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What We Read Today 06 April 2014

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

  • New findings may refocus search for Malaysia Airlines jet (Tom Watkins, CNN World) A Chinese naval vessel has detected pings that might be from the Malaysia Airlines Flight 370, now missing for over two weeks. The remote area of the Indian Ocean has a nearby debris field. A spokesman for the RAAF (Royal Australian Air Force) said deployment of more sensitive equipment to the area is being considered pending further information from the Chinese ship. The new area of interest is right in the middle of the highest probability are identified by Salil Mehta. See GEI Analysis article.

malaysia-airlines-searchareas-annotated

  • Economic Outlook For Rest Of 2014: Acceleration (James A. Kostohryz, Seeking Alpha) Kostohryz sees rising interest rates, higher stock prices and a significant boost to the economy in 2014. He also sees a stronger dollar and declining gold prices.
  • Capital Spending Boom? (Simon Constable, Barron's) Discussion topic at Global Economic Intersection LinkedIn discussion group. With capital equipment older than at any point since 1964, a spending pick-up should lift industrial stocks. Over the past five years capital stock has grown by an average of 1%, less than 40% of the long-term rate. The article discusses a recent report from Societe Generale.

Today there are 15 more articles discussed 'behind the wall'.

housing-affordability-Haltman-2014-apr-05
Click for full table of 36 metro markets at Hallmark Abstract Service LLC.

  • In Crimea, Russia Showcases a Rebooted Army (C.J. Chivers and David Herszenhorn, The New York Times) The Russian military on display in Crimea is far more professional and competent than previously, even when compared to the events in Georgia just over five years ago.
  • U.S. knocks plans for European communication network (Krista Hughes, Reuters) Hat tip to Roger Erickson. The United States on Friday criticized proposals to build a European communication network to avoid emails and other data passing through the United States, warning that such rules could breach international trade laws. Trust is a precious commodity and no more precious than after it has been lost.
  • A Low-Cost Vehicle that Gets 84 Miles to the Gallon (Tyler Falk, Smart Planet) An eight gallon gas tank gives 670 mile range. The single passenger car has a top speed of 100 mph and 0-60 in 9.6 seconds. Elio Motors does not seem to have a first delivery date on their website, but they do have a price ($6,800) and say they have over 13,000 orders.

elio

  • Killing Conscience: The Unintended Behavioral Consequences of ‘Pay For Performance’ (Lynn A. Stout, Columbia Law School Blog) The author argues that workplaces which rely on ex ante incentive contracts suppress unselfish pro-social behavior (conscience) and promote selfishness and opportunism. The end result may not be more efficient, but more uncooperative, unethical, and illegal employee behavior. Pay for performance can often produce counterproductive and even disastrous "solutions" to complex social problems. Full paper is available here. Econintersect would argue that the short-sighted errors of pay for performance might be overcome if compensation were based largely on pay for results, with results being measured over decades rather than quarters. We would suggest that the systemic optimization by combination of only individual-based market forces is a myth. Systems can only be optimized if individual forces (which are often short-range - "instant gratification") are combined with long-range global optimization. So much of the defective financial system experience of the recent years can be attributed to organization of effort to achieve instant gratification with long-term detriments incurred. If there is no long-term accountability, accounts will become bankrupt. (Econintersect platitude). See also GEI News article The Moral Limits of Markets.
  • America is not broke (Harry Stein, Reuters) This article presents nothing that is not very familiar to Global Economic Intersection readers. However it will be a complete mystery to some and will not reach them because it is written by the associate director for fiscal policy at the Center for American Progress. Here is some of his "propaganda":

With a bit of compromise, the triumphs of the New Deal and the Great Society can remain a cornerstone of American economic security for generations to come. But instead of compromising, the loudest proclaimers of national bankruptcy are often the same politicians calling for the deepest cuts to Social Security, Medicare and Medicaid.

America is not broke. Politicians who claim otherwise are just using scare tactics to sell an unpopular, unnecessary and deeply destructive conservative agenda. Don't buy it.

  • Lions in the US Stock Market? (John Mauldin, Thoughts from the Frontline) HFT (high frequency trading volumes are now larger than real money trades (starting in 2010. Mauldin says HFT should be reigned in because it is creating the illusion of liquidity and distorting markets because it can dry up in a flash at any time.

equity-volumes-thoguhts-frontline-2014-apr-05

Ecuador recently adopted a law, and new technology, to make it radically faster to start a legitimate small business. This is great for entrepreneurs, growth, reduced corruption, and collecting taxes. It is a radical reform that people of all political stripes can support. Similarly, ant-fraud and corruption efforts can save the Ukraine billions of dollars and spur growth. President Obama could develop an aid, stimulus, debt relief, and reform package for the Ukraine based on ideas like this that would that have broad appeal and help the working class and entrepreneurs. It would also be good for peace and security without being hostile to anyone. Instead, we are committing kamikaze capitalism that is so crazy that it should be criminal.
  • Why The World's 'Most Hated' Stock Belongs In Your Portfolio (Marshall Hargrave, Street Authority) Anti-GMO (genetically modified organisms) movements have damaged Monsanto's (NYSE:MON) reputation but not its stock price (up more than 60% in the past two years). Billionaires Stephen Mandel (Lone Pine Capital) and George Soros own millions of shares. But Hargrave knows how to hedge his bets. He also likes organic food retailers and is looking beyond Whole Foods (NADAQ:WFM). See Forget Whole Foods -- Buy This Stock Instead.

whole-foods-chart

  • Tech Breaks Support as Momentum Hits Highest Levels since 2000 (Chris Kimble, Advisor Perspectives dshort.com) Chris Kimble has contributed to Global Economic Intersection. There is some uncertainty about the origin of "a picture is worth a thousand words". But if the expression hadn't yet been invented it might have been first uttered when viewing this chart from Chris Kimble.

Click on graphic for larger view of expanded graphic at Advisor Perspectives dshort.com.
ndx-breaks-support-kimble-2014-apr-05


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