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What We Read Today 06 August 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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Today we have a section on non-residential construction in the U.S,


Articles about events, conflicts and disease around the world

Global

U.S.

  • Pennsylvania Attorney General Kathleen Kane Indicted (The Huffington Post)  The Democrat is charged with obstruction of justice for leaking Grand Jury information about the actions of her predecessor with regards to failure to prosecute persons associated with the Penn State football child sex scandal.  She is accused of using intermediaries in carrying out the leak and lying about it under oath.  This is the second state attorney general indicted within a month,  The other is Ken Paxton, Republican of Texas who is accused of securities fraud.
  • The Shale Patch Faces Reality (Bloomberg)  Over the past year, shale producers have lowered their costs so much that the average break-even price for a barrel of U.S. crude is now in the upper $40s, down from $60, according to research from IHS Energy. That’s allowed them to keep producing, feeding the glut that continues to weigh down prices. At some point, though, they may have to pull back.  Average break even in the upper $40s only supports half of current production when the price of oil is in the upper $40s.
  • Retirement Strategy: Waiting For A Correction; Surprise! We Are Having One! (Seeking Alpha)  A lot of blue chip stocks have corrected from 5% to 30% this year and have yet to bounce back.
  • The Federal Government Says Being Homeless Should Not Be A Crime (The Huffington Post)  Prosecuting people for sleeping in public "violates their constitutional rights" according to a Justice Department filing in a case against the city of Boise, Idaho.
  • Job Cuts Soar, Will Fed Still Raise Rates? (Confounded Interest)  The question about the Fed making a move on interest rates seems confounded by the employment data, with large numbers of job cuts in the military and energy sectors.  Both the civilian job cuts by the military and the energy sector job losses are undoubtedly contributing to the lower labor cost index, although the direct military personnel cuts almost certainly are not.  Graphs below are from this article.  For more detailed analysis of the Challenger data, see July 2015 Job Cuts Surge on Army Cuts.

challenger.cuts.2015.july

employment.costindex.2015.july

Egypt

  • Egypt launches Suez Canal expansion (BBC News)  Egypt has opened a major expansion of the Suez Canal, which deepens the main waterway and provides ships with a 35km (22 mile) channel parallel to it which will accomodate much bigger ships.

Russia

Australia

  • Lie-bore: powerful bank regulators running out of excuses (The Conversation)  Australian regulator ASIC (Australian Securities and Investments Commission) has significant power to help it stamp out systemic fraud in the banking sector. Now they just need to use it.  This author suggests that not only is hardened regulation needed but it needs to be redundant with overlapping agencies competing with each other to cut the blatant fraud out of the financial system before another crisis unfolds.

China

  • Contagion Contained (5 Min. Forecast)  The article is not quite convinced that the drop of the Chinaese market is over, but does argue that effects on the Chinese economy and other markets (such as the U.S.) are contained and should hace little impact.  The following chart is presented without comment, but we have added a red "neckline" for the head-and-shoulders (HaS) pattern.  This has a negative slope which makes the pattern more bearish than if the neckline were level or positive sloping.  Note also that there is a minor HaS pattern (green neckline) within the larger pattern which has a less negative slope.  The confirmation of the (red) HaS will come if the red line is penetrated, right now just above 3,000, about 12-13% below the current level. 

shanghai.comp.neckline.2015.aug.06


Top 10 largest construction project starts in the U.S. - June 2015 (Construction Market Data)

ten.largest.non.res.2015.june.no1top.ten.non.res.2015.june.no2


Non-residential Construction Starts Trend Graphs - June 2015 (Construction Market Data)  Only highway and bridge construction has recovered from the Great Recession and expanded further:

non.res.constr.2015.june.no1non.res.constr.2015.june.no2non.res.constr.2015.june.no3


Total Private Construction Spending: Nonresidential (FRED, Federal Reserve Bank of St. Louis)  The trend line of growqth is now steeper than before 2000 but it will be most of another decade before the current growth rate will reach the extrapolation of the previous one.  Here is another measure showing an output gap in the U.S. economy.

constr.non.res.private.annotated

Other Economics and Business Items of Note and Miscellanea

  • Racism defies logic – so don’t go searching for any (The Conversation)  There are no examples of evidence being put forward by race theorists that a race other than the one they belong to is superior. That's worth bearing in mind when it comes to 'understanding' racists.
  • The economics of climate change (The Hill)  Interesting discussion by former senator Mark Bagich (D, Alaska)  He points out that Alaska is experiencing significant negative effects from climate warming but also suggests that the methods to combat these effects must take the cost of living of Alaska's (and, by inference, everybody else) into account.
  • Gamestop (NYSE:GME)
  • Transocean (NYSE:RIG)
  • Cablevision (Nyse:CVC)
  • Chesapeake Energy (NYSE:CHK)
  • ADT (NYSE:ADT)

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