Written by Econintersect
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.
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Topics today include:
Investors accuse Nicholas Schorsch of plundering RCAP for own gain
A World Without Wi-Fi Looks Possible as Unlimited Plans Rise
Scientists create time crystals, a rule-bending new form of matter
Morgan Stanley debuts fiduciary product for small 401(k) plans, with eye toward DOL rule
Americans Aren’t Filing Their Taxes This Year
Oil Bubble Bursts and Traders are Loving It
Trump is Proud of Solid Jobs Gain
White House welcomes strong jobs data in potentially rule-violating tweets
White House: Trump didn’t know of Flynn plan to register as foreign agent
An obituary: The National Endowment for the Arts, 52, of unnatural causes
White House to Cut Low Income Housing Support
The House GOP’s puzzling ObamaCare replacement
California wants single payer and Texas wants free market – say hello to ‘StatesCare’
Draghi Creates a 0.5% ‘Pulse’ in the Euro
Who Owns Northern Iraq Oil?
Problems for Families of ISIS Fighters in Mosul
Indian Companies Issue Warnings to Employees in the U.S.
Xi-Trump Summit Next Month?
Big Inflation Spike in Mexico
You’re twice as likely to live the American Dream in Canada
American Dream is Alive and Well on the Great Plains and in the Rocky Mountains
And More
Articles about events, conflicts and disease around the world
Global
Oil Traders Are Having Some Fun Again as Price Bubble Bursts (Bloomberg) Oil’s plunge is bringing some excitement back into the market. As futures in New York slipped to the lowest since OPEC’s output deal in November, options trading surged and signaled the biggest bias toward a price decline in six weeks. That’s a stark departure from last month, when the West Texas Intermediate benchmark traded at the narrowest price band since 2003. The trading excitement comes as thee U.S. benchmark WTI dropped below $50 a barrel for first time this year.
U.S.
U.S. Jobs, Pay Show Solid Gains in Trump’s First Full Month (Bloomberg) U.S. employers added jobs at an above-average pace for a second month on outsized gains in construction and manufacturing while wage growth picked up, as the labor market continued its steady improvement in the new year. The 235,000 increase followed a 238,000 rise in January that was more than previously estimated, the best back-to-back rise since July, a Labor Department report showed Friday in Washington. The unemployment rate fell to 4.7%, and wages grew 2.8% from February 2016. For the most detailed analysis see February 2017 BLS Jobs Situation Improves.
White House: Trump didn’t know of Flynn plan to register as foreign agent (The Hill) President Trump was not aware ousted national security adviser Michael Flynn would likely have to register as an agent of a foreign government for his lobbying work during the campaign, the White House said Friday. The White House is defending its handling of the situation after the Associated Press reported Trump’s transition team was told Flynn would probably have to register with the federal government for his work on behalf of a firm owned by a Turkish businessman with close ties to his country’s government. Spicer said Thursday, before the report was published, that Trump was unaware that Flynn was acting as a foreign agent when he picked him as national security adviser. (Econintersect: No “extreme vetting here.” Actually, hardly any vetting.) Spicer said when asked whether Trump was informed of the arrangement:
“No. This was a personal matter, it’s a business matter, it’s not something that would be appropriate for a government entity to give someone guidance on when they should file as a private citizen.”
An obituary: The National Endowment for the Arts, 52, of unnatural causes (The Hill) (Econintersect: Is the only art left the “art of the deal”?) Here’s the obit:
The National Endowment for the Arts, aged 52, has finally died. After brushes with extinction in the 1980’s and 1990’s, along with a three-decade wait to be launched after the McCarthy-era’s relentless attacks on artists, police are describing the NEA’s demise as “totally preventable, but oddly, both a homicide and a suicide.” The agency had been ill although determined to make a difference for many years.
The NEA expired under the care of President Donald Trump and the Tea Party Congress. It leaves as survivors its parent, the United States government. We are now the only country in the world without a federal arts presence. Other survivors include millions of artists and thousands of arts organizations. The NEA died because artists tried too hard to be “the other,” apart from the society they chronicled. It failed to make the case that the arts should mean more to ordinary Americans than whatever they did as children (overwhelmingly, Americans participate in the arts only when young). Late attempts at awkward medical procedures such as translating art into economic development did not improve the agency’s health.
White House Weighs a $6 Billion Cut to HUD (Realtor Mag) The Trump administration reportedly is considering cuts at the Department of Housing and Urban Development of more than $6 billion, which could particularly hit public housing support programs hard, according to The Washington Post. The potential cut is expected to reduce public housing support and end most federally funded community development grants, such as those that help to repair abandoned properties in low-income neighborhoods.
HUD’s preliminary budget would shrink by about 14 percent to $40.5 billion in fiscal 2018, if approved, The Washington Post reports. Up to $1.3 billion could be cut from the public housing capital fund, while $600 million from a public housing operating fund could be affected. That means programs on the chopping block could include the HOME Investment Partnerships Program, which provides block grants for local communities to build affordable housing, and Choice Neighborhoods, a program that invests in redeveloping low-income communities. Also, programs like the Community Development Block Grant Program could have its $3 billion in funds cut entirely.
The House GOP’s puzzling ObamaCare replacement (The Hill) The author doesn’t understand:
On reading the House Republicans’ new American Healthcare Act, it is difficult to understand what the proposal is designed to accomplish, either substantively or politically. On the one hand, it contains enough provisions with superficial resemblances to those in the Affordable Care Act (ACA) that it seems sure to inflame the “Repeal Only” faction. Yet on the other hand, it fails to prevent millions of people from losing coverage; as soon as that becomes known, swing-district members will again be facing outrage in constituent meetings.
White House welcomes strong jobs data in potentially rule-violating tweets (Reuters) A series of tweets by White House spokesman Sean Spicer on Friday commenting on strong February job creation figures may have run afoul of federal guidance barring most officials from commenting on key economic data within an hour of its release. The rule, Statistical Policy Directive Number 3, is meant to “preserve the distinction between the policy-neutral release of data by statistical agencies and their interpretation by policy officials,” the White House budget office explained when it published the most recent version in September 1985. Jason Furman, who led President Barack Obama’s Council of Economic Advisers, noted on Twitter that the rule had been in place for decades: “Everyone has followed it. Until now.” Econintersect: This is a White House that was the first to decline to attend ethics training as they went through the tansition from the previous admonostration to this one. They said they didn’t need it. Ignorance is bliss … until it isn’t.
California wants single payer and Texas wants free market – say hello to ‘StatesCare’ (The Hill) This article says the only solution to the bifurcated positions on health care is to return it to the states with federal funding. The Texas can operate a “free market” system and California a “single payer” system. Econintersect: Very quickly two systems could develop, one centered on California’s system with other states (like Vermont) joining when they have an insufficient population size to operate their own; and a second system building up as other states join Texas. Two results are possible: (1) one system will prove less expensive and/or provide better health outcomes than the other; or (2) neither system will demonstrate a clear advantage (costs or outcomes) over the other. There is one other test case: Will economic growth be favored by one system or the other? Perhaps the simplification and economies for businesses in the single payer states (businesses freed from the administration of health insurance benefits) will attract businesses away from the free market states. Or perhaps the lower costs (if they are realized) in the free-market states will attract businesses away from the single payer states.
EU
Draghi Creates a 0.5% ‘Pulse’ in the Euro (Walter Kurtz, Sober Look, The Daily Shot) It may have been a pulse but most of it stuck.
President of the ECB Mario Draghi said that there’s no longer a “sense of urgency” in the monetary policy. This was a hint that the central bank has no plans to ease further. The market saw this as a touch hawkish, sending the euro higher.
Iraq
Baghdad-Erbil oil disputes on hold until Mosul liberation (Al Monitor) The dispute over who owns the oil in northern Iraq, Baghdad or the Kurdistan Regional Government (KRG) in Erbil qill not be addressed until Mosul is completely free from ISIS. The question revolves around a production and revenue sharing agreement that was signed four years ago: Will it be continued or modified? See next article.
Map: Northern Iraq’s oil infrastructure (S&P Global)
Families of IS members evicted from liberated areas in Iraq (Al Monitor) Iraqi Prime Minister Haider al-Abadi said Feb. 22 that his government is ready to start the implementation of national reconciliation in the very near future. The plan includes returning the displaced families to their hometowns and building an inclusive political and social setting in the liberated areas. Abadi said the families of Islamic State (IS) members should not be punished for the acts committed by IS members if the family members had no involvement. He said that no matter the severity of the criminal act, the family should not be held responsible for the acts of one of its members. However, no official policy has yet been adopted when it comes to dealing with the families of IS members, and they are being evicted from the liberated areas, particularly in Qayyarah, Sharqat and some neighborhoods in the eastern part of Mosul, amid disagreements over the implications and repercussions of this “eviction.”
India
Kansas fallout: Wipro, Cognizant issue advisories, tell Indian techies in US to be on guard (The Economic Times) Tensions are elevated following the killing of an Indian engineer in a Kansas bar and other acts of harassment.
When Sudipta, an IT engineer working for Wipro in Houston, Texas, returned home after a weekend outing, he found his home ransacked and items broken. The incident led to Wipro issuing an advisory, similar to the ones the US issues to its travellers who visit sensitive countries, according to a report in BusinessLine. The email states that the advisory is to sensitise (Wipro’s) onsite employees to be watchful of the situation, says the report.
Another IT major, Cognizant, is also learnt to have sent an internal email advising employees to be on the guard, according to the report.
China
Xi-Trump summit may be on the cards for April (South China Morning Post) China and the US are looking for ways to hold a summit between President Xi Jinping and his counterpart Donald Trump as soon as possible, diplomatic observers said. See Donald Trump meets with top Chinese envoy Yang Jiechi as hopes for Xi Jinping summit build.
Mexico
Mexican CPI rose more than expected (Walter Kurtz, Sober Look, The Daily Shot) Even the core CPI rose more than expected.
Canada
You’re twice as likely to live the American Dream in Canada (Business Insider) The notion of an American Dream can be boiled down to a simple concept: a meritocracy in which place of origin and social status do not preclude success for hard workers. Talk of that dream fading has been present since the Great Recession sucked 9 million jobs out of the economy and knocked down already-depressed wages for millions.
Now, a study published by the Federal Reserve Bank of St. Louis has found a way to measure that decay. It does so by coming up with a simple, mathematical definition of the American Dream as represented by social mobility defined as “the probability that a child born to parents in the bottom fifth of the income distribution makes the leap all the way to the top fifth of the income distribution“.
Calculated in this manner, the chances of achieving the American Dream are nearly twice as high in Canada as they are in the US.
Upward mobility also varies a great deal within the US as the map below makes clear.
Other Scientific, Health, Political, Economics, and Business Items of Note – plus Miscellanea
Investors accuse Nicholas Schorsch of plundering RCAP for own gain (Investment News) A group of investors has accused Nicholas Schorsch, the former nontraded REIT czar, and his partners of siphoning off revenue in RCS Capital, or RCAP, a company once controlled by Mr. Schorsch that went into bankruptcy. The allegation, which surfaced in a lawsuit filed by the investors on Wednesday in Delaware Chancery Court, claimed that Mr. Schorsch and his partners enriched themselves by funneling revenue from RCAP to AR Capital, another company they controlled. See also Shareholders approve merger of two Schorsch REITs – An analyst called it a “massacre” for some investors.
A World Without Wi-Fi Looks Possible as Unlimited Plans Rise (Bloomberg) With every major U.S. wireless carrier now offering unlimited data plans, consumers don’t need to log on to a Wi-Fi network to avoid costly overage charges anymore. That’s a critical change that threatens to render Wi-Fi obsolete. And with new competitive technologies crowding in, the future looks even dimmer. In an all-data-you-can-eat world, consumers’ use of Wi-Fi at public places like stadiums and airports will drop to a third of all mobile data traffic from about half, according to estimates by Tim Farrar, founder of Telecom Media Finance Associates Inc. This means businesses not upgrading public access Wi-Fi as often. Smartphone users might not even turn on their Wi-Fi capability, according to Barry Gilbert, an analyst at researcher Strategy Analytics in Boston. At home as well. Almost a third of people don’t use a home broadband internet connection because they have an unlimited data plan on their phones, according to a survey released Thursday by ReportLinker.
The erosion of Wi-Fi’s influence is likely to be slow and uneven. While unlimited data plans make the technology less necessary for phones, many home devices, from a MacBook to an Amazon Echo, still use Wi-Fi to connect to the internet. Wi-Fi also helps fill in gaps in some office buildings and homes that have spotty cellphone coverage.
Some wireless carriers also still rely on Wi-Fi networks to handle a large portion of the growing volume of internet traffic. Putting all of that Netflix-bingeing and Spotify-listening on cellular networks could strain capacity.
Scientists create time crystals, a rule-bending new form of matter (New Atlas) A new phase of matter, called a time crystal, has been created and observed for the first time. In a regular crystal, the atoms are arranged in a pattern that repeats itself across physical space, but in a time crystal, that pattern repeats through time instead. The possibility of their existence was first proposed in 2012, but they were deemed “forbidden” according to the laws of thermal equilibrium. The creation of time crystals marks one of the first steps into a new class of non-equilibrium phases, according to this article. See Observation of a discrete time crystal (Nature) for the research paper. Econintersect: We think the description of these new structures as non-equilibrium may be an “unimmaginative” description. Chemists have been trained in first-year college courses that equivalent structures engage in “resonance” to account for chemical behavior. The most common example of this is the benzene ring which has a number of electrons corresponding to three double bonds in a six-carbon ring. The “resonance” occurs by oscillation between the two equivalent structures depicted below and is represented by the “average” structure comprised of a “pi-electron” ring of uniformily distributed electrons (the third stucture in the graphic). Conceptually we see an equivalence to the “time resolution” of the two equivalent double-bonded rings and time crystals. All that is needed to substantiate this concept is a temperature dependence of the time period in the time crystals – the higher the temperature, the higher the frequency of the periodic structure (ie, the faster it cycles). Another quantum mechanical phenomenon which has relational bearing on this new observation is the well-known particle in a box calculation.
Morgan Stanley debuts fiduciary product for small 401(k) plans, with eye toward DOL rule (Investment News) Even as doubts are increasing the the rule will ever be implemented, Morgan Stanley Wealth Management is making a push into the small 401(k) marketplace, debuting a fiduciary product exclusively available to its advisers and offering a risk-controlled way to continue servicing those plans when the Department of Labor’s fiduciary rule comes into force. Econintersect: On the surface this appears to be nothing more than a scheme to extract more income (and leave smaller returns for investors) from small 401(k) plans (assets less than $10 million). Discerning plan sponsors will likely chose comparatively lower cost 401(k) plans available from providers such as those offered by Principal Financial, Vanguard and others.
Americans Aren’t Filing Their Taxes This Year (Bloomberg) Hat tip to John O’Donnell, Online Trading Academy.. Are millions of Americans just forgetting to file their taxes this year? More than halfway through the 2017 filing season, the U.S. Internal Revenue Service reported receiving 5.7 million fewer individual returns than at a comparable point last year. That’s an 8.5% drop. One factor may be the IRS announcement earlier that refunds would be delayed this year for some who claim the Earned Income Tax Credit. Confusion might have resulted in people thinking all refunds could be delayed.
