EconVue Spotlight July 22, 2018

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lyric@econvue.com

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2018-07-22 17:15:25

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R. Hunter Biden <hbiden@rosemontseneca.com>

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EconVue Spotlight

Dear R. Hunter,

It's official, things are topsy turvy. The Republicans are sponsoring
climate legislation, and the Democrats are now free traders. Florida
Republican Congressman Carlos Curbelo has introduced carbon tax
legislation, something that not even Canada has been able to accomplish.
His idea is to abolish federal gas taxes, and replace them with hefty
carbon taxes and local fuel levies. The Republican guard immediately
passed a resolution against any type of carbon tax, but conservative
pundits such as Reihan Salam

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct1_1/1?sid=TV2%3AZTvpAm0Pu

, editor of the National Review, are taking note of his idea. Curbelo,
like Salam is also 38, and might be in the vanguard of future
policymakers who cross party lines going forward. My parenthetical
prediction is that while the Democrats and Republicans struggle to
rebuild an identity, generational politics could become a stronger
tribal force than old party loyalties.

For a longer view of energy markets, there are two annual reports
published each summer. The first is the 67 th edition of the BP
Statistical Review of World Energy

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct2_1/1?sid=TV2%3AZTvpAm0Pu

which finds that carbon emissions have been increasing for the past
three years. It is a treasure trove of data, and a look at the world we
live in today through an energy lens. The second is the investment
report

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct3_1/1?sid=TV2%3AZTvpAm0Pu

from the Paris-based International Energy Agency, which warns that
investment in energy has been declining for three years. These
complementary trends coincide with a period when oil prices breached
levels not seen since the Global Financial Crisis. Now that oil prices
are increasing, it could be that investment in the energy sector will
rise as well. The trick is finding the sweet spot where prices allow
both economic growth and investment to create abundant, clean energy.

The oil price has declined a bit over the last few weeks. But increasing
tensions in the Strait of Hormuz, the 12-mile wide passage for 30% of
seaborne oil, could change all of that. According to the International
Crisis Group

https://www.crisisgroup.org/trigger-list/iran-us-trigger-list/flashpoints/hormuz

this waterway is a particular flashpoint, because it could be the scene
of an uncontrolled direct confrontation between Iran and the United
States. The Trump Administration has asked all nations to stop importing
Iranian oil by November 4 th . The Iranian response from the head of the
Revolutionary Guard: "We will make the enemy understand that either
everyone can use the Strait of Hormuz or no one".

In spite of taking a tilt at the Ayatollah, President Trump seems
determined to keep oil prices down, bargaining with the Saudis, even if
this means using strategic oil reserves. Like many of his generation, he
remembers the 70's when OPEC ruled the oil seas, leading to a
devastating fall in global economic growth. I believe that a key to
NAFTA's revival will be a North American energy policy that will create
a frictionless exchange between the US, Canada and Mexico. Is this also
a focus of the Trump-Putin summits that is ignored by the media? There
is now "NOPEC" legislation in Congress to allow antitrust actions
against OPEC. One thing is certain-OPEC's limitation of oil production
in 1978 allowed the development of oil reserves and technologies
throughout the non-OPEC world.

Bumpy seas for energy prices are likely to continue. EconVue expert
Karim Pakravan

https://econvue.com/experts/karim-pakravan

holds out hope that the impact of the Iranian oil embargo will be
softened. You can read his commentary below.

RESEARCH BY ECONVUE EXPERTS

Oil Market Realities: The Trump Administration Roils Oil Markets

https://www.econvue.com/pulse/oil-market-realities-trump-administration-roils-oil-markets

Karim Pakravan

https://www.econvue.com/experts/karim-pakravan

Oil prices have fallen, recently, with WTI under $70/bbl. The U.S. is
also considering releasing some oil supplies from the Strategic
Petroleum Reserve. Faced with these realities, the more reasonable
voices in the Trump administration seem to be pulling back from the
maximalist position, with Secretary of State Pompeo hinting at some
flexibility in providing waivers to some importers of Iranian oil.

The Trump 'Trade Wars' Timelines

https://www.econvue.com/reports/michael-lewis/trump-trade-wars-timelines

Michael Lewis

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

The critical question remains when (and how) will the trade wars end?
FMI still believes that the end will come fairly soon, e.g., with Trump
anteing up a mass of tariffs in September, China officials will realize
that his hand is stronger than theirs.

Restart

https://www.econvue.com/pulse/restart

Collin Canright

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

By the large, payments topics remain the most popular in terms of the
most-often clicked on links. It will be no surprise to learn that all
things crypto come in second.

Gawande's Gift: Re-Imagining Corporate Wellness and Healthcare

https://www.econvue.com/pulse/gawande%E2%80%99s-gift-re-imagining-corporate-wellness-and-healthcare

David W. Johnson

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

America has historically separated healthcare and wellness. This is a
mistake. Fixing healthcare (right care, right time, right place, right
price) without addressing the country's exploding chronic disease is
suicidal.

STORIES IN OUR SPOTLIGHT

Energy

Carlos Curbelo Carbon Tax Proposal Deserves Credit

https://www.nationalreview.com/corner/carlos-curbelo-carbon-tax-proposal-deserves-credit/

Reihan Salam 7/20/18 National Review

To my surprise, Curbelo has come up with a pretty politically attractive
proposal. For one, it abolishes the federal tax on motor-vehicle fuels.
With a few tweaks, it could gain a head of steam.

Emissions, Energy, and Economic Implications of the Curbelo Carbon Tax
Proposal

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct15_1/1?sid=TV2%3AZTvpAm0Pu

Noah Kaufman, John Larsen, Shashank Mohan, Whitney Herndon, Peter
Marsters, John Diamond, and George Zodrow 7/19/2018 Rhodium Group

BP Statistical Review of World Energy

https://www.bp.com/content/dam/bp/en/corporate/pdf/energy-economics/statistical-review/bp-stats-review-2018-full-report.pdf

6/2018

The growth of China's energy demand in 2017 was still significantly
slower than its 10-year average, and its rate of decline in energy
intensity was more than twice the global average. Two steps forward, one
step back.

Global Energy Investment in 2017

https://www.iea.org/newsroom/news/2018/july/global-energy-investment-in-2017-.html?

Investment in the energy sector has fallen for the third consecutive
year. Will rising prices share this trend? The IEA has just issued a new
report on global energy investment. Another key finding: governments are
stepping in as private industry has stepped back.

Iran threatens to block Strait of Hormuz over US oil sanctions

https://www.theguardian.com/world/2018/jul/05/iran-retaliate-us-oil-threats-eu-visit-hassan-rouhani-trump

Saeed Kamali Dehghan 7/5/2018 The Guardian President signals Tehran
could disrupt shipments, prompting warning from US military.

U.S. pullout of Iran nuclear deal: What next for oil, business?

https://www.bloomberg.com/news/sponsors/cme-group/the-fundamentals-of-trading-futures-and-options/?adv=13162&prx_t=i8EDAnTQkAUt8PA

Bluford Putnam 7/13/2018 Bloomberg

The repeal of the U.S. ban on oil exports has allowed excess U.S. shale
oil production to be loaded on ships and sold to Europe and Asia. U.S.
exports are now 2 million barrels a day and rising. (The U.S. remains a
big oil importer.) The ability of the U.S. to export oil strengthens the
connections with other oil benchmark around the world, based in part on
spot shipping costs.

Imagine a World Without OPEC

https://www.bloomberg.com/view/articles/2018-07-22/imagine-a-world-without-opec

Julian Lee 7/22/18 Bloomberg

U.S.

Don't ignore Donald Trump's message

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct21_1/1?sid=TV2%3AZTvpAm0Pu

Paul Sheard 7/16/2018 Financial Review

First rate analysis of America's changing global role from the
Australian viewpoint by the former global economist for Standard &
Poors.

A debt crisis is on the horizon

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct22_1/1?sid=TV2%3AZTvpAm0Pu

Michael J. Boskin, John H. Cochrane, John F. Cogan, George P. Shultz and
John B. Taylor 3/27/2018 Washington Post

As interest rates rise remember this: If rates were to rise to 5%,
instead of just under 3.5%, interest alone on the projected $20T of
public debt would total $1T. More than 1/2 of all personal income taxes
would be needed to pay US treasury bondholders.

Nixon and De Gaulle

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct23_1/1?sid=TV2%3AZTvpAm0Pu

Chris Barber 3/11/2014

For history buffs: This thread is a discussion of Charles De Gaulle, who
opposed NATO and the EU, supported a free Quebec, criticized US
intervention in Vietnam, and granted independence to Algeria. All this
was after he led the French Resistance. His world view was
decentralization.

World

Trump Rushes to Build a Special Russo-US Relationship

https://threadreaderapp.com/thread/1019063912350617600.html

Robert E. Kelly 7/16/2018 Twitter

Why bother with Russia? Most people don't realize that Russia is 1.8
times as big as the US, and is in fact the largest country in the world,
9th largest in population, 6th largest economy in PPP terms, world's
largest energy and mineral reserves, and shares a border with North
Korea.

What's holding Mexico's economy back

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct25_1/1?sid=TV2%3AZTvpAm0Pu

Tyler Cowen 7/9/2018 Bloomberg

Two issues hold down growth in the Mexican economy-Educational
incentives can't compete with higher wages in the North. And
PYME's-small & medium size enterprises- represent 99% of Mexican firms
and are more resistant to improvements in productivity.

Europe could suffer collateral damage in US-China trade war

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct26_1/1?sid=TV2%3AZTvpAm0Pu

David McHugh 7/4/2018 AP News

When the world's two largest economies engage in tit for tat trade, no
one will emerge unscathed.

Ethiopia: The new China?

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct27_1/1?sid=TV2%3AZTvpAm0Pu

Al Jazeera News 7/15/2018

No, it has better demographics.

Asia

Pakistan seeks more loans from China to avert currency crisis

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct28_1/1?sid=TV2%3AZTvpAm0Pu

Farhan Bokhari and Kiran Stacey 7/5/2018 Financial Times

Absent intervention from China or the IMF, Pakistan is on the brink of a
currency and debt crisis. Is this a forerunner to other problems
percolating along the Silk Road?

The end game begins

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct29_1/1?sid=TV2%3AZTvpAm0Pu

Wajahat S Khan 7/14/2018 India Today

Election drama in Pakistan. Here's a killer statistic, literally.
Pakistan's never voted an incumbent back to power. By hook or crook, by
bombing or ballot, by coup or craft, Pakistan doesn't vote, nor allows
its leaders, back into consecutive terms.

In Modi's India, bright mood masks danger to democracy

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct30_1/1?sid=TV2%3AZTvpAm0Pu

Ben Heubl, 7/1/2018 Nikkei Asian Review

India's quiet retreat from democracy.

America's moment of truth With North Korea is coming

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct31_1/1?sid=TV2%3AZTvpAm0Pu

Uri Friedman 7/10/2018 The Atlantic

Would peace with a nuclear armed North Korea be an acceptable middle
stage step for the Korean Peninsula? devintstewart

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct32_1/1?sid=TV2%3AZTvpAm0Pu

Excellent question.

The US-DPRK Summit and the future of North Korea

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct33_1/1?sid=TV2%3AZTvpAm0Pu

(Q & A)

Stephan M. Haggard 7/2/2018

If you really care about what is going on in the aftermath of the
US-DPRK Summit, invest 13 mins and listen to this excellent, thoughtful
interview with UCSD's Stephan Haggard. Peace will be a long, complicated
process.

Seoul Mayor Park to move into rooftop home in rundown neighborhood

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct34_1/1?sid=TV2%3AZTvpAm0Pu

Yonhap News 7/15/2018

Taking a page from the book of Chicago Mayor Jane Byrne, who moved to
Cabrini Green, a public housing project in 1981.

China

Belt and Road reality check: How to assess China's investment in Eastern
Europe

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct35_1/1?sid=TV2%3AZTvpAm0Pu

Thomas S. Eder, Jacob Mardell 7/10/2018 Merics

How much is China really investing in Belt & Road projects?

China exposes rampant data fraud in provinces

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct36_1/1?sid=TV2%3AZTvpAm0Pu

Michael Lelyveld 7/9/2018 Radio Free Asia

The next time you see analysts agonizing over 100 bps changes in Chinese
GDP figures, remember this.

China to reimburse tariffs for state reserve soybeans

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct37_1/1?sid=TV2%3AZTvpAm0Pu

Bloomberg 7/8/2018

If China reimburses importers for its 25% tariff on soybeans, what does
this mean for US farmers?

FinTech

Fed Chair: Cryptocurrencies are 'great' for money laundering

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct38_1/1?sid=TV2%3AZTvpAm0Pu

Madeline Meng Shi 7/18/2018 Coin Desk

Cash is much better medium of exchange for criminals than
cryptocurrencies which are mostly traceable. Only Monero is a true
privacy coin.

Bitmain plans Hong Kong IPO, new funding round for USD15 billion
valuation

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct39_1/1?sid=TV2%3AZTvpAm0Pu

Dou Shicong7/17/2018 Yicai Global

Hangzhou Canaan Information Technologies, another well-known China
miner, submitted an IPO application to the Hong Kong bourse on May 15
and is set to become the first blockchain company to list in the Chinese
autonomous region.

‘This is not a passing fad': CFA exam adds crypto, blockchain topics

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct40_1/1?sid=TV2%3AZTvpAm0Pu

Michael Patterson and Andrea Tan 7/16/2018 Bloomberg

Cryptocurrency questions added to the CFA exam. Regulators getting ahead
of fintech innovation and more widespread adoption.

The first EVER blockchain lawsuit in China

http://content.davidhaleweb.com/acton/ct/3037/s-01fa-1807/Bct/l-sf-cl-701C0000000UEmJIAW-0024/l-sf-cl-701C0000000UEmJIAW-0024:15c/ct41_1/1?sid=TV2%3AZTvpAm0Pu

Katherine Wu 6/29/2018 Twitter

Blockchain evidence validated by a Chinese court.

With all best wishes,

Lyric Hughes Hale

Editor-in-Chief

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