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Ya see, I didn't start the thread, I am simply reacting to it, and engage in a discussion which you began, presumably because it was relevant to, oh, investing...Well Edmond, why don't you just explain to us exactly why accurate weather forecasts have no investing connection to agricultural or transportation or aviation or insurance or construction or emergency financial operations.
Every month, the federal government serves up a steady diet of economic reports on everything from the price of groceries to the unemployment rate. These reports are closely followed: They can move markets — and the president's approval rating. Businesses and investors put a lot of stock in the numbers, which are rigorously vetted and free from political spin.
Now the Trump administration is calling that trust into question. The government recently disbanded two outside advisory committees that used to consult on the numbers, offering suggestions on ways to improve the reliability of the government data. At the same time, Commerce Secretary Howard Lutnick has suggested changing the way the broadest measure of the economy — gross domestic product — is calculated.
Those moves are raising concerns about whether economic data could be manipulated for political or other purposes.
Erica Groshen is one of the outside experts who received a terse email last week saying her services were no longer needed, because the committee she'd served on — the Federal Economic Statistics Advisory Committee — had been folded. Groshen cares deeply about the reliability of government data, having previously overseen the number crunching as commissioner of the Bureau of Labor Statistics. "Statistical agencies live and die by trust," she says. "If the numbers aren't trustworthy, people won't use them to make important decisions, and then you might as well not publish them."
The email to Groshen said the commerce secretary had terminated the committee because its purpose had been fulfilled. A second committee that advises the government's Bureau of Economic Analysis was also discontinued.
That puzzled Groshen, who's now a senior labor market adviser at Cornell University's School of Industrial and Labor Relations. She says taking an accurate measure of a dynamic economy is an ever-evolving process. "It is part of the mission of statistical agencies to be continually improving," Groshen says.
The email Groshen received came just days after Lutnick said he planned to alter the formula for calculating gross domestic product (GDP). Such a change, however, would be a major break from both long-standing practice and international standards. It could also serve to mask any negative effects of the Trump administration's spending cuts.
Even without any deliberate meddling, government number crunchers have their hands full. Fewer people are answering their surveys these days. Their budgets have steadily eroded. And some staffers have accepted the administration's offer to quit in exchange for seven months' pay.
"They've been really working on a shoestring budget," says Tara Sinclair, a professor at George Washington University's Center for Economic Research. "Now they're facing additional concerns and uncertainty about what their budgets are going to be going forward. Sinclair says those worries were top of mind during a panel discussion last week hosted by the National Association for Business Economics.
"If the data were manipulated, even in a small way, that will affect the credibility of our entire statistical system," she says. "And that's going to have global financial implications, because people around the world rely on the quality of U.S. economic data to make decisions."
@Devo, and while we understand, we miss your monthly articles!in a world of "research" and financial journalism, the team at Mutual Fund Observer, are always a refreshing read. You walk away learning something new EVERY time. Love it.
The Consumer Financial Protection Bureau has dropped its lawsuit against the operator of payment platform Zelle and three of its parent banks, in the latest move by the Trump administration to undo actions of the bureau's prior leadership. The bureau had filed the lawsuit in late December against the operator of Zelle, Bank of America, JPMorgan Chase and Wells Fargo "for failing to protect consumers from widespread fraud." Customers of the top three banks lost more than $870 million over seven years due to the banks' failures to protect them, according to the CFPB.
"This is about financial institutions fulfilling their basic obligations to protect customers' money and help fraud victims recover their losses," then-CFPB Director Rohit Chopra said at the time. "These banks broke the law by running a payment system that made fraud easy, and then refusing to help the victims."
However, that was then. On Tuesday the administration dropped its case against Zelle, according to a filing in U.S. District Court in Arizona.
Zelle and its parent banks are just the latest enforcement target to be abandoned by the CFPB, which is currently led by acting director Russell Vought. Last week the bureau dropped cases it was litigating against five companies including Capital One, Rocket Homes and others. It had earlier dropped its case against online lending platform SoLo Funds.
The CFPB has also been decimated in a matter of weeks, with agency's employees ordered to stop essentially all work, while some 150 employees have been fired. The bureau's D.C. headquarters has also been shuttered.
The US Consumer Financial Protection Bureau on Thursday dropped a legal action against Capital One, which the agency had accused last month of cheating consumers out of more than $2bn in interest payments on savings accounts.
The dismissal continues Donald Trump’s rapid moves to dismantle the agency, which he has said should be eliminated, but comes the same day as his nominee to head the CFPB, Jonathan McKernan, testified before the Senate in a confirmation hearing. The action pointed to a broader retrenchment of CFPB enforcement actions under the Trump administration.
The agency earlier on Thursday had already dismissed a lawsuit brought last year against the student loan servicer Pennsylvania Higher Education Assistance Agency (PHEAA) accused of illegally collecting on student loans discharged in bankruptcy, and last week dropped a case against the online lender Solo Funds, which the agency had said deceived borrowers about loan costs.
Since taking office, Trump and his associate Elon Musk have vowed to destroy the CFPB, firing scores of staff, shutting its Washington offices and moving to cancel its lease, while placing virtually all agency workers on temporary leave, actions which employee unions and consumer advocates have challenged in court.
The administration has said in court filings, however, that it intends to operate a more streamlined and efficient CFPB, which Democrats say will be one wholly inadequate to meet the agency’s legal mandates.
In his confirmation testimony on Thursday, McKernan criticized the agency’s past enforcement actions as excessive but said if confirmed he would work to uphold the agency’s legal mandates.
“I’m fully committed to following the law fully and faithfully,” he said.
A key concern with generic quality strategies is that they use poor definitions, which are
sometimes even blended with other factors. For example, quality is often measured by
financial leverage or earnings stability, which are actually more related to the low volatility
factor. Other quality definitions – such as growth in profitability or earnings growth, but
also an oft-used measure like return on equity (ROE) – have weak or no predictive power for
future returns.
As shown in Figure 7, our research 9 also shows that measures based on academic studies
(blue bars) outperform industry-based measures (magenta bars) in global markets.
‘Academic’ measures are accruals, gross profitability and net stock issues, while ‘industry’
measures include ROE, margins, ROE growth, leverage, and earnings variability.
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