Welcome to week 372! The articles below caught my attention this week. What are intended to be relatively objective “briefs” are preceded by dashes (——–), whereas additional material or relatively subjective comments are preceded by asterisks (********). Article titles preceded by [SR] require a subscription.
(25 May 2019): “What Are Frontier Markets and Why Invest in Them?” Bloomberg Businessweek
——–[This is a QuickTake.] “If emerging markets are the wild child of the investment family, offering potentially higher rewards in return for greater risk, then what about their small sibling, frontier markets? These include countries such as Sri Lanka, Kazakhstan and Nigeria where stock exchanges and currency markets are too small or underdeveloped to be classified as emerging markets. While frontier markets may bring investors more exotic thrills, and spills, they also somewhat counterintuitively can be a safe haven when markets are rocky.”
********This QuickTake follows the usual format, i.e., concise and clear statements of essential points. Investors discern three types of markets: developed, emerging, and frontier. A lengthier discussion of the three types can be found here. Perhaps the most interesting point is “6. How are they [frontier markets] safe havens?”. Frontier markets are “less correlated with one another due to their geographic diversity.”
(29 May 2019): “Single Mothers Are Surging Into the Work Force” The New York Times
——–Since 2015, “something surprising has happened: The share of young single mothers in the work force has climbed about four percentage points, driven by those without college degrees . . . It’s a striking rise even compared with other groups of women who have increased their labor force participation during this period of very low unemployment. The last time single mothers’ labor force participation grew so rapidly was during the 1990s, driven by a thriving economy and major federal policy changes, including welfare overhaul and tax incentives. In recent years, though, there has been no new federal policy that would obviously encourage single mothers to work in large numbers. Instead, they seem to be responding to a patchwork of policies, both carrots and sticks. At the federal level, the safety net has become less reliable, so working for pay is increasingly their only option. But at the local one, new policies like paid leave and minimum wage increases have made it more feasible for single mothers to work. Together, these appear to have primed them to take advantage of the biggest driver of all: a highly competitive labor market.”
********A lengthy article that relates many of the institutional factors affecting the employment of single mothers. As in gravity models of migration, single mothers can be pushed and pulled into the labor market by a variety of positive and negative incentives.
(30 May 2019): “The Bond Market Is Trying to Tell Us Something (Worry)” The New York Times
——–“Let’s face it: Bonds are boring. Usually, stock markets are the source of hyperventilation and headlines. But right now, all the action is in the bond market. It is sending powerful signals that there’s trouble ahead for the United States economy. They’re powerful enough they’re even rattling the parts of Wall Street that people do talk about. Does it mean a recession is imminent? Certainly not. Part of what makes the bond market so ominous is that it’s not terribly specific. But there is good information buried in the weeds.”
********The remainder of the article reveals what is “buried in the weeds.” They include, falling bond yields, yield curve inversions, and dropping inflationary expectations.
(1 June 2019): “The Economics of Rihanna’s Superstardom” The New York Times
********This piece was written by the late Alan Krueger on the occasion of the publication of his book Rockonomics: A Backstage Tour of What the Music Industry Can Teach Us about Economics and Life. Since Krueger passed away on March 16, 2019, this must have been written some time ago, which makes me wonder about the placement of such Opinion pieces more generally. Here Krueger asks, “Why has the economy become more a winner-take-all affair?” In answering his question, he points to “scale and uniqueness” as been necessary “to create a superstar market” (one in which winner takes most, if not all). Two forerunners of the serious analysis of “superstar markets” are Alfred Marshal, Principles of Economics (1890 and later editions) and Sherwin Rosen, “The Economics of Superstars,” a technical piece published in 1981. So-called “power laws” are important in the study of income distribution for superstar markets. You can learn a bit about them here.
(3 June 2019): “Why does California’s public health department treat CBD like poison?” The Los Angeles Times
********This article discusses two bills making their way through the California state legislature. One dealing with cultivation of hemp and the other with the medicinal properties of cannabidiol (CBD). Cultivation looks promising as hemp uses one-third the water of alfalfa in a water-challenged area. But CBD is problematic and ironic. In a state where “psychoactive CBD from marijuana can be legally sold in pot shops” CBD “derived from hemp is currently not allowed in any of the items” regulated by the California Department of Public Health, “including conventional foods, drugs and cosmetics.”
(4 June 2019): “The Beginning of the End of the Old World Appellation System?” The Wine Economist
********This is a blog post by economist Mike Veseth, who produces The Wine Economist and is professor emeritus of International Political Economy at the University of Puget Sound. The appellation system, or systems, of which he writes, pertains to the rules for describing the provenance and product of wines most highly developed in Europe. While discussing the goals of appellation systems—protecting regional producers from fraud and protecting quality standards—he discusses the two forces threatening existing appellation systems: the global market and climate change. In doing so he provides clear and compelling analysis. I was especially interested in his discussion of what vintners the world over are doing experimentally to deal with climate change, even in well-established producing regions like Bordeaux. A nice example of how individual producers are adapting to the market and climate change.
(4 June 2019): [SR] “Fast Food Embraces Meatless Burgers, but There Aren’t Enough to Go Around” The Wall Street Journal
——–“Fast-food restaurants are rushing to add meat-free burgers to their menus, hoping these higher-priced alternatives will help them capture additional traffic and dollars even as suppliers have struggled to fill all the orders. Imitation meats made by Beyond Meat Inc and Impossible Foods Inc. are on sale at nearly 20,000 restaurants across the U.S., according to those companies. . . . Restaurants’ embrace of vegetarian-friendly fare reflects competition among fast-food chains to attract younger diners who prioritize sustainability and healthfulness.” But, rapid growth in demand “is straining the ability of Beyond Meat and Impossible Foods to meet it. Still, investors have signaled that they believe the companies will be able to bring plant-based products to the masses. Beyond Meat’s shares have nearly quadrupled from its May initial public offering prices, valuing the company at $6 billion.” These non-meat burgers are not inexpensive. Beyond Meat’s burger tends to cost double the price of standard ground beef. Presently delivery is a problem. Both Beyond Meat and Impossible are finding it impossible to meet the demand for its burgers.
********Closely related to the WSJ article is this informative
from Yahoo! Finance. For a look at the
Asheville, North Carolina food scene, check out the piece from food writer Mackensy
to find: Restaurants report vegetarian Impossible Burger shortage.”
May you have a good week!