The $26 Billion Woman Posted in: Featured, People - Read the Washington Business Journal profile on Amy Raskin, Chief Investment Officer, at Chevy Chase Trust.

Amy was also recently featured on CNBC. View below:
Don’t just take our word for it. Posted in: Featured - At Chevy Chase Trust, we specialize in global research and thematic investing informed by careful planning, and it's working. Forbes and RIA Channel recently ranked us among the highest in their Top 100 list, for 2 years running. Important Disclosures
Thematic Investing Performs Posted in: Uncategorized - Thematic investing at Chevy Chase Trust is a progressive departure from common Wall Street practice. It examines how the world is changing, determines which companies will be advantaged and invests accordingly.
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  • Investment Update, Third Quarter 2019 Posted in: Investment Update, Latest News, Noteworthy - Despite strong returns this year, U.S. equity markets remain stuck in a relatively narrow 20% trading range that has prevailed for almost two years. Volatility has increased, but the long running tug-of-war between bulls and bears has yet to be resolved. Important Disclosures

    Market Summary and Near Term Outlook — The S&P 500 generated a total return of 1.70% in the third quarter, ending the quarter at 2,977, only 49 points below its all-time closing high of 3,026. Year-to-date, the index has generated a return in excess of 20%. The MSCI ACWI index of global stocks was basically flat for the quarter, generating a total return of 0.1% for the quarter and 16.7% year-to-date. Falling global interest rates and generally easing financial conditions contributed to the modest third-quarter gains.

    Despite strong returns this year, U.S. equity markets remain stuck in a relatively narrow 20% trading range that has prevailed for almost two years. Volatility has increased, but the long running tug-of-war between bulls and bears has yet to be resolved.

    Our base case is that barring a significant change in the U.S.-China trade dispute, U.S. equity markets will remain relatively range bound through at least early 2020. Although global economic growth has slowed due to manufacturing declines in almost every major economy, central banks around the world have been quick to respond by lowering interest rates. The combination of slow economic growth and proactive intervention has yielded weak corporate earnings coupled with relatively high earnings multiples.

    This is not the first time global economic growth has slowed during this ten-year bull market. Slowdowns of roughly similar magnitudes occurred in 2012 and 2015/2016. However, in those instances, massive stimulus by China’s government jump-started global economic activity. We do not think China will act as aggressively this time. There may be some China stimulus which could stem declines in global growth and, perhaps, drive modest acceleration in certain geographies, but we think it will fall far short of the growth seen in 2015/2016, in particular.

    Given the already very low levels of interest rates around the world, it is far from certain that further interest rate declines can meaningfully stimulate economic activity. Lower rates may only put a floor under equity valuations by forcing savers out of bonds and into equities. More easing by central banks may be good for Wall Street, but not necessarily for Main Street. Interest rate movements are keeping equity markets in a contained range and equity market movements are doing the same for interest rates. We don’t think this cycle ends quite yet.

    What Breaks the Cycle?

    Looking out a bit further, there are reasons for concern. During the third quarter:

    • real residential investment in the U.S. declined year over year;
    • the U.S. ISM manufacturing index, an indicator of U.S. economic activity, fell below 50, an indication that manufacturing levels are contracting, rather than just growing more slowly;
    • and, the U.S. yield curve remained inverted for the entire quarter. As measured by U.S. 10-year Treasury Bonds versus the effective Fed Funds Rate, the U.S. yield curve has been inverted for 19 weeks.

    Since the mid-1950s, with one exception, every time these three warning signals coincided, a recession has followed within two years. The one exception was 1966; although the U.S. economy didn’t fall into recession in the late ’60s, economic growth slowed sharply and the S&P 500 fell more than 20%.

    The fact that these long leading signals are occurring at a time when valuations on bonds, equities and real estate are all relatively fully priced, skews the risk/reward trade-off negatively to the downside.


    Getting Defensive

    Slowing U.S. and global growth coupled with relatively high valuations has given us the impetus to position portfolios more defensively. We have maintained mid to low-end equity allocation ranges and increased equity exposure in more defensive sectors such as Consumer Staples, Healthcare, Utilities and REITS. We have also begun to add a small position in gold. We very rarely buy gold since it does not generate a return, but it is a store of value if both equity and bond prices decline. We are underweight traditionally cyclical sectors, Energy, Financials, Materials and Industrials. We are more defensively positioned today than at any point in the last five years.


    What Could Take the Market Higher From Here?

    There are several potential drivers of a near-term market rise.

    • Investors are already bearish and, counterintuitively, that’s bullish for equity markets. U.S. mutual fund investors have sold $116 billion of equities year-to-date and bought $594 billion of bonds and money market funds. Despite rising risks, investor sentiment is arguably more negative than current economic data warrants. An American Association of Individual Investors survey recently found the lowest five-week average of bulls since November 2016, right before the market soared.
    • While equity markets are expensive in absolute terms, equities are still attractive relative to bonds. Stocks tend to outperform other asset classes when the dividend yield of the S&P 500 is higher than the yield on 10-year U.S. Treasury bonds. That is the case today.
    • China stimulus could be greater than we expect. Many U.S. firms depend on China for growth. Sales by U.S. firms in China are more than twice as large as U.S. exports to China. Regions like Europe and Southeast Asia are even more levered to China. Stronger China growth could indeed be a “shot heard around the world.”


    Welcome to a Slow Growth World – A Longer Term Perspective

    Although China has the financial flexibility to engineer just about any outcome in the short term, we expect China GDP growth to slow considerably over the longer term. After decades of rapid growth, its economic growth has been slowing for several years, weighed down by rising debt levels, slowing working-age population growth, and diminishing returns from infrastructure spending. With no other country or trend large enough to compensate for a sustained slowdown in China, we expect global growth, particularly in areas where China spent heavily, such as industrials and commodities, to be slow for the next five to ten years.

    Other factors are also likely to contribute to slow global growth long term.

    Birth rates have dropped below replacement levels in almost all developed economies. In many countries, populations are declining, especially the working-age segment, which deprives economic growth of its main driver, human capital. In the U.S., strong population growth contributed substantially to real GDP growth of 4.0% per year, on average, in the 1950s, and 4.3% in the 1960s. It doesn’t appear the U.S. will even approach 3.0% in the decade to come. In Japan and Europe, where population growth is negative or very low, consensus estimates of economic growth are even lower, ranging from 0.5% to 2.0%.

    After a ten-year expansion in the U.S. and long expansions elsewhere, there is little pent-up demand to drive growth higher. In 2017, there were 259 million registered private and commercial vehicles in the U.S., compared to only 225 million licensed drivers. By contrast, in 1950, the number of licensed drivers, 62 million, far exceeded the number of registered vehicles, 48 million. Ownership penetration of most other consumer durables has similarly limited upside today. Consumers appear willing to spend their income, but are less inclined to borrow to buy things.

    On the other hand, government finances have spiraled out–of-control in many countries, constraining the potential for further fiscal stimulus. The U.S., for example, is saddled with unprecedented peacetime deficits. The Congressional Budget Office projects that federal debt held by the public will approach 100% of GDP within ten years. Historically, higher levels of government debt have been associated with slower growth.


    Looking at the Future Through the Lens of the Past

    With global economic growth likely slow for the next five to ten years, growth stocks should continue to outperform value stocks. Investors tend to favor growth when it’s hard to find. But, more important, the best growth stocks are unlikely to stay the same.

    Few companies can sustain terrific earnings and sales growth for more than ten years, and when growth slows, multiples generally contract sharply. A new set of global market leaders emerges every decade or so.

    In 1980, six of the world’s ten largest companies by market capitalization were energy firms: Exxon, Standard Oil, Schlumberger, Royal Dutch Shell, Mobil, and Atlantic Richfield.

    In 1990, eight of the top ten stocks were Japanese: NTT, Bank of Tokyo, Industrial Bank of Japan, Sumitomo Mitsui, Toyota, Fuji Bank, Dai-ichi Kangyo Bank, UFJ Bank.

    In 2000, seven of the top ten were tech or telecom firms: Microsoft, NTT DoCoMo, Cisco, Intel, NTT, Lucent, and Deutsche Telecom.

    In 2010, seven of the world’s ten largest stocks by market capitalization were energy or Chinese industrial firms, reflecting expectations of continued rapid growth in China and a commodity supercycle: ExxonMobil, PetroChina, BHP Billiton, Industrial and Commercial Bank of China, Petrobras, China Construction Bank, and Royal Dutch Shell.

    Today, the seven largest stocks in the world by market capitalization are all tech giants: Microsoft, Amazon, Apple, Google, Facebook, Alibaba and Tencent. Their sales and earnings growth have attracted huge amounts of capital. Capital flows tend to push down returns. Also, several of these companies face political risks, related to concerns about privacy, extraordinary size and market power.



    At Chevy Chase Trust, we are focused on finding the best growth opportunities for the next decade, not the growth leaders of the past decade. We think potential contenders can be found in healthcare, genomics, automation, luxury goods and luxury services.

    We believe our themes hold the promise of identifying some of the next decade’s market leaders. Here are thematic bullets that frame much of our current research:

    • U.S. Wealth Migration Mirrors Global Urbanization – Concentration of wealth is characterizing urbanization across the country, reinforced by demographics, changes in city planning and shifts in the housing market. Underpinning this wealth concentration are economies of scale that enhance growth and productivity, spurring new business models in what becomes a virtuous cycle. Urban living has profound implications on consumption and spending patterns.
    • The Advent of Molecular Medicine – Breakthroughs in genomic science are changing the practice of medicine. Genomic sequencing technology, clinical research, data analytics and gene editing are converging to deliver novel treatments and diagnostics that will improve medical outcomes and usher in a new era of healthcare.
    • The End of Moore’s Law Ushers in the Age of Heterogeneous Compute – For nearly 50 years, Moore’s Law broadly benefited the economy by providing exponential improvements in the performance and cost of computing technology. As the physical and economic challenges of further scaling semiconductors continue to mount, researchers are shifting focus from general purpose processors to special purpose technologies tailored to very specific tasks.
    • The End of China’s Emergence – After a multi-decade economic boom, China GDP growth is set to slow considerably. China has been the largest driver of global growth and the largest consumer of many commodities. A significant decline in growth and/or a shift away from infrastructure spending will have a material impact on growth and spending on cyclicals worldwide.
    • Inequality Paradox Leading to Cultural Convergence – Although economic inequality has been on the rise within countries for at least the past four decades, inequality between countries has been falling dramatically since the turn of the century. This shift has greatly expanded the population and distribution of middle and upper income consumers and presents new opportunities for global brands and products in a variety of sectors.
    • Next Generation Automation and Supply Chain Reorganization – Automation that was centered in automobile production in the developed world is now penetrating other industries such as retail, food service and healthcare. This will lead to improved productivity, dramatic shifts in supply chains and growing end markets for technology components and industrial equipment.


    Fixed Income Perspective

    Fixed Income markets were even more volatile than equity markets during the third quarter. The U.S. ten-year Treasury Bond began the quarter yielding slightly over 2.00%. Due to a breakdown in U.S. – China trade negotiations and a general slowdown in global growth, the yield precipitously dropped to 1.46% in early September, more than a 25% decline. Subsequently, the 10-year yield recovered some, to end the quarter at 1.66%.

    Interest rates around the world remain extremely low with approximately $15 trillion in negative yielding debt. It is difficult to predict a path forward for rates in the short term, since movements have been largely tied to inherently unpredictable events.

    A small acceleration in global growth from China stimulus could cause rates to rise modestly. This would likely pressure equity market multiples lower, which would depress consumer confidence and spending, forcing rates lower again.

    Central bankers are concerned that they do not have enough firepower to stimulate global growth when the next recession hits. The U.S. Federal Reserve typically lowers rates about 400 basis points, or 4.00%, during a recession to stimulate economic growth. That would pose an unprecedented challenge given the current Fed Funds rate of 1.75% to 2.00%.

    In a difficult environment for fixed income investors, we identify high-quality, value-add bonds with market or above-market yields.

  • Chevy Chase Trust Ranks: Barron’s Top 50 RIA Firms 2019 Posted in: Featured, Latest News, Noteworthy - At Chevy Chase Trust, we specialize in global research and thematic investing informed by careful planning, and it's working. Barron's Top Financial Advisors recently ranked us among the highest in their Top 50 list.

    Chevy Chase Trust is proud to announce its top ranking in Barron’s. 

    View Barron’s rankings here.

    Important Disclosures

  • Food for Thought: The Health Care Revolution Posted in: Latest News, Noteworthy, Video - Andrew Marshall, Portfolio Manager and Research Analyst, discusses our thematic investing approach to the Health Care Revolution.


    Andrew Marshall, Portfolio Manager and Research Analyst, discusses our thematic investing approach to the Health Care Revolution.

  • Q & A with Jastinder Sohi Posted in: Noteworthy, People - We recently sat down with Jast Sohi, who is an Equity Portfolio Manager and Macroeconomic Research Analyst at Chevy Chase Trust, to learn more about his background and who and what inspired his career in finance.

    We recently sat down with Jast Sohi, who is responsible for business development and relationship management for Chevy Chase Trust clients, to learn more about his background and what inspired his career in finance.


    Tell us about your role here at Chevy Chase Trust:

    I am fortunate to wear many hats here at Chevy Chase Trust. I work with clients on a variety of issues and coordinate with our specialists: portfolio managers, trust officers, financial planners, estate attorneys etc.


    Please tell us about your background:

    Right out of college I got into the financial industry as a federal bank examiner.  It was my job to go into banks and make sure they were performing in accordance with regulations and laws, and that they were lending in a safe and sound manner. It was a job that carried a lot of responsibility as it involved communicating with bank management regarding the practices at their institution.

    After two or three years, I transitioned to more traditional commercial banking. When my position was moved to Charlotte, N.C., I decided instead to stay put and accept a temporary role on the Trust side of the business and I never looked back.  I’ve been on the private banking, trust, and investment management side of the business for more than 25 years and I have really loved it.


    When did you join CCT?

    I joined three years ago and it’s been great! There seem to be few jobs that turn out how you hope and expect, but this one has. I love the size of the firm and the way it is structured.

    Additionally, I am here because of my colleagues, many of whom I worked with at prior jobs in the financial industry. I have been waiting to reunite with this very smart team of people. Not only are they highly competent, they are extremely fun to work with.


    What led to your interest in the financial/banking industry?

    Truthfully, I fell into it by chance. I went to UVA and loved everything about the McIntire School – accounting, finance, and marketing. I felt comfortable with the subject matter and when I graduated, I felt confident and well equipped to start in my role as a bank examiner.


    What would you be doing if you were not doing this?

    I always thought I would make a pretty good doctor, so maybe the medial field… The one small problem I had with this option was I don’t like the sight of blood. But the medical field has some similarities to this business, namely helping individuals. That’s what I like doing here, and what I would have liked as a doctor.


    What is your favorite thing to do outside of the office?

    When I turned 50, I decided I would take up skiing and golf. I’m not really succeeding at either, but at least I’ve started. I’m really enjoying trying – getting bruised on both fields but enjoying it nonetheless. I can’t wait to either get out on a golf course or go down the slopes.


    What advice would you give to someone considering a career path like yours?

    You have to be a people person. You have to like meeting and connecting with people. Almost all positions in this industry require dealing with personal and confidential matters, and you have to have an honest, genuine concern for the clients – where they are and what they need.

    If putting your clients first isn’t your priority, the private banking/wealth management field may not be for you.

  • St. Maria’s Meal Program & Chevy Chase Trust Posted in: Community, Noteworthy - On September 18, 2019, volunteers from Chevy Chase Trust headed into downtown D.C. to help support Catholic Charities’ St. Maria’s Wednesday Night Meal Program.

    On September 18, 2019, Chevy Chase Trust volunteers participated in Catholic Charities’ St. Maria’s Meal Program which provides warm, nutritious meals to DC individuals and families in need. Chevy Chase Trust volunteers manned the dinner buffet and delivered meals to others by tricycle.

  • Retail Bankruptcies Rise, Store Closures Skyrocket in First Half of 2019 Posted in: Noteworthy, What We're Reading - Store closures in the first six months of the year have already exceeded the number of bricks-and-mortar stores closed in all of 2018.

    The pace of retail bankruptcies and store closures in the U.S. has accelerated so far this year compared with 2018, due in part to last year’s lackluster holiday shopping season, a new report finds.

    More retail bankruptcy filings are expected in the second half of the year, and bricks-and-mortar stores will continue to close at a higher rate, according to a report released Wednesday by professional services firm BDO USA LLP.

    “We’re going to see this trend continue,” said David Berliner, who leads the business restructuring and turnaround services practice of BDO, which provides assurance, tax and advisory services. While retailers are expected to keep falling in the second half of the year, the torrid pace should slow, Mr. Berliner said.

    “I don’t think the pace of the bankruptcy filings will be as large as it was in the first half,” he said.

    Talk of a retail apocalypse has echoed throughout the industry for years as shoppers abandon the nation’s malls and flock to online sellers. But the expected increase in bankruptcies and closures means the industry’s recent pain shows little sign of easing.

    Retailers continue to grapple with excessive debt, over expansion, private equity-ownership pressures and changing consumer behavior. On top of that, retailers were hurt by the 2018 holiday season, which failed to meet expectations, resulting in the weakest retail sales performance since December 2009, BDO found.

    Retail sales in the first half of the year were also hit by smaller tax refunds for the average taxpayer, trade tariffs, the longest government shutdown in U.S. history and inclement weather, which led some retailers to offer deep discounts to move merchandise, according to BDO.

    In the first half of 2019, 14 retailers with 25 or more stores filed for bankruptcy, including Payless ShoeSource Inc., Gymboree Group Inc. and Charlotte Russe Holdings Corp., BDO found. That is up slightly from 13 retailers with 20 or more stores during the same period in 2018.

    Over the summer, several more retailers—including Charming Charlie Holdings Inc., Barneys New York Inc., A’Gaci LLC and Avenue Stores LLC—filed for bankruptcy.

    Visit the article here.

  • Consumer Electronics Manufacturer ASUS’s CTO Says AI Will Unblock Industry 4.0 Adoption Posted in: Noteworthy, What We're Reading - The manufacturing industry is undergoing technological transformation, but progress has been slow. From robotics and automation to AI, technological advancements have arrived, yet roadblocks exist that prevent widespread adoption.

    The manufacturing industry is undergoing technological transformation, but progress has been slow. From robotics and automation to AI, technological advancements have arrived, yet roadblocks exist that prevent widespread adoption. As part of my series to to uncover little discussed insights from technology leaders in manufacturing, I recently sat down with Tai-Yi Huang, CVP and CTO of ASUS, a top consumer electronics brand and manufacturer. Huang leads the charge in ASUS’s adoption of new technologies, with a particular focus on the development and early validation of a soon-to-be-released AI engine. While both Huang and I agree that manufacturing provides many high-leverage applications for AI, widespread adoption of the technologies that are on the market has been slow. Huang shared his perspective: “The reason we don’t see more AI in factories is that the systems integration effort is too heavy.”

    In the manufacturing ecosystem, there are three major players. The technology vendors develop and provide new technology products, like smart cameras, robot arms, or analytics software. The buyers are the brands or manufacturers who want to incorporate that technology into their process. In order to do that, they employ a middleman of sorts, a systems integrator. Systems integrators specialize in knowing about all of the available technologies and delivering combinations of them, tied together with some custom engineering, to provide a complete (but often non-reusable) turnkey solution for the manufacturer’s specific need.

    Read the full article here.


  • Demographics: Economic Consequences Posted in: Insights, Noteworthy, Whitepapers - We believe that long-term secular trends influence theme development, the macroeconomic environment and investment markets. One of the most important and enduring secular trends is demographics in terms of economic impacts.

    As thematic investors, we look for phenomena that are transforming economic prospects across multiple industries. Then, we seek to identify companies that will benefit, are investable through public equities with ample liquidity, and are likely to pay off within three to five years.

    We believe successful investing requires a long-term unconstrained global perspective and that using investment themes as an organizing framework for our research provides that perspective. We also believe that long-term secular trends influence theme development, the macroeconomic environment and investment markets. One of the most important and enduring secular trends is demographics in terms of economic impacts.

    Demographics encompass the study of population groups based on factors such as age, race, gender, fertility rates, mortality rates, income and migration patterns. While the future is unknowable, demographic data provides a degree of certainty to some aspects of the future. For example, if we know the number of 30-year-olds in the world, we know with certainty that the number of 40-year-olds, ten years from now, will be no greater and, in fact, will be fewer. Further, if we know the number of 30-year-olds by country and by gender, we can apply regional mortality rates to closely estimate the populations and distribution of these groups over the next decade.

    In behavioral finance, “anchoring” is the tendency to make decisions based on current facts and past results even though they may have little bearing on future outcomes. It is difficult to envision change. Markets generally overemphasize present data and short-term trends while underestimating and undervaluing the impact of longer-term structural changes. We believe demographic trends help us envision the future and mitigate the influence of anchoring. Here are some demographic trends we find relevant to our investment thinking.

    Workforce Demographics

    Workforce demographics pose a headwind to economic growth. This can be clearly seen in the long-term trend of dependency ratios.


    Dependency Ratios

    Source: World Bank


    Dependency ratios reflect the percentage of people 65 and older compared to the working age population (defined as those ages 15 to 64). The higher the ratio, the more workers need to produce to maintain, much less improve, the standard of living for all (measured by GDP per capita). Many of the countries that currently are among the largest contributors to global GDP are the most demographically challenged. These demographic headwinds contribute to a slowdown in productivity growth. Productivity growth has fallen in every major economy and in almost every sector.

    While not immune from this trend, the U.S. is one case where a larger percentage of those over 64 are staying in the workforce. In the U.S., the Phillips curve, which postulates a reverse correlation between the unemployment rate and wage inflation, appears to have broken down. Demographic changes in the labor force may partially explain why. A St. Louis Fed analysis found that almost all of the net increase in employment since 2000, some 18 million jobs, is attributable to workers 55 and older.


    Cummulative Change in Employment by Age Group (Millions)

    Source: Bureau of Labor Statistics: Labor Force Statistics from the Current Population Survey


    The population is aging and more people are continuing to work later in life. In 2000, 32% of those 55 and older were in the workforce. In 2018, that percentage had increased to 40.2%. The combination of a higher participation rate for seniors, a relatively flat participation rate for all others and 100% of net job gains attributable to seniors, helps explain subdued U.S. wage inflation. The pace of wage increases slows for older workers as they tend to place a higher value on benefits, flexibility and fewer hours.

    What is inevitable is that this trend will end. The population is aging at a slower rate and the older cohort of baby boomers will start to age out of the workforce. The Phillips curve may have life left. More important, developing regions of the world with younger populations will become an important source of human capital. Companies will intensify recruiting, training and locating facilities in emerging markets. This will contribute to a shifting and rebalancing of global economic geographies.


    Approximately a decade ago, for the first time in history, more than half the world’s population lived in urban areas. This migration trend from rural to urban is projected to continue for the foreseeable future. By 2050, the urban population will more than double its current size with nearly 70% of people living in cities.


    Population of the World, 1950-2050

    Source: United Nations, World Urbanization. Prospectus: The 2018 Revision


    Some regions of the world are more urban than others but all are experiencing the same migratory pattern.


    Urban Population (% of Total)

    Source: United Nations, World Urbanization. Prospectus: The 2018 Revision


    A decade ago, our original urbanization investment theme focused on the buildout of urban infrastructure, particularly in China and India, two countries that were urbanizing the fastest, albeit from the lowest starting points. As the economies in those emerging markets slowed, we shifted our focus to the re-urbanization of American cities, the development of urban-like villages surrounding city centers and new businesses built for and dependent on population density.

    Jonah Lehrer of The New York Times wrote about the research of Geoffrey West and Luis Bettencourt, two physicists who studied the economies of agglomeration – the benefits that firms and people enjoy from close proximity to one another.


    In city after city, the indicators of urban metabolism, like the number of gas stations or the total surface area of roads, showed that when a city doubles in size, it requires an increase in resources of only 85 percent. Whenever a city doubles in size, every measure of economic activity, from construction spending to the amount of bank deposits, increases by approximately 15 percent per capita. It doesn’t matter how big the city is, the law remains the same.

    A growing city makes everyone in that city more productive, which encourages more people to move to the city, and so on. This superlinear pattern demonstrates why cities are one of the single most important inventions in human history. As cities get bigger, everything starts accelerating. A key reason cities keep growing is their ability to create massive economies of scale.


    Not surprisingly, studies show that per capita GDP rises as countries become more urban. In the U.S., both by cause and effect, choice and consequence, the wealthiest are living closer to city centers than ever before. In addition to population migration to urban areas, the graph below shows that over the last 25 years there has been a pronounced wealth migration to urban areas.


    Per Capita Income, $000s (Composite Average 50 Largest Cities in the U.S.)

    Source: UVA Demographic Research Group, US Census, iamB Consulting


    City dwellers, on average, have higher incomes and higher education levels. This is important from an investment perspective as spending capacity, more than absolute population, influences consumer spending patterns. It is wealth migration within the urbanization trend that is driving new businesses and new business models.

    An Aging Population

    Population aging is a demographic trend worldwide. It is most acute in economically developed countries where fertility rates tend to drop as economies grow. Fertility rates have dropped below replacement rates almost everywhere except India and Africa.


    Fertility Rate, Total – Births per Woman (% of Total)

    Source: (1) United Nations Population Division. World Population Prospects: 2017 Revision. (2) Census reports and other statistical publications from national statistical offices, (3) Eurostat: Demographic Statistics, (4) United Nations Statistical Division. Population and Vital Statistics Report (various years), (5) U.S. Census Bureau: International Database, and (6) Secretariat of the Pacific Community: Statistics and Demography Programme.


    As a result, global population growth is slowing, and humans appear to be on a long-term demographic path toward self-extinction.


    Slowing Population Growth

    Source: (1) United Nations Population Division. World Population Prospects: 2017 Revision. (2) Census reports and other statistical publications from national statistical offices, (3) Eurostat: Demographic Statistics, (4) United Nations Statistical Division. Population and Vital Statistics Report (various years), (5) U.S. Census Bureau: International Database, and (6) Secretariat of the Pacific Community: Statistics and Demography Programme.


    Declining fertility rates, improved health, and increasing longevity are swelling older populations. By 2050, the number of people 60 and older will increase from 900 million to 2 billion, going from 12% to 22% of the world’s population. By 2020, for the first time in history, people age 65 and over will outnumber children under five. Improvements in nutrition, sanitation and healthcare are why more children today reach adulthood, and why most adults reach old age. The longer you live, the longer you’re likely to live.

    Because global population growth is slowing, demand for all sorts of things is also slowing. Japan is the most demographically challenged country in the world. There are no good models for population shrinkage. Depopulation has already resulted in Japan having eight million empty houses.

    While Japan may become the world’s largest nursing home, China is right behind. China’s workforce began declining in 2012 and its fastest growing population segment is those over 65, not a good combination for economic growth or productivity. China’s fertility rate is between 1.2 and 1.6, well below the 5.9 rate in the early 1970s and less than the 2.1 needed to maintain a stable population.

    The economic consequences of demographic trends in fertility, mortality, and workforces, directionally similar but measurably different in different parts of the world, point to slower global growth, subdued inflation in the U.S. and low interest rates in developed countries for a very long time. At the same time, urbanization is sparking productivity gains and innovative new businesses.

  • College Funding Tips from Laly Kassa Posted in: Insights, Latest News, Noteworthy - While deciding on the best way to save for college depends on your family’s unique situation, for many, the 529 plan offers the most flexibility and tax advantages.

    While deciding on the best way to save for college depends on your family’s unique situation, for many, the 529 plan offers the most flexibility and tax advantages:


    • Account balances may be used for college tuition, room, board, fees, books, supplies and computers. Graduate school and vocational school expenses are also eligible.
    • Up to $10,000 per year may be used for grades K-12 tuition.
    • Account owners may change beneficiaries. For example, funds that aren’t used by one child may be applied to another child or extended family member.
    • Large variety of investment choices including age-based portfolios that become more conservative over time.


    Tax Benefits:

    • Balance grows tax-free, and no tax is due on distributions as long as the funds are used for qualified education expenses.
    • Special provision that allows individuals to “frontload” 5 years of gifts, or up to $75,000 per beneficiary in 2019, and have the entire amount eligible for the annual gift tax exclusion. (Confer with your tax advisor if this technique is used; a federal gift tax return must be filed if more than $15,000 is given in one calendar year.)
    • Not included in account holder’s estate (as long as the 5-year period has passed for any frontloaded contributions).
    • Depending on your state, the contribution amount may be fully or partially deductible for state income tax purposes.



    • Parent-owned accounts receive favorable treatment for the federal financial aid asset calculation (only 5.64% of value is counted), and withdrawals are not included in income when calculating the expected family contribution. (Rules are different for grandparent accounts.)
    • Any withdrawals that are not for qualified educational expenses are subject to income tax and a 10% penalty.


  • Scientists Attempt Controversial Experiment To Edit DNA In Human Sperm Using CRISPR Posted in: Latest News, Noteworthy, What We're Reading - First it was human embryos. Now scientists are trying to develop another way to modify human DNA that can be passed on to future generations, NPR has learned.

    First it was human embryos. Now scientists are trying to develop another way to modify human DNA that can be passed on to future generations, NPR has learned.

    Reproductive biologists at Weill Cornell Medicine in New York City are attempting to use the powerful gene-editing technique called CRISPR to alter genes in human sperm. NPR got exclusive access to watch the controversial experiments underway.

    The research is aimed at finding new ways to prevent disorders caused by genetic mutations that are passed down from men — including some forms of male infertility. The team is starting with a gene that can increase the risk for breast, ovarian, prostate and other cancers.

    Read the full article here.

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