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What We Read Today 04 September 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:

  • A Nietzschean Lesson on the Use and Abuse of History

  • 5 Reasons Homebuilder ETFs Have Plenty Of Room For Growth

  • Countries with Economies Larger than California

  • Why Emerging Markets Remain A Strong Buy Despite Huge 2017 Rally 

  • Pessimism abounds on Trump tax reform effort

  • Labor Day Bombshell Dropped As Congress Is Investigating Trump For Seeking Russia Business

  • Investor With 30% in Cash Says North Korea Selloff Will Come

  • Trump Plans to End Program Protecting Child Immigrants

  • States threaten to sue if Trump scraps DACA

  • U.S. Gulf Coast Refiners Begin Recovery

  • Last Week Was Trump's Worst Legislative Week Ever, And Congress Wasn't Even In Session

  • The Trump Scoreboard

  • Haley: Kim Jong Un 'begging for war'

  • Kim Jong-un has been emboldened by American incoherence

  • And More


Articles about events, conflicts and disease around the world


Click for large image.

  • Why Emerging Markets Remain A Strong Buy Despite Huge 2017 Rally (Ky Trang Ho, Forbes)  KTH has contributed to GEI.  The video below is hosted by Simon Constable, who has also contributed to GEI.  Emerging markets -- led by China -- has rallied 25% in 2017, according to Morningstar. The SPDR S&P 500 ETF, up 12% YTD, is arguably an overrated rip-off, trading at 24 times earnings. That’s very expensive compared to an average P/E ratio of 16 but still miles away from an all-time high of 124 seen in May 2009, according to However, the S&P’s current price-to-book value ratio of 3 is in line with its historical average of 2.8.  For those who agree the S&P 500 is an overrated rip-off, Vanguard FTSE Emerging Markets Index Fund ETF offers a far better value -- tremendous, huge. It trades at a discount compared to U.S. stocks with a price-to-earnings ratio of 14 and a price-to-book value of 1.7.  iShares MSCI EAFE ETF sports a higher P/E of 15.5 and P/B of 1.7.


  • Pessimism abounds on Trump tax reform effort (The Hill)  Tax lobbyists and Wall Street rate the prospects of tax reform as very low.  One veteran tax lobbyist, a former member of the Senate Finance Committee staff, said the chances of a broad tax reform package similar to the 1986 rewrite of the code are “zero.”  Another K Street tax specialist put the odds at “less than one in four,” citing the lack of a detailed plan from the administration and the cluttered agenda.

  • Labor Day Bombshell Dropped As Congress Is Investigating Trump For Seeking Russia Business (Politicus USA)  During an interview on CNN's State Of The Union, Rep. Adam Schiff (D-CA), the ranking member of the House Intelligence Committee, confirmed that Congress is investigating Trump for seeking business in Russia during the 2016 election.  Rep. Schiff said:

“I think it’s very significant. We had requested documents from Mr. Cohen, and not being satisfied, we subpoenaed Mr. Cohen for whatever records were relevant to our investigation. It means, among other things, the President was dishonest when he said during the campaign that he had no business in Russia, was pursuing no business in Russia, so yet another misleading statement by the Administration about their relationship with Russia."

  • Investor With 30% in Cash Says North Korea Selloff Will Come (Bloomberg)   Stock markets are headed for a big selloff, maybe not today, but soon.  That’s the view of Nader Naeimi, who heads a dynamic investment fund at AMP Capital and helps manage about $110 billion. The Sydney-based investor has about 30% of his holdings in cash, an allocation to gold and is short emerging-market currencies versus the dollar. His fund has beaten 77% of peers over the past year, according to data compiled by Bloomberg.

  • States threaten to sue if Trump scraps DACA (The Hill)  At least two states are threatening to sue if President Trump decides to cancel the Deferred Action for Childhood Arrivals (DACA) program.  Washington Attorney General Bob Ferguson (D) said Monday that his state will sue Trump if ends the program, which shields from deportation undocumented immigrants who were brought to the country as minors and received work permits.  New York’s governor and attorney general also said their state would sue if Trump ends the Obama-era program.  See Trump Plans to End Program Protecting Child Immigrants (Bloomberg):  Polls show that the vast majority of Americans believe that immigrants protected from deportation by DACA should be allowed to remain in the U.S.

  • U.S. Gulf Coast Refiners Begin Recovery (Bloomberg)  As much of the U.S. shut down for Monday’s Labor Day holiday, Gulf Coast refiners continued their recovery from the devastation of Hurricane Harvey.  Valero Energy Corp. returned two Texas refineries to pre-storm fuel-making rates while three other plants were in various stages of resuming operations, said Lillian Riojas, a spokeswoman for the San Antonio-based company. Exxon Mobil Corp. began shipping gasoline and diesel in Houston-area pipelines, although its Beaumont, Texas, refinery was too flooded to turn back on. Flint Hills Resources LLC and Citgo Petroleum Corp. also were in the process of resuming production, according to Genscape Inc.

Gasoline futures for October delivery declined by 3.3 percent to $1.6906 a gallon, the lowest in more than a week. The price reached its post-Harvey peak on Aug. 31 when the futures jumped 14 percent to close at $2.1399.

  1. Trump's biggest problem occurred when the parliamentarian ruled on Friday that the Senate only had until September 30 to use the reconciliation instructions from the fiscal 2017 budget resolution to consider ACA repeal and replace legislation.  As of October 1, the Senate will need 60 votes rather than a simple majority to pass the health care change the White House has been promising and demanding.

  2. Trump's second big legislative setback came when the White House surprisingly announced that the president was backing off on his demand that funding for the wall he wants to build between the United States and Mexico had to be included in the legislation that will need to be enacted by October 1 to avoid a government shutdown.  It was surprising because, less than two weeks earlier, Trump promised at his rally in Arizona (see the video clip below) that he absolutely would shut down the government if he didn't get the funds he wanted.

  3. Trump's third big legislative loss came when the magnitude of the devastation and enormous cost of the Hurricane Harvey relief effort started to be realized.  Here again, Trump has two problems.  First, the White House has already made it clear that it is committed to combining the initial relief appropriation with the increase in the federal debt ceiling that will be needed in the next few weeks. Not only will this take away the president's ability to use the debt ceiling for any other purpose, it will neuter and anger the the president's closest House ally -- the House Freedom Caucus.  Second, Hurricane Harvey is going to spike the deficit by perhaps as much as 25 percent next year. With preliminary relief estimates ranging between $100 billion and $200 billion and almost no one in Washington pushing for offsets for that spending, the federal deficit could easily approach $1 trillion in both 2018 and 2019.

  • The Trump Scoreboard (MarketWatch)  Summary of how the U.S. economy has performed under President Trump:

Click for large image.

North Korea

  • Haley: Kim Jong Un 'begging for war' (The Hill)  U.S. United Nations Ambassador Nikki Haley said Monday that North Korea's leader, Kim Jong Un, is "begging for war" with his "abusive use of missiles."  During an emergency meeting of the U.N. Security Council, Haley said "enough is enough," comments which come after North Korea said Sunday that it has successfully tested a miniaturized hydrogen bomb that can be placed an intercontinental ballistic missile (ICBM).  She said:

“The time for half measures in the security council is over. The time has come to exhaust all of our diplomatic means before it is too late. We must now adopt the strongest possible measures. Kim Jong Un’s action cannot be seen as defensive.” 

  • Kim Jong-un has been emboldened by American incoherence (The Sunday Times)  Only a few weeks ago the president of the United States was threatening North Korea with “fire and fury like the world has never seen” for no more than “threats”. Last week Kim fired a missile over Japan. Yesterday he set off what appears to be a bomb up to eight times bigger than the device dropped on Hiroshima. What accounts for the headlong pace of Kim’s actions? Why doesn’t he take it more slowly, as his late father did, to avoid humiliating Mr Trump and potentially provoking him into military action?  This article asserts "the answer lies in the increasingly obvious weakness of the US leadership". After President Obama’s “strategic patience”, which amounted to ignoring Kim and piling on ineffective sanctions when he did something unforgivable, Mr Trump had a new, more businesslike approach — tough talk alternated with hints of rewards for good behaviour. One moment he was dispatching “armadas” to Korea. The next he was calling Mr Kim “a pretty smart cookie”.  Mr. Trump's rhetoric has backed him into a corner.

Mr Trump’s threats have proved hollow. No sign of fire and fury so far.

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

  • A Nietzschean Lesson on the Use and Abuse of History (Stratfor)  If one assumes an apocalyptic view of the world, as many among the alt-right and some within a rapidly thinning camp of ultranationalists in the White House have openly espoused, then their energy and focus will be on tearing down the current order at whatever cost to energize the masses to engage in their so-called revolution. To complete this aim, enemies need to be invented, the intelligentsia needs to be condemned and history needs to be revised. And whether they know it or not, the motto of the modern-day Monumentalist, in Nietzsche's words, will be the following: "Let the dead bury the living."  An excerpt:

The Third Reich. The Bolshevik Revolution. The American Civil War. The Spanish Inquisition.  This is heavy, heavy history. Yet in the words of some actors, some of the darkest days of our historical memory seem to take on a weightless form in today's angst-ridden political discourse. While jarring to observe, this kind of historical levity is to be expected whenever the world moves through a major inflection point. When more wretched periods of history lie just beyond the horizon of the current generation, they become fuzzy, impersonal anecdotes rather than visceral memories that impress upon everyday lives. And when the future looks especially bleak to that same generation, a raucous few can capture the minds of many by plunging deep into the depths of a blemished history to conjure up leaders and legends that, with a bit of polishing and dusting off, can serve as the unadulterated icons of a new world order.

  • 5 Reasons Homebuilder ETFs Have Plenty Of Room For Growth (Ky Trang Ho, Forbes)  KTH has contributed to GEI.  iShares Home Construction Index (ITB), +24% year to date, holds 45 names related to building homes and home improvement and charges a 0.45% annual expense ratio. It holds homebuilders, D.R. Horton, Lennar, NVR; home improvement retailers, The Home Depot, Lowe’s; and materials suppliers, Sherwin-Williams, Mohawk Industries.  ITB outperformed its biggest rival, SPDR S&P Homebuilders ETF (XHB) by about 21 percentage points this year. XHB, +3% year to date, overlaps ITB considerably with 35 names. But it has no exposure to ITB’s biggest winner this year, Lumber Liquidators, which rocketed 136% through Aug. 31. In addition, Bed Bath & Beyond and Tempur Sealy International, which lost 31% and 10%, respectively, dragged down XHB. 

Click on any graphic below for large image.

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