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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.
Goldman Says JPMorgan Should Break Itself Into Pieces (Hugh Son, Bloomberg) Goldman Sachs has determined that JP Morgan Chase could "unlock value in most scenarios". The company as structured is trading "at a discount of 20 percent or more to stand-alone peers" according to the assessment. Tougher rules have been proposed which will penalize firms for size and complexity. This contributes to the value that could be released if the world's largest investment bank (which competes with Goldman Sachs) and the largest lender in the U.S. were broken up into at least two parts and possibly four or more.
TREASURIES-Long bond yields hit multiyear lows on safety buying (Reuters) The yield on the 10-year U.S. treasury bond traded down to 2.02% today (Monday 05 January 2015) amd closed the day at 2.04% as oil and stocks sold off strongly. The 2% level has been identified as key support for the bond (The Treasury Magnet). The long bond (30-year treasury) saw yield dip to 2.59% with a close at 2.60%, decline of 1.3% since the beginning of 2014. The slope of the 5-year to 30-year yield curve has flattened to 1.03% over the last year from 2.20% a year ago. Steep yield curve slopes are associated with expectation for a strong economy. When the curve completely flattens to no slope (or inverts so that short-term interest rates are higher than long-term) a recession usually follows.
Nobel Laureate Stiglitz Blocked From SEC Panel After Faulting High-Speed Traders (Dave Michaels, Bloomberg) Republican SEC (Securities and Exchange Commission) Commissioner Daniel H. Gallagher has blocked the nomination of Columbia University Economics Professor Joseph Stiglitz who had been proposed for an advisory panel by Democratic Commissioner Luis Aguilar. Stiglitz has said that he thinks HFT (high-frequency trading) is not good for financial markets and the practice should be taxed. Stiglitz's reaction:
“I think they may not have felt comfortable with somebody who was not in one way or another owned by the industry.”
ESPN will be available through a streaming service, no cable required (Cecilia Kennedy, The Washington Post) The cable model for content delivery may be about to die. Dish Network has announced that it will offer an internet streaming service that will deliver ESPN, ESPN2, CNN, TNT, Food Network, HGTV and the Cartoon Network that will be completely separate from its existing cable and satellite packages. This may become known as the epoch when TV left home* to travel with each individual and their personal communication devices (phones, tablets, etc.). The move for ESPN to join other networks such as HBO, Showtime and CBS in the new delivery mode may mark the end of the cable era. The offering will be available through Dish Netwrok's subsidiary Sling TV.
*Of course, TV can come home to the big screen at any time desired by use of a simple USB cable connecting the personal device to the "home base".
Articles about events, conflicts and disease around the world
Race Relations and Related News
NSA / CIA
Crude Oil Crashes through $50 before Recovering (Investing.com) After all the excitement WTI Crude actually closed the day up narrowly. See also Oil extends crash into new year as glut fears deepen (Barani Krishnan, Reuters) See next discussion for longer term view of plunge below $50.
Oil Sank to $49.91 (Silver Surfer, Twitter) We know from the preceding article that Surfer was about an hour early - it eventually got down to about $40.70 before rebounding back above $50. But as we write this, Bloomberg has the latest Feb futures price at 49.47 for WTI and 52.46 for Brent crude. (Click for latest prices.)
2015 Fixed Income Yield Comparison And Recommendations (Dividend Investor 101, Seeking Alpha) Very good analysis and review article for income investors. An especially interesting part of the article is about Build America Bond funds. The author has a couple of recommendations that are yielding over 7% dividends.
What a Stronger Dollar Means for the Economy (Neil Irwin, The New York Times) The strengthening dollar is have global impacts. Non-U.S. Exporters should be helped and importers hurt, especially for trade with the U.S. Of course the effects are exactly reversed for U.S. companies.
The Isis economy: Meet the new boss (Erika Solomon, Financial Times) This article is worth more than simple listing in the reading list. The author reports that, while originally welcomed by Sunni Arabs, the Islamic State is losing support. "Signs of discontent are evident across the ‘caliphate’ as people tire of its taxes, price caps and shoddy services." People are saying that all through the wars with Iran and the U.S. things were never as bad as they are now. Another quote: "It is as if Isis is financing itself partly through a pyramid scheme, and this has begun to falter." This report is from the city of Mosul and is in sharp contrast to another report from there last week. See next article.
Inside Isis: The first Western journalist ever to be given access to the 'Islamic State' has just returned – and this is what he discovered (Adam Withnall, The Independent) Jurgen Todenhofer, "a renowned German journalist" spent 10 days with Islamic State leaders and forces in Mosul in December and reports finding great confidence and tremendous popularity. See also ‘They want to win and they are ready to die’: Lessons from 10 days with the Islamic State (PBS News Hour), ‘ISLAMIC STATE’ – Seven Impressions Of A Difficult Journey (Jurgen Todenhofer web site) and Q&A: German journalist on surviving ISIL (Al Jazeera)
Mosul diaries: Poisoned by water (BBC News) Contaminated water is a big problem in Mosul. Accompanying this article is a map shewing the min-December extent of Islamic State occupation.
Ten-year US Treasury yield dips below 2% again (Fast FT) The U.S. Treasury 10-year bond has dipped below 2% in overnight U.S. trading in Asia and Europe. It was as low as 1.38% in 2013 and went briefly to 1.86% in a "flash crash in October 2014. So this is the third time in history for this territory. The chart below shows 1.9833%.
Five Things To Watch In Housing In 2015 (Nick Timiraos, The Wall Street Journal) Housing market growth essentially disappeared in 2014. Unless there is a continuing strong economy there are problems with seeing any growth in 2015 as well.
Other Economics and Business Items of Note and Miscellanea
Joseph Stiglitz: Economics Has to Come to Terms With Wealth and Income Inequality (Lynne Paramore, truthout) Paramore interviews Prof. Stiglitz.
Liquidity: The Hidden Risk in the Municipal Market (AAII Journal)
Oil Below $60 Tests Economics of U.S. Shale Boom (Bloomberg) And today it's trying to go below $50.
The protesters who are trying to upend the ‘fantasy world’ of economics (The Washington Post) Students who want to fix the profession.
Marriage Makes for Happier People, Study Says (The Wall Street Journal)
The economics (and nostalgia) of dead malls (The New York Times, Star Advertizer)
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