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What We Read Today 23 March 2017

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:

  • House Delays Health Care Vote

  • Latest CBO Score Says GOP Bill Now Saves Less Money and Produces Same Loss of Coverage

  • Devin Nunes apologizes to Democrats for surveillance briefing

  • Trump is Losing White Working Class Support

  • Trump Jr. Called a 'Disgrace' for Criticizing London Mayor 

  • Utah man killed in London attack, wife badly injured

  • Scotland Yard Says Terrorist Acted Alone - and Arrests 7 Possible Accomplices

  • More than 200 migrants feared drowned in Mediterranean 

  • Putin critic Denis Voronenkov shot dead in Ukraine

  • Russia may be helping supply Taliban insurgents

  • Summers Says Scrapping NAFTA Would Be Handing a 'Gift' to China

  • Cannabis Stocks Soar 120% in Australia

  • Populism: The Phenomenon 

  • In praise of autonomous vehicles and our self-driving future 

  • Jack Bogle’s 4% Annual Return Forecast For Stocks Could Prove To Be Heroically Optimistic

  • And More 

Articles about events, conflicts and disease around the world

Global

If Trump leads governments toward a new era of outright protectionism, he will do untold damage both to the U.S. and to the wider global economy.

  • Oil could collapse into the $30s if OPEC doesn't keep its act together (CNBC)  When they meet in Kuwait Sunday, a handful of OPEC and other oil producers are expected to put a happy face on their production agreement, and they should point to the potential for extending the deal in May.  That should help support oil prices, after the recent 10 percent plunge that temporarily took international benchmark Brent crude below the $50 level when investors began to doubt the deal earlier this month.  Gene Marcial, manager market research at Tradition Energy, said :

"Without the production cut agreement, I think you could basically target the low-to-mid $30s. I'm of the mind they extend it.  The Saudis need the revenues from higher oil prices. They know that prices at $30 to $35 is trouble for them."

U.S.

  • House GOP postpones ObamaCare repeal vote (The Hill)  House GOP leaders postponed Thursday’s planned vote on their ObamaCare replacement bill, sources told The Hill, a devastating setback that signals Republicans are far short of the votes needed to pass the legislation. 

House Republicans will hold a special meeting at 7 p.m. Thursday to discuss the next steps. Majority Leader Kevin McCarthy (R-Calif.) and other key negotiators are still hoping they can hold a vote on the underlying bill on Friday.

  • CBO releases new score for ObamaCare repeal bill (The Hill)  The Congressional Budget Office (CBO) on Thursday released a new score for the revised plan to repeal and replace ObamaCare that Republican leaders are struggling to pass through the House.  The CBO find that the latest version of the healthcare plan contains significantly less deficit reduction than the original bill, but would lead to essentially the same levels of coverage losses and premium increases. 

The legislation would reduce the deficit by $150 billion over 10 years, down from $337 billion in the original legislation, the office said. The plan would still result in 24 million more people being uninsured in 2026, a finding that has been a rallying cry for Democrats.

Premiums would still initially rise by 15 to 20 percent before eventually becoming 10 percent lower, CBO said.

  • Devin Nunes apologises to Democrats for surveillance briefing (BBC News)   The chairman of the House intelligence committee has apologised for not informing Democratic colleagues before going public with allegations about surveillance of Donald Trump's team.  Devin Nunes apologised privately and vowed to work with them on the issue, a committee aide said.  Democrats were furious that Mr Nunes went straight to the White House.  They questioned whether the panel's inquiry into Russia's alleged role in the election can proceed objectively.

  • Trump Jr. Called a 'Disgrace' for Criticizing London Mayor (Bloomberg)  Donald Trump Jr. is facing criticism for a tweet sent in the hours after Wednesday's London attack that included a months-old comment from London Mayor Sadiq Khan that terror attacks are part of living in a big city, but left out that Khan was noting that residents need to "be prepared" for such attacks.

  • Trump is Losing White Working Class Support (Twitter)

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white.working.class.trump.2017.mar.23

UK

Kurt Cochran, 54, and his wife, Melissa, were in Europe to celebrate their 25th wedding anniversary and had been due to return to the United States on Thursday, according to his brother-in-law, Clinton Payne.

The couple were struck by a sports utility vehicle that plowed into pedestrians on Westminster Bridge, Payne said in a statement.

Libya

  • More than 200 migrants feared drowned in Mediterranean (BBC News)  More than 200 migrants are feared dead in a boat sinking off the coast of Libya, a Spanish aid organisation says.  Proactiva Open Arms said it had recovered five bodies floating near two capsized boats, which can each hold more than 100 people.  The group's Laura Lanuza said the five they pulled from the Mediterranean were young men who appeared to have drowned.  A spokesman for Italy's coast guard, which co-ordinates rescues, confirmed the five deaths, Reuters reports.

Ukraine

  • ‘An act of state terrorism’: Putin critic Denis Voronenkov shot dead in Ukraine (Raw Story)  A former lawmaker of the Russian lower house of parliament, Denis Voronenkov, was shot dead in the center of Ukraine’s capital of Kiev on Thursday, which Ukraine’s President Petro Poroshenko has called “an act of state terrorism by Russia.”   Kiev police chief Andriy Kryshchenko told TV channel 112 that Voronenkov was killed around noon, in what police believe was an ordered killing. The politician’s bodyguard was also injured in the attack as was the suspected assailant. Both are reported in hospital.

Russia

  • Russia may be helping supply Taliban insurgents: U.S. general (Reuters)  The top U.S. general in Europe said on Thursday that he had seen Russian influence on Afghan Taliban insurgents growing and raised the possibility that Moscow was helping supply the militants, whose reach is expanding in southern Afghanistan.  He did not elaborate on what kinds of supplies might be headed to the Taliban or how direct Russia's role might be.

Moscow has been critical of the United States over its handling of the war in Afghanistan, where the Soviet Union fought a bloody and disastrous war of its own in the 1980s.

But Russian officials have denied they provide aid to the insurgents, who are contesting large swaths of territory and inflicting heavy casualties, and say their limited contacts are aimed at bringing the Taliban to the negotiating table.

China

  • Summers Says Scrapping Nafta Would Be Handing a 'Gift' to China (Bloomberg)   Ending the U.S. free-trade deal with Mexico, as Donald Trump threatened during his presidential campaign, would hand a significant victory to China, former Treasury Secretary Lawrence Summers said.  Continuing with an unfriendly policy toward Mexico could lead to the election of a president along the lines of Venezuela’s Hugo Chavez and a strained relationship with the U.S., he said Thursday in an interview with Bloomberg Television. Summers, who served in President Bill Clinton’s administration, spoke on the sidelines of the nation’s annual banking convention in the Mexican resort city of Acapulco.

Australia

  • Cannabis Stocks Soar 120% in Australia (Bloomberg)  There’s a buzz in Australia’s stock market.  Shares of companies involved in the cultivation, production and research of medicinal marijuana have on average soared more than 130 percent in Sydney this year. That’s six times higher than their peers in the U.S. and Canada. The surge was sparked by Australia easing restrictions on imports of cannabis to treat illnesses from epilepsy to cancer.

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

  • Jack Bogle’s 4% Annual Return Forecast For Stocks Could Prove To Be Heroically Optimistic (The Felder Report)  In order to generate the 4% annual return Bogle forecasts, the S&P 500 will need to trade at 2,890 in 2026. This would yield investors a 1.9% per year return from dividends and 2.1% per year in capital appreciation. If earnings do, in fact, grow at his 4% rate the S&P 500 will still need to trade at a p/e of 22 in order to reach 2,890. And if you assume a more conservative estimate of earnings growth of 2% then you need to maintain a p/e of 26 over the next decade in order to achieve his target price. Clearly, Bogle doesn’t assume much reversion in valuations if any at all.

The real problem with this assumption is that not only do demographics trends pose a headwind to earnings they also pose a headwind to valuations. In a recent study the Fed demonstrated the long-term correlation between population growth and price-to earnings ratios. Based upon this relationship and the retirement of the baby boom generation they forecast a price-to-earnings ratio of just 8.25 in the year 2025. At a 4% growth rate in earnings this demographics-based valuation forecast yields an S&P 500 price target of 1,043. At a 2% earnings growth rate we get a price target of just 876. These stand in stark contrast to Bogle’s implied price target of 2,890.

Click for large image.

  • In praise of autonomous vehicles and our self-driving future (AE Ideas)  People should be excited by the prospect of self-driving cars (AVs). It’s a big deal. As tech analyst Benedict Evans tweets:

    “US car accidents kill 30k people & cost $240bn a year. Non-residential parking is $300bn. Do tell me how tech is focused on trivial problems.”

    Author James Pethokoukis suggests that the current 30,000 deaths a year might be reduced to as few as 100 when only AVs are on the road.

  • Populism: The Phenomenon (Bridgewater Daily Observations)  This report is an examination of populism, the phenomenon—how it typically germinates, grows, and runs its course. Populism is not well understood because, over the past several decades, it has been infrequent in emerging countries (e.g., Chávez’s Venezuela, Duterte’s Philippines, etc.) and virtually nonexistent in developed countries. It is one of those phenomena that comes along in a big way about once a lifetime—like pandemics, depressions, or wars. The last time that it existed as a major force in the world was in the 1930s, when most countries became populist. Over the last year, it has again emerged as a major force.

To help get a sense of how the level of populist support today compares to populism in the past, we created an index of the share of votes received by populist/anti-establishment parties or candidates in national elections, for all the major developed countries (covering the US, UK, Japan, Germany, France, Italy, and Spain) all the way back to 1900, weighting the countries by their population shares

Click for larger image.
populism.index.1900.2017.mar
 

Click for larger image.


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