Book Bits |24 September 2016

The Wealth of Humans: Work, Power, and Status in the Twenty-first Century
By Ryan Avent
Summary via publisher (St. Martin’s Press)
None of us has ever lived through a genuine industrial revolution. Until now. Digital technology is transforming every corner of the economy, fundamentally altering the way things are done, who does them, and what they earn for their efforts. In The Wealth of Humans, Economist editor Ryan Avent brings up-to-the-minute research and reporting to bear on the major economic question of our time: can the modern world manage technological changes every bit as disruptive as those that shook the socioeconomic landscape of the 19th century?
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Analyzing Risk-Managed Funds With R

Morningstar tells us that efforts at taming volatility in a multi-asset class framework generally turns up mixed results among publicly traded funds. Studying 60 products that are labeled “multiasset volatility-protection funds,” a recent Morningstar article reports that “as a group, volatility-protection funds do generally offer refuge when equity markets turn negative.” But it’s debatable if the extra cost and complexity that tends to define this group is worthwhile. As Morningstar notes, a simple blended index of 40% equities/60% bonds, which can be created with low-cost index funds, delivered superior downside risk management during periods when the S&P 500 fell.
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Chicago Fed: Subdued US Growth Continued In August

US economic output remained steady at a below-trend rate in August, based on this morning’s update of the three-month average of the Chicago Fed National Activity Index (CFNAI-MA3). Last month’s reading inched up to -0.07, the highest since Sep. 2015. But the slightly below-zero level reflects modest economic activity, which is in line with the data over the last several months.
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Fed Holds Rates Steady But Trims Economic Estimates

The Federal Reserve left interest rates unchanged yesterday, which Janet Yellen insisted wasn’t because the central bank is downgrading its outlook on the economy. Quite the contrary, Fed Chair Janet Yellen advised. “Our decision does not reflect a lack of confidence in the economy,” she said in a press conference on Wednesday. Economic growth is holding steady at a “moderate pace,” by her reckoning. But the Treasury market isn’t wholly convinced. Maybe that’s because the Fed’s economic forecasts were flat to slightly lower vs. the June projections.
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Is The Business Cycle Dead—Or Just In Remission?

Is the US economy trapped in what might be described as a macro version of Dante’s Nine Circles of Hell? No one knows the answer at this point, but the possibility may be rising that the US economy is destined to hobble along with tepid growth while avoiding a formal NBER-defined recession. In that scenario, the Federal Reserve can’t raise interest rates or “normalize” policy, leaving the economy in a perpetual state of dysfunction.
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