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What We Read Today 29 January 2015

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.

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10 PPACA exchanges with upmarket appeal (Allison Bell, LifeHealthPro)  In Clorado 47% of the insurance sold is to those who do not qualify for any subsidies.  This article has a slide show with Colorado the nine other states which have a high percentage of business without subsidies.  See also 10 ZIP codes that love PPACA exchange plans.


PPACA penalty will hit up to 6 million taxpayers (Alex Wayne, LifeHealthPro)  Those without health insurance will have to pay a "penalty" (the SCOTUS called it a "tax") when filing their federal income tax return starting with 2014 return due this April 15.  See also IRS summarizes PPACA individual mandate rules (Allison Bell, LifeHealthPro)


Articles about events, conflicts and disease around the world

EU

Greece

greek-banks-stocks-2015-jan-28

Race Relations, Civil Rights and Related News

Yemen

Turkey

Israel

Syria

Iraq

North Korea

India

Japan


How The American Shale Boom Warped The Oil Production Cost Curve (Myles Udland, Business Insider)  Shale oil totally changed the cost curve for global oil production.  With oil priced above $90 it made perfect sense to pump as much oil as possible with production costs under $80.  Econintersect:  We have raised this question before:  How much will the cost curve be moved further in 2015 and 2016 in response to the collapse in oil prices?  Could the horizontal red line be moving lower as the horizontal drilling and fracking learning curve plays out?  We don't know exactly how much but we suspect that it can come down further.

oil-production-cost-curves-2000-2014


Investing Strategies for a Strong Dollar (Donald Jay Korn, Financial Planning)  If the dollar keeps on strengthening what are favored investments?  Here is Korn's list (which has some internal contradictions):

Overweight foreign stocks.  Yes, you will lose on exchange rate changes but you should gain more as exporting economies gain ground on the U.S. where exports will suffer as the dollar is worth more and more against other currencies.  (From RegentAtlantic Capital)

Increase holdings in U.S. stocks.  During long-running dollar appreciation moves U.S. stocks have performed better than during short-running dollar bulls and dollar weakening periods.  Small caps especially outperform because, as a group, they are less exposed to export weakness.  (Robert W. Baird & Company)

Econintersect:  If you are picking individual sticks favor small caps that have limited exposure to both export markets and to competition from lower cost imports.

Buy bonds.  Yes bonds are at record high prices (low yields) but the U.S. yields are still much higher than much of the developed world.  Money should flow to the U.S. as Japan and the EU increase liquidity via QE (quantitative easing).  Avoid high yield (junk) bonds. (Schwab Center for Financial Research)

Currency plays.  Use investment managers with proven track records in currency hedges.  Especially look for yen hedges. (Cleary Gull)

See also 10 Investments for High Rollers (Lou Carlozo, U.S. News & World Report).  One of the ten ideas is from GEI contributor John O'Donnell, Online Trading Academy.


So, here's that 'Obamacare' alternative you wanted (Megan McCardle, LifeHealthPro)  here are the points of McCardle's plan:

  • The government picks up 100 percent of health-care costs above 15 to 20% of adjusted gross income.
  • Maintain current Medicaid for those below 150% of poverty line.
  • Expand medicaid to 200% of poverty line.
  • Maintain current Medicare.
  • Maintain current VA care.
  • Create a national high-risk pool for all those turned down for insurance with government supported premiums at healthy person rates.

Different ball game for new McDonald’s chief (Neil Munshi, Financial Times)  The burger is no longer king of fast food and the new CEO of MacDonald's (NYSE:MCD) will have a major challenge in moving the company on a new path.  Steve Easterbrook, a 41-year old former cricket player will be the one to face the "bowling" now at the MCD "wicket".  He is a career MacDonald's employee who has headed MCD UK and Europe.  Under his management the UK was rescued from "struggling" to a 10% sales growth a year between 2006 and 2008.  MacDonald's is struggling globally now as the 35,000 store chain saw it's first decline in same stores sales last year since 2003.  See also McDonald’s flips chief as burgers lose sizzle.

mcd-stock-2015-jan-28


Our Stock of the Year Turns out to be the Best Stock of the Year! (Phil Davis, Phil's Stock World) It was iPhone sales that dominated but iPad also had the third best quarter ever and even iMac had the best quarter in 2 1/2 years.  As Phil says:  Apple knocked it out of the park!

apple-phils-stock-2015-jan


Have We Become Too Flexible? (Adair Turner, Project Syndicate)  The one thing that fiscal and monetary policy have limited effect upon is the level of wages.  And that is a major source of current difficulty, according to Lord Turner.  His conclusion:

Because deflation, like inflation, is ultimately a monetary phenomenon, fiscal and monetary weapons are the most critical means to combating it. But the potential importance of structural policies should not be ignored. Weidmann and Abe are right: some cost-push pressure would be useful. But deliberate policies will be needed to stimulate it.
 


Crude settles at $44.45 after Fed; lowest level since March 2009 (AP, Reuters)  Analysts are saying that oil will stay near $40 a barrel for the first half of the year as oil U.S. inventories reach the highest level since 1982 and the price of WTI for March lost $1.22 to close at $48.38 on Wednesday (28 January 2015).  The U.S. benchmark had rallied more than 10% over the the two previous weeks before the pullback.  But a rally is coming eventually:  John Kilduff, Again Capital LLC, says that within two years oil will be $25 higher.



Other Economics and Business Items of Note and Miscellanea

Obama could be final jumbo jet customer (Financial Times)  The next Air Force One will be a Boeing 747-8 which may be discontinued because of lack of commercial acceptance.

Census: 16 million kids relied on food stamps in 2014 (Al Jazeera) 20% of U.S. kids on SNAP, more than before the Great Recession.

Public satisfaction with NHS at second-highest level in 30 years – but are we really happier? (The Conversation) 15% in the UK are dissatisfied with the National Health Service.  That's about the same percentage that have no health coverage at all in the U.S.

Rent to Own: Wall Street’s Latest Housing Trick (ProPublica)  Read the comments.  Several are critical of the quality of reporting.

View: Vermont's lessons for fans of single-payer system (LifeHealthPro)  A well known conservative journalist finds single payer would not be a cost containment system.

Best ways to profit from beaten-down energy stocks (CNBC)

Immigration: replace the migration security complex with an ‘integration industry’ (The Conversation)



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