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".).
Wall St. logs biggest two-day gain since financial crisis (Reuters) Wall Street rallied more than 2 percent on Thursday as strong U.S. economic data and hints that a September interest-rate hike was unlikely fueled optimism that the worst of recent market turmoil was over. The Dow Jones industrial average scored its biggest two-day percentage gain since 2008, while the S&P 500 and Nasdaq Composite racked up their biggest two-day increases since 2009. See Gary's Market Close commentary at GEI.
Where’s That Cheap Oil Windfall? (Bloomberg) A year ago as oil prices started to fall credit card companies were thought to be among the winners. Consumers and businesses would soon be buying ever-cheaper gasoline made with ever-cheaper crude. The effect would be like a tax cut. Move forward 12 months and just the opposite has happened as household spending has failed to increase in other areas because there has also been a loss of consumer income because U.S. production has risen to 2/3 of consumption. Here is how credit card companies are reporting:
During a July 24 earnings call, Visa Chief Financial Officer Vasant Prabhu said gasoline prices have had a “significant negative impact” on business. MasterCard says cheaper gas took 2 percentage points off the growth in the value of its overall second-quarter transactions.
Undercover Planned Parenthood Videos Were Altered, Analysis Finds (The New York Times) You call it editting, I call it "manipulation", the word used by Planned Parenthood in communication to a Congressional investigation. The analysis was by Fusion GPS, a Washington-based research and corporate intelligence company, and its co-founder Glenn Simpson, a former investigative reporter for The Wall Street Journal. The Fusion analysis was funded by Planned Parenthood.
The reviewers looked at both shorter, edited videos that are about eight minutes to 15 minutes long and what Mr. Daleiden said were full-length recordings, some more than two hours long, that he released simultaneously.
A transcription service was hired to transcribe the videos, without being told that Planned Parenthood was the client, to compare with transcripts publicized by the anti-abortion group. That comparison, the analysis said, showed “substantive omissions” from the group’s version. Mr. Simpson was assisted in the analysis by several others including a video forensics expert, Grant Fredericks, and a television producer, Scott Goldie.
According to the investigation, the reviewers could not determine “the extent to which C.M.P.s undisclosed edits and cuts distort the meaning of the encounters the videos purport to document.”
But, it said, “the manipulation of the videos does mean they have no evidentiary value in a legal context and cannot be relied upon for any official inquiries” unless C.M.P. provides investigators with its original material, and that material is independently authenticated as unaltered.
One of the Most Popular Doom Scenarios for the U.S. Economy Is Fizzling Out (Bloomberg) For years, politicians, gloomy newsletter writers, and even some economists have been warning that the U.S. is at the mercy of China, because China owns so much Treasury debt. In 2010, a group called Citizens Against Government Waste made an infamous commercial called the Chinese Professor, in which a professor in Beijing in the year 2030 teaches his class about the demise of the U.S. because its government spent so much money and mortgaged the country's future to the Chinese. Well, it's simply not true. China has not been buying U.S. Treasuries for the past four years and hold less today than they did in late 2011. During this time rates for U.S. Treasuries have fallen significantly. China does not "hold America at its mercy".
Given the recent sharp decline in the market, the overwhelming question from clients is whether this is the beginning of a new bear market similar to 2000-2002 or 2007-2009. Though I don’t think we are quite there yet, here is the big picture outlook as I see it with possible risks laid out further below.
If I am correct and this is not yet the beginning of a new bear market, then we are likely to see a recovery rally (which is underway as I write this) with further volatility heading into year-end. A possible scenario could be something similar to what we experienced in 2011.
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