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What We Read Today 21 April 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:

  • ObamaCare repeal: Where the GOP-Trump plan stands right now

  • Squabbles that Sank Health Plan Once could Do It Again

  • White House budget chief floats trade on ObamaCare, border wall funding

  • 20,000 Drug Cases Could be Dismissed Because of Chemist's Wrongdoing

  • Home Sales Zoom to Highest Pace in Decade

  • Mortgage Rates Drop Below 4%

  • Fixing the Financial Crisis Was the Easy Part: Five Things We Learned This Week

  • Can Bitcoin Be the Foundation of a Fairer Financial System?

  • Musk Nearing $1.4 Billion Windfall as Tesla Achieves Milestones

  • Subway Shuts Hundreds of U.S. Stores

  • Britain's economy could be stronger than previously thought says Bank of England economist

  • Sterling falls against the dollar as British retail sales plummet at fastest quarterly rate since 2010

  • Russia mulling options with OPEC meeting looming

  • China Bond Yields Keep Rising

  • Massive Pro and Anti Government Protests in Venezuela

  • And More

Articles about events, conflicts and disease around the world

Global

  • International bank lending slumped by $280bn at end of 2016 says Bank for International Settlements (City A.M.)  Banking activity around the globe fell by hundreds of billions of dollars in the last three months of 2016 as lending to businesses and governments fell sharply.  Cross-border claims fell by $280bn in the last quarter of the year, according to the Bank for International Settlements (BIS).  ‚ÄčLending to non-banks was the biggest contributor to the declines, with claims from hedge funds, pension funds, and insurance companies, amongst others, falling by $120bn.

Total claims outstanding at the end of December across the world totaled $26.97 trillion, said the Basel-based BIS, often known as the central bankers' central bank.

Amongst emerging markets China saw lending increase, with claims on borrowers rising by $16bn, as the build-up of credit in the world’s second-largest economy continues.

Turkey saw the biggest contraction in lending, as the country struggled economically. Turkish inflation soared in the second half of the year as the lira plummeted, prompting a mass exodus of money from the country in anticipation of further economic woes.

  • Rig Count Overview & Summary Count (Oil Pro)  Baker Hughes has issued the rotary rig counts as a service to the petroleum industry since 1944, when Hughes Tool Company began weekly counts of U.S. and Canadian drilling activity. Hughes initiated the monthly international rig count in 1975. The North American rig count is released weekly at noon central time on the last day of the work week. The international rig count is released on the fifth working day of each month.  This report was released 21 April 2017.  North American rig counts have approximately doubled over the last year.

U.S.

  • ObamaCare repeal: Where the GOP-Trump plan stands right now (The Hill)  A White House effort to win House approval next week for an ObamaCare repeal bill is running head-on into a divided GOP conference struggling to reconcile its differences.  While centrist Rep. Tom MacArthur (R-N.J.) and conservative Rep. Mark Meadows (R-N.C.) say they are close to a deal, other Republicans say they are not a part of the agreement and that MacArthur is not bringing other centrists along with him.

Republican lawmakers will hold a conference call on Saturday to discuss the issue.

They’re also likely to confer on another problem: keeping the government open.

Even as the conference seeks to revive ObamaCare repeal legislation, it faces an April 28 deadline to pass legislation that prevents a government shutdown.

  • Squabbles that sank health plan once could do it again (Reuters)  President Donald Trump, striving to make good on a top campaign promise, is pushing Republicans to pass revamped healthcare legislation, but the same intraparty squabbling that torpedoed it last month could do it again.

  • White House budget chief floats trade on ObamaCare, border wall funding (The Hill)   President Trump's budget chief, Mick Mulvaney, said Friday that the White House is offering Democrats money for key ObamaCare payments in exchange for money to help fund the president's proposed border wall.  "We'd offer them $1 of CSR payments for $1 of wall payments. Right now that's the offer that we've given to our Democratic colleagues," Mulvaney said during a Bloomberg Live interview, referring to the insurance company reimbursements known as cost-sharing reduction (CSR).  Mulvaney added that the administration had "finally boiled this negotiation down to" the border wall and the cost-reduction payments, which offset costs for insurers who cover ObamaCare's low-income enrollees.

  • Home Sales Zoom to Highest Pace in Decade (Realtor Mag)  This spring’s housing mantra: Going, going, gone! “Severe” housing shortages are prompting existing homes to sell significantly faster this year, propelling home sales to the highest pace in more than a decade, the National Association of REALTORS® reported Friday.  Strong sales gains in the Northeast and Midwest were behind most of the nationwide 4.4% month-over-month increase in existing-home sales in March. The West was the only major region of the U.S. to see a modest decline in sales activity last month.  For complete analysis see March 2017 Headline Existing Home Growth Pace Quickens.

  • Mortgage Rates Drop Below 4% (Realtor Mag)  Freddie Mac reports the following national averages with mortgage rates for the week ending April 20:

  • 30-year fixed-rate mortgages: averaged 3.97 percent, with an average 0.5 point, falling from last week’s 4.08 percent average. Last year at this time, 30-year rates averaged 3.59 percent.

  • 15-year fixed-rate mortgages: averaged 3.23 percent, with an average 0.5 point, falling from last week’s 3.34 percent average. A year ago, 15-year rates averaged 2.85 percent.

  • 5-year hybrid adjustable-rate mortgages: averaged 3.10 percent, with an average 0.4 point, falling from last week’s 3.18 percent average. A year ago, 5-year ARMs averaged 2.81 percent.

UK

  • Britain's economy could be stronger than previously thought says Bank of England economist (City A.M.)  The underlying growth in Britain’s economy may be stronger than previously thought, according to an influential economist at the Bank of England.  Michael Saunders, a member of the interest rate-setting Monetary Policy Committee (MPC), said the Bank’s errors in forecasting GDP growth may reflect a healthier recovery in the UK economy than previously thought.  The Bank’s forecasts were based on assumptions Brexit would harm the economy, but Saunders said the MPC “was not necessarily obliged” to wait for the full effects of Brexit to become clear before changing monetary policy.  City A.M. says that strong consumer spending was one of the drivers behind the UK economy's outperformance.  However, see next article. 

  • Sterling falls against the dollar as British retail sales plummet at fastest quarterly rate since 2010 (City A.M.)  Retail sales in the UK fell at the sharpest quarterly rate for seven years in March as price increases started to weigh on the British consumer.  The volume of sales fell by 1.8% during the month while store prices grew by 3.3%, the fastest rate of growth since March 2012, according to the Office for National Statistics (ONS).  The fall of 1.4% in the first three months of 2017 was the first quarterly decline in sales since the end of 2013, and the biggest fall since the start of 2010, when value-added tax (VAT) jumped.  Retail sales had previously surprised economists by increasing by 1.7% month-on-month in February. However, quarter-on-quarter sales have declined throughout 2017.

Russia

  • Russia mulling options with OPEC meeting looming (Oil Pro)  Friday Russian Energy Minister Alexander Novak said a decision on extending oil production cuts has not been made as of yet, but would be examined further with OPEC on May 24.  OPEC production cuts in the first half of 2017 were aimed at reducing the global glut of crude oil and have led to a modest market recovery so far this year. With the next OPEC policy meeting a little more than a month away, individual countries are weighing their options in regards to extending production cuts.  "There are no firm decisions on that. Each country is looking into the matter by itself so it can make its proposals and evaluations," Novak said.  Novak went on to say that Russia's oil output cuts reached 250,000 barrels per day and were on track to hit 300,000 bpd by the end of April.

China

china.5.yr.bond

Venezuela

  • Massive Pro and Anti Government Protests in Venezuela (The Real News Network)  While international media focused almost exclusively on the opposition protests and clashes with the police, the pro-government protests were equally as large, says Lucas Koerner from Venezuelanalysis.com.  Most mdia is focused on the opposition protests.  However, there are similar protests in support of the gpovernment, as well.

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

  • Fixing the Financial Crisis Was the Easy Part: Five Things We Learned This Week (Bloomberg)  It made sense during the financial crisis to throw money at the problem. Since then, balance sheets of the central banks in Europe, China and the U.S. have ballooned to $13 trillion, at least double their levels in 2008—largely through buying government bonds, and even debt and shares in companies, such as a French yogurt-maker and Japan’s top soy-sauce brewer. Now markets and analysts are seriously pondering what will happen if and when policymakers reverse course. What they don’t want is another “taper tantrum,” when yields quickly rose in 2013 after then-Federal Reserve Chairman Ben Bernanke talked about buying fewer bonds.

  • Can Bitcoin Be the Foundation of a Fairer Financial System? (MIT Technology Review)  Hat tip to Neil Peters.  According to one prominent economist, cryptocurrencies could make financial systems safer and more accessible to all.  Simon Johnson discussed bitcoin, or rather the blockchain technology on which cyrptocurrencies run, and the possibility of replacing the current fiancial system with one using digital currency.  Here is a brief video clip:

[iframe width='560' height='420' frameborder='0' allowfullscreen src='//player.ooyala.com/static/v4/stable/4.10.6/skin-plugin/iframe.html?ec=EyaXd0YTE61oS0KmFaFn1x2FfC4eQbSJ&pbid=5ad1946db28d45cdb4325c91c7751266&pcode=FvbGkyOtJVFD33j_Rd0xPLSo0Jiv'][/iframe]  

  • Elon Musk Nears $1.4 Billion Windfall as Tesla Hits Milestones (Bloomberg)   Only six remaining milestones stand between Tesla Inc.’s Elon Musk and an estimated $1.4 billion windfall for the carmaker’s billionaire chief executive officer.  Musk, who was awarded 5.27 million stock options in 2012 tied to Tesla operational and market value targets, has achieved six of the 10 operational goals to date, up from five at this time last year, according to a proxy statement filed Thursday. The automaker has also met eight of the 10 market value milestones, up from seven last year, the filing shows.  Musk has until 2022 to reach the goals that trigger the payout, but he could cash in the options sooner if the company hits targets ahead of schedule. They are worth an estimated $1.4 billion as of Thursday’s close, Bloomberg calculations show. 

  • Subway Shuts Hundreds of U.S. Stores (Bloomberg)   Subway Restaurants closed hundreds of domestic locations last year, marking the biggest retrenchment in the history of a chain that spent decades saturating America with restaurants.  The company lost 359 U.S. locations in 2016, the first time that Subway had a net reduction. The store count dropped 1.3% to 26,744 from 27,103 in 2015, but Subway remains the nation’s most ubiquitous eatery. (McDonald’s Corp. is No. 1 by sales.)

The closely held company is coping with a sales slowdown in the U.S., made worse by the emergence of newer fast-casual rivals and the industry’s heavy reliance on discounts and promotions. Subway also has lost some of its luster as a healthier-food option. It’s been working to restore its status by eliminating antibiotics from its chicken and switching to cage-free eggs.

In another bid to revive growth, Subway is adding delivery services -- a strategy that’s also been embraced by McDonald’s. And it even unveiled a new, more contemporary logo. But so far, the changes haven’t helped much: Sales fell 1.7 percent last year to about $11.3 billion.


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