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What We Read Today 10 October 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:

  • Elon Musk’s offer to rebuild Puerto Rico’s electricity grid is a game-changer

  • Active Fund Managers Face A Major Dilemma: Momentum

  • Top 30 employers for women

  • Pension Woes – A trillion here, A Trillion There

  • EPA formally moves to repeal major Obama power plant rule

  • California wildfires: Residents find devastation in Santa Rosa

  • Trump Says He’ll Adjust His Tax Plan in the Next Few Weeks

  • Krugman Says Potential Fed Chair Warsh Is ‘Wrong About Everything’

  • Jake Tapper: Trump headlines read like The Onion

  • Mensa offers to host IQ test for Trump and Tillerson

  • Brexit: Theresa May won't say if she'd vote Leave now

  • Britain considers regulating Facebook and Google as news publishers

  • Catalonia independence declaration signed and suspended

  • And More

Articles about events, conflicts and disease around the world

U.S.

  • EPA formally moves to repeal major Obama power plant rule (The Hill)  The Trump administration formally proposed to scrap the Obama administration’s signature climate change rule for power plants.  Environmental Protection Agency Administrator Scott Pruitt signed the notice Tuesday, arguing that former President Barack Obama’s 2015 rule, dubbed the Clean Power Plan, exceeds the agency’s authority under the Clean Air Act.  He previewed the action Monday at a coal equipment business in Kentucky, calling it the end of the "war on coal."

  • California wildfires: Residents find devastation in Santa Rosa (BBC News)  California residents who fled their homes to escape deadly wildfires return to Santa Rosa and other communities devastates by the blazes - Video.

  • Trump Says He’ll Adjust His Tax Plan in the Next Few Weeks (Bloomberg)  President Donald Trump said Tuesday he plans to make changes to his tax plan within the next few weeks, while dismissing concerns that his public spat with Senator Bob Corker would scuttle an overhaul.

  • Krugman Says Potential Fed Chair Warsh Is ‘Wrong About Everything’ (Bloomberg)   Nobel Prize-winning economist Paul Krugman didn’t mince words when asked about former Federal Reserve Governor Kevin Warsh’s candidacy to run the institution: “He’s been wrong about everything,” from inflation to fiscal policy, Krugman told Bloomberg Television in an interview Tuesday.  But that may not stop President Donald Trump from nominating Warsh, 47, for Fed chair, because he has solid family connections and a Republican pedigree, according to Krugman, a consistent critic of the GOP. Warsh is married to Jane Lauder, daughter of Trump friend Ronald Lauder.

  • Jake Tapper: Trump headlines read like The Onion (The Hill)  CNN anchor Jake Tapper called out the Trump administration on Tuesday, saying on his show that headlines about the administration sound like they were ripped straight from satire website The Onion.  In a blistering monologue on "The Lead with Jake Tapper," the host said that "maturity and decency are in the same abundance" under a Trump White House "as electricity and potable water in Puerto Rico."

  • Mensa offers to host IQ test for Trump and Tillerson (The Hill)   Bring on the IQ test — Mensa says it’s willing to host President Trump and Secretary of State Rex Tillerson in a battle of the brains.  In an interview with Forbes published Tuesday, Trump suggested he and Tillerson — who allegedly once called the commander in chief a “moron” — go head-to-head in an intelligence quotient showdown. The State Department has denied Tillerson ever made the comments.  Trump told the magazine of Tillerson’s “moron” remark: 

“I think it's fake news, but if he did that, I guess we'll have to compare IQ tests. And I can tell you who is going to win."

UK

  • Brexit: Theresa May won't say if she'd vote Leave now (BBC News)  Prime Minister Theresa May has refused to say how she would vote if Britain held another EU referendum.  Mrs May, who backed Remain in last year's vote, was repeatedly asked by LBC presenter Iain Dale if she would now vote Leave.  Dale told her that Health Secretary Jeremy Hunt had switched from Remain to Leave and pushed her to admit a similar change of heart.  However, she said she would not answer "hypothetical questions" - but insisted she was the prime minister who would "deliver Brexit".

  • Britain considers regulating Facebook and Google as news publishers (Seeking Alpha)  Britain is considering classifying and regulating Facebook (NASDAQ:FB) and Google (GOOGGOOGL) as news publishers, rather than platforms.  Consultancy group Enders Analysis says 6.5M British internet users get most of their news from Facebook.  A spokesman for Prime Minister Theresa May said:

“We are looking at the role Google and Facebook play in the news environment.  As part of that work we will look carefully at the roles, responsibility and legal status of the major internet platforms.” 

Spain

  • Catalonia independence declaration signed and suspended (BBC News)  Catalan President Carles Puigdemont and other regional leaders have signed a declaration of independence from Spain, following the disputed referendum.  However, they say the move will not be implemented immediately to allow talks with the government in Madrid.  It is unclear whether the document - calling for Catalonia to be recognised as an "independent and sovereign state" - has any legal status.  The move was immediately dismissed by the Spanish central government.

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

  • Elon Musk has offered to bring Tesla to Puerto Rico to fix and improve the island's power grid.

  • This represents a new way for investors to look at disaster response beyond just lending cities money in new bonds.

  • The American people seem more open to this kind of approach than they have in many years.

  • Active Fund Managers Face A Major Dilemma: Momentum (ValueWalk)  Active equity  fund managers are staging a comeback. After years of underperformance, during which active managers lost tens of billions of dollars in assets to passive funds, during the first half of this year, over half of all US equity mutual funds outperformed their benchmarks, according to the latest flagship scorecard from SPDJI. Equity hedge funds are also doing well, gaining an average of 8.6% this year to the end of September, according to HFR. This is the strongest performance in four years from the equity hedge fund group.  The Great Correlation Collapse is helping active equity fund managers profit from individual equity themes such a rate rises, which would have been difficult to plan this time last year. A recent research note from analysts at Bank of America notes that rate sensitive equities, such as Financials, Utilities, and Telcos have seen correlations to rates rise substantially in recent months.  For example, the correlation between the 10Y and US Financials has risen from around -0.55 over the past two years, to -0.75 in the last three months.  Econintersect:  The new frontier in active management is effective tracking of the time variation of correlations.  This plays directly into beneficial tracking of momentum.

  • Boston Consulting Group

  • Dell

  • Accenture

  • PepsiCo

  • General Electric

  • Salesforce

  • Deloitte

  • PWC

  • Vanguard Group

  • Apple

  • Pension Woes – A trillion here, A Trillion There (ValueWalk)  Econintersect:  The premise of this article is that the obligations referred to must be paid out of money now in existence.  That is incompatible with any economic growth; in fact it is compatible only with economic contraction.  It is simply not being rcognized that the amount of money not secured by debt that must be repaid with interest must be increased on proportion to the increase in the economy.  Increase it faster, inflation results; increase money more slowly and deflation results.  Here is the summary statement from the author's introduction:

Social Security and Medicare are two ticking timebombs for the US government. The provision of pensions and medical care for those over a certain age is universal in universal in most developed nations, and most nations are paying for it.

However, the annual cost to the US government for these programmes appears to be completely unsustainable.

 


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