Saturday, May 18, 2024

An Inflation Conversation - Mauldin Economics

An Inflation Conversation - Mauldin Economics

...“But in an inflationary world—and I’ll go into a second as to why we are an inflationary world and why we will stay there—in an inflationary world, rising interest rates are seldom enough to break the back of bull markets because the reality is, nominal growth tends to go up just as fast as interest rates. And so, if you have interest rates that move from 0% to 5% but nominal growth that moves from 2% to 7%, then with 7% nominal growth, companies, individuals, households can pay off their debt, and you don’t get into the bust phase of the cycle.

...nominal growth grew even faster and is still doing so. Why? Louis sees two drivers. First, the demographic labor shortage is raising wages for low-end workers with a propensity to spend most of it. This boosts demand for all kinds of products. The second factor is an unfolding boom in emerging markets—not just China. This is raising global demand for energy and natural resources.

Thursday, May 16, 2024

Orange Charger thinks a $750 outlet will solve EV charging for apartment dwellers | TechCrunch

Orange Charger thinks a $750 outlet will solve EV charging for apartment dwellers | TechCrunch

A message for those graduating in toxic times - GZERO Media

A message for those graduating in toxic times - GZERO Media

   

You might be wondering … what’s it like to be the graduation speaker on an American college campus these days? On Monday evening, I got the chance to find out.

Columbia University’s School of International and Public Affairs, a school where I teach a class on applied geopolitics, invited me to deliver this year’s commencement speech. It was a privilege – and a challenge – that I took very seriously.

I’ve reprinted my speech below, but first, let me describe the experience.

Yes, there were protesters – of course there were. A number of students in the audience wore the keffiyeh, the scarf that has become a symbol of solidarity with Palestinians, particularly those trapped by the war in Gaza. Many brought Palestinian flags on stage with them as they collected their diplomas. More still passed out “diplomas” calling on Columbia University to divest from Israel in protest against the continuing conflict.

But not a single student walked out. Not one turned their back. When I began speaking about the war, there were rumblings in the audience for me to go into more depth. I stopped the speech briefly to assure them I intended to do just that. And then I did.

At no time did anyone try to disrupt the event or to shout me down – or anyone else.

The protesters were visible, creative, constructive, and respectful of the importance of the event for the graduates. They made themselves seen and heard, but they allowed everyone else to be seen and heard too.

In short, it was a beautiful thing, and I was proud to see it, particularly for the reasons I laid out in my speech.

Here it is … in its entirety.

*****

Dean Yarhi-Milo, distinguished faculty, honored guests, SIPA class of 2024.

Congratulations! To the graduates, with thanks to your families that supported you in your studies to get here today. With appreciation for the faculty and staff that make SIPA such a unique and valuable experience.

You made it!

How, exactly, you should feel about that and what, exactly, you’ve made it to, may feel unsettling to you today.

You’ve come to SIPA from all over the world, and you’ve finished an intense and rigorous program in public affairs. You’ve explored how institutions can improve human societies, and how and why they fail. You’ve studied these things so that you can help guide the future in ways that will ultimately serve the public good. I’ve no doubt that doing good and solving problems are your goals.

And yet …

You’re leaving behind a campus that has been ripped apart by an intractable problem of societies in conflict. Here on this campus, in this tiny insignificant microcosm of that deadly, decades-long crisis in the Middle East, has progress been made? Demands have been issued by the powerless, and mostly ignored by the powerful. There have been chants and yelling, and not much listening. And now, the players in this drama, and all of you, depart for new jobs, internships, fellowships, and summer travel, boundless opportunities afforded by elite institutions and the constituencies they serve.

While the war rages on. The hostages remain. And death stalks the population of Gaza.

You might ask yourselves why this particular conflict in the Middle East has so captured our attention. It is not, of course, the only conflict out there.

The war in Ukraine still deserves more of our attention. No, not because they’re white people in Europe. Hundreds of thousands have died, and more will follow. And this war’s impact on global food and fuel supplies threatens to push tens of millions of the world’s poorest back into poverty and starvation. Of all the conflicts in the world through your time here at SIPA, the war in Ukraine has hurt the most people.

In Sudan, with far fewer journalists to tell the stories, we will never know how many have already been killed or how many face starvation.

A few hundred miles from the tip of Florida, violent gangs are consuming Haiti. The government of the United States has done nothing about it, except to send back the desperate refugees who make it to our shores.

In Armenia, where some of my family are from, 100,000 people were ethnically cleansed just a few months ago in Nagorno-Karabakh. An old friend of mine, who left a comfortable life to serve his people there, has been falsely imprisoned on charges of terrorism.

Why has Israel / Palestine taken such command of our attention? Is it because we believe this killing results from the sins of Western civilization? Is it that America bears greater responsibility for this conflict? Or has greater opportunity to influence the outcome?

Let me pose a different hypothesis. Perhaps it is because this conflict is easier to reduce to absolutes. One side is right. The other is always wrong. One is always a victim, the other a hotbed of terrorism, or a vindictive colonial oppressor. We identify with one side over the other. We share the greatest cultural or religious affinity with this side or the other one.

Wherever you come from, I’ve no doubt that you — SIPA graduates — know this conflict is deeply complex, with historical roots well beyond the fighting this year. And yet the nature of this conflict makes it useful to powerful interests in this country. Useful to generate clicks, to capture attention, to sell ad space, to secure political advantage in this instant — and in this election — without any attention to the long, slow slog of work and compromise that is the only path to peace.

There are so many political and commercial forces today that frustrate progress. They ignore history and reject evidence. They amplify bias. They push made-for-the-moment ideas that are more slogan than solution. “Build the wall.” “Defund the police.” “From the river to the sea.”

These slogans divide us from them.

We don’t need to find shadowy forces that come from some deep global conspiracy. These threats are the result of the political and economic systems we’ve built. In recent decades, we thought liberal democracy would be the bulwark against dictatorships and autocracy. But liberalism has been supplanted by corporatism, which lacks a moral compass and makes a mockery of the public good.

Our public institutions are in decline just when we need them the most.

When I say the word “institution,” what image do you see? An edifice of stone, solid and unyielding, built for the ages? Hamilton Hall?

As SIPA grads you know that institutions are more like gardens. Dynamic systems of diverse and competing interests, constantly growing and reacting to their environment. Capable of great beauty, but at constant risk of infestation and disease.

Your leaders and elites have failed to tend as they should to the institutions they inherited. We have taken for granted the benefits of globalization with no plan to pay the check. We have reached for short-term gains — in wealth, in power — and avoided the hard effort of tending the gardens that sustain us.

And so, graduates, you should face the future with concern about our ability to manage the forces that drive us apart. Are our institutions fit for today’s purpose? Information warfare is fought on all sides, and we are the civilian casualties. Algorithms — controlled by people and business models that don’t care about civil society — shape our perceptions of what is true.

Israel and its supporters don’t see and hear the same news that Palestinians and their supporters see. Russians don’t get the same information about their war as Ukrainians, Europeans, and Americans do. In today’s America, the political information consumed by Biden and Trump voters comes from different planets.

I wish I was overstating that problem. But here at SIPA, you know that I’m not.

Our technological futures are being shaped by corporate leaders who don’t answer to elections, who will oversimplify the challenges we face and promote fixes only the technologists can provide. Techno-utopianism is a dangerous fantasy. Look at what it offers us: painless solutions to complex problems. Endless profits for its high priests. Civil society becomes an externality. The public good, a helpless bystander.

Disinformation, conspiracies, and performative outrage are the most dangerous rot in the gardens of our institutions. They will be impossible to eradicate if we huddle comfortably within our own bubbles, rejecting all the ideas and information that challenge us to question our assumptions, refusing to hear the other side.

How do we prevent these outcomes, and the violence that will inevitably ensue?

I have built my professional career on thoughtful analysis, but on these questions, I have no easy answers. We live in a world of complexity, where real evidence, critical thinking, and the dogged, persistent pursuit of practical solutions are so essential.

I am certain of a few things. First, it does not have to be this way. Humans created these problems, and humans can solve them.

Second, your generation — particularly you who have been so fortunate to study at this place and in this moment — YOU MUST find different paths from those who came before you.

I know that you have goals as varied as your backgrounds. Some of you are ready to change the world, you will pursue the heights of public service and government or found innovative startups to make a difference. Some of you have debts to pay, families to support, responsibilities too great to think about taking big risks. Some of you, like me over 30 years ago, have absolutely no idea what you really want to do. I’ll be honest, when I came to New York from Stanford so long ago, I just wanted a good job. But no one would hire me. They thought they didn’t need political scientists. I’ve spent the past three decades trying to show them they were wrong, and I’m looking forward to you doing the same.

Regardless of the path you choose, now or in the future, ALL of you have something to offer. All of you can make a difference. You know how to analyze problems, and you understand much of what makes societies stable, what brings countries into conflict. You can see where the choices that governments and institutions make can either help or hurt your fellow humans. You can help others to see clearly. You can choose to do the right thing.

In my own history, even when crammed into a borrowed cubicle, eating ramen under a leaky roof off West End Avenue, there were easy paths to financial success I would not follow. And later, when my company Eurasia Group finally became something more than Eurasia Guy, there were clients we would not take, governments we would not serve. That remains true today.

You may feel that your role today is small, that nothing you do will matter so much. Resist such feelings. Hard work is never a hopeless cause. Each step in the right direction matters.

You will make endless decisions over your careers in public affairs. Countless opportunities for small steps forward when you remain focused on doing right, with an eye toward the long term, toward repairing public confidence in our civic institutions.

This is what you have been trained for, and this is what our institutions need.

As you set off on the next phase of your lives, I hope that you will keep a few principles in mind, some themes to help us create a truly civil society:

1. Change your mind

The world never stops changing.
If you’re afraid to change your mind …
even about things you consider fundamentally important …
ESPECIALLY those things,
the more wrong you will become as the world around you changes. Having a fixed worldview is the one thing that guarantees you’ll be wrong as the world changes.

2. Listen to the other side

Are you a tolerant person?
I’m really asking you.
If you’re a tolerant person, you can listen to people you disagree with, even strongly disagree with, and learn something you didn’t know.
Learn something that can help you do what you think you should do.
Make a list of people you respect …
… but with whom you disagree on questions you feel are truly important.
Listen to those people. Read what they write. Follow them on social media.
They may not shift your core convictions. It doesn’t matter.
Listening to them and considering FAIRLY, HONESTLY what they say will broaden and deepen your perspective.

3. Remember that your work is about helping people

If your work is on the problems of international and public affairs, your work is about people and their lives.
Don’t forget that.
It’s not mainly about ideas and principles.
It’s about creating opportunities for people alive today and others not yet born.
Opportunities to live securely. To learn. To realize potential. And to share.

When life gets in the way, as it surely will, remember what brought you here, to this place, to this field of study. Remember how fortunate you are, and never forget those whose most basic needs are constantly under pressure. Resist the gentle tug of fatalism. Resist the long slide into complacency.

And please remember, cynicism is toxic. It’s pure poison. Do not swallow it.

And last but not least (at least not for those of you who know me)

4. Take your work, but not yourself seriously

I was going to make this speech funny.
Because I’m generally a funny person.
But I take this moment seriously.

If you’re a generous person, your WORK will outlive you.
When we go, we can’t take anything with us.
Give what you have.

I believe this is a secret of happiness.
The happiness of those who will benefit because you shared what you had to give.
I believe that can make you happy too.

Class of 2024, today’s wars will grind on a while longer, and America’s election season will only get uglier.

We’re not going to kid ourselves.

None of us will change the world this week.

But each of us has a chance to use whatever talent and wisdom we have to learn what this world has to teach us … and to work with other people, especially those we disagree with, to build a more cooperative future.

I wish you, graduates, the very best.

And I thank you.

Wednesday, May 15, 2024

Why an MLP Doesn’t Belong in Your IRA - btbirkett@gmail.com - Gmail

Why an MLP Doesn’t Belong in Your IRA - btbirkett@gmail.com - Gmail

Why an MLP Doesn't Belong in Your IRA

By Ed D'Agostino | May 14, 2024

Ed D'Agostino

   

The path to the US’s energy future is becoming obvious. Over time, nuclear will become one of, if not the primary, sources of energy feeding our ever-growing demand for electricity. China and India are far ahead of the US on this, with hundreds of new reactors slated for construction.

The problem is our projected increase in energy demand is here now. The rapid growth of artificial intelligence is fueling the construction of massive new data farms, housing thousands of energy-hungry CPUs. The government wants us to drive electric cars, get rid of our gas stoves, and replace our central heat and AC systems with more efficient heat pumps.

It is not obvious how to reconcile today’s greener energy goals with a grid that depends on fossil fuels. You may believe the answer is more wind or solar power, combined with batteries, but that comes with another set of problems—our reliance on China for solar panels and the rare earth metals required to build them.

So, what’s the plan? How do we generate more electricity over the next two decades? That’s how long it will take (under current regulatory restrictions) for the US to build more nuclear power plants.

The only viable option to get us from today’s goals to a nuclear-powered future is natural gas. It is the perfect bridge to nuclear—at least, in the US. It’s cheap, abundant, provides baseload power, and burns far cleaner than other traditional fuels.

I am bullish on US energy. Energy has outperformed the market over the past four years, yet energy stocks are still relatively cheap. Louis Gave calls energy the new “anti-fragile asset of choice,” taking the place of bonds in a portfolio. Energy provides you with a geopolitical hedge, while paying generous dividends.

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Several readers of our macro investment service, Macro Advantage, have asked why we have not added a company like Energy Products Partners LP (EPD) to the portfolio. After all, the company yields over 7%, and is well regarded and relatively cheap.

No argument. EPD is a fine business and worth considering, but… the company is structured as a Master Limited Partnership (an “MLP”).

MLPs are hybrid entities. They are considered partnerships for federal tax purposes, but they trade on public exchanges just like many corporations do. MLPs issue “units” instead of shares, and investors are the limited partners. MLPs do not pay income taxes at the business level. Instead, the MLP’s profits and losses pass through to the limited partners (aka, the investors), who receive a Schedule K-1 each year.

To maintain this setup, an MLP needs to produce at least 90% of its income from qualifying sources. These qualifying sources include the production and processing of natural resources. This is why MLPs are concentrated in the energy sector.

MLPs make minimum quarterly distributions, typically returning most of their distributable cash flow to investors. The often-repeated rule is that around 80% of these distributions tend to be tax deferred, but the mechanics here are complicated, and the amount that is deferred varies.

If this all sounds good so far, you are right. MLPs, for the right investor (consult your advisor) can be a fantastic source of steady, tax-deferred income. But as always, know what you are buying. If you invest primarily through an IRA or other type of tax advantaged account, an MLP might bring unexpected issues.

MLP investors will see some amount of “unrelated business taxable income,” or UBTI, listed on the Schedule K-1 they receive from the MLP annually. A few unpleasant things happen when you have more than $1,000 in UBTI from MLPs in your IRA. First, you need to submit another special tax form (Form 990-T). Second, you need to pay taxes on the UBTI. And third, in some rare instances you could endanger your IRA’s tax deferred status.

In short, investing in an MLP can offer tax benefits—and even some estate planning benefits if you get strategic. But MLPs also come with additional paperwork at tax time that you might not want to deal with. If you’re a high-net-worth investor or running a family office, you likely have the infrastructure in place to manage the extra work.

But if you are new to investing, invest primarily through an IRA, or merely place a high premium on simplicity come tax time, MLPs might not be the best way for you to invest in the energy sector.

Not to worry—there are plenty of traditional energy stocks worth a look, including the two domestic producers we hold in the Macro Advantage portfolio. If you’d like to learn more about them, consider joining us at Macro Advantage by clicking here.

🍅 Axios Finish Line: Eat your veggies - btbirkett@gmail.com - Gmail

🍅 Axios Finish Line: Eat your veggies - btbirkett@gmail.com - Gmail

  • For example, eating a tomato with olive oil unlocks a different nutrient profile than eating a roasted tomato: "If you're eating it in a way that tastes very good," it's often a more "nutritionally rich experience."

Monday, May 13, 2024

Just how bad are ultraprocessed foods? Here are 5 things to know | CNN

Just how bad are ultraprocessed foods? Here are 5 things to know | CNN

///\\\... Researchers found that when the participants were on the ultraprocessed diet, they ate about 500 calories more per day than when they were on the minimally processed one. This difference in calories translated quickly to the scale. Participants gained on average 2 pounds during the two weeks on the ultraprocessed diet and lost 2 pounds on the minimally processed one. And their blood work showed lower markers of inflammation when they were on the latter.