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WOWS full issue, July 22, 2016
An Alternative Way To View Or Print The Entire Current Issue As A Single Document
7/22/16 4:00 AM
Attention Paid-Up Subscribers: To read or print the entire current issue as a single document, use the "easyprint" feature in the "Nav bar" to the right to open it, or any of WOWS' individual features, as an Adobe PDF file, and then print it. Alternatively, you can click "more" at the bottom of this paragraph and then click the red Adobe icon that appears. Your second click will download the full issue .pdf file of WOWS' latest issue to your computer, a process that -- depending on the file size and your connection speed -- might take more than the blink of an eye. Then, depending on preferences you've set on your device, it will either open automatically or show up in your downloads folder, waiting to be opened. [More]
Softening Softs
Economist Danny Blanchflower on Labor Slack, Rising Risks
7/22/16 6:00 AM
That’s David G. “Danny” Blanchflower in the cover photo above, in his ever-so-suitable book-lined office at Dartmouth College. The learned Professor of Economics was smiling when it was shot, but don’t let that disarm you. He’s lately been telling everyone who will listen — including his legion of Twitter followers — that the current economic and political environment, post-Brexit, “feels like 2008.” And not just in the U.K.

Scaremongering, you say? Not so fast, Danny Blanchflower is no typical ivory tower economist. [More]
The Passenger
Making A Strong Case For Active Management
7/22/16 8:00 AM
By David B Iben
Oh, the passenger
How, how he rides
Oh, the passenger
He rides and he rides
He looks through his window
What does he see?
He sees the sign and hollow sky
He sees the stars come out tonight”
 — Iggy Pop

Was Iggy referring to drugs or had he anticipated the beauty of ETFs circa 2016? Reviewers suggest that “he sees how wonderful everything is once he relinquishes control, becomes the passenger instead of the driver.” Longtime readers know that I have a proclivity to view many songs and movies as metaphors for the investment world. In this case, passive investing, de rigueur in the marketplace, comes to mind.

The “old school” investors labor over 10-Ks, 20-Fs and other regulatory filings, struggling through those boring “notes to the financial statements,” and “pounding the pavement” to perform due diligence via site visits and industry conferences, while vigorously “interrogating” company management teams and then spending hours building valuation models. [More]
Rabidly Risk Averse
The Perils Of The Bubble In “Safe” Investments
7/22/16 7:00 AM
By Richard Bernstein
1999 was a very unique period. There was an overwhelming consensus that the “new economy” was a permanent investment theme that couldn’t be stopped. The valuation of technology, media, and telecom companies were bid to extreme valuations. [More]
Gold’s Prospects
Weeks Where Decades Happen
7/22/16 6:00 AM
By John Hathaway
The precious metals markets have clearly turned the corner, becoming flat-out bullish following the extensive and painful correction from August 2011 to year-end 2015. Year-to-date through June 30, the U.S. dollar gold price has increased 24.57 percent, while the XAU (Philadelphia index of gold and silver stocks) benchmark has increased 116.16 percent. [More]
Immigration And Brexit
The Risk In Uncontrolled Political Experiments
7/22/16 5:00 AM
By Jeremy Grantham
I set myself a task this quarter to give my views on why suddenly so many strange things are going on in the U.S. and in the U.K. and what they might mean. [More]
Politics & Contagion
Italy Slowly Moves Toward Comprehensive Bank Rescue
7/22/16 4:00 AM
By Christopher Whalen
• For the past several years, the European Central Bank (ECB) under Governor Mario Draghi has carried the world of banking in the European Union on its shoulders. Kroll Bond Rating Agency (KBRA) believes that the political shock of the vote in the UK has forced the EU to begin moving towards some type of direct aid for banks, but there remains enormous opposition from some EU member states.

• KBRA believes that the core nations of the EU led by Germany must quickly put aside their reluctance to commit resources to support a comprehensive bailout of Italy’s banking sector. [More]
Rational Signals
Why Are People Buying Volatility When There Is None?
7/22/16 3:00 AM
By Tim Quast
The market message appears to be: If you want to know the rest, buy the rights.
While rival Nintendo is banking on Pokemon Go, Sony bought the rights to Michael Jackson’s music catalog for an eye-popping $750 million. This may explain the sudden evaporation of Jackson family discord. [More]
Bear Call
Put Options Historically Cheap; Market Setting Up For A Fall
7/22/16 7:01 AM
By Michael Belkin
An extremely rare volatility event has occurred. The ratio of the VIX (option volatility index) to realized S&P500 index volatility (20 day standard deviation) just reached the 2nd lowest level ever (0.5996). [More]

Don’t Nap
Financial Conditions Index Remains Mired Below Panic Low
7/22/16 6:01 AM
By Thomas R Peterson
Economy: The Chicago Fed “National Financial Conditions Index” shows the historical drop from 20082–2009 into the low in 2010. But despite Fed intervention, and massive QE, the index is even now still below the 2010 panic low. [More]

It’s Our Data, Stupid
Packaging & Repackaging Customer Info Fuels Exchange Profits
7/22/16 5:01 AM
By Joe Saluzzi
“Tabb Group, a consultancy, estimates that while trading volumes, market-making profits, brokerage revenues and institutional trading commissions have all declined, the revenues of U.S. exchanges have climbed 16 percent over the past five years — largely thanks to rocketing data revenue. [More]

U.S. Healthcare Reform
President Publishes in JAMA: Progress To Date And Next Steps
7/22/16 8:00 AM
By Barack Obama
Importance:  The Affordable Care Act is the most important health care legislation enacted in the United States since the creation of Medicare and Medicaid in 1965. [More]

Demand-Side View
What’s Ailing Entrepreneurship & Business Dynamism
7/22/16 7:00 AM
By Mike Konczal and Marshall Steinbaum
Academics and policymakers have recently focused on a worsening economic phenomenon commonly referred to as the decline in “business dynamism,” that is, the declining rate at which new businesses are formed and the rate at which they grow. [More]

Money Fund Waterloo
The Unintended Consequences Of The Zero Lower Bound Policy
7/22/16 6:00 AM
By Marco Di Maggio and Marcin Kacperczyk
We study the impact of the zero lower bound interest rate policy on the industrial organization of the U.S. [More]

Productivity Enhancer?
Study Indicates Government Spurred 19th Century Innovation
7/22/16 5:00 AM
By Daron Acemoglu, Jacob Moscona, and James A Robinson
In the Rise and Fall of American Growth Robert J. [More]

Acute Observations, week ending July 22, 2016
Perceptive Commentary from July 1 to July 22, 2016
7/22/16 8:00 AM
Dave Rosenberg
The Bull market in greed and complacency is back intact:

1. The Chicago Board of Options Exchange Volatility Index (VIX) is now well south of 12, and at its lowest level since August 2015.

2. [More]

© 2014 Welling On Wall Street, LLC.