Sunday, June 25, 2017

On the Health Care Debate in the U.S.

  • Last week, as the U.S. Senate released its version of an alternative to the “Affordable Care Act”, U.S. Chamber of Commerce President and CEO Thomas J. Donohue said, "The Senate health care bill will help to stabilize crumbling insurance markets caused by the Affordable Care Act, work to curb runaway premium increases, and jettison ill-conceived Washington mandates and taxes that have weighed heavily on our economy. This is an extremely important step in putting doctors and patients ahead of politicians when it comes to American health care.” 
  • AARP Executive Vice President Nancy LeaMond released a statement that said, “This new Senate bill was crafted in secrecy behind closed doors without a single hearing or open debate—and it shows. The Senate bill would hit millions of Americans with higher costs and result in less coverage for them. AARP is adamantly opposed to the Age Tax, which would allow insurance companies to charge older Americans five times more for coverage than everyone else while reducing tax credits that help make insurance more affordable … 
  • AARP is also deeply concerned that the Senate bill cuts Medicaid funding that would strip health coverage from millions of low-income and vulnerable Americans who depend on the coverage, including 17 million poor seniors and children and adults with disabilities … 
  • The Senate bill also cuts funding for Medicare which weakens the programs ability to pay benefits and leaves the door wide open to benefit cuts and Medicare vouchers. AARP has long opposed proposals that cut benefits or weaken Medicare."
  • Note: Numerous studies suggest that the U.S. health care system is one of the least effective among developed countries and that implementing a Universal Health Care system may be part of the solution.
  • Countries with some form of universal health care include Austria, Canada, Cuba, Denmark, Finland, France, Germany, Greece, Israel, Italy, Mexico, Norway, People's Republic of China, Portugal, Russia, Singapore, Sweden, Switzerland and the United Kingdom

MY TAKE
  • Both the U.S. Chamber of Commerce (representing corporate interests)  and the AARP (representing Americans 50 and older) are powerful lobbying organizations.
  • While the bill's supporters suggest that they are aligned with the views of most U.S. citizenssurveys suggest that this is not the case.
  • Regardless of the outcome of current U.S. Congressional actions - health care in the U.S. will remain a contentious topic and its quality will likely continue to lag behind many other nations..  

Sunday, June 18, 2017

On the Effects of Overweight and Obesity (Globally)

  • Last week, the article “Health Effects of Overweight and Obesity in 195 Countries over 25 Years was published in The New England Journal of Medicine. 
  • Comments included :"The prevalence of obesity among children and adults has doubled in 73 countries since 1980 and has shown a continuous increase in most other countries …  (Globally more than 2 billion adults and children are overweight or obese), 
  • Our systematic evaluation ...  showed sufficient evidence supporting a causal relationship between high [Body Mass Index] and cancers of the esophaguscolon and rectum, livergallbladder and biliary tractpancreasbreastuterusovarykidney, and thyroid, along with leukemia.
  • In 2015, among the 20 most populous countries, the highest level of age-standardized adult obesity was observed in Egypt (35.3%), and the highest level of age-standardized childhood obesity was observed in the United States (12.7%)
  • China and India had the highest numbers of obese children, whereas the United States and China had the highest numbers of obese adults.
  • The Pew Research Center's article "What’s on your table? How America’s diet has changed" (December 13, 2016) said "Broadly speaking, we eat a lot more than we used to: The average American consumed 2,481 calories a day in 2010, about 23% more than in 1970 ... 
  • Americans consume 29% more grains, mostly in the form of breads, pastries and other baked goods, than they did in 1970 – the equivalent of 122.1 pounds a year ..
  • [American are[ eating a lot more cheese: 21.9 pounds a year, nearly three times the average annual consumption in 1970."
MY TAKE
  • The causes of overweight and obesity are complicated (including poor diet, lack of physical activity, genetics, and food additives), but increased consumption, and  changes in what is consumed are significant contributing factors.
  • This is a health crisis that not only results in personal harm, but has a significant negative economic impact by increasing medical costsreducing workforce productivity, as well as causing premature deaths and disabilities.
  • Addressing the problem will require public education to drive lifestyle changes, as well as public policy initiatives to improve access to healthier foods and beverages.

Monday, June 12, 2017

Observations from High Profile Investors (Ray Dalio and Paul Singer)

  • Last week, Ray Dalio (Bridgewater Associates) said “UK and US Increase the Odds That Conflict Will Lead to Political Ineffectiveness … normally we don't need to pay much attention to politics to get the economics and markets right. However, there are times when politics becomes the most important driver … The 1930s were the last time this happened in the developed world and globally …  
  • Conflicts between the common man and the elites typically take place a) during times of economic stress due to wealth and opportunity disparities, b) when the common man believes that the country’s core values are being threatened by foreigners, and c) when government seems so dysfunctional that radical change is widely believed to be necessary … Those conditions typically lead to a strong-minded, confrontational fighter being brought to power to represent the underserved constituency, typically by pursuing more nationalistic, protectionist, and militaristic policies, which typically leads to more domestic and international conflicts. In some cases it led to democracies becoming dictatorships, and wars. I am not saying that we are on that path, but I am saying that it has to be watched out for because if it is in the works, it is a really big deal … 
  • Over the last 24 hours we’ve seen developments in the US (pertaining to the issues surrounding Jim Comey's testimony) and the UK (concerning no UK party having a ruling majority and the threat of a left populist leader emerging). While in both cases, so far, the political and legal institutions and systems have worked as intended … nonetheless these developments entail the risk that political conflicts will lead to reduced government effectiveness in these two countries at especially challenging times for each of these countries (e.g., for the UK exiting the union and needing to redefine its economic and geopolitical place in the world, and for the US needing to clarify its domestic and international directions).
  • Also, Paul Singer (Elliott Management) said during an interview at a Bloomberg investor conference “I am very concerned about where we are … What we have today is a global financial system that’s just about as leveraged -- and in many cases more leveraged -- than before 2008, and I don’t think the financial system is more sound … 
  • I don’t think that the fixes that have been put into place have actually created a sound financial system. I don’t believe that confidence is justified in policy makers and central bankers … 
  • If and when confidence is lost, it could be lost in a very abrupt fashion causing conceivably a ruckus in bond markets, stock markets and in financial institutions.” 
  • Finally, on Friday, the VIX Volatility Index for the S&P 500) ) briefly dropped to 9.37, its lowest level in more than 23 years. 

MY TAKE
  • As Ray Dalio (his firm manages $150 billion) and Paul Singer (managing $34 billion) share their concerns about policy makers, it is unclear what process will lead to "better" political leadership in the short term.
  • Regarding low equity market volatility - while investor complacency may be a contributing factor, the increased use of algorithmic trading may also contribute to the current low level. Going forward, investors have to consider the potential that "hoped for" cuts in government spending and lower taxes may not take place.

Monday, June 5, 2017

Observations on Trump and the Paris Climate Accord

Last week, the following views were shared on the Paris Climate Accord:
  • U.S. President Donald Trump -  “My obligation is to the American People. The Paris Accord would undermine our economy, hamstring our workers, weaken our sovereignty, impose unacceptable legal risks, & put us at a permanent economic disadvantage to the other countries of the world.”
  • White House Chief of Staff Reince Priebus  – “Promise kept. @POTUS exits flawed #ParisAccord to seek better deal for U.S. workers & economy. This WH will always put #AmericaFirst.”
  • U.S Vice President Mike Pence‏ - “Our President is choosing to put American jobs, American consumers, American energy, and American industry first.”
  • U.S. Senator Mitch McConnell (Kentucky) -  “I applaud President Trump and his administration for dealing yet another significant blow to the Obama administration’s assault on domestic energy production and jobs”.
  • From a joint statement by AdobeAppleBlue Cross Blue Shield of MassachusettsDanfossDigital HealthFacebookGap Inc.. GoogleThe HartfordHewlett-Packard EnterpriseIngersoll RandIntel Corp.Johnson ControlsLevi Strauss & CompanyMars IncorporatedMicrosoftMorgan StanleyNational GridPG&E Corp.Royal DSM,  SalesforceSchneider ElectricTiffany and CompanyUnileverVF Corp. - "Continued U.S. participation in the agreement benefits U.S. businesses and the U.S. economy in many ways ....As other countries invest in advanced technologies and move forward with the Paris Agreement, we believe the United States can best exercise global leadership and advance U.S. interest by remaining a full partner in this vital global effort." 
  • Over 175 U.S city mayors representing + 50 million Americans "will adopt, honor, and uphold the commitments to the goals enshrined in the Paris Agreement. We will intensify efforts to meet each of our cities’ current climate goals, push for new action to meet the 1.5 degrees Celsius target, and work together to create a 21st century clean energy economy."
  • California Governor Jerry Brown - "Donald Trump has absolutely chosen the wrong course. He's wrong on the facts. America's economy is boosted by following the Paris Agreement. He's wrong on the science. Totally wrong. California will resist this misguided and insane course of action. Trump is AWOL but California is on the field, ready for battle."
  • Michael Bloomberg - "Americans will honor and fulfill the Paris Agreement by leading from the bottom up - and there isn't anything Washington can do to stop us."
  • Tesla and SpaceX CEO Elon Musk – “Am departing presidential councils. Climate change is real. Leaving Paris is not good for America or the world.”
  • General Electric CEO Jeff Immelt – “Disappointed with today’s decision on the Paris Agreement. Climate change is real. Industry must now lead and not depend on government.”
  • Goldman Sachs CEO Lloyd Blankfein  - “Today's decision is a setback for the environment and for the U.S.'s leadership position in the world.”
  • Disney CEO Robert Iger - "As a matter of principle, I've resigned from the President's Council over the #ParisAgreement withdrawal.”
  • Canadian Prime Minister Justin Trudeau - “We are deeply disappointed that the United States federal government has decided to withdraw from the Paris Agreement. Canada is unwavering in our commitment to fight climate change and support clean economic growth. Canadians know we need to take decisive and collective action to tackle the many harsh realities of our changing climate."
  • German Chancellor Angela Merkel - “I am so moved and enthused that so many states and enterprises in the United States of America want to travel this path with us,” she said. “We will travel it together.”
  • Former U.S. President Barack Obama - “... in the absence of American leadership; even as this Administration joins a small handful of nations that reject the future; I’m confident that our states, cities, and businesses will step up and do even more to lead the way, and help protect for future generations the one planet we’ve got.”
  • European Union Council President Donald Tusk - "We are convinced that yesterday's decision by the United States to leave the Paris agreement is a big mistake.”
  • Paris Mayor Anne Hidalgo – “[Trump is] not up to the level of what one would expect from a president of a great nation that we love .. [he is] a representative of a world gone by, a world that is looking back in the rear view mirror and does not see what is happening today."
  • Bishop Oscar CantĂș of Las Cruces - “The United States Conference of Catholic Bishops (USCCB), along with Pope Francis and the entire Catholic Church, have consistently upheld the Paris agreement as an important international mechanism to promote environmental stewardship and encourage climate change mitigation. The President’s decision not to honor the U.S. commitment to the Paris agreement is deeply troubling.”
  • American Civil Liberties Union – “Pulling out of the Paris Agreement would be a massive step back for racial justice, and an assault on communities of color across the U.S. Drought, hurricanes and flooding will impact every American - but climate change doesn't affect us all equally. Black and brown people are more likely to live near coal plants, and have higher asthma rates than white Americans do. That disparity is only going to worsen in coming years, and it's why we must #ActOnClimate if we're serious about racial justice.”

MY TAKE
  • The Paris Climate Accord was signed by 196 countries in 2015 and is an evolving framework of provisions to address climate change.
  • As Trump plays to his base supporters, U.S. states and cities will likely increase their influence on U.S. environmental policy and perhaps other policy matters as well. 
  • Note: Syria and Nicaragua are the only other countries not signed on to the Accord.