Southwestern Finance Association (SWFA) Conference in Little Rock

I was happy to present my research paper entitled “Gentrification: A Market Microstructure Based Explanation for a Real Estate Sub-Market” at the recent conference in Little Rock.    Also, discussed a very interesting paper – “The Spillover Effect of Municipal Bond Insurers on Uninsured Municipal Bonds” – by Prof. Chunchi Wu, State University of New York Buffalo and Xuan Zhang,  State University of New York Buffalo.


We got about 1.75 inches of the white stuff in the wee hours of the morning and the whole region is closed for the day!  SNOW DAY FOR EVERYONE.   Hope that everyone drives safely and enjoys some time inside with family.

Reporting from Germantown, TN – this is Frank SanPietro wishing everyone a good day and good news.

In Recognition of a Statesman and a Saint

Very pleased to see that the documentary which chronicled the role that St. John Paul the Great played in the downfall of communism was recognized and won 2 Emmy awards.
A Brilliant Thinker and Writer
As Cardinal Karol Wojtyla and as Pope John Paul II, John Paul the Great was recognized as an intellectual who made great contributions to the study of Philosophy.    He also created literary works and plays.

A True Humanitarian
From his youth,  St. John Paul the Great had a deep love and compassion for all people.  As a young seminarian and Priest, he helped rescue jewish children from the Nazi’s.  For his bravery and compassion, he received the award, “Righteous Among the Nations”  posthumously.

Citizen of the World
While he was Pope, St. John Paul the Great made trips to 129 countries.  He also met with world leaders, including the first visit to the United States White House by a Pope, when he met with then President Jimmy Carter in 1979.   He also met with the Queen of England and the Archbishop of Canterbury.  Displaying a genuine warmth and compassion for all, Pope John Paul attracted some of the largest recorded crowds in human history.

A Voice for Unity
As Pope, John Paul II called for a coming together of Christians, Jews and Muslims in what he called a “great religious armada”.  In 2001, he visited a mosque in Syria, which is supposed to be the site of the remains of John the Baptist.

Upon returning to his native Poland, in 1979,  millions of Poles saw in the new Pope, a fellow Pole who was free to fully embrace his Catholic faith.  Instead of criticizing the ruling regime, the Pope exhorted his fellow Poles to be good to one another, have no fear and trust in God.  This exercise in gentle power – much like other great spiritual leaders before him, struck a fatal blow to Communist rule.  As historian John Lewis Gaddis is quoted –
When Pope John Paul II kissed the ground at the    Warsaw airport he began the process by which Communism in Poland—and ultimately elsewhere in Europe—would come to an end.

Again, it’s gratifying to see that the many contributions of this great man and Saint are presented in this documentary and ultimately, that it has been honored with two Emmy awards.

Protect Your Time and Do Better Work…

Just finished reading a great post by one of my favorite bloggers/writers/observers of life, Cal Newport.  Cal is a wunderkind having earned tenure at a major University before the age of 35.   He writes about “Deep Work” and the ways in which knowledge workers can do great work, despite the distractions and obstacles which obstruct our path.   I was so impressed with the post that I wrote a reply and thought I’d share both with all of you.

Here’s the post.

Here’s my response —

This is an important and useful clarification. The “four weeks in advance” threshold is an excellent idea, as it “leapfrogs” the planning horizon of the vast majority of organizations. Excluding significant events (annual /quarterly meetings, product/tech launch, Holiday Party) most organizations (and those who work in them) just don’t think about a daily operating time horizon which extends past the next 5 to 10 days max. In fact, if you think about it, I would expect that >80% of the “requests” for your time are for the current week or next week.

This is not a trivial observation as it reveals a truth which Cal has frequently referenced – i.e., the vast majority of people are in a reactive state, planning and executing their actions in response to what is happening in real time.

And thus, 1/2 of the beauty/elegance of this approach – by re-configuring your personal planning horizon beyond the immediate, you preserve your opportunity/ability to do deep, focused work.

The other 1/2 lies in the “mental classification” of these blocked out times in the calendar. How many times have you seen a colleague (or you yourself) cross out something like “reading club”, “yoga class” or another activity on their schedule because something “important” came up from work. Notice that in the post, Cal repeatedly talks about protecting these blocks of time and assigning them the same importance as a medical appointment. (which, while sounding a little dramatic could very much BE a matter of life and death). So, the other important element of following this approach successfully is the idea that once identified and placed into the calendar, “deep work blocks” need to honored and protected..

Again, this is intuitive and while I think that many people would agree to the logic of it, some of those same people might be the ones who I mentioned earlier – the ones who are blocking out activities and times that are “nice to have” because there is something “blowing up” at work, or because they don’t want to be labelled as not being a team player.

I think that this is similar to what Steven Covey wrote about in “The 7 Habits of Highly Effective People”, when he developed his four quadrants of time management. The deep work blocks are clearly what could be referred to as the Quadrant II, Important But Not Urgent tasks. I think, without digressing too much into a discussion on Covey, which would be more appropriate for a different venue, that it’s interesting to note the following. In his classification, Covey even notes that the reflection of the Important, but Not Urgent Quadrant II activities, are the Urgent, but Not Important Activities found in Quadrant III. Covey refers to this as the Quadrant of Deception (though it isn’t clear to me, at least, whether that deceit is self-directed or directed towards others). Covey notes that Quadrant III activities include such easy to recognize tasks as “interruptions, some calls, some meetings and…..many pressing matters”.

To conclude, another important and enlightening clarification from Dr. Newport, rich with insight and loaded with practical application. Good Luck to all.

Families of all Types First…


Some very good news coming to us from Bloomberg about recent changes at American Express.  In response to a tightening labor market, and, in recognition of the changing ways in which Americans are creating and composing families, the financial services giant now offers 20 weeks of paid time off to their employees.  Even more encouraging is that this benefit is granted no matter whether the new family member arrives by “stork”, or adoption or surrogacy.

Amex is making this move in response to a labor market that is perceived as “tightening”  especially at the higher skilled and professional levels.  They are by no means the only company undertaking such an effort – the article points out that companies in the tech sector have been offering generous family leave as a tool to retain highly skilled workers and to address the issue of under-representation of women in that sector.  Etsy is pointed out as a company offering approximately six months (26 weeks to be precise) of paid time off, while Netfllix offers an even more generous benefit of one entire year of parental leave.  The article also notes that this escalation of benefits is not limited to the tech sector, with financial giants like Bank of America and Fidelity having made moves in the Spring of 2016 to expand the benefit which they offer to their employees who are starting or adding to their families.

I applaud any actions which support people in their quest to create or expand their families.   As noted earlier, the recent wave of enhancements are applicable to any situation where a family welcomes a new member.  They are also available to either the primary or secondary caregiver.  In the “old days’ there were differing levels of benefits for “maternity” and “pateritnity” with paternal benefits being of much shorter duration (and typically non-existent).  The new family benefits are increasingly neutral and applicable to either of the parents, whatever their gender or role in the home.

A brief aside.  As mentioned earlier, I am a strong advocate for adoption.  Right now there are thousands of children who are in foster care in every state in this country whose number 1 Christmas/Holiday wish is to have a “forever family”.   You may even have heard commercials from the US Dept of Human Services and their ADOPT US KIDS campaign telling that you don’t need to be perfect to be a perfect parent.  I can assure you that this is an absolute truth, as thousands of adoptive parents live it out each and every day. I am including a link to Adopt US kids and encourage everyone that is thinking of expanding their family to give serious consideration to adopting a child from foster care.

The Bloomberg piece closes by recognizing that these type of generous parental leave benefits are typically limited to larger, more “white collar” organizations and are often more likely to be in the larger cities. (it cites NYC and San Francisco as two examples). Noting that manufacturing companies tend to be smaller and located in more rural areas, the article notes a spokesperson from the Society for Human Resource Management who admits that there is still “work to be done” in that sector.  Still, an encouraging message about a change in workplace environments which helps people form and expand families – what better message for this time of year and what better than to close with the heartfelt toast of Dicken’s lovable Tiny Tim, which I send out to all families – “God Bless Us All….Everyone”

Silence is Golden…



Great piece by Paul Wallace (Former Euro Economics Editor at The Economist) on today. Thought I’d share it and some of my thoughts as it’s on point with some of the main ideas that help guide my research.

First off, let’s be clear – I am not a “macro” guy. My thing is finance, financial economics, if you prefer. More specifically, informational financial economics and that’s why this post was so intriguing to me. Wallace dives right into it with his lead where he notes

After ingesting the Trump agenda and spitting out its market implications investors and traders can get back to their usual pastime: trying to work out what central bankers are plotting.

A simple statement of a dominant reality – the machinations of our monetary policy architects and overseers are a preoccupation of much of our investor class. It is the decisions and actions of this group of economic actors that helps to drive the global markets, of interest to everyone from a retired schoolteacher watching her pension to the President Elect of the United States.

Markets Hate Uncertainty

Reiterating the central premise of his commentary, Wallace talks about how Central Bankers have become “overly talkative”. He cites quotes from Fed Chair Yellen and ECB President Draghi as examples of commentary that has proven to be less than helpful.

All this chit-chat may be good for the cottage industry of highly paid central-bank watchers, but monetary policymakers have become too talkative for their and the wider good, sowing confusion and losing credibility in the process.

The irony here is that the very actions which were supposed to help stabilize the markets by providing clarity to investors are creating the opposite. Even more concerning is the fact that as communication becomes less clear, and therefore, less reliable as guidance for investing decision makers, the sources of those communication lose credibility. This can be a dangerous situation because there may be a time in the future when a Central Banker needs to call out a clear and present economic danger. Will the financial public heed the call, or will they, after years of “message fatigue” simply tune it out? Worse yet, will the public, guided by the pundits, try to parse the message and draw the exact wrong conclusion?

Back to the Future

Central Banker commentary is a relatively new phenomenon. I recall listening to the comments offered by Alan Greenspan and thinking that he had to be brilliant, because I could not for the life of me figure out if he was saying things were great, terrible or somewhere in the middle. Certainly his countenance offered no additional clues to the observer. Wallace notes that it’s been less than 20 years (since 1999 to be exact) since the Fed began offering statements following every meeting regardless of what, if any action had been taken in the meeting.

What drove this desire to share so much information? As Wallace aptly notes, citing the reasons behind the case for the new openness in central bank communication;

It formed part of a new model for monetary policy in which independent central banks sought price stability. In such a framework words count as much as deeds. They allow central bankers to mold expectations of future inflation, which feed back into actual inflation as businesses set prices and negotiate wages

The “echo chamber” at work. In this model, the bankers need the financial public to believe and act “as if” their plans for the future are going to happen. In so doing, they create the ultimate self-fulfilling prophecy. Notice the neat, almost cyclical relationship here – the Central Bankers issue communications which are correctly interpreted by their target audience, who then act in accordance with the expectations of the Central Bankers. This is challenging enough when the words/actions of the Central Bankers are being considered in real time. The complexity is amplified considerably when we get into the realm of future predictions, or “forward guidance”.

Forward Looking Statements

Most investors are familiar with forward looking statements and the accompanying legal disclaimers provided in conjunction with them. Publicly traded companies, by law (Securities Act of 1933 and Securities Exchange Act of 1934) must follow specific guidelines as to their communication with the investing public. The rules regarding forward looking guidance basically state that any such statements rely on information accurate at the time they are made, that circumstances and the company’s actions may change and there is no obligation or expectation that the company will update their communications to reflect those changes.

Central Banks and Bankers are under no such regulatory requirement. Further, as Wallace notes, forward guidance by Central Bankers goes beyond projections and moves dangerously close to the realm of promises. Wallace notes the dangers associated with this stance when he writes;

(F)orward guidance goes beyond hints about short-term decisions to explicit undertakings about the longer-term stance of monetary policy, including dates and thresholds for a critical gauge of the economy such as unemployment. Central bankers have overdone their attempts to talk their way out of an economic hole. Attempts to direct markets well into the future have lost credibility as policymakers failed to follow their own signals

Failed to follow their own signals? Faced with realities that diverged markedly from those they had themselves predicted several quarters prior, Central Bankers are forced to make changes to the models which they themselves had hoped to implement. The situation is exacerbated by the size of the Boards of the major Central Banks. There are numerous, highly educated, politically aware, opinionated men and women who make up these entities. There is bound to be differences of opinion among the members of this group. Unfortunately, the media spotlight may choose to focus on the most interesting, or well known of the group, and ignore comments from some of the quieter, more reserved members.


The last two decades have seen massive changes in the ubiquity and role of information in investor decision making. Chief among these have been the emergence of Central Bank guidance as a source of macro economic (inflation) information for investors. Wallace makes excellent points regarding the sensitivity of the investing public to Central Banker commentary, along with misguided attempts by Central Bankers to “talk the future into existence”. Ultimately, it may be too late to return to a time when Bankers were the unknown force behind the curtain, but efforts to increase the clarity of communications would be a welcome change for the investing public.



Hope that everyone shares some of what they have (money, time, love) with those that need it.  Please see link to a great story about “Tripp” a lab pup who (like many of us) had a rough start, but with a little help from some friends and the love of family is doing great!   Please help if you can and share this with others!




All right, so we are over a week into the campaign and it  looks as though the University of Memphis Student Veterans Organization is just about 1/4 of the way to their goal.

Allow me to encourage everyone reading this to support this worthy cause.  These men and women served OUR country and were willing to make the ultimate sacrifice in defense of our freedom and liberty.  The least that we can do is to try to support them as they complete their education and move on with their lives.  PLEASE SHARE THIS MESSAGE WITH AT LEAST 3 OTHER PEOPLE TODAY!  THANKS!

Frank SanPietro is a doctoral candidate in Finance at the University of Memphis.  His research looks at the role and effect of information on financial markets and those who participate in those markets. Frank posts about financial markets, financial regulation, investments, personal finance, current events and other matters of interest to him… and hopefully others.

Rise of the Machines

For some people, this latest bit of progress might seem eerily akin to “On August 29, 1997 @ 2:14 am eastern time, Skynet becomes self aware”, however, let’s look at what’s happening down at “The Exchange”. 


One of the main purposes of the exchange and those authorized to trade within it, is the maintenance of an “orderly market”.  Which basically means a market that allows for traders on “both sides” to have their views reflected into the pricing.  The idea being that this serves to curb volatility, nasty large swings in pricing.  Note – most people think of this in the negative – however, exuberant rallies aren’t all that much better than terrifying plunges when one considers market mechanics.  Both reflect extremes.  Not the use of the term “orderly market” earlier,  extremes are the opposite of orderly markets.
Rule 48, was a fairly straight forward bit of regulation which could be translated as follows;  if there is too much volatility, the exchange officer will allow market makers to “not open” trading in a particular stock.  This is invoked when the market officer feels that the extreme volatility condition would present a challenge to market makers ability to open a fair and orderly market.
So, if things are going “crazy” for one reason or another – people step in and basically put all of the traders into “time out” until cooler heads prevail.   Seems reasonable.
So, why repeal it?
Simple.  Machines don’t like to be put in time out. With so much of the markets daily trading volume being done by automated means, a rule that suspends trading in a particularly volatile stock, is likely to do the opposite of it’s intent.  Rather than reduce volatility, the delay in opening would likely keep orders “in the queue” stacking up and driving the pricing to even greater levels of volatility. (again could be higher or lower).   Accordingly, it’s been deemed to be more effective to let the stock open and let the traders and the machines use market forces to bring the price into equilibrium.  And while there are few of us who are bigger fans of that famed finance superhero, the Walrasian auctioneer than myself, this one  has the potential to turn out bad.  After all, on Sept 29, 1997 Skynet launched an attack on Russia because it “knew” that the Russian countermeasures would eliminate it’s enemies here in the states.  You never can tell where the logic of machines will lead to in the affairs of people.
Thanks for stopping by with Frank SanPietro…