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What We Read Today 10 December 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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Articles about events, conflicts and disease around the world

Global

  • Unfriended (The Economist) While media focus has been on the attacks which are destroying some of the Islamic States's (IS) oil revenue, it is also important that IS appears to be esperiencing diminishing social media effectiveness, both in volume and quality of content.

U.S.

  • Buckle up (The Economist)  Since interest rates hit rock-bottom in 2009, the Federal Reserve has repeatedly made optimistic forecasts about when they would start rising, only to delay the big day again and again. If the Fed has been a bullish coach, the markets have been trusting fans, continually believing that an increase is imminent, only to have their expectations dashed. At last, however, the moment seems to have arrived. On December 16th, when the Fed’s rate-setting committee meets, it seems all but certain to raise rates.  This article diuscusses what some of the economic follow-on might be for a rate hike. 

  • Connecticut to ban gun sales to those on terror watch list (Al Jazeera)  Gov. Malloy calls executive order banning purchases a response to inaction by the Republican-controlled US Congress.

  • The Top 10 Hottest Housing Markets For 2016 (Bloomberg, Financial Advisor)  the number one hottest market is Grand Rapids, Michigan.  All the rest are west of the Mississippi, well south of the Mason-Dixon Line or both. 

  • 97%+ Loan-To-Value Mortgage Loans: It's Deja Vu' All Over Again! (Michael Haltman, LinkedIn)  MH contributes to GEI.  Residential mortgage-backed securities (RMBS) stuffed with sub-prime "liar loans' were at ground zero of the 2008 financial crisis and, guess what...  Well guess what: They're Ba-ack!   Well Michael says they are not "stated loans" per se but in a new program from Fannie Mae called HomeReady Mortgages, 97%-plus Loan-to-Value loans become possible 'based not on the borrowers income (which is too low) but on "non-borrowers" like extended family or children!

  • Republicans Discuss Plans to Challenge Trump at Convention (Bloomberg)   Republican party officials are now actively preparing for the prospect of a contested convention in Cleveland as front-runner Donald Trump continues to draw strong support from the GOP base.  The scenario was discussed by more than 20 party stalwarts Monday at a Washington, DC, dinner held by Republican National Committee Chairman Reince Priebus, the Washington Post reported. A person familiar with who attended the dinner confirmed to Bloomberg that it took place, and that Priebus, members of congress, establishment lobbyists and others have held similar discussions for weeks.  Should Trump continue to dominate the nomination race in the coming months and amass the required number of delegates to become the official Republican nominee, members of the establishment told the Post they would be forced to contest his nomination on the convention floor in Cleveland from July 18–21. 

  • Obama's executive actions could open a door for successors (Associated Press)  While the White House has condemned Donald Trump's call for a ban on Muslim immigrants as "disqualifying" and "toxic," President Barack Obama may have only himself to blame if a President Trump ever succeeds in putting his plan, or some version of it, into action.  In his efforts to work around Congress, Obama has made the aggressive use of executive power, particularly on immigration, an increasingly effective and politically accepted presidential tool. While legal scholars are divided on whether Obama has accelerated or merely continued a drift of power toward the executive branch, there's little debate that he's paved a path for his successor.

EU

  • Showing How US Can Stand Up to Wall Street, Europe Advances 'Robin Hood Tax' (Common Dreams)  Ten European Union countries agreed on Tuesday to some aspects of a so-called "Robin Hood Tax" on financial transactions, offering a model for U.S. politicians who have thus far showed little resolve on standing up to Wall Street high-rollers who have maintained that such a tax would end human life as we know it.  (Well, at least hamper their rentier life style.)  This article contains excerpts from Reuters and The Wall Street Journal.  See also Study: Financial Tax Would Pay Off Big (Common Dreams).

Australia

  • Remote but Connected: Two Australian Communities go Solar (Rocky Mountain Institute)  In the far reaches of Western Australia, more than 17,000 people live in indigenous communities spread through 287 townships. Basic services are hard to come by, such as adequate water, wastewater services, and electricity. The Australian Government was faced with how to provide basic electricity to these communities, and in 2006, the Western Australian State Government established Horizon Power, a commercial utility that provides energy services to these remote locations far beyond the reach of Southwest Australia's grid.  Marble Bar and Nullagine are two small indigenous communities near the Great Sandy Desert on the far western coast of Australia, about 1,500 km north of Perth. These communities have been bringing in large amounts of diesel—about 786,000 liters per year—by truck. With both of the power stations at Marble Bar and Nullagine close to 30 years old and in need of replacement, Horizon Power decided not to invest in upgrading the diesel power stations, but instead to embark on an energy journey to bring solar to this remote, diesel-based grid.  With 50 percent funding from the Australian Government and 50 percent utility equity, the communities connected 2.7 MW of solar to the grid, providing 30 percent of their annual electricity generation. They included a flywheel storage system to store the excess energy produced during times of high solar output to reduce dependence on diesel shipments. 

Brazil

  • Dying for a story: Brazil's journalists are being killed at record rates (Al Jazeera)  The country now ranks among the most deadly nonwar zones for reporters, yet these abuses are difficult to prove.  Journalists in Brazil have long lived in fear of being threatened, sued, beaten, exiled or murdered. But in recent years a new cohort of lone operators has emerged, enabled by the Internet. Lacking institutional support and often the only reporters in their towns, they are especially vulnerable in an increasingly violent country that now records nearly 60,000 murders a year. Few perpetrators are brought to justice, although the number of convictions has edged upward in recent years.


Double Top in the S&P 500, at the "Wrong Time?" (Chris Kimble, Kimble Charting ServicesLinkedIn)   The impact of an improbable event can be huge *think Black Swan).  The S&P 500 peaked in 2000 and 2007. The time between these historical tops was 7-years and 7-months apart. Could the S&P 500 have created another key high, 7-years and 7-months apart, following the 2007 highs?  The odds of this are low, the impact would be high if its true.

Click for large image at Kimble Charting Solutions.
double.top.kimble.2015.dec.07.600px

Other Economics and Business Items of Note and Miscellanea

  • Massive insider selling spurs stock market concerns (CNBC)   Corporate insiders have been selling their shares at near-record levels, and according to some, this could be a sign for outside investors to start selling as well.  Investment research firm TrimTabs reported on Wednesday that insider selling reached $7.6 billion for the month of November, the fourth-highest monthly level on record. For some this may be an alarming indicator, as corporate insiders tend to have more knowledge than public shareholders on the inner workings of the company, and what may drive stock prices up or down.  Econintersect:  Follow the weekly Insider Trading Report (Asif Suria, GEI Investing) - latest report:  Insider Trading 04 December 2015: Twitter Selling.

  • How Financial Criminals Use the Internet (Wealthy Retirement)   Financial criminals have noticed the power of viral marketing combined with social media.  In order to establish a bond with their victims, dishonest stock promoters or pumpers will join social media interest, alumni or even interest groups. Often, they will create several fake profiles to target members of several groups at the same time.  Pumping and dumping schemes for stocks are one area of widespread activity.

  • S&P 500 Companies That Can Afford to Pay Dividends--But Don't (Financial Planning)  Bear in mind that there are other good uses for corporate mountains of cash that can benefit shareholders. Companies can expand, acquire or repurchase stock, among other moves. But if dividends are what you seek, based on recent precedent, they aren't likely to find them here. For good dividend bets, see the next article.

  • Biggest Dividend Increases From S&P 500 Companies (Financial Planning)  Companies that keep raising dividends are the mohter lode for income seeking investors.  Here is a list of 15 ompanies that have average annual dividend increase from 42% all the way up to an astounding 114%.  That final number belongs to Helmerich & Payne (NYSE:HP) which had a dividend of $0.28 in 2012 and currently has an annual dividend rate of $2.75 based on the latest quarterly dividend of record as of 10/31/2015.

  • Mohamed El-Erian: Here's the new paradigm for 2016 (CNBC)   Allianz Chief Economic Adviser Mohamed El-Erian said Thursday the new paradigm for financial markets in 2016 is divergence.  The former Pimco co-CEO told CNBC's "Squawk Box

"Are divergent central banks ... still able to repress the volatility that comes from geopolitics ... [and] economics? That is going to be the great question.  Central banks are no longer on the same side.  The Fed is going to be easing its foot off the stimulus accelerator [while] the ECB, the Bank of Japan, and the People's Bank of China are going to be pressing harder on the stimulus accelerator." 

  • 7 Reasons Businesses Should Accelerate Their Renewable Energy Strategy Now (Rocky Mountain Institute)  Yet again, Congress has been working furiously to pass a year-end version of the "Tax Extenders" bill, something that has become an annual ritual to forestall the executioner on a variety of wide-ranging temporary tax incentives. Meanwhile, those with a vested interest in the U.S. renewable energy market wait with baited breath. The bill includes provisions to extend the Production Tax Credit (PTC) and Investment Tax Credit (ITC), two powerful economic subsidies for continued renewable energy expansion.  Arguably, this year's Tax Extender legislation stands to affect no group of interested parties more than corporate or institutional (C&I) buyers of long-term renewable energy.  As seen below this area has seen exponential growth over the last three years.

Click once for large image, twice for huge image.


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