Margins, Not Revenue, Have Been The Main Driver Of EPS Growth This Cycle

Link here.

Mapped: Every Power Plant in the United States

Every year, the United States generates 4,000 million MWh of electricity from utility-scale sources.

While the majority comes from fossil fuels like natural gas (32.1%) and coal (29.9%), there are also many other minor sources that feed into the grid, ranging from biomass to geothermal.

Link here and here.

The Conservative Case for Antitrust

Fewer competitors leads to less competition and more collusion. There is nothing new under the sun. Even in the 18th century, Adam Smith wrote in The Wealth of Nations that, “People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices.” A little later John Stuart Mill echoed the sentiment, “Where competitors are so few, they always end by agreeing not to compete.”

Capitalism without competition is not capitalism.

Competition creates clear price signals in markets, driving supply and demand. It promotes efficiency. Competition creates more choices, more innovation, economic development and growth, and a stronger democracy by dispersing economic power. It promotes individual initiative and freedom. Competition matters because it prevents unjust inequality, rather than the transfer of wealth from consumer or supplier to the monopolist. If there is no competition, consumers and workers have less freedom to choose.

Capitalism is a game where competitors play by rules that everyone agrees. Today, the state, as referee, has not enforced rules that would increase competition, and through regulatory capture has created rules that limits competition. All too often today, monopolies exist through lobbying, regulation and the helping hand of government.

Link here.

We need diplomacy not sanctions for peace in Syria

The truth is that the U.S. engagement from 2011 was misguided and doomed to fail. The U.S. goal was to overthrow Assad in order to end a regime backed by Russia and Iran. Yet, both countries were prepared to more than match Obama’s commitment of forces, especially with Russia’s intervention in 2015, rendering the U.S.-backed insurgents a complete failure. The misguided proxy war stoked by the U.S., Saudi Arabia, and other US allies eventually displaced more than 10 million people and led to the deaths of around half a million civilians and combatants.

Moreover, Operation Timber Sycamore supported Sunni jihadists favored by Saudi Arabia, and it was the splintering of those jihadist forces that led to the rise of ISIS in Syria. This was a classic boomerang effect, where the initial CIA action came back to haunt the U.S. in even more disastrous terms.

Link here.

Why Regulators Went Soft on Monopolies

The process of getting mergers approved appalls the mind. Firms hire Washington, D.C. K Street law firms and engage highly paid economists to argue that mergers will promote efficiencies and lower prices. The top economists in the field move back and forth from consulting firms such as Compass Lexecon or Charles River Associates to run the DOJ and the FTC. The economists create models arguing that mergers will lower prices. But once mergers are approved, prices mysteriously go up.

This naturally influences the work of well compensated pro-merger economists. Financial models rely on questionable assumptions of demand, costs, and the way firms will behave in the future. Numerous studies show that these assumptions turn out to be incorrect, and merger simulations do not accurately predict actual post-merger prices. In layman’s terms, “garbage in = garbage out.” Merging firms pay well, and economists are happy to perform on demand.

Since the early 1980s, economists have become wealthy moving in and out of government promoting mergers. Each time, they land at a cushy law firm or research firm that trades on their inside connections in government, and they return to government.

Link here.

Fed Blinks as Housing, CLOs Slump

Ben Bernanke noted in 2010 that “higher equity prices will boost consumer wealth and help increase confidence, which can spur spending.” The Fed's fixation with perception rather than data is illustrated by the way in which former Fed Chairs Bernanke and Yellen deliberate chose to inflate the value of financial and real assets to "stimulate" the economy. The WSJ’s Nick Timiraos reported last week:

“Former Fed Chairman Ben Bernanke often argued that it was the maturity and risk-profile of the Fed’s holdings, not the overall size of its reserves or securities portfolio, that determined how much it stimulated markets and the economy.”

The Fed’s dual mandate from Congress includes full employment and price stability. But to look at recent policy suggests members of the FOMC cannot read federal statute or do simple sums. Causing asset prices to soar by double digit rates is not price stability – it is inflation, plain and simple. Please, Chairman Bernanke, do show us where it says in the Federal Reserve Act that the FOMC is allowed to employ asset price inflation as a policy choice.

In the Orwellian newspeak of the Federal Reserve System, inflating the value of stocks, bonds and real estate to absurd levels is a form of economic “stimulus.” Never mind that this vast act of asset price inflation did not help the majority of Americans. Indeed, the biggest impact of the Bernanke/Yellen asset inflation seems to be preventing a whole generation of younger Americans from buying a new home.

Link here.