While You Were Working - August 24

Programming note: WYWW will not be published tomorrow. See you Monday.

Whatever you do, don’t use the “S-word”

I teased this report yesterday and now it is out. The Energy Department, with a whole lot of input from the coal industry, released a report calling for more support of, yes, the coal industry. What is really entertaining is that the report pretty much admits that coal can’t compete with natural gas and renewable energy sources on price, but should be supported by the government because it offers “resilience.”

What the coal industry is really asking for is a subsidy. It wants the government to make special rules because it can no longer compete in the open marketplace. Considering how “subsidies” have been blamed for by certain folks in the energy sector for enabling the birth of wind and solar, it is pretty funny to see those same folks turn around and ask for a subsidy.

Make no mistake: Coal is gonna get its wish list from Energy Secretary Perry under the guise of jobs – and to fulfill a campaign promise of President Trump. But most of the mining is going to be done by machines.

And this last paragraph from this Bloomberg piece to see just how far Perry is going to make it seem like there is “nothing to see here” regarding his influence over the findings of the report.

“Since ordering the study in April, Perry has taken a deliberately hands-off approach and was only briefed on its findings Tuesday morning, agency officials said. The report was overseen by Travis Fisher, a senior adviser at the department, and Brian McCormack, Perry’s chief of staff.”

Because of course everyone knows that when his chief of staff and a senior adviser oversee the production of a report, there is no way they could ever, ever, ever, ever reach the conclusion the Secretary Perry has been seeking all along.

All-powerful index-makers? Or all-powerful investors?

Great piece form The Economist about the rise of index-makers like S&P Dow Jones, FTSE Russell and MSCI. It covers the growth of the indexing “industry” but also leaves out a big reason for the rise in such entities: investor preference.

Mom-and-pop investors are flocking to indices and the related investments because they are simply afraid of most individual stock outside the blue-chips. Too many things can go wrong, from an exploding phone to a run-aground oil tanker, to make picking individual stocks a “safe” bet.

And it is worth noting that the indices take the job of constructing each index very seriously. More often than not, investor input (pressure) can help shape an index. The Economist highlights how FTSE Russell and S&P Dow Jones took the step of excluding SNAP from its indices because it consisted solely of non-voting shares. Such a move shows indices are not all-powerful. To survive they will continue to show respect for investor preferences and if SNAP is an example, will even draw applause from fans of corporate governance.

A monkey wrench landed in the accepted behavioral science of traders

For quite some time, the accepted wisdom has been that male traders are more irrationally exuberant than female traders. I have always felt John Coates is pretty enlightened in this area and his research suggests females are just as willing to take huge risks as males, but that women tend to want more information before making huge trades.

I am admittedly a geek for this topic, so I was surprised when I saw this piece from The Economist suggest such conclusions might actually be cultural in nature. Researchers found women in Asia were just as irrationally exuberant as men. Hmmm…

And speaking of panicked trading…

When all those irrationally exuberant male and female traders are seeking liquidity during the next crisis, researchers at the St. Louis Fed think policymakers should be careful about turning on the public debt spigot.

Comcast went from fighting cord-cutting to picking up the scissors

Comcast has entered a partnership with residential solar provider Sunrun. The move makes sense because Comcast can tie solar panels and energy into one of its many bundle offerings. But it is kind of funny. Comcast is under threat from consumers who are cutting the cable cord in growing numbers. But here it is turning around and helping consumer cut the cord that tethers them to the power grid. Well, even if these consumers aren’t going to go off the power grid entirely, Comcast is helping them wean.

WYWW Appetizers