Master Financial Education

Financial Planning Daily Commentary 2017
The  most intensive and extensive on the Web

E. F. Moody Jr.

click above for bio

USA Today- "This is a high-powered personal bookmark list that spans the spectrum of the truly useful."

FORBES- "You'll find some great information."

BUSINESS WEEK: "For an Expert, Click here" 

Uniform (Im)Prudent Investor Act- Waaaaaaaaaaaaaaaaaay Out of Date

World Statistical data  

6/21: Kiss your job bye bye. And probably most of your self worth.

tasks most likely to get automated within the next 10 years were rote, mechanical tasks. Language translation could outpace human performance by 2024, responses indicated, and robots may be able to write better high-school-level essays than humans in 2026.

More complex and creative tasks, like writing books and performing high-level math, will take longer. Ultimately, the researchers found AI could automate all human tasks by the year 2051 and all human jobs by 2136.

This is probably the scariest end to human intelligence- and to our civilization. No need to work, no need to think, a pension for life (stipend available to all citizens), Maybe no need for teachers since everything the children  will learn is moot- the robots are already doing any of the tasks that we now 'enjoy'. No need to do anything, no need to exceed at anything since the human will not be as good no matter what. Even if a child might succeed at art or music, they will never be prodded to do so in our utopian world. . 


Nation’s opioid epidemic flooding hospitals and ERs, new data show

The coast-to-coast opioid epidemic is swamping hospitals, with 1.27 million emergency room visits or inpatient stays for opioid-related issues in a single year, according to new government data.

6/20: Probabilities- what I had to do with recent research.

"Prices of Macroeconomic Uncertainties with Tenuous Beliefs" Free Download
Becker Friedman Institute for Research in Economics Working Paper No. 2973331

LARS PETER HANSEN, University of Chicago - Department of Economics, National Bureau of Economic Research (NBER)
New York University (NYU) - Department of Economics, Leonard N. Stern School of Business, National Bureau of Economic Research (NBER)

A decision maker suspects that parameters of a set of structured parametric probability models vary over time in unknown ways that he does not describe probabilistically. He expresses a fear that all of these parametric models are misspecified by also wanting to consider alternative unstructured probability distributions. He restricts these unstructured probability models to be statistically close to the structured parametric models. Because the decision maker is averse to ambiguity, he uses a max-min criterion to evaluate alternative plans. We use this decision theory to construct competitive equilibrium uncertainty prices that confront a robust decision maker who solves a portfolio choice problem and offer a quantitative illustration for structured parametric models that focus uncertainty on macroeconomic growth and its persistence. Nonlinearities in marginal valuations induce time variation in market prices of uncertainty that fluctuate because the investor especially fears high persistence in bad states and low persistence in good states.

I knew these were big but when you look at this, it is enormous

6/20: If Trump fires Yellon, the mess will bring him down,

Bank of Japan keeps monetary policy on hold


No-change decision shows Haruhiko Kuroda’s determination to continue stimulus

6/20: I thought they would get their act together in the early 90's. I'm not sure they can do it if they are still screwing around .

Bank of Japan keeps monetary policy on hold


No-change decision shows Haruhiko Kuroda’s determination to continue stimulus

  1. Sovereign Bond Prices, Haircuts and Maturity




Tamon Asonuma ; Dirk Niepelt ; Romain Ranciere

Rejecting a common assumption in the sovereign debt literature, we document that creditor losses (“haircuts”) during sovereign restructuring episodes are asymmetric across debt instruments. We code a comprehensive dataset on instrument-specific haircuts for 28 debt restructurings with private creditors in 1999–2015 and find that haircuts on shorter-term debt are larger than those on debt of longer maturity. In a standard asset pricing model, we show that increasing short-run default risk in the run-up to a restructuring episode can explain the stylized fact. The data confirms the predicted relation between perceived default risk, bond prices, and haircuts by maturity.



Stay on Top of 401(k) Fees -- 401k Averages Book

Just Published! 17th Edition of the 401k Averages Book. All 401(k) fee charts and tables updated for 2017. Use the 401k Averages Book to better understand investment, recordkeeping, revenue sharing expenses for 401(k) plans. The 401k Averages Book is the most recognized source for comparative non-biased 401(k) information. Click here for more information+


  1. The Merit Primacy Effect




Alexander Cappelen (Norwegian School of Economics) ; Karl Ove Moene (University of Oslo) ; Siv-Elisabeth Skjelbred (University of Oslo) ; Bertil Tungodden (Norwegian School of Economics)

Do people give primacy to merit when luck partly determines earnings? This paper reports from a novel experiment where third-party spectators have to decide whether to redistribute from a high-earner to a low-earner in cases where earnings are determined by luck and merit. Our main finding is that the spectators assign strong primacy to merit in such situations, and as a result violate basic fairness conditions. We believe that the results shed new light on inequality acceptance in society, in particular by showing how just a little bit of merit can make people significantly more inequality accepting.


luck, experimental economics, Inequality, fairness


C93 D31 D63


6/20: Going up??

The S&P 500 is up 9% so far this year, and it would like to thank its most trusted allies: high-flying tech stocks.

But the benchmark's reliance on mega-cap tech has come at a price. Market pessimists have frequently cited the highly-concentrated gains as a negative driver, arguing that while the ride higher is enticing, any unwinding can be swift and brutal.

EFM- doesn't anyone remember the Dotcom breakup??

After all, just 10 companies have accounted for almost half of the benchmark's return this year. It's all a misconception, argues JPMorgan, which doesn't think the concentrated market move is anything out of the ordinary.

EFM- Yes, within the S&P 500 there are times when just a few stocks have risen so much that it can make up for the rest. But it does not last, Caveat emptor

6/20: Teens and drugs

While marijuana is the substance teens are most likely to abuse, rates of pot usage have also declined slightly since 2011. Fewer teens started using alcohol, marijuana or cigarettes in 2015 than in 2011. Cigarette use in particular has been steadily dropping, from nearly 8% in 2011 to 4.2% in 2015.

However, it's not all good news. While rates of substance abuse are dropping among teens, those who do abuse illicit drugs are not receiving the treatment that could help them with their addiction.


  1. Essays on behavioral finance




Terzi, Ayse (Tilburg University, School of Economics and Management)

This thesis deals with a range of topics in experimental and behavioral finance. The first part investigates the role of personal inclination in reference point employment by individuals. The second part extends this questions by focusing on the role of personality traits and demographic factors in driving reference point exhibition in decision making under risk. The third part documents the role of ambiguity in the dissemination of private information in asset markets. Finally, the last part explores differences in time discounting under risk and ambiguity.


6/20: The Behavioral Economics Guide 2017


Introduction by Cass Sunstein

Part 1 – Editorial

Behavioral Economics: Expanding Boundaries

Part 2 – Applications

Behavioral Science in Practice

Part 3 – Resources


Biggest outflows year to date



Actively managed funds saw the majority of the largest outflows this year as investors flocked to less expensive passive alternatives.

EFM- the management fees will drop precipitously and managed funds will grab a toehold. But investors need to realize that the losses of 2000- 49% and 2008- 57% were the S&P 500. So cheap funds are no better in a recessionary climate.`    


  1. Nudging in education: A survey




Mette Trier Damgaard (Department of Economics and Business Economics, Aarhus University, Denmark) ; Helena Skyt Nielsen (Department of Economics and Business Economics, Aarhus University, Denmark)

Can we nudge children, youths and their parents to make better educational decisions? Educational decisions involve immediate costs and potential future benefits. Research suggests that in such settings behavioural barriers (such as lack of self-control, limited attention and social norms) are likely to influence choices. This raises the question whether low cost ”nudges” can improve people’s educational choices. While interventions targeting cognitive or attentional limitations seem to be effective, it is too soon to provide a roadmap for introducing nudges in the education sector.


Behavioural bias, boost policies, education choice, human capital investment


D03 D04 I20



Life Insurance and Annuities: The Impacts of Regulatory Requirements on Consumer Cost and Consumer Choice (PDF)
12 pages. "This issue brief addresses the difference between equality and equity in insurance, and its impact on consumer cost. Then it describes some simple cases involving life insurance and annuities. These cases illustrate basic insurance principles and show that equity can be different from equality. Last, these cases are used to show possible impacts of laws and regulations, or 'mandates,' that: [1] Limit insurers' ability to equitably classify risks on new policies; or [2] Require certain rights or benefits on new policies."
American Academy of Actuaries

6/19 Lara Rhame does this video on the economy and covers several issues I deem important. . Clear, concise, and understandable

You really should view her video. About 30 minutes

6/18: Rate Hikes    

(This graph was just before the rate increase last week)

the fourth rate hike has been accompanied by negative returns in the following year, but this is shaping up to be one of the exceptions. 

The table below details returns after previous fourth rate hikes. On average, stocks have lost 1.19% in the year after the fourth rate hike without a cut following.

From Lara Rhame

6/18: The hubris of most applied behavioral scientists

If you are into the new philosophy of investment and retirement planning, you should read these tow articles

6/18: Most applied behavioral science projects are behavior amplification projects

6/17: Depression

Persistent Sadness & Loss of Interest in Life



"Prices of Macroeconomic Uncertainties with Tenuous Beliefs" Free Download
Becker Friedman Institute for Research in Economics Working Paper No. 2973331

LARS PETER HANSEN, University of Chicago - Department of Economics, National Bureau of Economic Research (NBER)
New York University (NYU) - Department of Economics, Leonard N. Stern School of Business, National Bureau of Economic Research (NBER)

A decision maker suspects that parameters of a set of structured parametric probability models vary over time in unknown ways that he does not describe probabilistically. He expresses a fear that all of these parametric models are misspeci
ed by also wanting to consider alternative unstructured probability distributions. He restricts these unstructured probability models to be statistically close to the structured parametric models. Because the decision maker is averse to ambiguity, he uses a max-min criterion to evaluate alternative plans. We use this decision theory to construct competitive equilibrium uncertainty prices that confront a robust decision maker who solves a portfolio choice problem and offer a quantitative illustration for structured parametric models that focus uncertainty on macroeconomic growth and its persistence. Nonlinearities in marginal valuations induce time variation in market prices of uncertainty that fluctuate because the investor especially fears high persistence in bad states and low persistence in good states.

6/16: Yes, you need to be concerned

the computer model that allowed two bots to have a conversation—and use machine learning to constantly iterate strategies for that conversation along the way—led to those bots communicating in their own non-human language.

6/16: “Don’t Blow a Hole in the Deficit”

Trump's plan for infrastructure spending while also lowering taxes (do the rich need to pay LESS tax?) could further add total financial misery to our enormous deficit.

Treasury secretary Lew noted, we don’t need a tax cut. We don’t need to add fiscal stress in a world where the Fed is raising rates,”

If hard decisions like how to pay for tax reform and closing loopholes prove too difficult to make, then he said “having an insistence that you don’t blow a hole in the deficits should matter to both parties.”

A growing deficit “will limit the tools at our disposal,” Lew said. “Our flexibility to deal with growing problems will be more challenging.”

6/16: Say it isn't so!!! It certainly could not happen here

Britain will stop giving politicians early access to financial data amid fears it is being leaked to the market ahead of release

6/16: Best insurance for high risk drivers comparison

6/16" This is noe of the funds to consider for investing abroad

The FTSE 100 is diving after the Bank of England signalled a rate hike may be on its way

6/16: Financial Times

Bank of England rate setters show worries over rising inflation


The Bank of England came closer to raising interest rates at its Monetary Policy Committee meeting in May with its members signalling more concern that inflationary pressures were taking hold of the British economy, voting by five to three to keep interest rates unchanged.

In a close vote, all of the interest rate-setting MPC agreed that the “inflation overshoot relative to the [2 per cent] target could be more pronounced than previously thought”, but the majority on the committee still voted to keep rates at the historic low of 0.25 per cent on the grounds that the UK economy’s weakness would keep a sufficient lid on inflation.

The central bank’s dilemma over how to deal with Britain’s stagflation problem piles yet more pressure on Theresa May’s minority government as it seeks to manage a Brexit-related squeeze on household finances at the same time as starting negotiations on the UK’s withdrawal from the EU.

6/13: Pay very close attention to this from now on. I taught the real life implications of this in the late 90s but next to no one paid any heed. The inverted curve had been a 100% indicator of a recession. There was an inverted curve in 2000 and a subsequent loss of 49%. But since clients did not know of the real life implications to investing, they had no clue and did a buy and hold. Did I see any other articles on this issue prior to 2000? Not that I can remember. So the economy rebounded and I did not see an article on the inversion. There was an inversion in 2006. And what happens? 57% loss. If an inversion now occurs, it should be worse than that of 2008.

Therefore. when looking for a fiduciary who does the best for you- ask them what they did in both instances. I do not believe you will get anyone who did the proper research. Further for the CFP, ChFC, PFS et al. there were no continuing education classes  on this 100% indicator.

Inverted Yield Curve- Gary Halbert

Yield Curve Flattening – Could It Invert in the Next Year?

The so-called “yield curve” is simply the spread between yields on short-dated Treasuries (notes) and longer-dated Treasuries (bonds). The spreads have been narrowing most of this year, and analysts wonder if this trend is likely to continue.

Some even worry that we could see an “inverted yield curve” – where short-term rates climb above long-term rates – later this year or early next year. Inverted yield curves are almost always bad for the economy.

In fact, inverted yield curves have preceded each of the last seven recessions dating back to the late 1960s. This is because bank lending dries up during inverted yield curves when their income off of longer-term loans falls short of the interest they pay on short-term deposits. So they just stop or cut back significantly on lending.

The decline in lending almost always leads to higher interest rates, and this is bad for the economy – which is in turn bad for the stock markets. Given that our equity markets are arguably in a bubble, an inverted yield curve could be devastating, especially if it lasts very long.

The last two times the yield curve inverted was in the years 2000 and 2006. The 2000 inversion and subsequent recession caused NASDAQ stocks to plummet 80%. The 2006 inversion helped cause the Great Recession in which the S&P 500 dropped over 50% and home prices fell over 30% in many parts of the country.

Let’s take a look at where we are on the long end of the yield curve now. The first chart below is the yield on the 10-year Treasury Note that ended last week at 2.20%. As you can see, yields on the 10-year have been trending lower since March.

10yr Treasure Yield

The next chart is the yield on the 30-year Treasury Bond that closed last week at 2.86%. So the spread between them has narrowed to 0.66%.

30yr Treasury Yield

With the Fed expected to hike its short-term rate tomorrow and again in September or December (or both), there is speculation that the 10-year yield could overtake the 30-year later this year, thus inverting the long end of the yield curve.

CNBC Writer Predicts Inverted Yield Curve This Year

While I doubt the Treasury will let the 10-year yield overtake the 30-year, to the extent it can control it, speculation about an inverted yield curve intensified following a June 5 column in CNBC written by Michael Pento, a guest contributor.

Mr. Pento believes that the yield curve will invert by the end of this year and warns that it will usher in a “brutal” new recession next year. He believes this will be very negative for stocks, bonds and real estate – each of which he considers to be in a bubble.

Mr. Pento’s concern is different from the 10-year/30-year discussion above. Mr. Pento is in the camp that believes the 10-year Treasury yield will continue to fall, and will fall more than is currently expected. He expects the 10-year Treasury yield to fall this year to 1.35% where it was in July 2015.

Meanwhile, he believes the FOMC will continue to raise the Fed Funds rate at least as much as is currently expected.

10yr Treasury Yield vs Fed Funds

Thus, he sees the Fed Funds rate (blue line) overtaking the 10-year yield (yellow line) by the end of this year. He believes the FOMC will have to raise the Fed Funds rate more than expected in 2018, thus making the inversion even worse and longer-lasting.

This, Pento believes, will lead to a serious recession in 2018 which will usher in the next bear market in stocks, bonds and real estate. He says the only way to avoid an inverted yield curve by the end of this year is if the US economy improves significantly just ahead.

6/12: Stay on Top of 401(k) Fees -- 401k Averages Book

Just Published! 17th Edition of the 401k Averages Book. All 401(k) fee charts and tables updated for 2017. Use the 401k Averages Book to better understand investment, recordkeeping, revenue sharing expenses for 401(k) plans. The 401k Averages Book is the most recognized source for comparative non-biased 401(k) information. Click here for more information.

6/11: Read this and underneath

A sharp rise in African American opioid overdoses has Cleveland officials worried

An outlier in the opioid epidemic, which largely affects white Americans, the surge in black overdoses is believed to be linked to fentanyl-laced cocaine.

6/8: Terrible, just terrible

Drug crisis pushing up death rates for almost all groups of Americans

After falling for a century, the overall death rate for Americans ages 25 to 44 rose 8 percent between 2010 and 2015.

6/8: Well, Duh

Three Times as Many Millennials Spend Time on Social Media Profile than Retirement Planning

6/7: You can get insurance for almost anything. But the more difficult the issue will not be covered by mainstream companies
































Cancer Histories, Hepatitis A/B/C, Morbidly Obese, Pacemakers, Heart Disease, Multiple Sclerosis

Grand Mal Siezures, Sleep Apnea, Parkinson's, Leukemia, Sarcoidosis, Depression/Bi Polar

Autism, Foreign Travel/Residency, Kidney Disease, Arthritis, Asthma, Substance Abuse

DUI's, Aviation Activities, HIV


6/5: 11% draws a lot of incapable people into the business and then allows them to thrive as well.

Simplified Issue


Caregivers Emotional First Aid Kit

  1. Smile, it’s not funny how often we forget to do this simple act and how well it lifts our spirits 

  2. Call someone who makes you feel good, especially if you haven’t spoken with them in a long time

  3. Have a bite of something sinfully delicious, while being conscious your own dietary limitations. When was the last time you treated yourself to a snack?

  4. Take a bubble bath, once you make sure that your loved one is safe and secure, nothing expresses caregiver self-care better than a leisurely bubble bath

  5. Read, pick up that novel or re-read that motivating poem. When was the last time you turned off the television, turned down the phone and read something nice? (P.S. this tip goes very well with tip number 3.)

  6. Get a massage. It’s like taking a mini vacation. It will relax you and take care of all the tension you build up every day.

  7. Buy yourself some flowers. You deserve it and the sight and smell of something beautiful and fragrant will give you a reason to smile (see number 1).

  8. Take a walk at a pace that allows you to feel the energy of the wind washing over you.

  9. Go shopping buy something “just for you”, something that makes you feel special.

  10. Go online. You can explore different places, find new friends and learn new things. Make the Internet your getaway even when you can’t get out of the house.

A very happy dog


Recovery Room Kit

By Hana Kim


Three years ago, my mom underwent major surgery to remove a brain tumor. The day of her surgery felt like the longest day of my life. Because she didn’t have any family members in the area, I was going to be her primary caregiver. She worried how I would be able to handle things by myself. It was an emotionally draining experience, but I had prepared myself for the long wait.

Prior to the surgery, I prepared a backpack filled with items that I would need for the long day. To help with my mom’s recovery, I needed to remain strong, both physically and emotionally. My backpack was my recovery room survival kit.

If someone you love will be undergoing major surgery, it might be helpful to have your own survival kit. The day of surgery can be a traumatic experience for both the patient and the caregiver. If you make adequate preparations, you can make yourself as comfortable and alert as possible.

My own kit included the following essentials:

Notepad and pen: The patient will receive a lot of instructions regarding post-operative procedures such as medications and wound care. You and the patient may experience information overload. It will be helpful to jot down notes as soon as the nurse or doctor gives you those instructions. If certain instructions are vague, ask follow-up questions before the patient is discharged.

Chocolate or energy bar: You may be so stressed that you will forget to eat. You will need to keep your energy level up. A piece of chocolate has enough caffeine for a temporary boost. An energy or protein bar has enough calories to substitute for a small meal. You can also carry a bag of nuts or a banana. If you don’t have an appetite for cafeteria food, keep some snacks in your bag.

Bottled water: This may seem obvious, but water is an essential. You don’t want to dehydrate yourself with too much coffee or soda. Also, you don’t want to pester the nurses for a glass of water. Right after surgery, the patient will not be able to take water for a few hours. However, you still need to keep yourself hydrated.

That one phone number: As a caregiver, you need to remain physically and emotionally strong. When you’re feeling overwhelmed, don’t forget to ask for help. Everyone has that one phone number to call. It can be a family member, friend, or mentor. You don’t have to do everything by yourself. When I thought the pressure was too much, I called my best friend to share my fears and anxieties. Just a five minute conversation can work wonders.

If you are going to be a caregiver, be prepared and bring your own essentials. In my mom’s case, the actual procedure lasted about five hours. She was awake by the time they rolled her into the Intensive Care Unit. I waited in the hospital lobby until they allowed me to see her. When I walked into her ICU room, I wasn’t sure what to expect. She looked up, saw me, and waved. I waved back, and I knew everything was going to be okay.

5/30 Job applicants are testing positive for marijuana, cocaine, amphetamine and heroin at the highest rate in 12 years, according to a new report from Quest Diagnostics, a clinical lab that follows national employment trends. An analysis of about 10 million workplace drug screens from across the country in 2016 found positive results from urine samples increased from 4 percent in 2015 to 4.2 percent in 2016.

The most significant increase was in positive tests for marijuana, said Barry Sample, the scientist who wrote the report. Positive tests for the drug reached 2 percent last year, compared with 1.6 percent in 2012.

There are 44 million borrows in the U.S. with student loan debt.


5/30: Trump trade

After Trump was elected, the market rallied sky-high — like a rocket off to Mars to meet Jesus. The standard explanation for this glorious move was that Wall Street expected tax cuts for corporations and the rich. It expected infrastructure spending and a Congress that would ignore deficit reduction. It expected the rollback of regulations on our banking system, on our energy companies, of Obama-era measures meant to protect land, sea, and sky.

Bernanke gently explained, as one would tell a child there is no tooth fairy, that there is no Trump trade. The tax cuts, infrastructure spending, and deregulation are not coming. Bernanke told Wall Street: You will not have what you were dreaming of. Some people are not who they say they are.

5/30: Beep beep

US banks pull back from $1.2tn car loans market

Overstretched American consumers raise fears of bubble in echo of subprime mortgage crisis


Europe can no longer rely on ‘others,’ Merkel says after Trump’s visit

German Chancellor Angela Merkel, who leads Europe’s most powerful economy, declared a new chapter in U.S.-European relations after contentious meetings with President Trump. Merkel did not mention the U.S. president but offered a clear repudiation of his leadership after he blasted NATO leaders and refused to commit to the Paris climate accord. She declared that Europe “must take our fate into our own hands.”

EFM- First Brexit was not in our best interests. Then all sorts of messes with Russia.. And now Trump pisses of Germany- actually all of NATO. One single match on all the rubble and we could have a big burning of Trump in effigy. Maybe just plain Trump.  I hope he keeps his mouth shut for awhile but I do not think he knows how.

5/30: active passive- the fight continues

only 4 percent of actively managed mutual funds beat the Vanguard S&P 500 Index Fund (VFINX) on an after-tax basis. Of that 4 percent, the average annual margin of outperformance was only o.6 percent, while those funds that failed to outperform VFINX did so by a "wealth destroying" 4.8 percent annually

5/30:Labor participation

5/30: Flood insurance

Congress found common ground on plans to give private insurers greater access to the $5 billion flood insurance program and to offer more buyouts for homeowners in areas likely to be repeatedly submerged.

At issue is the National Flood Insurance Program, which is $25 billion in debt. Congress has until the end of September to reauthorize the federal program. If it doesn’t act the real estate market along coasts and rivers will come to a halt, because homeowners need that insurance to qualify for federally-backed mortgages.

“The difference between who I was then and who I am now

is that now I never assume that anyone I encounter

shares my opinion about anything.”

Curtis Sittenfield

5/30: Did not know this was so low

Sixty percent of Americans go to college these days, but just half of them graduate with a bachelor’s degree

The financial prospects for college dropouts are poor, for two reasons. First, dropouts earn little more than people with no college education. Second, many dropouts have taken on student loans, and with their low wages, they have difficulty paying off even small balances. Dropouts account for much of the increase in financial distress among student borrowers since the Great Recession.

The dropout problem is particularly acute for students whose parents did not attend college. First-generation students beat enormous odds by even enrolling in a four-year degree program. Yet 30 percent of first-generation freshmen drop out of school within three years. That is three times the dropout rate of students whose parents graduated from college.

5/30 Made in America? Maybe Not. I suppose Carrier could stay here but the reality is when people shop, the lowest price pulls the trigger to buy.

Carrier, the company Trump pledged to keep on American soil, just informed the state of Indiana that it will soon begin cutting 632 workers from its Indianapolis factory. “The manufacturing jobs will move to Monterrey, Mexico, where the minimum wage is $3.90,” Daniel Paquette reports.

Trump told Indiana residents at a rally last year that, if he got elected, there was a “100 percent chance” he would save these jobs at the heating and air-conditioning manufacturer. "It’s not like we have an 80 percent chance of keeping them or a 95 percent chance,” he said. “100 percent!!”

After the election, Trump claimed credit for rescuing the factory. He tweeted on Thanksgiving that he called the company’s leadership to cut a deal. Trump then flew to Indy in December to announce that, thanks to his brilliant negotiating, the jobs would stay.

This makes Trump look like a schmuck.

5/30 This is something that I did not expect

Minimum wage increases do not pass through to prices
Although much of the minimum wage debate centers on the effects of minimum wage increases on employment, an increase in the minimum wage might also lead to higher prices by increasing labor costs or by increasing incomes and, thus, demand. Sharat Ganapati and Jeffrey Weaver of Yale conclude that minimum wage increases have no economically significant effect on the prices of food purchased at grocery stores and wholesale clubs, a sector that is particularly important for households in the lowest income quintile. They explain that this very weak pass-through stems from the fact that low-wage labor accounts for only a very small share of costs in this sector. They find that minimum-wage labor is a small share of costs in all sectors other than restaurants and fast food. They conclude that minimum wage increases will have almost no effect on prices in most sectors.

5/30 Celebrating life and the Gift of death- NY Times article.

Mr. Shields had seen a friend die from a painful and disabling disease. He was terrified of facing a similar fate. “One quality of life that’s important to me is my dignity — and sparing anxiety for my wife and daughter,” he said. Becoming debilitated and being tube-fed was unacceptable to him. “All of those painful and demeaning things,” he said, “I considered beyond the threshold of how I would like to live.”

“No matter how I looked at it, I saw pain,” he said. “No matter how I looked at my life from this moment on, I see personal, physical unbearable suffering. I don’t want to suffer anymore.”

5/30 ing up- way up

The price of U.S. medical benefits will climb by 7.5% by the end of 2017, 

When you have an itch

Fun to watch

5/30 Priceless                       Jelly Bean suit
Jessica Gomez of San Bernadino County is confused about candy. So confused that earlier this year, she brought a lawsuit against Jelly Belly, the company that creates jelly beans, alleging that "fancy phrasing" on the packaging led her to believe she was purchasing a sugar-free product.

I hope she didn't have any children because this type of mindless thought process  should be erased from our gene pool

Anyway, it's good for a laugh

5/30 Medicare expenses''

Payubg the bill With little available cash on hand, 53 percent of these families prepare to pay large, one-time medical expenses by waiting for an uptick in their income. Nevertheless, a year after the bill is paid, they are still struggling to patch the hole blown in their household budgets, according to the report, “Coping with Costs: Big Data on Expense Volatility and Medical Payments.”

The damage done to family finances was apparent even a year after such bills were paid.  Credit card balances, which had been reduced prior to paying the medical bill, rose for at least a year following a payment. Meanwhile, spending on non-medical purchases, as well as the amount of cash on hand, decline in the aftermath as the families struggle to repair their household finances.

5/30: Irresponsible Research

A few years back, scientists at the biotechnology company Amgen set out to replicate 53 landmark studies that argued for new approaches to treat cancers using both existing and new molecules. They were able to replicate the findings of the original research only 11 percent of the time.

These 53 papers were published in high-profile journals, and the 21 that were published in the highest-impact journals were cited an average of 231 times in subsequent work.

In 2011, Bayer pharmaceuticals reported similar reproduction work. Of the 67 projects they conducted to rerun experiments (47 of which involved cancer), only about 25 percent ended with results in line with the original findings.

In 2015, researchers reported on their replication of 100 experiments published in 2008 in three prominent psychology journals. Psychology studies don’t usually lead to much money or marketable products, so companies don’t focus on checking their robustness. Yet in this experiment, research results were just as questionable. The findings of the replications matched the original studies only one-third to one-half of the time, depending on the criteria used to define “similar.”

Academics are rewarded professionally when they publish in a high-profile journal. Those journals are more likely to publish new and exciting work. That’s what funders want as well. This means there is an incentive, barely hidden, to achieve new and exciting results in experiments.

But fraud is rare. What happens far more often is much more subtle. Scientists are more likely to try to publish positive results than negative ones. They are driven to conduct experiments in such a way as to make it more likely to achieve positive results. They sometimes measure many outcomes and report only the ones that showed bigger results. Sometimes they change things just enough to get a crucial measure of probability — the p value — down to 0.05 and claim significance. This is known as p-hacking

Fewer than half of the “significant” findings reported on by newspapers were later backed by other studies and meta-analyses. Most concerning, while 234 articles reported on initial studies that were later shown to be questionable, only four articles followed up and covered the refutations. Often, the refutations are published in lower-profile journals, and so it’s possible that reporters are less likely to know about them. Journal editors may be as complicit as newspaper editors.

EFM- why is this here? When you look at the 'research' in finance you find tons of conclusions based on half truths. Why are they published. Well, first of all there are very few people that can do the research in the first place.Most in the business cannot use a financial calculator. Nor can reporters. So if it looks good and sounds good, let's print it. And though I like to take material and quash it, it takes a lot of time and effort to do so. And generally no one cares.


Mapping 50 Years of Melting Ice in Glacier National Park

Glacier National Park’s eponymous ice formations lost more than a third of their area between 1966 and 2015. See how every glacier in the park has retreated over 50 years.

EFM- there goes the neighborhood

5/30 St. Louis Fed President James Bullard says the path of inflation in the U.S. is "worrisome... not as severe as the 1990s Japanese experience, but it is worrisome." Bullard cites the current level of U.S. prices, noting the gap between where they stand currently and where he says they should be if the Fed had been able to deliver on its 2% inflation target in recent years. On the Fed's rate hike plans, Bullard reiterates his long-held view that the Fed is seeking to raise rates too quickly and by too much, adding that the financial markets' view of the upcoming rate hike trajectory is out of lockstep with the Fed.


  1. People Are Conditional Rule Followers




Pieter Desmet (TU Delf) ; Christoph Engel (Max Planck Institute for Research on Collective Goods)

Experimental participants are more likely to follow an arbitrary rule the more of their peers do so as well. The difference between unconditional and conditional rule following is most pro-nounced for individuals who follow few rules unconditionally.


conditional rule following, deontological motives, conditional cooperation, experiment


A13 C91 D03 D63 K42


5/30: ETF vs mutual funds

Feature Actively Managed ETFs Actively Managed Mutual Funds
Transparency Prior-day holdings are disclosed on a daily basis, which can give investors the assurance that comes with knowing exactly what they own. Regulatory requirements only mandate quarterly disclosure of holdings. However, many funds choose to publish holdings on a monthly basis.
Liquidity All ETFs—including those actively managed—trade intra-day on an exchange like a stock. Actively managed mutual funds are structured such that investors can only buy and redeem shares at the end-of-day net asset value (NAV).
Cash Drag ETFs are structured such that buyers and sellers of shares are matched up in the marketplace. This secondary market liquidity reduces trading in the underlying securities that could affect existing shareholders. As a result, portfolio managers may not need to keep as much cash on hand for redemptions, thereby reducing the potential for cash drag. Since mutual funds don’t trade in the secondary market, cash drag can be a significant consideration. Portfolio managers for these funds generally keep a few percent in cash for redemptions, which may impact performance over time either positively or negatively.
Settlement Timing Many ETFs settle T+3, which means three days after the transaction date. This timing matches the standard settlement of the underlying securities, which may reduce the amount of cash held for redemption. Generally settle one day after the transaction date (T+1). This timing may not match the settlement of the underlying holdings, potentially requiring a greater cash position and/or higher transaction costs.
Fee Structures Investors transacting in ETFs incur trading costs, including the bid/ask spread and potentially a commission. However, ETFs generally don’t include 12b-1 fees, which are annual marketing or distribution fees on the fund. Although mutual fund investors don’t pay a bid/ask spread or commission, a mutual fund’s management fee may include 12b-1 fees and other fees associated with servicing the vehicle.
Fractional Shares Cannot be traded in fractional shares, hindering the ability to trade small amounts regularly. Ability to trade fractional shares, making it easier to accommodate regular, smaller trades

5/30 More full time work for retirees  LESS part time   SURPRISE

5/30  You are a pain

5/30: Outsourcing- Trump cannot stop the change

 Since 1999, the nation's manufacturing workforce has dropped 28%, from 17.3 million jobs to 12.4 million, as companies flee to countries with cheaper labor costs. Between 2001 and 2016, the U.S. had a net loss of nearly 54,000 manufacturing businesses. In those that remain, more and more work is being done by robots and advanced computers, which are usually overseen by engineers, programmers and others with at least four-year college degrees.

 Some 19.5 million Americans held manufacturing jobs in 1979, an all-time high. By 1983, the figure was already down to about 16.7 million. By 2024, according to projections from the Bureau of Labor Statistics, just 7.1% of Americans will work in manufacturing.

The reasons are many, but the prime culprits are globalization and automation. In 1991, China accounted for 2.3% of the world's manufacturing exports. In 2001, the country joined the World Trade Organization, and by 2013, China's share of global exports was 18.8%, according to a 2016 study in the Annual Review of Economics. Countries such as Mexico and the Philippines have also increased their exports. Labor in these markets tends to be substantially cheaper than in the U.S., and trade deals like NAFTA make it easy for American companies to produce goods in far-flung locales.

5/30 High Risk Pool- Short video by the NY Times on medical care

5/30: The Courts, the Restatement of Trusts, ERISA and Fiduciary Liability

As the Supreme Court pointed out in the recent Tibble decision1, the courts often look to the Restatement in determining applicable fiduciary law in ERISA cases, since ERISA is essentially a codification of the Restatement. The same is true for courts in non-ERISA fiduciary cases, as courts in non-ERISA fiduciary actions look to both the Restatement and the Restatement Agency.

5/30 How We Can Fight Period Stigma Around the World

5/30; Independence in aging

 many seniors are unprepared to live independently as they age.

79 percent of U.S. seniors are concerned about healthcare or other issues impacting their ability to live independently in their own homes over the long term, 54 percent are concerned about their ability to afford healthcare and 52 percent believe Medicare will be affected if the Affordable Care Act is repealed. Almost three in 10 indicated they feel less prepared to live independently in their own homes as they age than they did 12 months ago. Survey results also reveal 79 percent of seniors are more concerned about the future of Medicare than they were one year ago.

Canada's problem. They finally get a warm vacation. Go to a beautiful lake. And then turn their chairs in the wrong direction

Pity them

5/30:Trust most Americans lack confidence in financial advisers. According to the survey, 70% of respondents said that recent events in the industry have made them question the trustworthiness of financial services professionals. A third believe these practitioners are likely to take advantage of them. Of the 54% of Americans who don’t work with financial advisers, 45% say the indecision is due to a lack of trust.

The report found many survey participants suspicious of financial advisors. Thirty-two percent believed that an advisor was likely to take advantage of a consumer.

5/30: The Death Rate from Alzheimer’s Disease Is Climbing

Times short video on Alzheimers research- you really should view if you expect to get old

deaths from Alzheimer’s increased 55% from 1999 to 2014.

number of people with Alzheimer’s disease who are dying at home; it rose from 14% to 25% in the period analyzed in the study, which suggests that more families are caring for loved ones with the disease.

5/30: China's debt

With its economy maturing, China has had to pile on ever more debt to keep growth going briskly, a pace that could prove unsustainable. And the money is increasingly flowing through opaque channels that operate outside the regulated banking system, leaving China vulnerable should those hidden risks blow up.

A major credit rating agency sounded the alarm on Wednesday, saying the steady buildup of debt would erode China’s financial strength in the years ahead. The agency, Moody’s Investors Service, cut the country’s debt rating, its first downgrade for the country since November 1989, five months after the Tiananmen Square crackdown.

5/30/: Cut the international budget??? Colin Powell  Makes you rethink if it is the right thing to do

Today, the world is witnessing some of the most significant humanitarian crises in living memory. With more than 65 million people displaced, there have never been more people fleeing war and instability since World War II. The famines engulfing families in South Sudan, Yemen, Nigeria and Somalia put more than 20 million people at risk of starvation — further destabilizing regions already under threat from the Islamic State, Al Qaeda, Boko Haram and Al-Shabaab.

With 95 percent of the world’s consumers outside our borders, it’s not “America first” to surrender the field to an ambitious China rapidly expanding its influence, building highways and railroads across Africa and Asia. China is far from slashing its development budget. Instead, it’s growing — by more than 780 percent in Africa alone since 2003.

5/30 This is a mess

the debt limit will be reached way sooner than Republicans leaders planned/hoped for. OMB director Mick Mulvaney revealed that tax receipts are coming in “slower than expected” and that the federal government could run out of cash months before it had thought. Treasury is already taking emergency steps to suspend certain payments so that it can cover all of its bills, but it can do this only for a few more months. (Damian Paletta and Max Ehrenfreund have more.

The stripping of billions from Medicaid (AHCA could cut kids’ Medicaid funding by $43 billion) while the tax bill gives back billions to the rich makes no sense. The Health Care bill does  not work (American health care ranking an 'embarrassment') 'America’s ranking is an embarrassment, especially considering the U.S. spends more than $9,000 per person on health care annually, more than any other country..

There is no money for the WALL. GDP will not make 3% and 4% is out of the question. So it's either America goes down the drain in debt, or the rich must pay greater taxes.Trump is lowering their taxes.

5/30 Leaks

Britain is reported to be halting the sharing of intelligence with Washington in the wake of the Manchester attack. The move comes after a series of media leaks from the US that UK police say could undermine a “major counter-terrorism investigation”. Images of the bomb materials were leaked to the New York Times, which provided an analysis of the remnants. The photos were published barely 12 hours after Amber Rudd, the British home secretary, said she had made clear to the US that leaks must stop. UK prime minister Theresa May is expected to confront Donald Trump over the leaks when she meets him at a Nato summit on Thursday.

5/30 Ben Bernanke on Japan. Quote of the week: “If all goes well, the Bank of Japan’s current policy framework may yet be sufficient to achieve the inflation objective,”

EFM- in the early 90's I said that Japan will be back near the top of the economic rung due to exceptional quality of labor, good management, blah, blah, blah. I gave up by the late 90s since they could not get their act together for a host of reasons. Would not invest there and still think it is a gamble not worth the risk.

5/30: Let's look at a xxx site

Theresa May plans G7 push to purge internet of extremist material

Theresa May will on Friday urge world leaders to harness the anger provoked by the Manchester terrorist attack to put pressure on internet and social media companies to cleanse the web of extremist material.

EFM- Not a bad idea at all. A lot of civility has been lost in the last 20 years. This could help if only by a teeny amount


5/30 small business confidence


Moody's Investors Service downgraded China's long-term local currency and foreign currency issuer ratings one notch Wednesday to A1, citing expectations of a gradual erosion of the country's credit profile in coming years. Moody's also changed the outlook for China's ratings to stable from negative, noting that the government retains “considerable scope” to provide policy support for the economy. (Pensions & Investments)

EFM I would think that this will have a detrimental impact on global growth starting now. Will it stop the FED from raising rates? Not sure.
RETAIL FORECAST: U.S. consumers will spend $632 billion online by 2020

So that means how many retail employees lost their jobs permanently? That is exactly what is going on.

Recession Probability

 5/30 What is Al-Anon?

5/30: Bullish sentiment

5/30 Dangerous drugs

5/30 Long Term Care

Research shows that most clients value three distinct priorities in creating a plan to address long-term care costs:

Identifying your clients’ top priority and primary concern will help you implement the right strategy and solution to plan for their long-term care needs.  As a thought leader in the long-term care industry, CPS created this guide to help you match your clients’ needs with the optimal LTC solution.  Use the guide as a reference as you discuss the needs and priorities of your clients.

Client’s Top Priority Solution Considerations
Protect assets from an extended health care event Traditional LTCi PRO: Maximizes LTC leverage while minimizing premium commitment.  Potentially tax deductable particularly for businesses.
CON: Premiums not guaranteed, lack of flexibility
Protect assets from an extended health care event while retaining maximum flexibility Asset Based LTCi PRO: Maximizes flexibility while still retains a primary objective of providing a substantial benefit for an LTC event.  Provides Return of Premium, Death Benefit, and LTCi.  Guarantees level premiums.
CON: Reduced death benefit when compared to Life with rider option.  Reduced LTC pool when compared to traditional LTCi
Maximizing Death Benefit while retaining some flexibility Traditional Life Insurance with an accelerated benefit rider PRO: Provides largest Death Benefit while retaining flexibility to pay for LTC costs.  Better suited to pay for benefits on a monthly basis if needed.
CON: Reduced LTC benefit when compared to Traditional LTC and Asset Based LTC.  Typically does not offer 100% ROP.
Long Term Care options late in life with potential health concerns Fixed or Indexed Annuity with LTC Rider PRO: Provides streamlined underwriting for clients with current health concerns while turning tax deferred growth to potentially tax free income.
CON: No immediate leverage of the base asset and limited growth opportunities when compared to alternative annuity options.
Access to money Self-fund PRO: Zero upfront cost while retaining liquidity.
CON: Pay dollar for dollar for any care needed.  Estate serves as primary funding source.

Nuriel Roubini

"Yet the corporate sector's animal spirits may soon give way to primal fear: the market rally is already running out of steam, and Trump's honeymoon with investors might be coming to an end," . "The US dollar's appreciation since the election could destroy almost 400,000 manufacturing jobs over time,"

EFM- If you add in losses due to robots you can see enormous social problems for decades

Yet we have this currently-

Initial jobless claims just fell to their lowest level since 1973.

Claims, which count the number of people who applied for unemployment insurance for the first time in the past week, dropped by more than expected to 223,000.

This is the lowest level for claims since March 31, 1973, when they came in at 222,000.

5/30: My sister and I had to walk to school even in winter. Never thought buses would do it. Bad weather in Massachusetts was no fun. How children get to school can determine whether they show up for class. New research finds that children who take the school bus have fewer absences, suggesting that cutting bus services, as some resource-strapped U.S. schools have begun to do, would raise already-high rates of school absenteeism and widen existing achievement gaps.



Background on Ed Easterling's Crestmont P/E

For a better understanding of these charts, please see Ed's two-part commentary here:

'you have to understand before you judge'

5/30: Indonesia rated investment grade by all major agencies as S&P upgrades (Financial Times)
This is a well-deserved upgrade thanks to its prioritization of fiscal sustainability at the expense of growth in 2016; and the country’s key metrics, whether it’s growth or fiscal sustainability, are comparable to similarly rated IG. This upgrade would allow Indonesia to: access a pool of eligible foreign investors that only invests in at least IG rated asset, lowering funding costs; have a spillover impact to quasi sovereign assets as well as a sentimental lift that may boost equity and the real economy.

Indonesia government 10 yr

5/30: Individual graphs for country  returns

Financial Times James Bullard, president of the St Louis Federal Reserve, said that data since the Fed’s meeting in March has been relatively weak and that the projected path for raising rates may be “overly aggressive”.

5 30: Opiods and Hep C

Cases of hepatitis C in the United States have nearly tripled within a five-year period, reaching a new 15-year high of around 34,000 new hepatitis C infections in 2015, federal health officials reported. Experts attribute the higher rates to more injection drug use during the ongoing opioid epidemic.

The new report from the U.S. Centers for Disease Control and Prevention (CDC) shows that cases of the disease rose substantially, from 850 new cases in 2010 to 2,436 cases in 2015. However, because most people with hepatitis C do not know they have the disease and most new infections go undiagnosed, the CDC estimates there were actually 34,000 new infections in 2015.

5/30 Mental Health

5/30 Antarctica is going down the  drain

A graphical  display of how bad the ice melt is.
A rapid disintegration of Antarctica might, in the worst case, cause the sea to rise so fast that tens of millions of coastal refugees would have to flee inland, potentially straining societies to the breaking point. Climate scientists used to regard that scenario as fit only for Hollywood disaster scripts. But these days, they cannot rule it out with any great confidence.

Because the collapse of vulnerable parts of the ice sheet could raise the sea level dramatically, the continued existence of the world’s great coastal cities — Miami, New York, Shanghai and many more — is tied to Antarctica’s fate.

Recent computer forecasts suggest that if greenhouse gas emissions continue at a high level, parts of Antarctica could break up rapidly, causing the ocean to rise six feet or more by the end of this century. That is double the maximum increase that an international climate panel projected only four years ago.

Scientists once thought that further destruction of those ice sheets was likely to take thousands of years. But, starting in the 1970s, lone scientific voices warned that the ice sheets could be vulnerable much sooner if greenhouse emissions were not checked

5/30: I have identified the 'problem' of robots but this article gives some very big numbers to a class of workers that will be decimated

Nearly half of retail workers are at risk of losing their jobs to robots and other automation technology, 

Roughly 6 million to 7.5 million retail jobs "likely will be automated out of existence in the coming years, leaving a large portion of the retail workforce at risk of becoming 'stranded workers,'" according to the 56-page report by investment advisory firm Cornerstone Capital Group.

Retail cashiers, 73% of whom are women, will suffer the most job losses, the study found.

The losses will also disproportionately affect the working poor, since most hourly retail workers live below the poverty line. 

About 16 million people, or one in 10 American workers, are employed in the retail industry.

5/30 Yield curve flatening

5/30 The Most Stressed States
Hover or click on states for more details