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What We Read Today 08 October 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 (and sometimes longer ones) 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.

  • SCOTUS to review ACA subsidies; experts predict little change (Melisa A. Winn, Employee Benefit Advisor) Three U.S. District courts have rendered decisions on the ACA (Affordable Care Act) validity of subsidies for within states (36 in total) that have not set up their own state exchanges but have, instead, used the federal exchange Health.gov. Two of the three decisions upheld the implementation of the law providing federal subsidies with 3-0 decisions. One ruled subsidies for the 36 states violated the law by a 2-1 margin. A Republican backed appeal of one of the 3-0 decisions upholding the subsidies implementation for all 50 states has been accepted for hearings by the U.S. Supreme Court.

  • China, Japan announce four-part agreement to resume talks (JC Finley, UPI) China and Japan have reached a four-part agreement to resume diplomatic and security talks. Due to territorial disputes over Islands in the East China Sea relations have been strained for the last two years. One of the four parts of the agreement is that they "agree to disagree":
"Third, the two sides have acknowledged that different positions exist between them regarding the tensions which have emerged in recent years over the Diaoyu Islands and some waters in the East China Sea, and agreed to prevent the situation from aggravating through dialogue and consultation and establish crisis management mechanisms to avoid contingencies."
  • Judge approves Detroit bankruptcy exit plan (CNBC) The exit from the largest ever municipal bankruptcy has been approved. Detroit reduced its $18 billion debt by $7 billion, a revitalization plan was established (which includes $1.7 billion of demolition) and relatively modest losses were assigned to pensioners and creditors. For example, pensions have been reduced by 4.5%.
In a piece on the FiveThirtyEight site, Silver addressed this year's stunning polling bias in favor of Democrats, even as the Democrats were complaining of a bias against them. As the story demonstrates, polling bias is a bipartisan affair, skipping back and forth between Republicans and Democrats over the years. In 2010, for instance, there was a small bias in favor of the Republicans and a much larger pro-Republican tilt in 2012.
  • Make Election Day a National Holiday (Bernie Sanders) The Vermont Senator is sponsoring a petition to support his bill to make a new national holiday, "Democracy Day". Click link for petition and the read the short bill he has introduced.
  • Recent articles about Scotland Independence and Similar Movements

It’s unofficial, but Catalonia’s independence vote has the power to prompt change (The Conversation)

  • Articles about conflicts and disease around the world

Ebola

Map: How the Ebola Outbreak Spread Through Africa (Frontline)

Iraq

Obama doubles number of troops authorized for Iraq (The Washington Post)

Ukraine

Ukraine crisis: Tanks 'cross border' from Russia (BBC News)

Russia

Ailing ruble gets boost as market looks to central bank lifeline (Reuters)

Hungary Is Helping Putin Keep His Chokehold on Europe's Energy (Foreign Policy)

Putin Is Losing Out to China in Central Asia's Latest 'Great Game' (Bloomberg Businessweek)

Mexico

Bodies believed to be those of some of the 43 missing Mexican students (The Washington Post)


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  • Precious Metals Are Oversold (The Short Side of Long) Precious metals are oversold but perhaps nothing as much as the gold miners. See chart below which shows the second most oversold condition in the last 18 years, exceeded only by the Great Financial Crisis (GFC). Silver is more than 20% below its 200-day moving average, again seen only during the GFC. Speculators and hedge funds are heavily short silver and gold id trading at three standard deviations away from its 50-day moving average. It is the kind of situation which can produce fireworks - yet the author doubts the bottom is quite here. He mentioned wanting to see a test of $1,000 gold as a possible trigger - not exactly $1,000, just something "close".

Click for larger image.
gold-miners-18-years-600x450

  • Crude oil hasn’t bottomed yet, traders say (Alex Rosenberg, CNBC) Inventories are piling up in the U.S., Saudi Arabia is starting a price war, demand in China is down, the dollar is strengthening and oil is priced in dollars; there are just "so many factors in the equation that are putting downward pressure" on the price of oil. Traders say the current settle above $77 could quickly move the $74.50.
  • For Draghi, Promises Are Still His Main Policy Option (Jack Ewing, The New York Times) Draghi can't seem to escape his old habits learned as a Goldman Sachs con man when he sold magic financial powder to Greece to hide their deficits from the EU. The fairy tale of the boy who cried wolf also comes to mind. If this performance wasn't so pathetic it would be comical.
  • Weak South Korean Manufacturing (Walter Kurtz, The Daily Shot email, no url) South Korea has had relatively weak manufacturing numbers since 2011. Kurtz says that part of the reason is the disadvantage Korea has trying to export when the currency has appreciated by 50% against the Japanese yen.

south-korea-pmi-2000-2014

KWYYEN-2012-2014

  • RBA Sees Slow Growth, Warns Japan Flows May Keep Aussie High (Michael Heath, Bloomberg) The Reserve Bank of Australia is projecting subdued growth for the land of Oz but flows from Japan's QE could support the Aussie dollar. With the falling price of iron ore and other mining products an artificially high dollar will not help Australia.

  • Bank of America Sets Aside $400 Million More for Currency Inquiry (Michael Corkery and Ben Protess, The New York Times) Bank of America is nearing a deal with federal regulators to settle an investigation into the bank’s suspected manipulation of the currency market. Econintersect: When is this protection racket going to end? When will the criminals be sent to prison?
  • Every man for himself (The Economist) As the world struggles to avoid getting caught with bags full of debt, a deflating economy and a relatively strong currency, the coordinated attack on monetary policy by central banks is unraveling. Currently the combat appears to be between the yen and the euro as the U.S. Fed has ended QE and seems content to let the dollar appreciate.

dollar-yen-gold-economist-2014-nov-08

  • The super-rich are just as miserable as the rest of us (Yuval Rosenberg, The Fiscal Times, This Week) Almost a quarter of those worth more than $25 million say they worry constantly about money. They should compare notes with the poor of whom (Econintersect believes) most worry constantly about no money.
  • Microsoft, Changing Tack, Makes Office Suite Free on Mobile (Nick Wingfield, The New York Times) Microsoft Office provided almost 1/3 of revenue last year, yet the company has decided to give away the full suite on mobile devices. It is part of Microsoft's plan to build the company's future by providing cloud service for which Office will provide connectivity.
  • Federal Employees at a 48-Year Low (Walter Kurtz, The Daily Shot email, no url) This would be quite revealing if calculated per capita.

federal-gov-employees

  • Other Economics and Business Items of Note and Miscellanea

Takata hid results of secret airbag tests - report (CNN Money)

Why room temperature needed to be taken down a notch (The Conversation)

It’s Official: Spain is Unraveling (Wolf Street)

Low Crop Prices to Weigh on North American Farmers' Bottom Lines-BMO Economics (Market Wired)

Bitcoin Firm Head Charged in First-of-Kind Ponzi Case (Bloomberg)


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