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What We Read Today 26 March 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.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).


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It looks like this for-profit college could be in financial trouble (Abby Jackson, Business Insider)  Apollo Education Group, the parent company of The University of Phoenix (UoP), announced its second-quarter earnings Wednesday 25 March 2015.  Enrollments were down 15% and revenues down 14%.  Enrollments at UoP have been cut in half over the past five years.  Jackson writes:

Declining enrollment at the University of Phoenix, the largest for-profit university in the US, is potentially another signal of distress in the for-profit higher education sector. Last year, Corinthian Colleges, another major for-profit system, closed its doors amid legal action and accusations of financial manipulation towards students.

Further discussion about Apollo Group in members section.  Membership is free with free subscription to daily newsletter.

Articles about events, conflicts and disease around the world






  • Saudi Arabia leads air strikes against Yemen's Houthi rebels (Reuters)  Saudis attack Iranian proxies.  Saudis are backed by a coalition including Egypt, United Arab Emirates, Qatar, Bahrain, Kuwait, Jordan, Morocco and Sudan.  Pakistan is considering request to send troops to participate in possible ground campaign.




U of Phoenix parent posts major losses (Tara Garcia Mathewson, Education Dive)  Here is Mathewson's summary:

The University of Phoenix’s decline has been a political one. The for-profit university has been attacked from critics in the government and consumer advocates questioning whether the cost of the education is worth the quality of the online coursework. The CNN Money article notes University of Phoenix students made up half of all student loan defaults in 2013 but only 12% of the nation’s students in the same year. It is now harder to get federal financial aid to attend for-profit colleges and, as CNN Money also pointed out, the offer of free community college likely will pull even more students from the University of Phoenix.

With Republican control of both the U.S. House and Senate, there is a chance the furor over the for-profit model might lessen, but as the University of Phoenix continues to struggle with enrollment, the change in leadership could be too late.

Stifel, Bank Of America Are Talking About Apollo Education (Anthony San Filippo, Benzinga)  Brokerage and Investment banking firm Stifel Nicolaus still rates Apollo Group (NASDAQ:APOL) as a buy, but with a lowered price target of $25, down from $35 before the latest earnings disappointment.  Bank of America (BoA) has a neutral rating with a price target of $24.  See all the analysts ratings for APOL at Benzinga.  Besides Stifel and BoA, Deutsche Bank (Hold) and BMO Capital (Outperform) have reaffirmed ratings today (26 March 2015).  Other ratings maintained from last year are Compass Point (Neutral) and JP Morgan (Overweight).

APOL Interactive Chart (

Click for latest chart at

Why more U.S. colleges will go under in the next few years (Jilliam Berman, MarketWatch)  It is not just the for profit educational concerns such as University of Phoenix (Apollo Group) and Corinthian Colleges (bankrupt in 2014).  Some traditional private colleges are not going to be able to saty open either.  An iconic women's college in Virginia, Sweet Briar College, announced this month it was closing forever at the end of this semester.  Financial woes did in the more-then-100-year-old institution.  Susan Fitzgerald, a senior vice president at Moody’s is quoted:

We expect that there will be more college closures over the next three to four years.  I don’t think it’s going to be a landslide of college closures, but we are coming through a very tough period of time.” 

Also from this article:

About one-third of all colleges and universities in the U.S. are on an unsustainable financial path, according to a 2012 report from consulting firm Bain & Co. While some of the schools on that list have resources, like a large endowment and a steady enrollment base, that could help them stave off closure, smaller, private colleges “need to be on the lookout,” Jeff Denneen, the leader of Bain’s higher education practice and one of the authors of the report, said in an interview.

Declining college age population growth, increasing awareness that high debt burdens often are not justified based on economic opportunity for graduates and other economic factors are suppressing enrollments at some private institutions, especially those with small enrollments (under 5,000 students) and predominantly liberal arts curricula.      

Old Age Doesn’t Kill Bull Markets (excerpt) (Dr. Ed's Blog)  Somewhat interesting discussion of why a bull market isn't over 'til its over but a very interesting graphic showing the last seven depressions of coincident economic indicators.  Note: The depression associated with the recession of 1980 is not highlighted even though it is more pronounced than for the recession of 1969 which is highlighted.  For the definition of recession and depression see (from 2010):  Depression: The Forgotten Part of the Business Cycle


Vehicle Miles Traveled: A Structural Change in Our Behavior (Doug Short, Advisor Perspectives  Doug Short is a regular contributoe to GEI.  Doug finds the change over the last year in U.S. vehicle miles driven to be of limited significance:

[T]he 12-month MA of the civilian population-adjusted data (age 16-and-over) is little changed, up 0.08% month-over-month and up only 0.97% year-over-year.

But, small as it is, this is still the largest advance since the peak in June 2005.  So we shall have to wait and see if there is follow-through on the increase in miles driven per capita to know if the recent change is insignificant or may be the start of a new structural change in driving behavior.

Click for large image at Advisor Perspective

Other Economics and Business Items of Note and Miscellanea

Windows 10 Vs. Windows 8: 10 Differences (Information Week)

Lifetime retiree health care cost projections up 6.5% (Investment News) Average costs could exceed Social Security benefits in the future.

The Real 401(k) Rip Off That Insurance Companies Don’t Want Your Clients To Know About (Financial Advisor)  By Phil DeAngleo who has contributed to GEI.  Stable Value funds are not guaranteed to be stable and have hidden costs and fees deducted.

Why Bank of England employees are reading my A-level economics textbook (The Guardian)  Author Alain Anderton comments on use of his textbook.  "People seem to think there are simple answers to complex problems. Even politicians could learn a thing or two from revisiting the basics."

Economics can’t solve political problems (The Guardian)  Good collection of Letters to the Editor.

Felix Zulauf: Asset Prices Will Continue to Inflate as China Joins the Party Next (Financial Sense)  Author believes China will have to decouple from the dollar and depreciate the yuan renminbi and that will put another big blast of air into the global asset bubble.

Through the roof (The Economist)  Rising house prices may be chiefly responsible for rising inequality.  This is not what Piketty proposed.

The Universal Man: new Keynes biography looks beyond the economics (The National)  There is far more to the intellectual Keynes than his famous theories.

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