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EconVue Spotlight

Dear R. Hunter,

I returned to Europe this week to hear views from the other side of the
pond, as US trade policy continues not just to pivot, but to spin. There
is no doubt that a major reset of key trading relationships is now
underway with implications for currencies worldwide. As the US economy
seems to be outpacing growth everywhere except in China and India, will
US monetary policy have unintended global spillover effects, especially
for emerging markets? And more direct effects from trade policy in
developed nations? European PMI figures announced today are down to
2-year lows.

Jay Powell's speech

http://content.davidhaleweb.com/acton/ct/3037/s-01fd-1809/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct1_1/1?sid=TV2%3AOzHaeWnip

at Jackson Hole was clear about the lack of certainty around the usual
rules of economic behavior, and the Fed's goal of remaining as neutral
as possible. One of the academic papers

http://content.davidhaleweb.com/acton/ct/3037/s-01fd-1809/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct2_1/1?sid=TV2%3AOzHaeWnip

presented attempted to answer Powell's questions about the seeming
disconnect between full employment, low wages, low productivity,
inflation, and levels of investment that continue to stagnate below
pre-2000 levels. A possible explanation: more and more of what
corporations value and invest in is intangible and unmeasured, e.g.
brands, which also serve to enable market concentration.

The coming weeks promise a steady stream of news about NAFTA, US-China
trade negotiations, and a possible US pullout from the WTO. The reality
is that all of these agreements are out of date and need to be revamped.
The question remains if the new agreements will be any better, or if we
are going to continue to witness the megatrend I have been writing about
for some time, increasing decentralization, resulting in a plethora of
bilateral agreements.

Bitcoin and cryptocurrencies are yet another manifestation of this
trend. In places where central banks have failed, uptake in these
currencies is bound to increase and now stands at 18% in Turkey for
example. We just posted a new panel

http://content.davidhaleweb.com/acton/ct/3037/s-01fd-1809/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct3_1/1?sid=TV2%3AOzHaeWnip

on our website that includes a bitcoin maximalist, economist Saifedean
Ammous, a self-confessed crypto-contrarian, Dr. Gina Pieters at the
University of Chicago, and Grant Hummer, an Ethereum development leader
in San Francisco.

I'm looking forward to seeing friends and colleagues at the GIC's timely
conference on trade issues at the Chicago Fed next week. Details are
listed below under our new events section.

Treasury and Bitcoin

https://econvue.com/pulse/treasury-and-bitcoin

Collin Canright

https://econvue.com/experts/collin-canright

The U.S. Department of the Treasury issues its FinTech report as bitcoin
gains institutional momentum . Given all the attention to cryptoasset
trading over the past two weeks, it's a bit strange that the report
makes no mention of it Yet bitcoin was designed and is used as a
cryptocurrency, and Treasury and its Office of the Comptroller of the
Currency would seem to have some interest in currency regulation.

Data Round-Up: Regional Surveys Show Solid Momentum Overall in August

https://econvue.com/reports/michael-lewis/data-round-regional-surveys-show-solid-momentum-overall-august

Michael Lewis

https://econvue.com/experts/michael-lewis

With the Chicago Purchasing Managers Index remaining above 60 and all
Fed bank manufacturing surveys also showing solid expansion, FMI expects
the national PMI (Institute of Supply Management data) to come in at 58
for August, the same as July.

Against the Wind: Hospitals Challenge CMS's Pro-Market Payment Reforms

https://econvue.com/pulse/against-wind-hospitals-challenge-cmss-pro-market-payment-reforms

David W. Johnson

https://econvue.com/experts/david-w-johnson

Over the past month, the Centers for Medicare and Medicaid Services
(CMS) announced several pro-market policies that will enhance pricing
transparency, stimulate competition (and fair prices) for routine
procedures and eliminate burdensome reporting requirements.

Hospitals welcome the regulatory relief but generally oppose measures
that improve pricing parity and transparency. They are on the wrong side
of history.

Trade & Currencies

Trade war pushes Japanese supply chains out of China

https://asia.nikkei.com/Economy/Trade-War/Trade-war-pushes-Japanese-supply-chains-out-of-China

8/28/2018 Nikkei Asian Review

To avoid China tariffs, Japanese companies with flexible supply chains
are quietly shifting production to Japan, the US and Mexico.

Protectionism for liberals

https://www.project-syndicate.org/commentary/protectionism-for-liberals-by-robert-skidelsky-2018-08

Robert Skidelsky 8/14/2018 Project Syndicate

A discussion of the disconnect between liberal politics and
protectionism.

Details on the U.S. - Mexico trade agreement

https://twitter.com/inumanak/status/1034175168170610689

@inumanak

https://twitter.com/inumanak

8/27/2018 Twitter thread

In addition to agricultural tariffs remaining at zero, here is some good
news about the US-Mexico trade agreement. Terrific thread that examines
all the details and as expected some are positive, others negative.

Trade works. Tariffs don't

https://www.uschamber.com/tariffs?state=il

8/20/2018 U.S. Chamber of Commerce

State-by-state interactive map of products targeted by new trade
tariffs. Illinois's potentially hardest hit product category: $156M of
bread, cake & puddings to Canada. Evidently, somebody doesn't like Sara
Lee.

Was the U.S. actually ‘built on tariffs,' as Trump says?

https://www.nytimes.com/2018/08/15/us/politics/trump-tariffs-fact-check.html

Julia Jacobs 8/15/2018 New York Times

Currency against US Dollar, past year

https://twitter.com/spectatorindex/status/1034769485947981826

spectatorindex

https://twitter.com/spectatorindex

8/29/2018 Twitter

Sweden at -15% against the dollar in the past year. Historic elections
on September 9th

http://x-apple-data-detectors://21

could further weaken the krona. Sweden begs the question -where would
other European countries be without the euro?

Trade and currency weapons

https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3235196#.W4DkXen_ZeU.twitter

Agnès Bénassy-Quéré, Matthieu Bussière & Pauline Wibaux 6/20/2018 SSRN

The twin levers of tariffs and currency devaluation in a trade war work
differently when interest rates approach the zero lower bound.

China central bank reintroduces measure to bolster the Yuan

https://www.wsj.com/articles/china-central-bank-reintroduces-measure-to-bolster-the-yuan-1535114489

Lingling Wei8/24/2018 Wall Street Journal

Float down, manage up. That's countercyclical.

Countries most at risk from a currency crisis

https://geopoliticalfutures.com/countries-risk-currency-crisis/

8/17/2017 Geopolitical Futures

Non-bank dollar denominated debt stands at an all time high--nearing
$12T dollars. As comparison, the borrowings of all governments
everywhere in the world total $63T.

Let's roll back the hyper-globalization rules of the WTO

https://www.washingtonpost.com/news/theworldpost/wp/2018/08/20/wto/?utm_term=.9a19cd47cfa6

Nathan Gardels 8/20/2018 Washington Post

Flexibility is key in a world rocked by political, economic and
technological changes. Global regulators simply can't keep up.

World

Greece is in ‘Hotel California': Checked out but it can never leave

https://www.brookings.edu/blog/up-front/2018/08/22/greece-is-in-hotel-california-checked-out-but-it-can-never-leave/

Theodore Pelagidis 8/22/2018 Brookings

"Of 100 euros, a professional has to pay 45 euros income tax, 28 euros
toward SS, 10 euros in solidarity tax, and a "tax-payment in advance"
for the next year that evaporates the remaining 17 euros (no kidding).
And we expect this country to recover?" Italy won't follow Greece.

How central bankers shape financial markets

https://ftalphaville.ft.com/2018/08/23/1535025600000/How-central-bankers-shape-financial-markets/

Benjamin Braun 8/23/2018 Financial Times

A different take: How central bankers shape financial markets, instead
of the other way around.

Framing Turkey's financial vulnerabilites: Some rhymes with the Asian
Crisis, but not a repeat

https://www.cfr.org/blog/framing-turkeys-financial-vulnerabilites-some-rhymes-asian-crisis-not-repeat

Brad W. Setser 8/20/2018 Council on Foreign Relations

Turkey's firms have around $335 billion in foreign currency debt, and it
certainly seems that a number of the firms that took out foreign
currency loans don't really have natural hedges. The CME has now
delisted LIRA futures.

Can China, the world's biggest pork producer, contain a fatal pig virus?
Scientists fear the worst

http://www.sciencemag.org/news/2018/08/can-china-world-s-biggest-pork-producer-contain-fatal-pig-virus-scientists-fear-worst

Dennis Normile 8/21/2018 Science Magazine

U.S.

Trump calls off Pompeo's North Korea visit, citing a lack of progress on
denuclearization

https://www.washingtonpost.com/world/national-security/trump-calls-off-pompeos-north-korea-visit-citing-a-lack-of-progress-on-denuclearization/2018/08/24/5349733a-8915-45ee-b075-ae840d9d272b_story.html?noredirect=on&utm_term=.37f73132e68e

John Hudson, David Nakamura and Josh Dawsey 8/24/2018 Washington Post

What are the odds that this meeting is reinstated, just like the
Trump-Kim Summit?

It is not unusual for a president to fight the Fed and Trump may have
good reason to

https://www.cnbc.com/2018/08/21/dick-bove-it-is-not-unusual-for-a-president-to-fight-the-fed.html?__source=twitter%7Cmain

Richard X. Bove 8/21/2018 CNBC

Terrific commentary and history of Federal Reserve "independence" since
inception.

I do not understand why the left should want a sovereign wealth fund

https://medium.com/@rortybomb/i-do-not-understand-why-the-left-should-want-a-sovereign-wealth-fund-a2e64e82126e

Mike Konczal 8/28/2018 Medium

A US sovereign wealth fund to create a market with socialist
characteristics is one of the most unrealistic proposals to reduce
income inequality.

Why Chicago's pension obligation bond plan is even worse than it seems

https://www.forbes.com/sites/ebauer/2018/08/24/why-chicagos-pension-obligation-bond-plan-is-even-worse-than-it-seems/#181afd487e5b

Elizabeth Bauer 8/24/2018 Forbes

Instead of going into more debt to cover a $28B shortage, Chicago could
restructure its pensions so they are sustainable.

FinTech

Stop worrying about how much energy bitcoin uses

https://phys.org/news/2018-08-energy-bitcoin.html

Katrina Kelly-Pitou 8/20/2018 Science X

Remember peak oil? Useful addition to the debate about Bitcoin energy
consumption. Projected uptick in electricity use, much like oil
consumption 20 years ago, will spark major technical innovations with
impact beyond cryptocurrencies.

Why Google and Facebook should be treated like banks

https://www.entrepreneur.com/article/318502?utm_source=newsletter&utm_medium=email

Pavel Bains 8/23/2018 Entrepreneur

As well as protecting our intangible personal assets, should Google and
Facebook be required to share financial returns with users? Thought
provoking.

Federal courts now accepting cryptocurrency for bail

https://padailypost.com/2018/08/15/federal-courts-now-accepting-cryptocurrency-for-bail/

Allison Levitsky 8/15/2018 Daily Post

https://padailypost.com/2018/08/15/federal-courts-now-accepting-cryptocurrency-for-bail/

Federal courts now accepting cryptocurrency for bail: "If the value of
the currency were to fluctuate dramatically, Simmons said he was
"certain" that either party could file a motion to change the bail
amount."

Aspen St. Regis Owner Ditches REIT Plan, Says the Hotel Will Be Sold on
Blockchain

https://commercialobserver.com/2018/08/aspen-st-regis-blockchain/#.W4MfJgxX-DI.linkedin

Matt Grossman 8/23/2018 Commercial Observer

https://commercialobserver.com/2018/08/aspen-st-regis-blockchain/#.W4MfJgxX-DI.linkedin

Luxury resort would be the first major commercial asset to be
‘tokenized' in the U.S.

https://commercialobserver.com/2018/08/aspen-st-regis-blockchain/#.W4MfJgxX-DI.linkedin

Bitmain IPO fiasco

https://twitter.com/Excellion/status/1034413924605603840

Samson Mow

https://twitter.com/Excellion

Excellion

https://twitter.com/Excellion

8/26/2018 Caijing

Bitmain, a key player in cryptocurrency hardware, will face increasing
competition

The blockchain chickens bringing the future to free-range

http://www.sixthtone.com/news/1002804/The%20Blockchain%20Chickens%20Bringing%20the%20Future%20to%20Free-Range/;text=The

Nicole Lim 8/23/2018 Sixth Tome

China & Blockchain Chickens link to food safety.

Events

GIC Events: Trade, Trade Wars, & Economic Impacts and Outlook on
Agriculture, Manufacturing & Tariffs

http://content.davidhaleweb.com/acton/ct/3037/s-01fd-1809/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct38_1/1?sid=TV2%3AOzHaeWnip

The Global Interdependence Center (GIC) is partnering with the Federal
Reserve Bank of Chicago to discuss an outlook on agriculture,
manufacturing and tariffs. This day-long conference on September 12,
2018 will be held at the Federal Reserve Bank of Chicago.

With all best wishes,


Lyric Hughes Hale

Editor-in-Chief

Econvue.com
https://www.econvue.com
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My articles for Yale Books London
http://yalebooks.wordpress.com/?s=lyric+Hughes+Hale

"What's Next? Unconventional Wisdom on the Future of the Global Economy"
http://whatsnextbook.com/

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