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What We Read Today 07 July 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:

  • There Is No Excuse For Janet Yellen's Complacency

  • The “high road” Seattle labor market and the effects of the minimum wage increase

  • Wall Street Strategists Forecast Most-Bearish Second Half Since 1999

  • Gundlach Says Bond Wipeout Just Beginning As Bulls Rush For Exit

  • How Commodities Performed in H1 2017, and Why They’re Very Cheap

  • G-20 Countries' Trade Balances with the U.S.

  • Tillerson: Trump pressed Putin on election interference

  • As DOL's Rule Stalls, States And Other Policy Makers Take Up Slack

  • Conservatives revolt over talk of keeping ObamaCare tax

  • Koch-funded Ex-GOP Congressman Tim Huelskamp to Lead Climate Science Denial Group Heartland Institute

  • The gap between white and black unemployment in America is at a record low

  • US, Russia reportedly set to announce a cease-fire in southwestern Syria

  • Shaking Russia's Weak Economic Hand

  • Are Property Prices Headed Down in China?

  • Sitting next to Mexico's president, Trump says he 'absolutely' still wants him to pay for a border wall

  • And More

Articles about events, conflicts and disease around the world

Global

U.S.

  • Tillerson: Trump pressed Putin on election interference (The Hill)  President Trump confronted Russian President Vladimir Putin about Moscow's election meddling during a face-to-face meeting in Germany on Friday, according to Secretary of State Rex Tillerson.  Tillerson, who was present for the more than two-hour meeting, told reporters afterward that Trump opened the conversation by “raising the concerns of the American people regarding Russian interference in the 2016 election”.

Putin denied Russian involvement, Tillerson said, but Trump “pressed” him on the matter “on more than one occasion.”

Trump and Putin agreed to explore a “framework” around which they can work to better understand these types of cyberthreats, the U.S. diplomat said.

GOP lawmakers have floated keeping ObamaCare’s 3.8 percent net investment income tax to help pay for more generous healthcare subsidies for low-income people. Democrats criticized an earlier version of the Senate’s healthcare bill for eliminating the tax because it generally applies to high earners.

But prominent conservatives argue Democrats will criticize the bill regardless of what happens with the tax. They say the tax is harmful to economic growth and should be repealed. 

Tim Huelskamp, a prominent Tea Party figure, will take over from current president and institute founder Joseph Bast, who said he would stay on as CEO until some time in 2018.

Despite financial backing from groups affiliated with the Koch brothers, Huelskamp lost his March 2016 primary race, ending almost 20 years in Kansas state and federal politics.

According to Federal Election Commission disclosures, the oil and gas industries and groups affiliated with Koch Industries have been among Huelskamp’s most enthusiastic financial supporters.

  • The gap between white and black unemployment in America is at a record low (Business Insider)  According to the Bureau of Labor Statistics, the share of jobless African Americans in the labor force fell to 7.1%, the lowest level since April 2000. It was 1.5 percentage points down from a year ago, and it helped create the smallest gap between white and black employment on record.

Syria

The deal marks a new level of involvement for the U.S. in trying to resolve Syria's civil war. Although details about the agreement and how it will be implemented weren't immediately available, the cease-fire is set to take effect Sunday at noon Damascus time, said the officials, who weren't authorized to discuss the cease-fire publicly and spoke on condition of anonymity.

Russia

[As] Russian President Vladimir Putin meets his American counterpart, Donald Trump, at this week’s G20 summit in Hamburg, he will not be doing so from a position of economic strength. To be sure, despite the steep drop in oil prices that began three years ago, Russia has managed to escape a deep financial crisis. But while the economy is enjoying a modest rebound after two years of deep recession, the future no longer seems as promising as its leadership thought just five years ago. Barring serious economic and political reform, that bodes ill for Putin’s ability to realize his strategic ambitions for Russia.

China

  • Are Property Prices Headed Down in China? (The Daily Shot)  Is the Peoples' Bank of China worried about deflating the property bubble too rapodly?  Maybe the recent downturn in interest rates will continue?

Mexico

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

Janet Yellen has been reported by Reuters as saying in London yesterday that “she does not believe that there will be a run on the banking system at least as long as she lives”:

"Would I say there will never, ever be another financial crisis? You know probably that would be going too far but I do think we're much safer and I hope that it will not be in our lifetimes and I don't believe it will be," Yellen said at an event in London. “Fed’s Yellen: Not another financial crisis in ‘our lifetimes’

The only word I can use to describe this belief is “delusional.”

  • The “high road” Seattle labor market and the effects of the minimum wage increase (Economic Policy Institute)  This report finds that data limitations and methodological problems bias new analysis of Seattle’s minimum wage increase by a team of researchers at the University of Washington.  Two of the data findings from the UoW team are shown in the two graphics created by the Economic Policy Institute below.  These are among the findings that are are called "implausible" and "spurious" in this article.

  • One reason the study may be finding strong employment gains well above any plausible range where the minimum wage could be having an effect on employment is that Seattle was experiencing a labor market boom at the same time the city was implementing the minimum wage increase.

  • A second reason that the study may be biased toward finding job loss is that it excludes about 40 percent of total employment in the state, making it very difficult to draw meaningful conclusions about what actually happened to low-wage employment in Seattle.

seattle.01

seattle.02

  • Wall Street Strategists Forecast Most-Bearish Second Half Since 1999 (Zero Hedge)  Hat tip to TalkMarkets.  Bloomberg reports that Wall Street strategists are fighting historic odds when urging investors not to chase the rally in the U.S. stock market.  They’re predicting the S&P 500 Index will see momentum fade in the second half after shares climbed 8.2% for the best first-half performance since 2013.  The average year-end prediction, 2,439, represents a 0.6%increase by December, the least bullish forecast at this time of year since 1999, data compiled by Bloomberg show.  See also next article.

  • Gundlach Says Bond Wipeout Just Beginning As Bulls Rush For Exit (Financial Adviser)  (Econintersect:  If this forecast bears out, the second half of 2017 will see investors with no place to hide as stocks go nowhere.  See preceding article.  Perhaps commodities?  See next article.  We would suggest that a significant rally in commodities, with bonds facing a bear and stocks not gaining, seems unlikely.)  Hedge funds that built up bullish long-end Treasury wagers to the highest outright level since 2008 are rushing for the exit as a government bond rout that started in Europe following a weak French debt auction is spreading to the U.S. market.

This may be just the beginning, according to DoubleLine Capital’s Chief Executive Officer Jeffrey Gundlach and positioning data from the Commodity Futures Trading Commission.

  • How Commodities Performed in H1 2017, and Why They’re Very Cheap (Visual Capitalist)  First graphic shows winning commodities for the first half of the year.  The second shows the losers.  The final graphic below shows that commodities are undervalued vs. stocks (or stocks are overvalued relative to commodities) by the most in more than 46 years.

Click for larger image.

Click for larger image.


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