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 dayin the early am at GEI News (membership not required for access to "The Early Bird".).
The amount of new retail space hasn't topped 40 million feet a year since 2009, according to CBRE, a real estate brokerage firm. This comes after many years with more than 150 million square feet added to the market annually. And now some of the country's biggest developers are making huge bets that the shopping mall—long a symbol of the American suburbs—still has a bright future; albeit with a major makeover.
Why Are Americans Buying So Many Cars? (CNBC) A half-decade after plunging to its lowest levels in a half-century, the U.S. new car market is in the midst of a major boom. All told, U.S. buyers spent $52 billion for their new vehicles in May, as the price of the typical vehicle surged to $32,452, up 4 percent from May 2014, according to TrueCar.com. One major reason for booming sales is so-called pent-up demand. Another trend is the shift from small, more affordable cars to costlier SUVs and pickups. Still another trend is the emergence of the so-called Certified Pre-Owned, or CPO, vehicle. Econintersect: No discussion of what might happen if gasoline returns to the $4 a gallon region.
Merkel-Schaeuble Differences Over Greece Approach Said to Widen (Bloomberg) A split between German Chancellor Angela Merkel and Finance Minister Wolfgang Schaeuble is widening over Greece as the funding standoff goes down to the wire. Merkel is ready to make concessions to keep Greece in the euro because of geopolitical concerns, while Schaeuble is willing to let the country exit the euro .
US strategy on Iraq 'not yet complete' - Obama (BBC News) The president said the Pentagon was reviewing ways to help Iraq train and equip its forces. But Mr Obama said a full commitment to the process was needed by the Iraqis themselves.
Improved data set shows no global warming ‘hiatus’ (Jay Lawrimore, The Conversation) In its Fifth Assessment Report in 2013, the Intergovernmental Panel on Climate Change found that the temperature of the Earth increased at a rate of 0.22 Fahrenheit (0.12 Celsius) per decade from 1951-2012. It also found that the rate of warming from 1998-2012 had slowed to 0.09F (0.05C) per decade. In an article published in Science Express on June 4, my colleagues and I at NOAA’s National Centers for Environmental Information (NCEI) presented updated findings that show no hiatus in the rate of warming.
Other Economics and Business Items of Note and Miscellanea
Less Risk, Better Returns? (Financial Advisor) The low-volatility model, called the low-beta effect, is a challenge to the prevailing capital asset pricing model (CAPM). Commonly implemented using ETFs combined to produce a low volatility portfolio, these combinations perform better in both up and down markets, according to sources in this article. Econintersect: Not mentioned in this article is the problem that beta values vary over time and this can produce unexpected results (often losses). We would suggest that a process of portfolio rebalancing on a regular basis using current beta values is a process deserving study. The nature of the problem and the approaches to mitigating the variable correlation effect is developed in detail in the outstanding book by GEI contributor Clive Corcoran: Systemic Liquidity Risk and Bipolar Markets: Wealth Management in Today's Macro Risk On / Risk Off Financial Environment.
“I don't care what his beta was … that was a risky bet. And, in general, the smart beta stuff hasn't worked. Value hasn't worked, recently, small vs. large -- sometimes has but sometimes hasn't worked. RAFI [where popular stocks are traded for the unloved] performed because they used momentum investing -- at a much higher cost to investors than traditional ETFs.”
4 Ways Bad Economics Journalism Happens (The Federalist) Economics reporters recently insisted a new study discourages reducing government debt. It does no such thing. See next article for that paper.
Financial bailouts, stimulus spending, and lower revenues during the Great Recession have resulted in some of the highest public debt ratios seen in advanced economies in the past 40 years. Recent debates have centered on the pace at which to pay down this debt, with few questions being asked about the desirable level of public debt to which the economy should converge following a debt shock. While some countries face debt sustainability constraints that leave them little choice, others are in the more comfortable position of being able to fund themselves at reasonable—even exceptionally low—interest rates. For these countries, there is a very real question of whether to live with high debt while allowing the debt ratio to decline organically through growth, or to pay it down deliberately to reduce the burden of the debt.
Efforts to help homeowners fail their troubled mortgages (Diana Orlick, CNBC) The programs to help home owners with troubled mortgages stay in their homes "has given borrowers less relief of late". Banks are being more aggressive with delinquent loans and are offering less opportunities for modifications.
Of the approximately 952,000 borrowers who are 90 or more days past due on their monthly payments, but not yet in foreclosure, 62 percent have already been through some form of home retention program, according to Black Knight Financial Services (BKFS). They are, it seems, beyond help. Home retention programs were established by lenders and the government to work with borrowers to enable them to keep their homes.
ETFs Beat Out Mutual Funds In Popularity, Study Shows (Financial Advisor) Advisors are now for the first time recommending exchange-traded funds (ETFs) more often than mutual funds to their clients, says a Financial Planning Association report released Wednesday 27 May.
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