Book Bits | 8 April 2017

The One Percent Solution: How Corporations Are Remaking America One State at a Time
By Gordon Lafer
Summary via publisher (Cornell University Press)
In the aftermath of the 2010 Citizens United decision, it’s become commonplace to note the growing political dominance of a small segment of the economic elite. But what exactly are those members of the elite doing with their newfound influence? The One Percent Solution provides an answer to this question for the first time. Gordon Lafer’s book is a comprehensive account of legislation promoted by the nation’s biggest corporate lobbies across all fifty state legislatures and encompassing a wide range of labor and economic policies.
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US Employment Growth Slows Sharply In March

The private workforce grew by a weak 89,000 in March, the US Labor Department reports. The gain, which fell far short of the 221,000 increase for February, is well below what the crowd was expecting. Economists were looking for a moderate increase of 170,000 in private-sector employment last month, according to Econoday.com’s consensus forecast. Meanwhile, the strong ADP Employment Report for March hinted at even faster growth at the close of the third quarter. Today’s update from Washington, however, presents a dramatically softer tone for the US labor market.
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US Missile Attack On Syria Reshuffles Risk Analysis

President Trump on Thursday night (Washington time) authorized a US missile strike on a Syria-government airfield in response to a chemical weapons attack that killed more than 80 civilians in a northern Syrian town. It’s unclear at this point how or if the US military action materially alters the outlook for geopolitical, economic and market risk, but the potential for change can’t be dismissed. Here’s a brief summary of key factors to consider as the world evaluates the news:
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Another Strong Gain For Payrolls, But Growth Trend Still Moderate

US companies added more workers than expected in March, boosting confidence that the labor market’s strength will keep economic growth humming. Private payrolls increased 263,000 last month vs. February, according to yesterday’s ADP Employment Report. The rise marks the fifth monthly advance above 200,000. That’s a strong pace and it hints at the possibility that the macro trend may be stronger than sluggish first-quarter GDP growth projections of late suggest. But looking at employment numbers through the filter of the more-reliable year-over-year change still leaves room for a cautious interpretation of the numbers.
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Book Bits | 1 April 2017

Confessions of a Wall Street Insider: A Cautionary Tale of Rats, Feds, and Banksters
By Michael Kimelman
Review via Forbes
As former U.S. Attorney Preet Bharara contemplates his next move after being fired by President Trump, he leaves behind a mixed record on insider trading cases. Instead of cleaning up Wall Street by going after senior executives at the big banks who were responsible for much of the 2008 financial crisis, he chose to go aggressively after the hedge fund industry. While he can take credit for convicting, and sending to prison, billionaire Raj Rajaratnam and Goldman Sachs board member Rajat Gupta, he proved to have reached too far by going after Todd Newman and Anthony Chiasson who had their convictions overturned. As most media outlets touted Bharara’s record of wins and losses, few looked into the tactics used to win a number of these cases. Now, Michael Kimelman gives us a view of what it was like.
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Research Review | 31 March 2017 | Managing Portfolio Risk

Bubbles for Fama
Robin M. Greenwood (Harvard Business School), et al.
February 2017
We evaluate Eugene Fama’s claim that stock prices do not exhibit price bubbles. Based on U.S. industry returns 1926–2014 and international sector returns 1985–2014, we present four findings: (1) Fama is correct in that a sharp price increase of an industry portfolio does not, on average, predict unusually low returns going forward; (2) such sharp price increases predict a substantially heightened probability of a crash; (3) attributes of the price run-up, including volatility, turnover, issuance, and the price path of the run-up, can all help forecast an eventual crash and future returns; and (4) some of these characteristics can help investors earn superior returns by timing the bubble. Results hold similarly in U.S. and international samples.
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Will Tax Reform Boost Economic Growth?

The near-term outlook for the US economy isn’t terrible, but assuming that growth is destined to accelerate sharply due to Trump administration policies looks challenged in the wake of last week’s failed efforts to repeal Obamacare. The question is whether the White House and Republicans in Congress can find legislative success by pivoting to tax reform? The stakes are high because another failure would deal a hefty and perhaps fatal blow to the notion that the so-called Trump bump for the economy is still plausible.
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