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What We Read Today 27 October 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".).


Every day most of this column ("What We Read Today") is available only to GEI members.

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Topics today include:

  • Twitter Beats Expectations, Stock Pops

  • Twitter Announces 9% Employment Cut

  • Tesla's Surprise 3Q Profit was Not that Good a Report

  • This Market Cycle Will End

  • Outlook for Stock Returns for Next 10- and 20-Years Not So Good

  • Global Bonds Down Significantly Last Two Months

  • U.S. Senate to Hold Hearings on AT&T - Time Warner Deal

  • Latest on Election Campaign Tactics

  • Can Clinton Resue Obamacare?

  • UK Has GDP Surprise - and It's Good

  • UK Airports Expansions

  • UN Peace Plan for Yemen Shortchanges the President

  • Putin Says U.S. has Election Hysteria Over Russia

  • SocGen Looks for Falling Yen vs. Dollar

  • And More

Articles about events, conflicts and disease around the world


  • Bonds Fall, Dollar Rises as Traders Mull Waning Stimulus; Oil Up (Bloomberg)  This month’s selloff in global bonds deepened amid speculation that major central banks may be moving closer to scaling back their extraordinary stimulus measures. Oil climbed with the dollar.  The debt rout was led by U.K. gilts as data showing faster-than-estimated economic growth left money markets showing virtually no chance of lower interest rates through the end of 2017. Treasuries sank and the greenback rose to a seven-month high amid bets on a Federal Reserve hike in December. Stocks fluctuated on mixed earnings, while oil approached $50 a barrel.


"The hearing will examine the impact of the proposed transaction on consumers, including the implications for competition and innovation in the creation and distribution of video content." 

  • GOP vulnerables dial back Hillary attacks (The Hill)  Republicans in close congressional races are toning down criticism of Hillary Clinton in hopes that some Clinton voters will split their tickets. 

  • Black turnout key to House fight (The Hill)   Hillary Clinton is not the only Democrat scrambling to rally black voters to the polls next month to temper the drop-off widely expected from a presidential election without Barack Obama on the ballot.  House Democrats are also hurtling to energize African-American voters, who compose a meaningful bloc in a number of battleground districts and could prove the deciding factor in races spanning from Florida to California.

  • Trump aide reveals 'three major voter suppression operations' (The Hill)  The efforts are intended to cut down on votes by white liberals, young women and black voters, three blocs important for Clinton, the official said.  To suppress the vote by "idealistic" white liberals who might have been attracted to Sen. Bernie Sanders's (I-Vt.) campaign, the Trump official said the GOP nominee's campaign would highlight Clinton's support for the Trans-Pacific Partnership trade deal.  Trump has also tied his campaign to women who have accused former President Bill Clinton of sexual assault to try to decrease turnout by young women, the official said.  Hillary Clinton has a huge edge among female voters, according to polls. Trump invited three women who have made accusations against Bill Clinton to the second presidential debate.  To try to lower black voter turnout, the senior official said the GOP nominee and his campaign were citing Hillary Clinton's 1996 comments referring to some young black criminals as "superpredators."

  • Clinton to the Rescue of Obamacare (Bloomberg)  After two years of underpricing their plans to attract enrollees, insurers have lost money and need to catch up. But that’s not the only disappointing Obamacare news. Younger, healthier adults aren’t signing up because out-of-pocket costs are too high for their moderate incomes. Most Americans, in any case, are covered by employer-based plans, which have expanded, not shrunk, since Obamacare began.  Enrollment is half what the Congressional Budget Office projected it would be by now, causing some insurers to abandon the program because they can’t make a profit. When open enrollment begins on Nov. 1, the sticker shock could be severe for customers in states where only one or two companies are still offering plans.  Clinton says she favors a public option, which would move the U.S. closer to a single-payer system. It’s a popular idea with the Democratic left. Oregon Senator Jeff Merkley’s proposed resolution calling for it has 32 co-sponsors.   (See also Obamacare Will Survive (With Some Tweaks) But:

A public option was debated in 2009-10, when Obamacare was being created. Fear of Medicare’s bargaining power among insurers, hospitals, physicians and pharmaceutical companies -- all of whose cooperation is needed to make Obamacare work -- doomed the idea politically even though Democrats were in control of Congress. There’s no reason to think this has changed, or will change after the election, as Clinton knows.

Clinton would do better to focus on restoring competition to the state marketplaces and luring healthier individuals to sign up. One way she could do this is by pressing Congress to renew a government reinsurance program that is about to expire.


  • Brexit, what Brexit? UK economy grows by 0.5%, slower than the previous quarter but better than economists had expected (City A.M.)  GDP is estimated to have grown by 0.5% in the third quarter of the year, in a sign the economy has, so far, shrugged off the effects of Brexit.   The statistics from the Office for National Statistics (ONS) are the first to cover the full three months after the UK voted to leave the European Union back in June.  Brexit-supporting politicians are expected to jump on the figures as proof that warnings about the economy prior to the referendum were just scare stories. Analysis from the Treasury predicted earlier this year that if the UK voted to leave, this quarter could see growth as low as 0.1%.

  • What about other UK airports' expansion plans? (BBC News)  The government may have decided to go ahead with Heathrow's third runway, but that doesn't mean the debate is over.  Protest groups and local councils are already vowing to oppose it all the way, and some say a third runway is unlikely to be completed before 2030 because of the planning and environmental issues.  But as air travel is expected to continue growing significantly in the first half of the 21st Century, how are the UK's other major airports planning to expand?  The very busy Gateway airport has pn;ly one runway, for example.


  • U.N. peace plan for Yemen seems to sideline exiled president (Reuters)  A U.N. peace proposal to end a 19-month war in Yemen appears aimed at sidelining exiled President Abd-Rabbu Mansour Hadi and setting up a government of less divisive figures, according to a copy seen by Reuters.  Hadi fled the armed advance of the Iranian-allied Houthi movement in March 2015 and has been a guest of neighboring Saudi Arabia ever since.  A U.N. Security Council resolution a month later recognized him as the legitimate head of state and called on the Houthis to disarm and quit Yemen's main cities.  But the Houthis and their allies in Yemen's army have said he will never return, accusing him and his powerful vice president, Ali Mushin al-Ahmar, of corruption.  The latest peace plan submitted by U.N. envoy Ismail Ould Cheikh Ahmed suggests Ahmar would step down and Hadi would agree to become little more than a figurehead after a Houthi withdrawal from the capital Sanaa.  It was not immediately clear if the men had been consulted on the plan. But their supporters have in the past insisted that past agreements recognizing Hadi as leader must be respected.


  • Putin says U.S. 'hysteria' over Russia is election ploy (Reuters)  President Vladimir Putin on Thursday accused American politicians of whipping up hysteria about a mythical Russian threat as a ploy to distract voters from their own failings in the run-up to the U.S. presidential election.  Putin, addressing an audience of foreign policy experts gathered in southern Russia, repeatedly lashed out at the Obama administration, saying it did not keep its word on Syria, did not honor deals, and had falsely accused Moscow of all manner of sins.


  • JPY: The 'fall guy' among major currencies; we stay short - SocGen (  Very slowly rising US rates, low volatility and over-correlated markets are a recipe for yield-hunters to stick to their guns even in the face of small setbacks, and for the yen to be the fall guy among major currencies.  So the higher US yields have USD/JPY trending up again. For a bigger move, we need to get a bigger move in relative real yields however -so far, they've lagged the nominal move. That will come, but needs US yields to keep going.  SocGen maintains a long USD/JPY position from 100.30.


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

  • Twitter Pops on Q3 Beat, Cuts Workforce by 9% (Investopedia)  Despite prolonged weakness with user growth and engagement, the company's third quarter results Thursday and the announced 9% reduction in its workforce suggests Twitter is not that far off from turning things around. Given the improved growth, combined with leaner operations, there's still the question: Is it enough to command any significant M&A premium?  For the three months that ended September, the San Francisco-based micro-blogging site reported ththird-quarterdjusted earnings of 13 cents per share on revenue of $616 million, which beat Wall Street's expectations of 9 cents per share on $606 million in revenue, according to Thomson Reuters. Beyond the top and bottom line beat, it's also encouraging that Twitter's Q3 profits marks a 30% rise year over year.  In the past month, all rumored merger suitors withdrew consideration of Twitter.


  • Here's Why Tesla's Q3 Report Wasn't As Good As You Might Think (  Yesterday, Tesla (NASDAQ:TSLA) reported positive earnings of $0.14 per share on $2.30 billion revenue, which caused the stock to jump more than 4% overnight. While the results were a positive surprise since analysts as a whole expected the company to report a loss, one has to wonder if Tesla is really reaching profitability. Or could this simply be a one-time event that may not happen again soon?  Over both the short and longer term, significant questions surrounding Tesla persist, namely about the completion of its Gigafactory and its ability to deliver half a million quality cars annually, less than two years from now.


  • This Cycle Will End (Lance Roberts,  LR contributes weekly to GEI.  This is the fourth longest economic recovery in history, going back to 1871 (first graph below). We have recently reached the highest ever peak in the ratio of household equity holdings to disposable personal income (second graph below).  Based on historical references we are expecting very low, even possibly negative, 10- and 20-year returns from stocks (third and fourth graphs below).

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