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What We Read Today 19 June 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".).


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

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Topics today include:

  • Nearly Half of S&P 500 Earnings Growth in Q2 Due to Energy

  • The Illusion Of Declining Debt To Income Ratios

  • A Global Middle Class Is More Promise than Reality

  • U.S. Drillers Are Hammering OPEC’s Plans

  • Shale's Record Fracklog Could Force Crude Prices Even Lower

  • Amazon Plans Cuts to Shed Whole Foods' Pricey Image

  • White House reporters fume over off-camera briefings

  • Was Trump’s ‘hope’ Comey’s command? We asked a language expert

  • Senators ask Mnuchin, Tillerson to probe possible Russian takeover of Citgo

  • The Kansas Supply-Side Experiment Unravels

  • U.S. Moves Jets to Ease Syria Tensions Amid Russian Threat

  • Yield curve spells more and more trouble for China

  • The Yield Curve and Recessions: Against U.S. - Centricism

  • And More

Articles about events, conflicts and disease around the world


  • U.S. Drillers Are Hammering OPEC’s Plans (Bloomberg)  Oil fell, extending four weeks of declines, as U.S. drillers continue adding rigs and Libya boosts output, blunting OPEC-led efforts to re-balance an oversupplied market.  Futures dropped 1.2 percent in New York after capping the longest run of weekly declines since August 2015. U.S. drillers targeting crude added rigs for a 22nd straight week, the longest uninterrupted stretch of growth in three decades, according to data from Baker Hughes Inc. on Friday. Libya is producing the most oil in four years after a deal with Wintershall AG enabled at least two fields to resume production.  See also first article under U.S., below.



  • Shale's Record Fracklog Could Force Crude Prices Even Lower (Bloomberg)  There were 5,946 drilled-but-uncompleted wells in the nation’s oilfields at the end of May, the most in at least three years, according to estimates by the U.S. Energy Information Administration. In the last month alone, explorers drilled 125 more wells in the Permian Basin than they would open. That represents about 96,000 barrels a day of output hovering over the market.

If OPEC thought shale was a thorn in its side before, just wait until U.S. explorers turn their spigots on full blast. Wells waiting to be fracked and flowing are an overhang that could mean a burst of new supply in the second half of the year and into 2018

Amazon expects to reduce headcount and change inventory to lower prices and make Whole Foods competitive with Wal-Mart Stores Inc. and other big-box retailers, according to a person with knowledge of the company’s grocery plans. That included potentially using technology to eliminate cashiers. An Amazon spokesman denied any job cuts were planned.

  • White House reporters fume over off-camera briefings (The Hill)  The White House press corps vented frustration Monday with press secretary Sean Spicer for conducting off-camera briefings in place of the usual publicly broadcast briefings.  Spicer conducted an off-camera briefing with reporters on Monday in which the press was told it could not film or broadcast audio of the proceedings. Spicer conducted the last on-camera briefing last Monday.  CNN White House reporter Jim Acosta said after the briefing:

“The White House press secretary is getting to a point where he’s just kind of useless.  If they’re getting to this point where he’s not going to answer questions or go on camera or have audio, why are we even having these briefings or gaggles in the first place?”

  • Was Trump’s ‘hope’ Comey’s command? We asked a language expert (The Conversation)  The president of the United States may be one of the most powerful people in the country, if not the world. To not take his expression of desire as a directive could be seen as a dereliction of duty. There are other aspects of this particular context that Comey noted – others were requested to leave so that they could speak in private. These factors also clearly contribute to the interpretation of the president’s utterance as a directive.

Phrasing a request as a desire, and using nonliteral language in general, provides a speaker with plausible deniability, the benefits of which have been described and documented by psychologist Steven Pinker. In a sense, nonliteral language allows one to have it both ways. The recipient might accept the intended meaning and act on it – Comey could have complied and terminated the Flynn investigation. On the other hand, if the recipient questions the meaning – Are you asking me to terminate the investigation? – the speaker can then simply deny that interpretation – No, of course not, I was simply stating a wish.

  • Senators ask Mnuchin, Tillerson to probe possible Russian takeover of Citgo (The Hill)  Six senators are calling on the secretaries of State and the Treasury to review whether a potential Russian takeover of petroleum company Citgo could threaten national security and violate economic sanctions.   Citgo, owned by the government of Venezuela, risks defaulting on a loan from Rosneft, a Russian state-owned energy company. Rosneft could take control of Citgo upon default, giving a company with close ties to Russian President Vladimir Putin command of United States infrastructure. 

The senators, including Senate Finance Committee ranking Democrat Ron Wyden (Ore.), Foreign Relations Committee ranking Democrat Ben Cardin (Md.) and Majority Whip John Cornyn (R-Texas), expressed national security concerns in a Monday letter to Secretary of State Rex Tillerson and Treasury Secretary Steven Mnuchin. 

Sens. Ted Cruz (R-Texas), Marco Rubio (R-Fla.) and Richard Blumenthal (D-Conn.) also signed the letter.

  • The Kansas Supply-Side Experiment Unravels (Bloomberg)  Tax cuts were supposed to spur growth, boost revenue and create jobs. The results were the exact opposite.  The experiment revealed a deep ignorance about the nature of money and the basics of economics.  Barry Ritholtz explains.


  • U.S. Moves Jets to Ease Syria Tensions Amid Russian Threat (Bloomberg)  The American-led military coalition in Syria said it has repositioned aircraft after Russia threatened to treat its warplanes as targets in response to the U.S. downing of a Syrian government jet.  The U.S. moved to ease tensions after the Russian Defense Ministry threatened to “track any air targets, including the international coalition’s planes and drones, found to the west of the Euphrates river” following the downing of a Syrian Su-22 jet by a U.S. F-18 fighter on Sunday, the first such incident in the six-year war. The ministry called the attack “a cynical violation of Syria’s sovereignty” and said Russia was halting so-called deconfliction coordination with the U.S. aimed at averting air incidents.  Air support to U.S.-backed fighters against Islamic State will go on, according to U.S. Army Colonel Ryan Dillon, a coalition spokesman.


Click for large image.

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

  • Nearly Half of S&P 500 Earnings Growth in Q2 Due to Energy (FactSet)  Hat tip to @PatrickW .  For Q2 2017, the estimated earnings growth rate for the S&P 500 is 6.5%. At the sector level, nine sectors are projected to report year-over-year growth in earnings for the quarter. However, the Energy sector is projected to report the highest earnings growth of all 11 sectors at 401%. 

This sector is also expected to be the largest contributor to earnings growth for the S&P 500 for Q2 2017. If the Energy sector is excluded, the estimated earnings growth rate for the index for Q2 2017 would fall to 3.6% from 6.5%.

Click for larger image.

  • The Illusion Of Declining Debt To Income Ratios (Lance Roberts, Real Investment Advice)  LR is a regular contributor to GEI.  One of the charts that are often bantered about in the media is the increasing prosperity of the average American as witnessed by the first chart.  But, like most data extracted from the Federal Reserve, you have to dig behind the numbers to reveal the true story.    But then see the the second chart below.  See also the following article, which is cited by LR.

  • A Global Middle Class Is More Promise than Reality (Pew Research Center)  The first decade of this century witnessed an historic reduction in global poverty and a near doubling of the number of people who could be considered middle income. But the emergence of a truly global middle class is still more promise than reality.

In 2011, a majority of the world’s population (56%) continued to live a low-income existence, compared with just 13% that could be considered middle income by a global standard, according to a new Pew Research Center analysis of the most recently available data.

And though there was growth in the middle-income population from 2001 to 2011, the rise in prosperity was concentrated in certain regions of the globe, namely China, South America and Eastern Europe. The middle class barely expanded in India and Southeast Asia, Africa, and Central America.

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