Economic Data - Practical Considerations

Changes in Inventories – Effect on GDP Data

A component of private domestic investment – changes in inventories – has become more consequential in recent quarters:

http://www.bloomberg.com/view/articles/2016-08-02/there-s-something-new-in-businesses-stagnant-inventories

Data Revisions Matter

A timely piece from Bloomberg [a must read for financial market participants]:

http://www.bloomberg.com/news/articles/2016-07-27/why-economists-are-better-than-markets-at-telling-you-how-the-economy-is-doing

“If you want to know how the economy is doing, trust an expert rather than the financial markets, says a team led by Paul Donovan, UBS Ltd.'s managing director of global economics.

That might sound a bit self-serving coming from someone in the profession, but let's hear him out:

Financial markets place an immense amount of weight on economic data, but far less to their more accurate revisions. In other words, markets take the strongest signal from releases that are most likely to be noise. Compare those initial-release data with economists' educated guesses, and the latter wins out.”

Why We Need Experts

Why Democracy Requires Trusted Experts by Jean Pisani-Ferry:

https://www.project-syndicate.org/commentary/why-democracy-requires-experts-by-jean-pisani-ferry-2016-08

European economist Jean Pisani-Ferry wisely notes:
“This divide between experts and citizens is a serious cause for concern. Representative democracy is based not only on universal suffrage, but also on reason. Ideally, deliberations and votes result in rational decisions that use the current state of knowledge to deliver policies that advance citizens’ wellbeing. This requires a process in which experts – whose competence and honesty are trusted – inform decision-makers of the available options for meeting voters’ stated preferences. Citizens are unlikely to be satisfied if they believe that experts are imposing their own agenda, or are captured by special interests. Distrust of experts fuels distrust of democratically elected governments, if not of democracy itself.”

London’s Financial Center Role

Even after Brexit, London will still continue to be a key global financial center –

London dominates global derivatives trading:

http://www.wsj.com/articles/in-derivatives-trading-london-is-king-1469736556

English laws (and settlement courts) continue to play a dominant role in global financial contracts:

http://www.wsj.com/articles/post-brexit-londons-financial-center-has-english-law-on-its-side-1469630733

Related:
Felix Martin on UK versus Continental Europe
http://www.newstatesman.com/politics/economy/2016/07/no-economy-island-why-britains-finances-now-depend-europe

An Interesting Perspective on American Democracy

Harvard historian Jill Lepore's take on the recently concluded RNC and DNC conventions:

A TALE OF TWO CONVENTIONS

http://www.newyorker.com/magazine/2016/08/08/a-tale-of-two-conventions

Lepore notes:

“Every tyrant from Mao to Perón rules in the name of the people; his claim does not lessen their suffering. Every leader of every democracy rules in the name of the people, too, but their suffering, if they suffer, leads to his downfall, by way of their votes (which used to be called their “voices”). Still, “the voice of the People” is a figure of speech. “Government requires make-believe,” the historian Edmund S. Morgan once gently explained. “Make believe that the king is divine, make believe that he can do no wrong or make believe that the voice of the people is the voice of God. Make believe that the people have a voice or make believe that the representatives of the people are the people.””

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On a lighter note, The Simpsons on the 2016 Presidential Election

Benefits of Globalization: Voters versus Economists

Harvard economist Greg Mankiw offers a timely note on public perceptions regarding the effects of globalization:

http://www.nytimes.com/2016/07/31/upshot/why-voters-dont-buy-it-when-economists-say-global-trade-is-good.html

New research from political science indicates that the general public is not forming its opinions (regarding the benefits of globalization) based on narrow self-interest. Instead, isolationism, nationalism and ethnocentrism may be driving popular attitudes towards globalization.

Related:
http://vivekjayakumar.blogspot.com/2016/07/politics-and-globalization.html

Brazilian Economy – Is the Worst Over?

Signs of economic recovery emerge in Brazil

http://www.wsj.com/articles/brazils-economic-gloom-shows-signs-of-lightening-1469403296

WSJ piece notes:

“Latin America’s largest country remains mired in a brutal recession, but some leading economic indicators have ticked up slightly in recent weeks, or at least stopped deteriorating, raising prospects for a return to growth.”

Some risks still remain:
http://theconversation.com/why-brazils-post-olympics-hangover-will-hit-so-hard-61488  

Related:

Rio De Janeiro – Long-Term Economic Developments
http://www.economist.com/news/americas/21702811-olympic-city-has-been-decline-1960s-games-will-not-change-its

Review of BRAZILLIONAIRES: Wealth, Power, Decadence, and Hope in an American Country by Alex Cadres

http://www.nytimes.com/2016/07/24/books/review/brazillionaires-alex-cuadros.html

Brexit and the Limited Market Reaction

NYU economist Nouriel Roubini notes:

https://www.project-syndicate.org/commentary/europe-brexit-hangover-by-nouriel-roubini-2016-08
“The market reaction to the Brexit shock has been relatively mild, because it was regional rather than global, with the impact concentrated in the UK and Europe. But the risk of European and global volatility may have been only briefly postponed”