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EconVue Spotlight

Dear R. Hunter,

Mexico matters. In addition to being our southern neighbor, Mexico is
our third largest trading partner, after China and Canada. It is ranked
as the 15 th largest economy in the world. On Sunday the country
experienced a seismic change in leadership. Fueled by anger at violence
and corruption, Andrés Manuel López Obrador, the 64-year old populist
center left candidate best known as AMLO, was elected by a clear
majority in all but one state and a simple majority in both houses. He
had promised to Make Mexico Great Again.

AMLO will not be inaugurated as Mexico's 58 th president until Dec 1 st
. This long interregnum could be a blessing. Investors are concerned
about changes in fiscal policy and sectoral reform, and the quality of
his new and probably divided cabinet. When he governed Mexico City, AMLO
was not known as a listener, but as a bit of an autocrat, big on
promises but providing few details on programs for combatting crime and
corruption. Over the last 25 years, Mexico's guiding governing
philosophy was focused on a small state, market-driven economy. That is
likely to change, with support of "national champion" industries such as
agricultural and energy.

In addition to increasing entitlements, AMLO has plans to double
infrastructure spending, especially in the disadvantaged south, and on
the campaign trail he discussed working with China to build refineries
to create energy self-sufficiency. Will the US see Chinese ownership of
telecommunications facilities for example as a security threat? EconVue
expert Evan Ellis

https://econvue.com/experts/r-evan-ellis

explores this question, which illuminates a new global game.

Guest commentator Isidro Morales Moreno

http://escueladegobierno.itesm.mx/profesores-e-investigacion/personal-docente/dr-isidro-morales-moreno?language=en

discusses the role President Donald Trump has played in Mexican politics
and will continue to play. Trump said last night that he is willing to
consider a bilateral Mexico-US trade agreement, so will this negative
impact turn positive? Much will depend on the chemistry between these
two improbable leaders, who began life so differently, and who are now
on opposite sides of the political spectrum as well as the border.

RESEARCH BY ECONVUE EXPERTS

Mexico Likely to Elect 'AMLO' President — How Will It Impact the Region?

https://www.econvue.com/pulse/mexico-likely-elect-amlo-president-%E2%80%94-how-will-it-impact-region

R. Evan Ellis

https://www.econvue.com/experts/r-evan-ellis

In South America, although the region has moved to the political right,
including the return of Sebastian Piñerain Chile, Ivan Duque's election
in Colombia and Martin Vizcarra continuation of the Kuczynski government
in Peru, its conservativism is increasingly divorced from its discontent
with U.S. policies and China's growing influence.

How Trump is helping López Obrador pave his way to the Mexican
Presidency

https://www.econvue.com/pulse/how-trump-helping-l%C3%B3pez-obrador-pave-his-way-mexican-presidency

Isidro Morales Moreno

https://www.econvue.com/users/isidro-morales-moreno

With the advantage of not having held a government position since he
left the governorship of Mexico City in 2005, AMLO easily exploited the
binational crisis unleashed by President Trump to strengthen his
presidential campaign.

Data Round-Up: Strong PMI Argues Trade War Fears Exaggerated

https://econvue.com/reports/michael-lewis/data-round-strong-pmi-argues-trade-war-fears-exaggerated

Michael Lewis

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

Newspapers and cable news are filled with comments from nervous
executives complaining about the "Trump trade war." Apparently,
purchasing managers are too busy to follow the news. Domestic and trade
orders showed solid expansion in June. Meanwhile, non-residential
construction appears headed for another double-digit quarter (fueled by
oil rigs, which are not included in today's report).

The necessary illusionists: How money keeps its magic

https://www.econvue.com/pulse/necessary-illusionists-how-money-keeps-its-magic

Robert Pringle

https://www.econvue.com/experts/robert-pringle

Funny thing about money. It is supposed to be a bedrock of stability but
it feeds on illusions. So much monetary policy relies on trickery. The
elite know things that the unwashed masses do not. Such as money
illusion. The success of devaluation rests on tricking the masses. But
tell a central banker he or she is in the business of peddling illusions
and risk a smack in the eye.

How Soccer Explains Healthcare: Collective Performance Defines Success

https://www.econvue.com/pulse/how-soccer-explains-healthcare-1-collective-performance-defines-success

David W. Johnson

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

Soccer legend Pele made this observation about life, "Success is no
accident. It is hard work, perseverance, learning, studying, sacrifice
and most of all, love of what you are doing or learning to do."
Healthcare is an industry infused with hard work, perseverance,
learning, studying, sacrifice and most of all, love. With the right
tactics and strategy, every healthcare organization can win.

STORIES IN OUR SPOTLIGHT

MEXICO

López Obrador and the Future of Mexican Democracy

https://www.foreignaffairs.com/articles/mexico/2018-07-02/lopez-obrador-and-future-mexican-democracy

Shannon K. O'Neil 7/2/2018 Foreign Affairs

Will he further erode the checks on executive power?

Third Time's a Charm: Why AMLO succeeded this time around

http://www.letraslibres.com/mexico/politica/millenials-agendas-y-campanas-por-que-la-tercera-fue-la-vencida-amlo

(Spanish)

Santiago Rodríguez ​

http://www.letraslibres.com/mexico/politica/millenials-agendas-y-campanas-por-que-la-tercera-fue-la-vencida-amlo

and Jorge Galindo 7/2/2018 Letras Libres

A series of graphs that display the coalitions behind each of the
candidates in Mexico's presidential race.

Tropical Messiah: H

https://www.economist.com/briefing/2018/06/21/how-andres-manuel-lopez-obrador-will-remake-mexico

ow Andrés Manuel López Obrador Will Remake Mexic

https://www.economist.com/briefing/2018/06/21/how-andres-manuel-lopez-obrador-will-remake-mexico

o

The Economist 6/21/2018

AMLO has promised to combat the 'Mafia of Power' in Mexico and bring
about the '4th transformation' in Mexican history, this time without
violence. "His concern for the poor and wish to improve their lot is
sincere. However, Mr López Obrador has a shaky grasp of economics... and
he has little respect for rules or institutions."​

In Mexico, rising 'mass crime' defies security forces

https://www.washingtonpost.com/world/the_americas/in-mexico-rising-mass-crime-defies-security-forces/2018/06/27/7491c4a8-79bf-11e8-ac4e-421ef7165923_story.html?utm_term=.5ba6db75e5cc

Mark Stevenson 6/27/2018 Washington Post

The breakdown in trust between citizens and the state has corrupted
daily life. "The logic of the people is that they see politicians and
officials stealing big time... and they see themselves as having the
same right to steal as the big-time politicians."

The Power to Kill (Spanish)

https://www.proceso.com.mx/540545/poder-para-matar

Denise Dresser 6/28/2018 Proceso Magazine

In recent months, over 100 politicians have been slain... Men and women
on the campaign trail, shot, beaten, and kidnapped. As Mauricio Merino
states, "the macabre punctuality of death" now reaches into the town
halls, mayoral offices, and electoral districts. Blood stains elections
and ballots. It stains Mexico.

U.S.

Disquiet on the home front

https://economicequality.blog/2018/06/29/disquiet-on-the-home-front/

Karen Shaw Petrou and Basil N. Petrou 6/29/2018 Economic Equality Blog

Does increasing overall prosperity mask growing economic inequality?
Cautionary words for the Fed.

U.S. retail sales jump 0.8% in May, point to strong second-quarter GDP

https://www.marketwatch.com/story/us-retail-sales-jump-08-in-may-point-to-strong-second-quarter-gdp-2018-06-14

Jeffry Bartash 6/14/2018 Market Watch

You just can't keep the American consumer down, even with higher oil
prices.

E-Commerce might help solve the mystery of low inflation

https://www.nytimes.com/2018/06/11/business/economy/inflation-internet.html

Patricia Cohen and Jim Tankersley 6/11/2018 New York Times

Unemployment is sinking and businesses are churning out more goods and
services. Yet even with the economy standing on tippy toes, prices and
wages are climbing a lot more slowly than anyone has expected. Now a
growing body of research is putting the blame more pointedly on
e-commerce.

Online retailers slide after U.S. court ruling on sales tax

https://www.reuters.com/article/us-usa-court-taxes-buzz/online-retailers-slide-after-u-s-court-ruling-on-sales-tax-idUSKBN1JH27O?utm_campaign=trueAnthem:+Trending+Content&utm_content=5b2bd74204d3012f33a9367a&utm_medium=trueAnthem&utm_source=twitter

6/21/2018 Reuters

Predictions: this will hurt small businesses as it has in Canada,
hitting them with an insurmountable administrative burden, helping the
bigger online players such as Amazon. Higher online sales taxes could
negatively impact consumers more than Chinese import tariffs.

More students are taking on crippling debt they can't repay—it's time
for higher education to share the risks

https://www.brookings.edu/blog/up-front/2018/02/16/more-students-are-taking-on-crippling-debt-they-cant-repay-its-time-for-higher-education-to-share-the-risks/

Adam Looney 2/16/2018 Brookings

If ever there were a time for a debt amnesty this is it. Imagine the
positive effects on household formation. It would be interesting to see
a projection about the long term effects on GDP should this happen.

American families shouldn't be separated, either

https://www.bloomberg.com/view/articles/2018-06-18/family-separation-goes-beyond-trump-s-immigration-plan

Tyler Cowen 6/18/2018 Bloomberg

I've written about for-profit prisons and the simultaneous rise in
incarceration rates. Fewer than 15% of the millions of children whose
parents are in prison see them even once a month. "Our treatment of
outsiders is rarely an accident, and it so often mirrors how we have
been treating each other all along."

The geography of poverty and nutrition: Food deserts and food choices
across the United States

https://econpapers.repec.org/paper/eclstabus/repec_3aecl_3astabus_3a3631.htm#.Wyf0cYdavIE.twitter

Hunt Allcott, Rebecca Diamond and Jean-Pierre Dube Econpapers

Supply side issues (food deserts) are not as critical as demand, largely
driven by regional choices, knowledge of nutrition, and education.

World

The wealth of the other Americas

https://nephist.wordpress.com/2018/04/25/the-wealth-of-the-other-americas/

Gerardo della Paolera, Xavier Durán & Aldo Musacchio The NEP-HIS Blog

This is one of several new papers about industrialization proving many
of our earlier assumptions wrong.

Trade war hits stocks as $8 trillion in Bear Market: Inside EM

https://www.bloomberg.com/news/articles/2018-06-26/trade-angst-hits-emerging-stocks-with-8-trillion-in-bear-market

Ben Bartenstein & Giulia Morpurgo 6/26/2018 Bloomberg

And possibly more to follow in emerging markets.

When is it rational to learn the wrong lessons? Technocratic authority,
social learning, and Euro fragility

https://www.cambridge.org/core/journals/perspectives-on-politics/article/when-is-it-rational-to-learn-the-wrong-lessons-technocratic-authority-social-learning-and-euro-fragility/976C56459E4C7D3EAB536CD3CB1B5AAA

Matthias Matthijs and Mark Blyth 9/18/2017 Cambridge University Press

Fascinating paper that explains why bad policy decisions persist when
they are economically wrong--because politics.

Emerging markets under pressure

https://www.cfr.org/blog/emerging-markets-under-pressure

Brad W. Setser 6/14/2018 Council on Foreign Relations

Not all emerging markets are created equal. Brazil also benefits from
having much higher reserves than either Turkey or Argentina. Its
reserves are sufficient to cover the foreign currency debt of its
government as well as its large state banks and firms in full .

How a satirical tweet managed to dent Euro and German stocks

https://www.bloomberg.com/news/articles/2018-06-15/how-a-satirical-tweet-managed-to-dent-the-euro-and-german-stocks

Lorcan Roche Kelly 6/15/2018 Bloomberg

Investors worried about the potential impact of fake news on financial
markets, look away now.

Fed and ECB risk being caught off guard

https://www.omfif.org/analysis/commentary/2018/june/fed-and-ecb-risk-being-caught-off-guard/

Desmond Lachman 6/18/2018 OMIFF

Could the Fed be caught flat footed by problems in emerging markets and
in Italy?

Can the Euro be saved?

https://www.project-syndicate.org/commentary/next-euro-crisis-italy-by-joseph-e--stiglitz-2018-06?utm_source=Project+Syndicate+Newsletter&utm_campaign=e4e588b06f-sunday_newsletter_17_6_2018&utm_medium=email&utm_term=0_73bad5b7d8-e4e588b06f-93754929

Joseph E, Stiglitz 6/13/2018 Project Syndicate

The end of the Euro, engineered by German inflexibility, and the
possibility of a dual currency regime in Italy as envisioned by
@stiglitzian

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.

Asia

Reason for optimism on the Korean Peninsula

http://www.eastasiaforum.org/2018/06/17/reason-for-optimism-on-the-korean-peninsula/

Sourabh Gupta 6/17/2018 East Asia Forum

A positive view of the Trump-Kim Summit which "paved a path that, if
faithfully trod, will close this painful chapter in Asia's modern
history and set the Peninsula on a more hopeful trajectory."

In defense of the Trump-Kim Summit

https://medium.com/@devintstewart/in-defense-of-the-trump-kim-summit-15c308950a5

Devin T. Stewart 6/13/2018 Medium

There are real experts on Asia, with depth and experience who understand
the big picture and the long game. @devintstewart

https://twitter.com/devintstewart

is one of them. Others say "Trump got played." Nonsense Stewart says.
Trump left the summit with exactly what he wanted.

Can the United States abandon Taiwan?

http://www.eastasiaforum.org/2018/06/15/can-the-united-states-abandon-taiwan/

Jansen Tham 6/15/2018 East Asia Forum

Three reasons why the US cannot do so, in spite of heightening
cross-strait tensions.

China

Learning Latin America: China's strategy for area studies development

https://www.thedialogue.org/resources/learning-latin-america-chinas-strategy-for-area-studies-development/

Margaret Myers, Ricardo Barrios & Guo Cunhai 6/21/2018 The Dialogue

The Chinese government is thinking long term about Latin America, and
has established 60 study centers throughout China.

China says industrial profits rose from 2.9 trillion yuan last year to
2.7 trillion yuan this year. Just don't ask why

http://www.scmp.com/news/china/economy/article/2153224/china-says-industrial-profits-rose-29-trillion-last-year-27

Sidney Leng 6/30/2018 South China Morning Post

Data that changes on an "ad hoc and floating basis"is really no data at
all. Even more interesting: what's driving numerical gymnastics at
China's National Bureau of Statistics?

So now, even a commercial passenger jet flying from Europe to China is
being called "Belt and Road"?

https://twitter.com/EvanFeigenbaum/status/1012246997154267136

Evan Feigenbaum Twitter 6/28/2018 Twitter

What will a map of Belt & Road look like 10 years from now-scenarios? Is
the program oversold right now?

Technology Notice how the regions that have been prone to hyperinflation
and/or capital controls are more willing to hold bitcoin.

https://twitter.com/MartyBent/status/1009299242035372032

Marty Bent 6 /19/ 2018 Twitter

Bitcoin will be impossible to reflate into a bubble again

https://www.marketwatch.com/story/bitcoin-will-be-impossible-to-reflate-into-a-bubble-again-2018-06-14

6/14/2018 Market Watch

As soon as someone says "I don't have a problem with blockchain as a
technology, which I admit is revolutionary; but I do have a problem with
bitcoin" I know they understand neither economic incentives nor
technology.

The Texas well that started the fracking revolution

https://www.wsj.com/articles/the-texas-well-that-started-a-revolution-1530270010

Russell Gold 6/29/2018 Wall Street Journal

One of those great untold stories in technology, and the engineer who
began it all.

On the sad state of Macintosh hardware

https://weblog.rogueamoeba.com/2018/06/14/on-the-sad-state-of-macintosh-hardware/

Quentin Carnicelli 6/14/2018 Under the Microscope Blog

This really is shocking-no Mac updates for over a year with the
exception of the IMac Pro, and that was six months ago. Or is there a
major Mac product update around the corner?

Regulated crypto custody is (almost) here. It's a game changer

https://www.bloomberg.com/news/articles/2018-06-18/regulated-crypto-custody-is-almost-here-it-s-a-game-changer

Olga Kharif & Sonali Basak 6/18/2018 Bloomberg

This is critical and gives banks a role too. Most investment advisers
are required by the SEC to keep client funds with a qualified custodian.
That's left more than 250 crypto-focused funds -- and especially the
largest -- facing the prospect that regulators could clamp down .

Sequoia Capital China said to invest in Bitmain's $400M pre-IPO round

https://www.chinamoneynetwork.com/2018/06/11/sequoia-capital-china-said-to-invest-in-bitmains-400m-pre-ipo-round

Yimian Wu 6/11/2018 China Money Network

Beijing-based Bitmain is the world's leading if not monopoly
manufacturer of cryptocurrency mining equipment. Is this valuation too
cheap?

Illinois

Why Chicago owns a piece of the southern border crisis

http://www.chicagobusiness.com/article/20180622/ISSUE07/180629954

6/22/2018 Crain's Chicago Business

Excellent editorial about Chicago's role in drug trafficking, but no
mention of US-manufactured guns that fuel the violence. 2-way street.

Illinois's rainy day fund would cover only 81 seconds of state spending

https://www.illinoispolicy.org/illinois-rainy-day-fund-would-cover-only-81-seconds-of-state-spending/

Joe Barnas 6/25/2018 Illinois Policy

A $98,000 emergency fund...for an entire state. That is less than one
penny per citizen.

Musk hyperloop: Hoover mover

https://www.ft.com/content/7851afca-70b1-11e8-852d-d8b934ff5ffa

6/16/2018 Financial Times

Capacity issues with a small number of passengers per pod could mean
that you'll spend more time waiting in line at the station than
traveling to O'Hare.

Happy 4 th of July!

With all best wishes,


Lyric Hughes Hale

Editor-in-Chief

Econvue.com
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