Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
Baton Rouge shooter was ex-Marine who denied ties to any group (Reuters) The gunman who killed three police officers in Baton Rouge, Louisiana, on Sunday was a former U.S. Marine sergeant who served in Iraq and made the dean's list in college, government officials with knowledge of the case said. The suspect, Gavin Eugene Long, 29, who also wounded three other officers, was from Kansas City, Missouri, a source familiar with the investigation told Reuters. He was divorced and living in a working-class neighborhood, and Missouri records show he had no criminal history. It was not immediately clear how Long, who was black, ended up in Baton Rouge, where police killed him in a shootout on his 29th birthday, according to media reports. The city has become a flashpoint for protests after police shot and killed Alton Sterling, a black man, outside a convenience store there on July 5.
What we know about Gavin Eugene Long, the Baton Rouge shooter (The Los Angeles Times) Gavin Eugene Long, the gunman who killed three police officers and wounded three others in Baton Rouge, La., on Sunday, left a vast and angry online trail documenting his interest in black separatism and fury at police shootings of black men. One law enforcement official described him as "a black separatist". He carried out the shooting on his 29th birthday, and was from Kansas City, Mo. Throughout his internet postings, Long described violence as the solution to what he saw as oppression of black Americans. He railed against the July 5 police shooting of 37-year-old Alton Sterling in Baton Rouge. When we read a quote from his writing below, Econintersect wondered if he had ever heard Mahatma Gandhi, Nelson Mandela and Martin Luther King. Long wrote:
"One hundred percent of revolutions, of victims fighting their oppressors, from victims fighting their bullies, 100% have been successful through fighting back through bloodshed. Zero have been successful through simply protesting. It has never been successful and it never will."
Dozens of GOP lawmakers staying away from Trump's convention (The Hill) The overwhelming majority of House Republicans in competitive races this fall won't be at the Republican National Convention to watch Donald Trump accept the party's nomination for president. Many have concluded that keeping their distance - figuratively and physically - from Trump is in their best interest, particularly in racially diverse districts where the businessman is unpopular. Despite the reduced attendance, most of the House GOP leadership team is slated to be in Cleveland to make a show of unity behind the nominee.
CEO compensation in the largest firms dipped temporarily in 2015 and remains 940.9 percent above its 1978 level. This growth in CEO compensation far exceeded the growth of the stock market, which grew forty-two percent less (up 542.9 percent). This shows that executives have done far better than the firms they have led and executive pay cannot be simply attributed to better firm performance. Neither can the spectacular rise in CEO compensation be attributed to the 'market for talent' providing more rewards for those at the top. The wages of the top 0.1 percent of wage earners (top one out of a thousand) is a decent proxy for the pay of the most financially successful and grew a remarkable 320.5 percent from 1978 to 2014 (the last year for which data are available). Yet, CEO compensation grew roughly three times faster than the wages of the top 0.1 percent. The fact that CEO compensation grew so much faster than the pay of other very highly-paid earners, and far faster than stock prices, indicates that unique dynamics are at play and that corporate governance is not adequately restraining executive pay.
Herbalife to Pay $200 Million Over Claims of Misrepresentation (The Wall Street Journal) Herbalife Ltd. HLF 9.92 % will pay $200 million in a settlement with the Federal Trade Commission that requires significant changes to Herbalife's business practices but allows the nutritional-products company to avoid being classified as a pyramid scheme. The settlement, announced Friday, is a dramatic twist in one of Wall Street's biggest ongoing fights, since avoiding the pyramid label is effectively a victory for Herbalife in its long-running battle with activist investor William Ackman. The development could worsen a dismal stretch for Mr. Ackman's Pershing Square Capital Management LP, which has bet against Herbalife stock. Shares of Herbalife have risen 12% to $66.70 in recent trading, bringing its gain to about 25% so far this year.
The FTC settlement requires Herbalife to restructure its compensation system to reward actual retail sales instead of the recruitment of distributors. The settlement also will require Herbalife to verify, through receipts and other methods, that its product sales are legitimate.
That will force the company to prove it has underlying users who drink its protein shakes, something it hasn't disclosed and that was at the crux of the debate Mr. Ackman stoked about its business model. Herbalife has said its business model is legitimate.
The settlement also bars Herbalife from misrepresenting distributors' potential earnings and prohibits the company from claiming that Herbalife members will be able to quit their regular jobs or live lavish lifestyles. A compliance monitor will be in place for seven years to oversee the company's adherence to the agreement.
The $200 million paid by Herbalife will compensate consumers who lost money because of the company's alleged deceptions, the FTC said.
• The bubblicious regions above all have one thing in common...STEM. As such, if the tech and biotech sectors hit a wall, which some believe has already begun, so will these housing regions.
• If these key housing markets hit a wall they will take the rest of the nation with them; Bubbles and busts don't happen in "isolation".
• House prices have retaken Bubble 1.0 levels on the exact same drivers: easy/cheap/deep credit & liquidity that found its way to real estate. The only difference between both era's is which cohorts controlled the credit and liquidity. In Bubble 1.0, end-users were in control. In this bubble, "professional"/private investors and foreigners are. But, they both drove demand and prices in the exact same manner. That is, as incremental buyers with easy/cheap/deep credit & liquidity, able to hit whatever the ask price was, and consequently - due to the US comparable sales appraisal process - pushed all house prices to levels far beyond what typical end-user, shelter-buyers can afford. Thus, the persistent, anemic demand.
• Bubble 2.0 has occurred without a corresponding demand surge just like peak Bubble 1.0. As such, it means something other than fundamental, end-user demand and economics is driving prices this time too.
• The end result of Bubble 2.0 will be the same as 1.0; a demand "mix-shift" and price "reset" back towards end-user fundamentals once the speculators finish up, or events force them to the "sidelines".
• Lower prices will create demand, which the housing sector will always achieve one way or another...it's what it does. Just like the anemic demand led the price crash of Bubble 1.0, which ultimately led to increased demand as prices stabilized lower.
• The Bubble 2.0 pop will also free up supply in the same manner as Bubble 1.0, just not as much from foreclosures. However, I do think people underestimate the volume of low-down mortgages originated over the past several years, and those with little to no equity in legacy loans or rising interest rate mods, which if house prices drop a few percent turn high-risk, especially when factoring in the 6%+ cost to sell. But, it doesn't matter where the supply comes from - maybe the PE firms start to dump rentals - as it's fungible.
• Sure the bubble could blow bigger. Maybe we get a double-bubble. Bubbles are strange things. But, when they begin to fall there is a lot of air under there because the downside has clearly been established.
• Lastly, I am betting 2016 marks the high for house prices, as mortgage rates can't go meaningfully lower, the unorthodox demand cohort is exhausted, and real affordability to end-user shelter-buyers has rarely been worse. In fact, I believe this is the year house prices go red yy.
The Federalist Threat to Europe (Project Syndicate) Anders Borg, a former Swedish finance minister and now Chair of the World Economic Forum's Global Financial System Initiative, says that a post-Brexit push for further integration will only hasten the EU's demise. Se the next article for a different opinion.
Those who want the EU to survive should resist the temptation to assert more control. We need a Europe that stands united because it wants to, not because it is forced to by new political super-structures that lack any underpinning of popular support.
Turkey arrests hit Erdogan's inner circle (Financial Times) The crackdown against those responsible for Turkey's abortive coup moved into the heart of President Recep Tayyip Erdogan's inner circle on Sunday night while sporadic fighting in two cities signalled that small pockets of mutineers were still resisting arrest. Thousands of loyal Turks crowded around public areas such as Ataturk airport in Istanbul and the presidential palace in Ankara, underscoring Mr Erdogan's call to his followers to remain vigilant. The arrest on Sunday night of Mr Erdogan's aide-de-camp, Colonel Ali Yazici, a man with unfettered access to the president, showed how deep the conspiracy to topple his government ran. A Turkish official revealed that Mr Erdogan's jet was "harassed" by at least two fighter jets in the early hours of the coup. At least 29 generals and more than 20 colonels are among the nearly 6,000 arrested, while 3,000 more remain at large, according to Turkish officials. The alleged ringleader, ex-air force chief Akin Ozturk, will be charged with treason, according to an official. Fears were growing that Mr Erdogan would use the coup to target the independent judiciary. More than 2,700 judges and prosecutors have been fired, including two members of the highest court. The government has yet to tie them to the putsch.
US lashes out at claims of orchestrating coup attempt (Financial Times) The Obama administration lashed out at accusations made by senior Turkish officials that Washington was behind Friday's attempted military coup against President Recep Tayyip Erdogan, calling such charges "irresponsible". The Turkish claims, made by ministers close to Mr Erdogan, center on the exiled cleric Fetullah Gulen, a one-time ally of the president whom Ankara now insists orchestrated the coup from his compound in rural Pennsylvania. Turkey's prime minister has demanded that Mr Gulen, a legal permanent US resident, be extradited. Suleyman Soylu, labour minister, said he believed that the Obama administration was behind the coup. John Kerry, US secretary of state, told CNN on Sunday:
"The US is not harbouring anybody; we're not preventing anything from happening. We have always said: give us the evidence, show us the evidence. We need a solid legal foundation that meets the standard of extradition in order for our courts to approve such a request."
SoftBank Group Nears Deal to Buy ARM Holdings (The New York Times) SoftBank Group Corporation is nearing a deal to acquire ARM Holdings, the British semiconductor company, two people briefed on the matter said. While the negotiations are not yet final, said the people, who asked not to be named because they were discussing private information, the deal could be the first large-scale transaction since Britain voted to leave the European Union. ARM, which designs chips and parts of chips, has a market capitalization of about $22 billion. The price that SoftBank was willing to pay could not immediately be learned. SoftBank, based in Tokyo, invests in technology media and telecommunications companies. See next article.
SoftBank poised to take UK's Arm for £23.4bn (Financial Times) This was posted a short time after the preceding article. Japan's SoftBank has agreed to acquire Arm Holdings, the UK's preeminent technology company, for £23.4bn in an enormous bet by the Japanese telecoms group that the smartphone chip designer will make it a leader in one of the next big tech markets, the internet of things. The deal is expected to be announced first thing Monday morning, according to two people familiar with the negotiations. SoftBank and Arm could not immediately be reached for comment.
Top South Korean Prosecutor Arrested on Charges He Accepted Bribes (The New York Times) A top South Korean prosecutor was arrested on Sunday on charges of taking millions of dollars in bribes from the owner of Nexon, a leading online game maker, in a case that the country's news media has portrayed as the epitome of corruption among its elite. The prosecutor, Jin Kyung-joon, a vice ministerial-level official, is the most senior prosecutor arrested while in office in modern South Korean history.
The South China Sea Is Not China's (Project Syndicate) This piece is written by Gareth Evans, former Foreign Minister of Australia (1988-1996) and President of the International Crisis Group (2000-2009), is currently Chancellor of the Australian National University.
The PCA [Permanent Court of Arbitration ]ruled that China's "nine-dash line," a 1940s-era delineation that implies ownership by China of 80% of the South China Sea, is legally meaningless. It also made clear that China's recent land-reclamation activity, turning submerged or otherwise uninhabitable reefs into artificial islands with airstrips or other facilities, confers no new rights to the surrounding waters or any authority to exclude others from sailing or flying nearby.
Official Chinese statements on the nine-dash line have never stated precisely what it is intended to encompass. Some refer to "historic rights," others to "traditional Chinese fishing grounds," while still others suggest that it is merely shorthand for describing all the land features in the South China Sea over which China claims sovereignty. But every variation has provoked others in the region, by signaling China's willingness to encroach on perceived fishing rights (as with Indonesia), rights to exploit resources (as with Vietnam), or their own rights to the land-features in question
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