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What We Read Today 14 December 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:

  • This is What Happened the Last Two Times the Fed Raised Rates

  • If Trump Were to Match Obama, the Dow Would Have to Reach 50,000 in 8 Years

  • There Really isn't that Much Difference between Most Dem and GOP Presidents Re: Stock Market Performance

  • Two Diametrically Opposed Views of Where Markets are Going

  • Did 'Dark Stars' Help Form the Universe?

  • NASA's 3-D Time Progression Data Map of Global CO2 and Temperature

  • Judge Orders Colorado Electors to Vote for Hillary Clinton

  • Trump Team Removes Climate Change Names Request

  • Washington's Trump International Hotel is a Big Problem for Trump

  • Charges Filed in Generic Drug Price Fixing Cases

  • U.S. Oil Production is Surging

  • Aleppo War Crimes

  • In Violation of Economic Theory, BoJ Needs to Print a Lot More Money to Hold Interest Rates Down

  • Can Abe and Putin Resolve Island Dispute?

  • China Weaponizes Disputed Artificial Islands

  • And More

Articles about events, conflicts and disease around the world


  • Did 'dark stars' help form the Universe? (BBC News)  Everything we can observe in the Universe makes up just 5% of the known mass.  Some of the rest is still a mystery.  It has been estimated that as much as 25% of this unseen mass is the so-called 'dark matter'.  It doesn’t even share the basic building blocks, the electrons and protons inside the atoms found in all matter.  Dark matter is believed to be composed of  Wimps (Weakly Interacting Massive Particles), large particles that do not interact with electromagnetic forces. This makes them “dark” – they can’t be observed using the electromagnetic sensors humanity has been scouring the Universe with over the last century.  Econintersect:  Visible light is just one of the electromagnetic elements used for observation. 

  • NASA just released an unprecedented 3-D map of heat-trapping CO2 in the atmosphere (Business Insider, Twitter) Econintersect:  Enjoy this animated display of data from NASA before President Trump cancels their climate data measurement program.  Is the philosophy that what we don't know can't hurt us?


  • Judge orders Colorado electors to vote for Hillary Clinton (Associated Press)  Colorado's nine electors must vote for Hillary Clinton because she won the state's popular vote, a judge ruled Tuesday, effectively stopping the state's electors from joining a longshot effort to unite with Republicans behind a compromise presidential candidate other than Donald Trump.  Denver Judge Elizabeth Starrs also ruled that any electors who fail to do so can immediately be replaced when the Electoral College convenes Dec. 19. She responded to a request from Colorado's secretary of state, who was seeking a way to prevent electors from diverging from the winner of the state's popular vote.  Electors Polly Baca and Robert Nemanich had sued to overturn a state law requiring them to vote for Clinton, but a federal judge refused to do so Monday.  There are similar lawsuits in California and Washington state seeking to overturn laws binding electors. A total of 28 other states have laws binding their electors to the winner of the popular vote.  At least one other Colorado elector has said he will vote for someone other than Clinton in a bid to woo Republican electors to a different GOP candidate, such as Mitt Romney. Only one Republican elector nationally has publicly said he would do that.

  • Michael Flynn quietly deletes fake news tweet about Hillary Clinton's involvement in sex crimes (CNN)  Incoming National Security Adviser Michael Flynn has quietly deleted a tweet with a link to a fake news story about Hillary Clinton's involvement in sex crimes with minors.  In the since-deleted tweet from Nov. 2, Flynn linked to a story on that falsely claimed the FBI investigation into Anthony Weiner had turned up evidence "to put Hillary (Clinton) and her crew away for life".

  • Trump team disavows survey seeking names of climate workers (Reuters)  President-elect Donald Trump's transition team on Wednesday disavowed a survey sent to the U.S. Department of Energy that requested the names of people working on climate change in the agency.  Trump spokesman Sean Spicer said:

"The questionnaire was not authorized or part of our standard protocol.  The person who sent it has been properly counseled."

  • The Latest: Possible problems for Trump over his DC hotel (Associated Press)  Donald Trump could have big legal or political problems if he doesn't dump his new hotel in the nation's capital.  Democrats say he'd be in breach of his lease to use the government-owned building that houses the hotel unless he sells his ownership interest before he assumes office on Jan. 20.  House Democrats cite a Dec. 8 briefing by a deputy commissioner at the government agency that's overseeing the lease.  The General Services Administration says in a statement that it won't make a decision on whether there's a breach until after Trump is in the White House.  A clause in the lease requires that "no elected official" shall be "admitted" to the lease. Some experts in government contracting law have said that means Trump must divest his ownership interest.

  • U.S. Files First Charges in Generic Drug Price-Fixing Probe (Bloomberg)  The Justice Department accused two executives of colluding with other generic pharmaceutical companies to fix prices, the first criminal charges stemming from a sweeping two-year investigation.  Jeffrey Glazer, a former chief executive officer of Heritage Pharmaceuticals Inc., and Jason Malek, an ex-president, were charged in Philadelphia, according to court filings unsealed on Wednesday. Each were charged in a criminal information with two counts of conspiring with other drug makers to fix the prices of an antibiotic and a drug used to treat diabetes.  Glazer and Malek intend to pleaded guilty and are cooperating with authorities, according to people with knowledge of the matter. A plea hearing is scheduled for Jan. 9.

  • US drillers pumped like crazy last week, and that's a 'major concern' for OPEC (CNBC)   U.S. crude oil production surged by about 100,000 barrels a day last week, providing further evidence that American drillers are responding quickly to the higher prices that OPEC created by agreeing to curtail their own production.  The Organization of Petroleum Exporting Countries reached an agreement to cut production by 1.2 million barrels a day last month and got commitments from some nonmembers to 558,000 barrels a day in reductions this past weekend. Hopes for output limits had boosted prices ahead of the agreements.  American drillers were not among the nonmembers who agreed to cut. In the lower 48 states, they drove production to nearly 8.8 million barrels a day in the week through Dec. 9, according to the U.S. Energy Information Administration. That is up from about 8.7 million barrels a day the week prior.



  • Inside the world's longest rail tunnel (BBC News)  The new 35.5 mile long Gotthard Base Tunnel promises to revolutionise European freight transport, because it will link the two largest ports in Europe: Rotterdam in the Netherlands and Genoa in Italy. Alpine highways will see about a million less trucks a year.  Currently, when trains zigzag and pass through the gorges and series of smaller tunnels, they inevitably climb up and down the slopes, burning extra electricity. Pulling trains up the hills requires a couple of locomotives and a lot of energy, explains Maurus Lauber, CEO of the Swiss Travel System.  But the Gotthard Tunnel runs through the mountains straight rather than rising and falling, or “flat-rail” as engineers call it. Eliminating the need to pull trains uphill and reduces the energy consumption.


  • Syria rebels retreat in Aleppo in 'terrifying' collapse (Associated Press)  Syrian rebels retreated from former strongholds in eastern Aleppo in a "terrifying" collapse Monday, holding onto a small sliver of territory packed with fighters and thousands of civilians as government troops pressed on with their rapid advance.  The Syrian military said it had gained control of 99% of the former opposition enclave in eastern Aleppo, signaling an impending end to the rebels' four-year hold over parts of the city as the final hours of battle played out.  See also next article.

  • Aleppo battle: Raids on Syria city 'likely a war crime' UN says (BBC News)  The bombing of the last parts of Aleppo held by rebels is probably a war crime, the UN's human rights chief says.  A deal to evacuate rebel fighters and civilians from eastern Aleppo has stalled, with heavy shelling reported.  Syrian activists say air strikes resumed over rebel-held territory, where at least 50,000 civilians remain.  The UN said raids by the Syrian government and its allies on an area "packed with civilians" most likely violates international law.  The renewed violence came despite a ceasefire put in place less than a day earlier.  See also Opinion: The UN left the people of Aleppo to die (CNN).


  • BoJ needs to print a lot more money to defend 10y interest rate target at 0% (Twitter)  Econintersect:  Economic theory says that printing a lot of money creates inflation and raises interest rates.  Japan has been in and out of deflation for past 20+ years and the correlation has been negative between the amount of money printed (BOJ balance sheet increase) and interest rates.  How fundamentally wrong can theory be?

Click for large image.

  • Can Putin, Abe change Asia Pacific power dynamic? (CNN)  They're the islands where World War II never ended and now they're the focal point of a rare meeting between the leaders of Japan and Russia.  Russian President Vladimir Putin makes his first visit to Japan in 11 years on Thursday with Tokyo hopeful of progress in getting Russia to return islands in the Kuril chain that the then-Soviet Union seized three days after Japan's surrender at the end of World War II.  It's been a sore spot in Japan-Russia relations for the past 71 years and is something that both Moscow and Tokyo are looking to leverage to enhance their security and economic interests in the Pacific.


  • South China Sea: Satellite photos 'show weapons' built on islands (BBC News)   New photographic evidence has emerged of "significant" Chinese military defenses on artificial islands in the South China Sea, a think tank reports.  China had previously committed to not militarising its controversial developments in the region.  But satellite images published by a US group appear to show anti-aircraft guns and missile defense systems on the seven islands.  Several countries claim territorial rights in the South China Sea.  The Asia Maritime Transparency Initiative (AMTI) said it had been tracking construction of hexagon-shaped buildings on four of the Spratly islands for several months.  Econintersect:  The Spratlys are 500-800 miles distance from the nearest recognized Chinsese territory (Hainan Island) and largely within the 200-mile international maritime limits of Philippines, Malaysia, and Brunei.


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

The last time the Fed raised short-term interest rates, stocks rallied. On Dec. 16, 2015, when the Fed boosted rates by 0.25 percent, the S&P 500 rose 1.45 percent, while the Dow Jones industrial average climbed 1.28 percent. The enthusiasm was short-lived, however, and the S&P sank more than 11 percent by mid-February.

The 2015 rate hike marked the first time in more than nine years that the Fed decided to boost the range for its key rate, which currently stands at 0.25 percent to 0.50 percent. Before that, the Fed last raised rates in June 2006. Markets also rewarded the news then, with the S&P jumping 2.2 percent and the Dow rising 2 percent, as the Fed strongly hinted that its long string of 17 rate hikes could be coming to a close.

Markets surged even higher when the Fed first embarked on its zero-bound policy on Dec. 16, 2008, in response to the financial crisis. That day, the S&P 500 spiked 5 percent and the Dow jumped 4.2 percent. The Fed would go on to maintain this low rate policy for the next seven years as the U.S. struggled to recover from the Great Recession and regain its economic footing.

  • Dow would rise to 50,000 if Trump matches market performance under Obama (CNBC)  Investor enthusiasm around his presidency has helped push the Dow Jones industrial average to the cusp of 20,000.  Now all President-elect Donald Trump needs to do while in office to get the Dow to 50,000 is match the stock market's performance under his predecessor.  During the eight years of President Obama, the Dow jumped 150%, or 12.3% annually, through Tuesday, according to Bespoke Investment Group. That's the third-best stock market performance since WWII for any president behind only President Clinton's and FDR's triples.  Econintersect:  For Republicans who want to get something to their benefit out of this, the difference between the presidents of the two parties is entirely due to Herbert Hoover.  The average annual gain under the other 10 GOP presidents is 6.7%, exactly the same as for Democrats.  For democratic talking points, there are two:  (1) If the outsized loss for Hoover is not included, the outsized gain for Coolidge should also be omitted (ie, count the two terms as an 8-year GOP reign), reducing the average for 9 Republicans to 5.7%; and (omitting Hoover) there have been 5 presidents with losses with 3 Republicans averaging -2.3% and 2 Democrats averaging -0.5%.  Final point:  We consider it ridiculous to use such a broad brush to connect presidents to stock market performances.  But there may be better generalizations that could be made.  For example, the policies from 1912 - 1932, it could be argued, contributed to the secular economic depression of the 1930s and the policies from 1980 - 2008 contributed to the financial crash of 2008, the Great Recession, and its aftermath.  Presidents of both parties can share each of those burdens.

Source: Bespoke Investment Group


  • Economist Harry Dent predicts 'once in a lifetime' market crash, says Dow could plunge 17,000 points (CNBC)   Every once in a while, Harry Dent makes a correct market call.  Is this one of the times?  He's a market watcher known for making bold calls spanning decades. Now, Harry Dent is arguing that the Trump rally is setting investors up for an inevitable stock market crash.  Investors have embraced the prospect of President-elect Donald Trump's victory by sending stocks on a tear to new record highs. Dent, however, thinks there's trouble brewing.  Dent Research Founder Harry Dent recently told CNBC's "Futures Now":

"I think this is going to be a stock market peak of a lifetime followed by a crash very similar to the early 1930s. This happens once in a lifetime.  I think this is the last rally in this bull market."

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