circumstances

Today, when I can look at your zip code and can tell whether you are going to get a good education – can I really say that it doesn’t matter where you came from – it matters where you are going.  The crisis in K-12 education is a grave threat to who we are.

We need to have high standards for our students – self-esteem comes from achievement not from lax standards and false praise.  And we need to give parents greater choice – particularly poor parents whose kids – most often minorities — are trapped in failing neighborhood schools.

And on a personal note– a little girl grows up in Jim Crow Birmingham – the most segregated big city in America – her parents can’t take her to a movie theater or a restaurant – but they make her believe that even though she can’t have a hamburger at the Woolworth’s lunch counter – she can be President of the United States and she becomes the Secretary of State.

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Laughs: For one day, let’s lighten up on Trump…

December 17, 2018

Both sides are getting way too serious either defending or skewering the guy.

So, let’s step back and start the week with a chuckle.

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Yeah, I’m still a fan of America’s Got Talent .

I watch it so that you don’t have to … except for the highlights that I dish to loyal readers.

Here’s a hilarious one for you, whether you’re pro-Trump or anti-Trump …

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The back story:

When the Singing Trump walked on stage for his first audition, the crowd booed loudly … remember, it is an NBC show.

Australian “Mel B.” – former Spice Girl and now an AGT judge – joined the booing and gave him a disqualifying ‘red X’ as soon as he started his act.  Politically motivated?

The other judges passed him on to the next round.

This time, crowd was friendlier and Mel B. said

“I have to eat my words and apologize. You’re just like ‘him’ and you entertained us with the best 2 Backstreet Boys songs ever.”

Trust me … and start the week with a smile (and maybe a laugh).

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How many chickens does Costco buy & sell each year?

December 14, 2018

According to CNBC

Costco is shelling out $440 million to open a Nebraska chicken farm.

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Why is Costco doing it?

“To partially escape the American chicken monopoly run by the likes of Tyson, Pilgrim’s Pride and Perdue.”

Technical note to CNBC: A monopoly has only one supplier.  A duopoly has two. When there are three, it’s a concentrated competitive market.

The self-operated farm provide Costco with 100 million chickens … 40 percent of its yearly chicken needs.

Doing the arithmetic, that means that Costco goes through about 250 million chickens every year.

That’s a lot of chickens but pales in comparison to KFC which reportedly goes through 3 or 4 times as many.

Personal note: Many, many years ago, I interviewed for a position at KFC as a chicken buyer. I was recruited because I had an economics degree and had worked for a large grocery store chain.

It wasn’t a good fit. (<= understatement)

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The two most dangerous words in the English language today …

December 13, 2018

When it comes to human behavior, “studies show” are becoming “the two most dangerous words in the English language today.”

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According to Andy Kessler, writing in the WSJ

Many of the cited studies on human behavior are pure bunk.

For example:

The 270 researchers working under the auspices of the Center for Open Science spent four years trying to reproduce 100 leading psychology experiments.

They successfully replicated only 39 of the 100 psychology experiments.

A survey of 1,576 scientists published in Nature reported that “more than 70% of researchers have tried and failed to reproduce another scientist’s experiments … and more than half are unable to reproduce their own experiments.”

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What’s going on?

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President acts Russian … names more than 30 “Czars”

December 12, 2018

Why hasn’t this gotten any attention recently?

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Dems and their media buddies keep hammering Trump for being too cozy with Russia.

The slightest innuendo or chance encounter (think: Trump chats with Putin at formal G20 dinner”) gets blown up into a faux cause celebre that quickly evaporates.

Imagine for a moment if President Trump were to circumvent the Senate’s “advise & consent” rules by appointing people to his administration who play high-level cabinet-like roles … but aren’t subject to Senate approval.

The screaming would be deafening.

And, imagine if Trump were to call the process-circumventing appointees “Czars”.

Russia !  Russia !!!  Russia !!!!

Clear evidence of collusion: Impeach for treason.

 

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Only problem with the story: Trump hasn’t done it, but Obama did … to a gleeful, encouraging press that argued “he had no choice but to do it.”

For a trip down memory lane, here’s a list of Obama’s Czars….

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“Resisters” now think that it’s not fair to resist … say, what?

December 11, 2018

Forrest Grump: “What goes around, comes around”

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For a couple of years, it’s been in fashion among the established, the elite and the folks on the left to use any method to stymy the Trump agenda.

After all, the end justifies the means, right?

Well now, from Madison,Wisconsin to Paris, France … left-leaning elected officials are being thwarted.

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And, many who were touting the graces of the Resist Movement just a couple of weeks ago are squealing like pigs.

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In praise of gridlock …

December 10, 2018

And, why I don’t care if Trump gets impeached.

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I had a few very interesting conversations over the past week or two.

They revolved around a couple of linked topics:

1) Buyer’s remose

2) Congressional gridlock

3) Impeachment

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For what it’s worth, here’s how I come out on these topics …

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Maybe we’re just not that smart …

December 7, 2018

Yesterday, we reported that the U.S. is, on average, #40 in the world in mathematics.

Usual punditry is that schools are bad … blame it on the teachers.

But, I wondered: is it a bad production process (the schools) … or could it be the raw material going into the process (i.e. innate brain power).

So, the question of the day: how does the U.S. rank on IQ versus other countries?

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Ouch: U.S. math scores continue to drop

December 6, 2018

U.S. now trails 39 countries …

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The Program for International Student Assessment (PISA) recently released its  survey results for math “literacy” … and, the results aren’t pretty.

The average for 15-year-old U.S. students slipped to 470 on the PISA scale … down about 3.5% from 2009 … ranking the U.S. #40 among developed nations (see list at end of this post) … 20 points lower than the average of the 35 OECD (Organization for Economic Co-operation and Development) countries.

The scores differential versus the OECD countries is roughly equal for the average, 25th percentile and 90th percentile … refuting claims that “our” best are head-to-head competitive with the the rest of the world’s best.

 

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Digging a bit deeper into the numbers ….

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#15 – Why I’m lukewarm to climate change …

December 5, 2018

Reason #15: Did Paris just pull out of the “Paris Accords”?
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For the record: I’m neither a denier nor a zealot …  so, according to British writer (& phrase-coiner) Matt Ridley, I’m a “lukewarmer”.
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In car-speak,  the rubber seems to be hitting the road in Paris.

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In case you missed it, French President Macron tried to slap-on a gas tax to save the planet by discouraging petrol consumption, (i.e. driving).

The result: a political crisis for Macron … more than a million protesters … some rioting in the streets … approval ratings in the 20s.

Apparently, French citizens who don’t travel by Metro, Uber or private jets took the gas-tax personally since it impacts their get-to-work costs and, thus, flattens their wallets in a statistically significant way.

As Gomer Pyle would say: “Surprise, surprise, surprise”

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Need proof that charter schools work?

December 4, 2018

New study of NYC charter schools provide compelling evidence.
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I recently stumbled upon an interesting research study by CREDO – the Center for Research on Education Outcomes at Stanford University.

CREDO was established to gather and analyze empirical evidence about education reform and student performance (i.e. “outcomes) with a particular emphasis on innovative programs, curricula, policies and accountability practices.

A recent report focused on New York City  charter schools since “New York City has been the nexus of public discourse about charter schools for nearly two decades but only a fraction of that debate has been grounded in well researched evidence about charter schools’ impact on student outcomes.”

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And, the answer is …

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Finding college-caliber disadvantaged high-schoolers …

December 3, 2018

Universal SAT / ACT testing  “finds” talented low-income college candidates
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Interesting study reported by Brookings

Entrance exams (ACT or SAT ) are required for admission to virtually all selective colleges in the US.

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For low-income students, that’s a hurdle to overcome.

Students have to register and pay for these tests, and then travel to a testing center on a weekend to take them.

This is straightforward, if you have internet access, a computer, a credit card, and a car.

If you are missing any of these resources, it’s a lot more challenging.

The nearest testing center may be in a suburb that is unreachable by public transportation early on a Saturday morning.

To overcome these hurdles, several states are now giving the ACT or SAT exams in school, for free, on a school day during school hours.

The benefits are two-fold …

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