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".).
"We expect 4Q15 earnings to be sharply lower for all oil and gas producers, including integrated companies, with deeper losses and wider cash flow deficits, compared with the prior periods, as realized prices fell below break-even levels. The industry's financial condition continues to deteriorate, despite asset sales and secondary offerings, which are a temporary solution to a longer term problem of low prices for a longer period."
BlackRock Earnings Miss; Fink Sees Further Market Correction (Financial Advisor) Stocks fell around the world today and bonds jumped as oil’s plunge below $30 sent markets reeling. Fink said markets will probably decline another 10% before rebounding in the second half, and oil may test $24 a barrel. Econintersect: Let's see - Another 10% from right now would be about 14,300 for the Dow, down 18% for the year 2016 and down 22% from the all-time closong high on 18 May 2015.
2 Days, $5 Billion In US Shale Writedowns (Oil Pro) Two days brings news of a total of $5 billion in U.S. shale writedowns. BHP Billiton said Thursday that it expects an impairment charge of $4.9 billion (post-tax, or ~$7.2 billion pre-tax) against the value of its shale assets in the US, and Tokyo Gas Company said it expects to writedown $90 million on its US shale gas project in the Barnett Shale.
FTSE closes lower as $5.7 trillion is wiped off global stocks (City A.M.) It's not looking good all round: a note from analysts at Bank of America Merrill Lynch today suggested $5.7 trillion has been wiped off the market capitalization of global equities in 2016. That’s more than the GDP of France and the UK combined.
France clinical trial: 90 given drug, one man brain-dead (BBC News) One man is brain-dead and another five people are in hospital after an experimental drug was administered to 90 people in a French clinical trial. There is no known antidote to the drug, the chief neuroscientist at the hospital in Rennes said. Of the five men in hospital, three could have permanent brain damage, Gilles Edan added. Reports that the drug is a cannabis-based painkiller have been denied by the health ministry. The trial, which involved taking the drug orally and has now been suspended, was conducted by a private laboratory in Rennes. Econintersect: Was this test cheaper than using lab rats?
Dollar-needy Turkey tightens foreign currency rules (Al Monitor) Unable to stop the economic hemorrhage sparked by the flight of foreign investors and money, Turkey’s government has tightened the country’s 26-year liberal foreign exchange rules. Travelers exiting Turkey are now required to make declarations of cash and credit cards or face sanctions on charges of money laundering and smuggling.
Iran-India energy cooperation opens new horizons (Al Monitor) Last month, Turkmenistan began construction of an ambitious $7.6 billion pipeline to export natural gas to India via Afghanistan and Pakistan. The project, known as TAPI (Turkmenistan-Afghanistan-Pakistan-India), will supply 33 million cubic meters of gas per day to India through a 1,814-kilometer (1,127-mile) pipeline. If finished on schedule, it is slated to become operational by the end of 2019. Some energy analysts see the long-delayed launch of TAPI as the death knell to the stalled Iran-Pakistan-India (IPI) project, which — similar to TAPI — has seen years of planning and negotiations and was supposed to supply India with almost the same amount of natural gas per year.
Sean Penn says Mexico wants him in crosshairs of Chapo's cartel (Reuters) Oscar-winning actor Sean Penn on Friday rejected Mexico's claim that his secret meeting with Joaquin "El Chapo" Guzman was crucial to the drug kingpin's recapture, saying officials were trying to put him in the crosshairs of the feared cartel. Penn also told talk show host Charlie Rose that he regrets the fallout from the Rolling Stone article based on his interview with Guzman. Their meeting in a jungle hideout was the first interview anyone scored with the fugitive drug lord, and Penn said he had hoped it would spur a broader discussion on the drug war.
There Is a New Climate Change Disaster Looming in Northern Canada (Vice) Hat tip to Lorne Warwick, Newsana. Not only is thawing of the Arctic releasing frozen CO2 and methane, but decades of mining tailings loaded with "skeevy chemicals like arsenic, lead, and mercury—in frozen dams reinforced with permafrost" are starting to spread into the environment as the dams melt and give way.
Towards a global narrative on long-term real interest rates(Łukasz Rachel and Thomas D. Smith, Voxeu.org) The authors (from the London School of Economics and the Bank of England) look for a relationship between macroeconomic factors and interest rates. They think they have found a "unifying framework". Their work can be visually understood with their Figure 5 (below) and their summary statement (also below). This article has produced a flutter of Twitter activity (see next article). Econintersect: The conclusion and the graphic do not discuss the amount of scatter on the data they have used. There is obviously such a small correlation coefficient in the graphic's data to render any possible dependable (and dependent) relationship invalid. Here is their summary statement, followed by their characterization of Figure 5:
This column attempts to fill that gap, and suggests that persistent shifts to global desired savings and investment are behind the bulk of the fall in real interest rates.
Over the past 30 years the proportion of dependents (those aged 0-19 and 65+), has fallen from 50% of the global population to 42%. There is a stable negative relationship between dependency ratios and saving rates across countries over time (Figure 5).
Other Economics and Business Items of Note and Miscellanea
Vote from Home, Save Your Country (Washington Monthly) Universal vote by mail can revive the franchise and change the political map. So why the resistance? Because those in political power (in both parties) don't want a higher voter turnout. Econintersect: American politicians aren't interested in representative democracy; they are interested in staying in power.
What are your thoughts on Gen Y’s (and other generations) ability to manage the economic climate being handed over to them?
I’m very optimistic. Globally, we’ve decreased poverty, violence and wealth inequality tremendously. And at the exponential rate that we’re developing technology, it will be very soon before the vast majority of humanity will be able to experience what only the affluent have access to today.
What Forecasters Expect From the Economy in 2016 (The Wall Street Journal) The consensus on all the usual metrics is very "goldilocks" in tone and also probably very wrong. Some of the numbers by year-end: Unemployment 4.7%, more than 2.2 million additional jobs, $43 oil and 2.5% GDP growth.
The NRA is a well-heeled political front man for the arms industry and is complicit in duping its members and other gun owners into an ideological war when in reality continued growing gun sales is the real strategy.
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