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What We Read Today 29 February 2016

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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Topics today include:

  • Today's Fundamental Case for Gold

  • Oil Keeps Rising

  • The New Profit Point for Shale is Below $40

  • Global Market Reaction to the G20 Meeting

  • How the $7 Billion Stanford Ponzi Scheme was Uncovered

  • Migrant Crisis in Europe is Getting Really Nasty

  • Giant Iraqi Dam Could Collapse Producing Massive Devastation

  • Moderates in Majority in Iran's Election

  • China Supports Growth, Not Yuan

  • Argentina Settles 15-Year-Old Bond Dispute

  • Excessive Cost and Treatment is the U.S. Health Crisis

  • Clarence Thomas Asks First Questions in 10 Years

  • What President Trump Would Mean for Business

  • And More

Articles about events, conflicts and disease around the world

Global

  • US oil ends up 3% on Saudi freeze comments (CNBC)   U.S. oil prices rose on Monday after China moved to boost its slowing economy and Saudi Arabia pledged to work with other crude producers to limit market volatility, feeding hopes the oil selloff would end.  A Reuters poll also indicated the Organization of the Petroleum Exporting Countries pumped less crude this month than in January, boosting market sentiment.Brent futures were trading at $35.97 per barrel, up 87 cents, or 2.48%. U.S. crude futures settled at $33.75 a barrel, up 2.96%, or 97 cents.

  • Were Markets Expecting Too Much From the G-20 Meeting? (Bloomberg)  There has been a market letdown following last week's meeting.

U.S.

stanford.downfall.audio

  • Hecklers disrupt Trump rally, photographer shoved to the ground (Reuters)  A Donald Trump rally at Radford University in southwestern Virginia was repeatedly disrupted by hecklers, including some from the Black Lives Matter movement, on Monday and a Time magazine photographer said he was choked and pushed to the ground in a tussle with U.S. Secret Service agents.

  • US shale producers may come back above $40 (CNBC)  $40 is the new $70.  A lean and mean U.S. shale oil industry can now make money at prices of $40.  Two years ago that number was $60 - $70.

EU

  • Europe's crisis worsens: Migrants face razor wire, tear gas (Associated Press)  Pressed against coils of razor wire and shouting "Help us!," refugees stranded at Greece's northern border were pushed back Monday by Macedonian police using tear gas and stun grenades, as the European Union scrambled to ease the escalating number of stranded migrants in Greece.  In a chaotic scene, Syrian and Iraqi refugees forced their way through part of a Macedonian border fence, some clutching infants or struggling to free duffel bags caught in the razor-wire fence. They were met by Macedonian riot police, bolstered by dozens of special forces officers flown in by helicopter to quell a refugee protest.  Amnesty International condemned European government for failing to adequately help stranded migrants.  See also article under France, below.

France

  • Calais Jungle is evicted by police with tear gas, rubber bullets and water cannons (The Independent)  French police are forcibly evicting refugees from the Calais Jungle camp using tear gas, rubber bullets and water cannon.  The eviction is being carried out by the CRS, or Compagnies Républicaines de Sécurité, who are the French riot police.  Following a court ruling last week that the camp could legally be evicted, a judge added that the camp had to be be relocated without force. However, volunteers in Calais say that the eviction is being carried out forcibly, and far sooner than expected.  The break-up of the camp reduces the refugees' chance of being accepted for asylum in England, where many have family, speak the language and feel they will be more likely to find work.

Syria

  • Saudi Arabia trying to destroy fragile truce in Syria, warns Assad regime (The Independent)  The Syrian regime has accused Saudi Arabia of trying to undermine peace efforts as the fragile ceasefire in the war-torn region enters its third day.   Bashar al-Assad’s government said the Saudi kingdom’s proposal of “plan B” if the truce fails is an attempt to thwart the cessation of combat operations.  The unstable peace has, so far, significantly reduced violence across the country enabling some aid to be delivered to desperate civilians in besieged towns.  UN chief Ban Ki-moon said there been some incidents but the ceasefire was generally holding.

Iraq

  • Iraq's Mosul Dam faces 'risk of catastrophic failure,' U.S. says (CNN)  )Iraq's Mosul Dam is facing a "serious and unprecedented risk of catastrophic failure with little warning", the U.S. Embassy in Baghdad warned on Sunday. At the same time, Prime Minister Haider al-Abadi played down the threat of a potential breach at the country's largest dam.  ISIS militants seized the dam in August 2014. U.S. airstrikes helped Kurdish and Iraqi forces take control of it back that same month.  Experts have questioned whether repairs are possible.

Iran

  • Iranian moderates win majority in parliament, clerical body (Associated Press)   Iranian reformists and relative moderates who support last year's nuclear deal won the most seats in parliament and a clerical body charged with selecting the next supreme leader in a major setback for hard-liners who opposed the agreement, official election results showed Monday.  Final results released by the Interior Ministry and broadcast on state TV show that reformists, who favor expanded social freedoms and engagement with the West, and other backers of President Hassan Rouhani, won at least 85 seats. Moderate conservatives -- who split with the hard-line camp and support the nuclear deal -- won 73, giving the two camps together a majority over hard-liners in the 290-seat assembly.  Hard-liners won just 68 seats, down from 112 in the current parliament. Five seats will go to religious minorities, and the remaining 59 will be decided in a runoff, likely to be held in April.  While none of the country's three main political camps will dominate the next parliament, the assembly will be much friendlier to President Hassan Rouhani, a moderate elected in 2013 on pledges to relax restrictions on freedom of expression and improve ties with the West.

China

  • China Frees Banks to Boost Lending, in Shift on Yuan Stance (The Wall Street Journal)  Central bank, caught in a bind, cuts reserve requirements for lenders, a move that threatens downward pressure on currency.  Econintersect:  Trying to protect growth has priority over supporting the yuan renminbi.

  • China tells dead to 'squeeze up or go green' (Reuters)  With a shrinking amount of cemetery space, Beijing is calling on relatives to either scatter the ashes of their loved ones, or bury multiple family members in the same grave site. This goes against thousands of years of tradition, in a country were burials are taken very seriously.

Argentina

  • Argentina settles 15-year bonds battle (BBC News)   Argentina has signed an agreement with US hedge funds to settle a protracted dispute over its failure to repay billions of dollars worth of bonds.  It will pay the funds who sued the nation about $4.6 billion to settle claims.  They had bought the bonds at heavily discounted prices after the country's economy collapsed in 2001.  The previous government of President Cristina Fernandez de Kirchner, refused to negotiate with the investors, labelling them "vulture funds".   The agreement is a victory for Mauricio Macri, who was sworn in as Argentina's president in December.  He reversed the non-payment stance taken by his predecessor.


Golden Cross for Gold (Frank Holmes, U.S. Global Investors)  FH has contributed to GEI.  Here is the intro below, followed by some excellent graphics.

Last Friday, gold experienced a “golden cross,” a technical indicator that occurs when an asset’s 50-day moving average crosses above its 200-day moving average. It’s the first such movement in nearly two years and is a sign that gold might have further to climb.  

But there’s more exciting news involving gold. On the same day that New Jersey Governor Chris Christie endorsed Donald Trump for president, the precious metal received its own high-profile endorsement. In a note to investors, Deutsche Bank said it’s time to buy gold, writing: “Buying some gold as ‘insurance’ is warranted.” The bank also stated its opinion that gold “deserves to be trading at elevated levels versus many other assets”.  

The metal is already up 15 percent so far in 2016, its best start to the year in decades. But it started 2015 strong too, if you remember, before prices began to collapse in February.  

So what’s the difference between then and now?  Gold owes a lot of its success this year to negative real interest rates, something it didn’t have on its side in early 2015.

 

Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea

  • Why this radical activist is disillusioned by the toxic culture of the left (The Independent)  Econintersect:  What's the point of this article?  It is a generalized rant by a disillusioned idealist who happens to be a leftist.  It could have been written by a disillusioned right-winger by simply replacing the words "left" with "right", "Marx" with "Menger", and similarly with several other ideologically charged words.  The article is weakened by being framed in generalities without specifics.  I jumped to this article with great expectations and left very disappointed.  But if you like a good old fashioned rant, you should read it.  If you are a similarly frustrated leftist you may find it cathartic.  I certainly hope the author did - he/she clearly had some emotional issues to work out.   

  • Excessive treatment and cost at core of U.S. healthcare crisis (Employee Benefit News)  Excessive treatment and cost are at the core of the entire U.S. healthcare crisis. The fact that other societies and a few innovative firms here consistently deliver equal or better quality care at dramatically lower cost betrays the idea that conventional U.S. healthcare is necessarily superior or even appropriate.  The pharmaceutical industry is discussed as a case in point.

  • His Job Is to Sell a $1,000 Pill for $10 Without Losing Money (Bloomberg)  Gregg Alton has what seems like a disorienting job at Gilead Sciences Inc. He’s paid to figure out how to sell the drug Sovaldi, which infamously retails in the U.S. at $1,000 a pill, for relatively next to nothing.  The problem revolves around greatly expanding the market by selling the drug in poorer countries at prices they can afford.  At the moment there are 101 countries in Gilead’s most-needy category, including Egypt, Cuba, Pakistan and the Philippines, and they’re all on the company’s generic-approved list. Gilead has given 11 manufacturers in India licenses to make knockoffs, with sales strictly limited to the list; Gilead gets a 7% cut of sales. A generic pill is going for as little as $4.29 in India.  But expansion to many other countries on the list of 101 could take many years.  Meanwhile the drug remains Gilead's cash cow.

gilead.revenue.2012.2016

  • Defined contribution plans in need of makeover (Employee Benefit News)  Since defined contribution  (DC) plans — like 401(k) and 403(b) plans — have taken the place of guaranteed retirement income provided by workplace-sponsored defined benefit (DB) plans, it may be time to redesign them.  Initially, DC plans were never intended to fully replace DB plans.  Failure of employees to achieve sufficient retirement resources leads to many continuing to work to an older age which has several negative effects for employers, including delays in bringing in younger, recently educated workers and higher health care costs for the older workers.  This article suggests that the best solutions may be to enhance DC plans through greater use of matching funds and increasing employee participation through opt-out structures and increasing the diversity of investment options, including use of institutional multi-year asset strategies.

  • Thomas Asks Questions From Supreme Court Bench for First Time in 10 Years (Bloomberg)  Justice Clarence Thomas broke his decade-long silence during U.S. Supreme Court arguments Monday, asking almost a dozen questions in a case involving gun ownership by people convicted of domestic violence.  The queries came as the court considered a federal law that bars firearm possession by people convicted of a misdemeanor crime of domestic violence. The court will decide whether that law applies to a man convicted in Maine of assaulting his wife.  Thomas’ queries Monday came 16 days after the death of Justice Antonin Scalia, a fellow conservative who had been one of the court’s most active questioners. Thomas currently sits next to Scalia’s empty chair, which is adorned with black wool crepe.

  • What Donald Trump's Election Means for Business (Bloomberg)  Strategas Head of Policy Research Dan Clifton weighs in the impact of the 2016 Presidential race on the markets.  Watch video at Bloomberg.


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