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What We Read Today 21 April 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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Every day most of this column ("What We Read Today") is available only to GEImembers.

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Where Mohamed El-Erian is Putting His Money (Bloomberg Business)

elerian.money



Articles about events, conflicts and disease around the world

Global

  • Giant Waves Quickly Destroy Arctic Ocean Ice and Ecosystems (Scientific American)  Norweigian scientists have observed for the first time how very large waves destroy vast areas of Arctic ice in a very short time.  The process appears to be a self reinforcing cycle:  the more it happens the greater the increase of incidence later in the same season.  This observed process destroys Arctic ice cover much faster than previous models of the process have  predicted.

U.S.

EU

UK

  • U.K. Trader Accused of Manipulation Tied to 2010 Flash Crash (Bloomberg Businesss)  Navinder Singh Sarao, was arrested in the U.K. Tuesday, charged by the U.S. Dept.of Justice with a scheme that maintained a large number of orders which were manipulated so they could not be filled but create the appearance of order volume which could move the market significantly in one direction at which point real orders could make a guaranteed profit.  The process is called "layering and spoofing" and the orders so created by Sarao were a significant factor in the flash crash that occurred five years ago this May.

China

  • China to launch three new free-trade zones (The Business Times) Three new free-trade zones (FTZs) will be opened in the southern province of Guangdong, the northern port of Tianjin and the eastern province of Fujian.  The average size of each zone is around 46 square miles.  In addition, China's first FTZ, set up in the commercial hub Shanghai in September 2013, will also be quadrupled in size, it said, bringing it up to a similar scale and likely to take in the financial centre of Lujiazui, along with a manufacturing area and a high-tech base.
  • China Seen Close to First Bond Default by State-Owned Firm (Bloomberg Business)  Baoding Tianwei Group Co., a unit of central government-owned China South Industries Group Corp., said in a statement dated Monday (20 April) that it hasn’t raised enough money to pay the interest on the 1.5 billion yuan ($243 million - U.S.) of 5.7% bonds issued April 2011, according to an April 14 statement.  This is the second bond default in China within the past 24 hours - see next article.
  • Does the Collapse of a Chinese Developer Signal the Start of More Defaults? (Bloomberg Business)  This is repeated from Early Bird headlines earlier today. Kaisa Group Holdings Ltd., once a darling of investors, is buckling under its debts as a slumping real estate market weighs on the entire Chinese economy. After missing $52 million in interest payments, Kaisa now confronts an uncertain future with a potential default which could total into the billions. This is the first default in China's $43.2 billion market for U.S. dollar denominated bonds. The watch is now on for other empty shoes to hit the floor.

Australia

  • Report calls for emissions cuts, but plays down the opportunities (The Conversation)  Australia should cut greenhouse gas emissions by 30% below 2000 levels by 2025, according to a draft recommendation released by the Climate Change Authority today.  The article emphasizes two aspects:  (1) Australia would be cutting carbon more than other countries and so the recommendations could meet strong political resistance and (2) cleaner, more efficient energy (less costly) energy could provide an economic springboard for Australia and the Climate Change Authority has failed to develop that narrative.

climate.change.actions



This Is the Worst Retirement Solution Ever (Suzanne Woolley, Bloomberg)  The worst retirement solution ever is to keep working as long as necessary to be able to retire with financial security.  Why?  Personal health and employers often do not cooperate with that plan.  This is a big problem because 72% of those in a retirement plan are not feeling "very confident" about their retirement security.  And it's even worse for those not in a retirement plan, with 88% "not confident".  The only good news in the study quoted is that the confidence has been rising in recent years for those in a retirement plan.

retirement.confidence


Earth Day 2015: These 10 Funds Prove Investors Can Beat The Stock Market By Going Green (Trang Ho, Forbes)  Trang Ho has contributed to GEI.  Going green is making big green in 2015.  The 10 solar and clean energy exchange traded funds on the stock market vaulted anywhere from 6% to a mind blowing 41% year to date.

Click for larger image of table.
clean.energy.etfs


Triple Top Tuesday – Can Low Volumes Drive Us To New Highs? (Phil Davis, Phil's Stock World)   Hat tip to TalkMarkets.

Is this what a rally looks like?  I cannot emphasize enough that we are in CASH!!! and don't really give a crap what the market does, so I say this with all possible detached objectiveness when I ask you – WTF are you playing with? 

The chart below is how the S&P 500 ETF traded yesterday (Monday) after Friday's big sell-off.  For details on what happened Tuesday when the large cap market went down (small caps went up) See GEI's Market Close commentary by Gary:  21Apr2015 Market Close: Markets Close Mixed And Quiet, Large Caps Down Along With Oil, Small Caps Ended Up 0.4 Percent In The Green

spy.2015.apr.20


The BoJ's monetary expansion and its impact on the yen (Walter Kurtz, Sober Look)  At the end of last October the Bank of Japan announced a large stimulus increase which was followed by a sharp decline in the yen. In 2015, however, even though the extraordinary monthly securities purchases are continuing, the declines have stopped as USD/JPY remains range-bound.  Kurtz marvels at this behavior and comments:

In the long run however, further yen weakness seems inevitable. The reason has to do with the sheer relative size of Japan's quantitative easing. Based on the latest projections, the BoJ's balance sheet will be above 90% of Japan's GDP within a year or so. This dwarfs other major central banks' monetary expansion efforts, including that of the ECB. Furthermore, given the scope and size of this program, it is unclear if the Bank of Japan can ever effectively exit it without a massive disruption to the nation's economy. While we could see the yen strengthen briefly in the near-term, the currency will remain under pressure for some time to come.

usd.jpy.2014.2015



Other Economics and Business Items of Note and Miscellanea

How did Alan Turing figure out the Enigma machine? (Quora)  The answer is:  He didn't figure out the machine.  The machine was figured out done by a Polish Cypher Bureau member named Marion Rejewski.  What Turing did was to figure out an electro-mechanical scheme to screen transmissions and determine the code in use each day.  This was developed and refined by Turing and Gordon Welchman using the machine design determined previously in Poland.

Buttered Coffee Could Make You Invincible. And This Man Very Rich (Bloomberg Business)  "Biohacking" is big business for British Columbian Dave Asprey.

‘Corporate Terrorist’ Schwab Cost Me My Kidney: Breakaway Broker (ThinkAdvisor)  Richard Rosso tells how he went from being one of Schwab’s top financial consultants to losing a kidney from the stress of an arbitration battle.

Chip Cards Coming to America — Slowly! What You Need to Know!  (Money and Markets)  This is the next step in improving credit card security.

Baker Hughes Cuts 17% Of Workforce As Oil Slump Ripples Through Economy (Zero Hedge)  Hat tip to TalkMarkets.  ZH says that the BLS (Bureau of Labor Statistics) is way behind in counting job losses in the oil and gas sector.



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