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.
OPEC Needs This One Country to Boost Oil Prices - and They're About to Cave In (Kent Moors, Oil & Energy Investor) KM contributes to GEI. A key for Saudi Arabia is to boost crude prices above $50 and keep them in the $50-60 range for a significant period of time. With Russian crude priced consistently 15% below Brent those low prices have helped hold down the Saudi price, which also typically is at a discount to Brent. With both the Saudi's and Russia planning to IPO a portion of their government owned oil companies, both stand to gain from a higher market price for crude. This will raise the value of the shares sold as the value of their reserves will be higher. Dr. Moors says that this is why Russia will give in to Saudi Arabia and both countries will raise the price of their oil.
GOP drops hints in budget showdown (The Hill) Republican leaders have three weeks to settle a dispute over Planned Parenthood if they want to pass legislation to fight the Zika virus while avoiding a government shutdown at the end of this month. A shutdown is unlikely but possible given promises from GOP leaders to Florida Republicans that money for the Zika fight would be included in a package to keep the government operating after Sept. 30. The Zika funds have been held up for months because of a dispute over the funding bill's language, which would make Planned Parenthood's chapter in Puerto Rico ineligible for the Zika grants. Some Republicans are already signaling that they may have to drop their fight over the family planning grants, though that concession could stir another fight with House conservatives just weeks ahead of Election Day.
9 Senate seats most likely to flip (The Hill) The race for the Senate is heading into the homestretch as Republicans seek to maintain their grip on their slim majority. Democrats must net five seats - or four and retain the White House - to regain control of the upper chamber. They are defending 10 seats, while Republicans face a more challenging path, needing to defend 24 seats. Here are seats most likely to flip:
Mark Kirk (Illinois - R)
Ron Johnson (Wisconsin - R)
Kelly Ayotte (New Hampshire - R)
Pat Toomey (Pennsylvania - R)
Open Seat (Indiana - R)
Open Seat (Nevada - D)
Richard Burr (North Carolina - R)
Rob Portman (Ohio - R)
Marco Rubio (Florida - R)
"False" Economy Wake-Up Call Sparks Safe-Haven Surge In Bonds, Silver... & FANG Stocks (Zero Hedge) There was a lot of action yesterday (Tuesday 06 September) even though the major indices didn't move that much. The FANG stocks (Facebook, Amazon, Netflix and Google) - okay the company is now called Alphabet, but that ruins the acronym - were up a combined average of 1.6%, while the S&P 500 advanced only 0.3%. Also, as the graphic below shows, stocks have also not reacted to news the economy is slowing.
Larry Summers: The Fed thinks it can fight the next recession. It shouldn't be so sure. (The Washington Post) Hat tip to Stephanie Kelton. Former Treasury Secretary and Presidential Advisor Larry Summers says the data indicates the monetary policies of the past seven years really haven't been that effective with regard to boosting the reral economy and it is not strong enough to support higher interest rates. So he effectively sees the Fed as very limited in whst can effectively do in a future recession.
Moody's economic model finds Clinton pulling away from Trump (The Hill) Low gas prices and President Obama's rising popularity are bolstering Hillary Clinton's chances of winning the White House, according to a closely followed economic election model from Moody's Analytics. The August model forecasts that Clinton will notch a win over Trump, in part thanks to historically low gas prices and Obama's popularity. The model, which chooses a party, not a candidate, to win, awards Electoral College votes based on state-by-state outcomes. The most important economic variable is income growth by state, including job and wage growth, hours worked and the quality of the jobs being created in the two years leading up to an election. The latest forecast puts 16 states, which includes Washington, D.C., firmly in Democratic territory, with 11 more leaning in that direction for a total of 332 electoral votes. Republicans hold comfortable leads in 21 states, with three more leaning red, giving its candidate 206 electoral voters.
French 5-Year Government Bond Yield (Walter Kurtz, Sober Look, Twitter) Yes, that is MINUS 0.43% yield. It would cost you almost $22 to "store" $1,000 with the French government for 5 years.
Iran vessel 'harasses,' sails close to U.S. Navy ship in Gulf: U.S. officials (Reuters) A U.S. Navy coastal patrol ship changed course after a fast-attack craft from Iran's Islamic Revolutionary Guard Corps came within 100 yards (91 meters) of it in the central Gulf on Sunday, U.S. Defense Department officials said on Tuesday. It was at least the fourth such incident in less than a month. U.S. officials are concerned that these actions by Iran could lead to mistakes. Years of mutual animosity eased when Washington lifted sanctions on Tehran in January after a deal to curb Iran's nuclear ambitions. But serious differences still remain over Iran's ballistic missile program, and over conflicts in Syria and Iraq. Pentagon spokesman Captain Jeff Davis said the Iranian vessel sailed directly in front of the USS Firebolt, forcing the 174-foot (53-metre) U.S. ship to change course. The incident began when seven Iranian ships "harassed" the Firebolt, Davis said.
Tokyo shaken by magnitude 4.9 earthquake; no tsunami warning (CNBC) An earthquake with a preliminary magnitude of 4.9 shook buildings in Tokyo on Wednesday, but no tsunami warning was issued and there were no immediate reports of damage or injuries. Earthquakes are common in Japan, one of the world's most seismically active areas. Japan accounts for about 20 percent of the world's earthquakes of magnitude 6 or greater.
Samsung Says $38 Million of Goods On Board Two Hanjin Vessels (Bloomberg) Samsung Electronics Co., the world's biggest smartphone maker, said about $38 million of its goods and parts were on board two vessels operated by the distressed Hanjin Shipping Co., which applied for bankruptcy protection last week. Supporting Hanjin's Chapter 15 U.S. Bankruptcy Court petition, Samsung said in a court filing Tuesday that without an order protecting the shipping line against creditors, the vessels won't be able to dock, causing the South Korean electronics maker losses that may "continue to escalate so long as the cargo aboard these ships remains unloaded."
Goldman Sachs: China signaling further stimulus on the way (CNBC) Rumblings from China's State Council have indicated more policy loosening was on the way on the mainland, Goldman Sachs said. The bank pointed to China's State Council meeting this week, which discussed plans to streamline the approval process for investment projects, and to a State Council announcement last week that inspection teams would be sent to ensure the projects would be carried out in a timely manner.
China's Export Machine Is Grabbing More of the Global Market (Bloomberg) China is eating up a larger chunk of the world's shrinking trade pie. Brushing off rising wages, a shrinking workforce and intensifying competition from lower cost nations from Vietnam to Mexico, China's global export share climbed to 14.6% last year from 12.9% a year earlier. That's the highest proportion of world exports ever in International Monetary Fund data going back to 1980.
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