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What We Read Today 18 July 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.

malaysia-wreckage-ukraine-nyt-2014-jul-17

  • Malaysia Airlines Plane Brought Down by Missile in Ukraine: US Official (Colleen Curry and Luis Martinez, ABC News) Ukraine claims it was a ground-to-air-missile from Russian separatists; the separatists claim it was Ukrainian forces which was responsible. Earlier this week two Ukrainian military aircraft were brought down by rebel surface to air missiles. The latest video summary from ABC News is below - other videos accessible via the article title link.

ABC News | ABC Sports News

  • IBM Shares Drop After Hours Despite Beating Q2 Earnings, Revenue Estimates (Alex Konrad, Forbes) IBM's second quarter earnings were up 34% year-over-year at $4.32 per share. But revenue continued to decline, although at a slower rate that in recent previous quarters. The $24.4 billion earnings for 2Q/2014 was 2% below the same quarter a year ago. The negative implications of IBM's continuing revenue contraction and the company's reactions were discussed 'behind the wall' yesterday. That article discussion is repeated below.
  • DRUCKENMILLER: IBM Is The 'Poster Child' For What's Wrong With Corporate Behavior Today (Myles Udland, Business Insider) Repeated from 'behind the wall' yesterday. Stanley Druckenmiller says IBM is no longer a computer and software engineering company but a financial engineering company. They have the same sales as six years ago and have increased debt three fold to buy back stock and boost earnings per share by financial manipulation. He then goes on to say that IBM is not alone in this endeavor, many other corporations are doing the same thing. The article includes a graph from Ed Yardini which shows how 2014 is paralleling 2007. Note that the same behavior did not occur at the 2000 top - there was another mania going on then.

buybacks-market-tops

  • Seven arrested in alleged penny stock pump-and-dump (Scott Cohn, CNBC) Hat tip to Marvin Clark. Abraxas J. ("AJ") Discala, CEO of Rowayton-based OmniView Capital, a privately held investment-advisory and merchant-banking firm, is one of seven people arrested by federal authorities in what is alleged to be a "wide ranging pump-and-dump scheme" involving penny stocks. The micro-cap stocks involved were identified as:
CodeSmart, which purportedly provided guidance to health-care providers on Medicare billing codes; Cubed, which claimed to offer "a cloud-based, three-dimensional, functional cube" application for mobile device users; purported movie studio StarStream Entertainment; and purported staffing provider The Staffing Group.

There are 12 articles discussed today 'behind the wall'.

Please support all that we do at Global Economic Intersection with a subscription to our premium content 'behind the wall'. There are between 75 and 100 articles reviewed most weeks. That is in addition to the 140-160 articles of free content we provide.

You get a full year for only $25.


  • Domestic and Indian Gold Rally Points to a Strong Second Half (Frank Holmes, U.S. Global Investors) Frank Holmes has contributed to GEI. Gold imports to India are surging and continue to be strong in China. These two countries consume more that 50% of world gold trade. But even that does not constitute the most important thing to watch when making gold trading decisions. More important is is the real interest rates for U.S. Treasuries.

gold-interest-rates-frank-holmes-2014-jul-16

  • Krugman Now Disagrees with His Earlier Critique of MMT (Scott Fullwiler, New Economic Perspectives) Scott Fullwiler has contributed to GEI. So Krugman doesn't agree with himself. Well, that is a good thing when it involves learning. Fullwiler follows the education of Prof. Krugman in the fields of currency systems and of money and banking.
  • Using Nanotubes To Make Cheaper, Cleaner Hydrogen Fuel (Andy Tully, Oil Price) Hat tip to TalkMarkets. A new process for making hydrogen from water or methane has been invented by chemical and biochemical engineers at Rutgers University. The process replaces expensive platinum electrodes with carbon nanotubes for electrolysis of water to produce hydrogen and oxygen. The electrolysis can be powered by renewable energy sources such as wind and solar. Hydrogen would then become a means of energy storage when wind or solar facilities are producing more more electricity than is needed by the grid.
  • Is Yellen Being Misled By Employment Statistics? (Lance Roberts, StreetTalk Live) Hat tip to TalkMarkets. Lance Roberts contributes a weekly article to GEI Investing. There are a number of unique charts on the current status of employment, here, but the most important one might the below, showing how far below recent peaks is the percentage of "prime working years" employment.

employment-pop-ratio16-54-lance-2014-jul-16

  • Treasury Urges End to Foreign Tax Flights, but Quick Action Is Unlikely (David Gelles, The New York Times) Gelles reviews all the tired arguments about lack of corporate patriotism to the country which provides then with all the services that support their ability to prosper. Econintersect asks why not just eliminate the corporate income tax - problem solved.
  • Euro zone June inflation unchanged at low levels as expected (Martin Santa, Reuters) Euro zone inflation stayed low as expected in what the European Central Bank calls the "danger zone" in June. Consumer prices in the 18 countries using the euro rose 0.1 percent on the month in June for a 0.5 percent year-on-year gain. The data was unchanged from May and well below the ECB target of close to but below 2%. See also following article.
  • Eurozone CPI (The Daily Slot, email, no url) "The euro area is still struggling with disinflation. It's a precarious position to be in because it wouldn't take much to nudge inflation into negative territory, becoming more like Japan over the past decade."

eurozone-cpi-2014-jul-daily-slo

In extracting multibillion-dollar fines from Citigroup Inc. and other big banks, prosecutors say they are trying to deter future corporate wrongdoing by making shareholders angry enough to demand changes.

It is a significant shift in tone for the Justice Department and Federal Bureau of Investigation, which have argued for years that sending people to prison is the best way to prevent white-collar crime.

  • Are markets poised for Taper Tantrum 2.0? (Ann Saphir and Jonathan Spicer, Reuters) Are U.S. investors going to be taken by surprise when the Fed starts to raise interest rates? See next article for further insight on how close that might be.

taylor-rule-eu-sober-2014-jul-17

taylor-rule-us-sober-2014-jul-17


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