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.
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Topics today include:
Someone Apologizes for Inflation
Sugar is up 70% in Nine Months
Corporate Cash Inequality
Workers Eligible for Overtime Now Only 7%
Oil Prices in Doubt
Mars Courtesy of Hubble
Zika Infections in Pregnant US Women
Oklahoma Says Obama's Bathroom Orders are "High Crimes and Misdemeanors"
Russia Wants Joint Airstrikes with U.S.
More Violent Protests in Baghdad
More Details on EgyptAir Tragedy
All-time Record Temperature in India
Mexico Approves 'El Chapo' Extradition to U.S.
Articles about events, conflicts and disease around the world
Oil eases as focus returns to oversupply, strong dollar lends support (Reuters) Oil prices slipped on Friday as a strong dollar and recent gains incentivized investors to cash in, while focus shifted again to swelling global inventories that have cushioned the impact from unplanned supply outages. Global benchmark Brent crude prices LCOc1 traded down $0.30 at $48.51 a barrel at 1404 GMT. U.S. West Texas Intermediate (WTI) crude futures CLc1 traded at $47.91 a barrel, down $0.25 day on the day. The dollar was on course for a third straight weekly gain on Friday on hints the United States is getting closer to raising interest rates. A stronger dollar makes it more expensive for investors to hold greenback-denominated commodities like oil futures.
The 'dirty little secret' about $50 oil: Tom Ward (CNBC) Chesapeake Energy co-founder Tom Ward said Friday that oil prices need to recover to about $75 a barrel in order for most drillers to ramp up production. Crude futures have recently approached $50 a barrel after rebounding more than 80% from this year's lows in the mid-$20 range. Some worry those prices will incentivize high-cost U.S. oil producers to put more rigs to work, worsening a global supply glut and putting off a sustainable price recovery. U.S. oil production has fallen from a high of nearly 9.7 million barrels per day last year to about 8.8 million barrels per day. But $50 is not high enough to elicit a production response, said Ward, who is now chairman and CEO of Tapstone Energy. That is because the capital markets are essentially closed to drillers, and drillers need to outspend cash flow to increase production, he said.
Nearly 300 pregnant women in US test positive for Zika (BBC News) Nearly 300 pregnant women in the US have tested positive for Zika virus, according to the latest figures from the Centers for Disease Control and Prevention (CDC). In the US, 157 pregnant women have tested positive for the disease and 122 have tested positive in US territories.
Oklahoma introduces measure to impeach Obama over bathroom rights (Reuters) Oklahoma's Republican-dominated legislature has filed a measure calling for President Barack Obama's impeachment over his administration's recommendations on accommodating transgender students, saying he overstepped his constitutional authority. Lawmakers in the socially conservative state are also expected to take up a measure as early as Friday that would allow students to claim a religious right to have separate but equal bathrooms and changing facilities to segregate them from transgender students. Econintersect: What again are "high crimes and misdemeanors"?
Signs of fear are running rampant through the market (CNBC) The signs of market fear are everywhere, from deep-pocketed hedge funders on Wall Street to mom-and-pop investors in flyover country. A year after the market reached record highs and it looked like there was nothing that could stop what has become the second-longest bull market in history, market participants are pulling money off the table and heading for cover. Econintersect: Is this a "wall of worry" or the "hammer of death"?
Russia proposes joint air strikes on Syria rebels but U.S. is cool (Reuters) Russia has proposed to the U.S.-led coalition that they stage joint air strikes on Syrian rebels, including militant Islamist group Nusra Front, who are not observing a ceasefire, but the United States responded coolly on Friday. Such action would begin as of May 25 and be coordinated with the Syrian government, Russian Defense Minister Sergei Shoigu told a Defense Ministry meeting broadcast on state television, adding Moscow reserved the right to stage strikes unilaterally. He said joint air strikes should also target convoys carrying weapons and ammunition crossing into Syria from Turkey.
Iraqi protesters storm Baghdad's Green Zone, shooting erupts (Associated Press) For the second time in three weeks, Iraqi security forces fired tear gas and gunshots in the air as hundreds of anti-government protesters stormed Baghdad's heavily secured Green Zone on Friday. Several demonstrators, mostly supporters of powerful Shiite cleric Muqtada al-Sadr, were wounded as the crowd rushed the prime minister's office and the parliament building. The violence prompted Iraqi Prime Minister Haider al-Abadi to impose a curfew in the country's capital but it was lifted just a few hours later. By evening, the protesters were cleared from the Green Zone compound. Earlier in the day, crowds of mostly young men gathered outside the Green Zone walls, with their numbers swelling into the thousands. This led security forces to push through the crowd on foot, firing volleys of tear gas in an effort to push the people back from the gates. The violence quickly escalated. The protesters who made it into the Green Zone rushed toward the prime minister's office and the parliament building. Some posted jubilant photographs from inside the premier's office on social media sites.
Searchers find body parts, seats, luggage from Egyptian jet (Associated Press) Search crews found floating human remains, luggage and seats from the doomed EgyptAir jetliner 180 miles north of Alexandria, Egypt Friday but face a potentially more complex task in locating bigger pieces of wreckage and the black boxes vital to determining why the plane plunged into the Mediterranean. Looking for clues to whether terrorists brought down EgyptAir Flight 804 and its 66 people aboard, investigators pored over the passenger list and questioned ground crew members at Charles de Gaulle Airport in Paris, where the plane took off. The Airbus A320 had been cruising normally in clear skies on a nighttime flight to Cairo early Thursday when it suddenly lurched left, then right, spun all the way around and plummeted 38,000 feet into the sea, never issuing a distress signal.
Mercury rising: India records its highest temperature ever (CNN) India recorded its highest-ever temperature on Thursday when the heat in the town of Phalodi, in the western state of Rajasthan, shot up to a burning 51 degrees Celsius (123.8 degrees Fahrenheit). It was the second day in a row the town experienced temperatures in excess of 50 degrees Celsius. Other towns in the state, such as Churu, also recorded highs of about 50 degrees Celsius (122 degrees Fahrenheit) the same day. In New Delhi, the capital, the temperature reached nearly 47 degrees Celsius on Wednesday. The previous temperature record in India was held by Alwar, also in Rajasthan, at 50.6 degrees Celsius (123.1 Fahrenheit) in May 1956.
El Chapo: Mexico grants extradition of drug lord to US (BBC News) The Mexican government has approved the extradition of drug lord Joaquin "El Chapo" Guzman to the US to face charges including smuggling and murder. His lawyers have 30 days to appeal and even if it proceeds it could be months before he is sent north. Guzman was recaptured in January, six months after escaping through a tunnel from his maximum-security prison cell.
Other Scientific, Health, Political, Economics and Business Items of Note - plus Miscellanea
Much of the world is in the grip of deflation and negative interest rates, with all kinds of negative consequences. Yet no one takes responsibility. Who do we blame? How do we get them to change their ways?
I’m happy to report that someone is finally stepping up. TheNew York Timesreported this morning that Akagi Nyugyo, a Japanese ice cream company, is airing a televised apology for raising its prices. Grim-faced executives and workers face the camera as a subtly humorous folk song plays and then bow deeply in contrition.
This probably seems very, very strange to American and European viewers. It’s also amusing, at least to me, but there’s a serious point here. Most of us grew up in a world where inflation is normal. We expect prices for most goods and services to go up a little bit each year. That perception is starting to change, but it is still the default setting for most people, even economists.
The Japanese have a very different perception after 25 years of deflation. They expect prices to fall, not rise, or at least to remain steady. Akagi Nyugyo hadn’t raised the price of its signature ice cream bars in decades. Higher lumber expenses (for the sticks) finally forced their hand. The company feels terrible and decided to it should apologize.
Sugar Is Getting More Expensive, and It’s El Nino’s Fault (Bloomberg) Sugar traded in New York surged to a 20-month high on Friday. Supply woes are pushing prices higher after this year’s El Nino weather pattern parched fields from Thailand to India, the world’s No. 2 grower. At the same time, demand is increasing in Asia. Even with a bumper crop expected from Brazil, most analysts are forecasting global deficits.
A third of cash is owned by 5 U.S. companies (USA Today) Hat tip to Doomstead Diner. The rising cash holdings of U.S. corporations is increasingly in the hands of a few U.S. companies, with just five tech firms having grabbed a third of it. And nearly three-quarters of cash held by non-financial U.S. companies is stashed overseas, outside the long arm of Uncle Sam. Apple (NASDAQ:AAPL), Microsoft (NASDAQ:MSFT), Alphabet (NASDAQ:GOOGL), Cisco Systems (NASDAQ:CSCO)and Oracle (NASDAQ:ORCL) are sitting on $504 billion, or 30%, of the $1.7 trillion in cash and cash equivalents held by U.S. non-financial companies in 2015, according to an analysis released Friday by ratings agency Moody's Investors Service. That's even more cash concentration than in previous years, as these five companies held 27% of cash in 2014 and 25% in 2013. Apple alone is holding more cash and investments than eight of the 10 entire industry sectors.
Half or quits (The Economist) Currently, employees earning over $23,660 are not eligible for overtime pay, a mandatory 50% wage bump for work in excess of 40 hours per week. Inflation has put most over this level: in 1975 62% of full-time salaried workers were eligible; today just 7% are. From December, the White House has announced, the threshold will rise to $47,476. That will probably boost the earnings of existing employees slightly, though firms are likely to cut wages for new recruits to keep costs down. They may also be discouraged from allocating workers more than 40 hours. That will hurt some. A slightly higher federal minimum wage would be a less risky route to higher pay. But changes to overtime rules, unlike the minimum wage, do not require the consent of Congress. Econintersect: Could this go even lower? Afterall, how many robots get overtime?
Initial Jobless Claims Cycle(Nautilus Investment Research, Twitter) Econintersect: Will the next peak (if the projection is accurate) be high or low based on the weak economic expansion that has occurred?
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