LyrArc Article Gist
JP Morgan Chase disclosed that traders in the Chief Investment Office may have tried to avoid showing the full extent of losses by placing inaccurate prices on their positions. A trader named the "London whale," may have been asked by his boss to mark positions more aggressively. CEO Dimon said this has "shaken our company to the core."

LyrArc Article Gist
Daniel Yergin cites an estimate by IHS Cambridge Energy Associates which shows oil from shale and dense rock, which was about 1 million barrels a day in 2011, could reach 3 million barrels a day 2020. North Dakota where much of the production is taking place is now fourth in oil production in the U.S. after Texas, Alaska, and California, and is likely to move up to second place. U.S. imports of oil come primarily from Canada 25%, Mexico 11%, Venezuela 9%, and the Persian Gulf 16%. Canadian oil sands development has increased production and the completion of the Keystone pipeline will increase the share of oil imports from Canada. This is shifting the dynamic of oil away from the Persian Gulf, with the volatile politics in the region, and more towards North America.

LyrArc Article Gist
The European Union Commission says Ireland must recover 13 billion euros in back taxes for giving tax preferences to Apple that are against EU rules. The EU Commission says Ireland allowed Apple to pay a corporate tax rate of 1% on its European profits in 2003, and .005% in 2014. The EU Commissioner says the use of Ireland as the place where Apple pays taxes on operations in Europe has no base in reality, as most profits are earned in other countries outside Ireland. Taxable profits of Apple "did not correspond to economic reality," according to Ms. Vestager, the EU Commissioner.  In the current environment where political upheaval is unsettling the democratic process in the U.S., Britain, Spain, France and Italy, as well as in Brazil and other countries in the developing world- because of deep recessions, and efforts to cut the deficits with deep cuts in state spending including in education and healthcare, basic services- the moves by companies to reduce taxes to these absurdly low levels such as .005% when other companies in the EU are paying 12.5%, is becoming increasingly unpopular. As pointed out in this BBC News article this sounds like the way Carnegie, Rockefeller and Vanderbilt operated during the late 19th century, and were seen as operating in a manner that was above the law. Janet Yellen pointed out at a Boston Fed Conference on inequality in Oct 2014 that the bottom half of the distribution or 62 million households in the U.S. in 2013, had a net worth of about $10,000, One quarter of these households had a net worth of zero dollars. The working class and blue collar workers in the U.S. provide much of the support at Trump rallies. Younger college educated people support Sanders, because of the situation of the working and middle class in the U.S., and a similar situation exists in Europe. It is for the sake of the democratic process and delivering services in education, healthcare, and other basic areas to all, that companies small and large need to pay their fair share of taxes, regardless of size, influence, or technological advantages. Today this is is seen by most leaders who draw public support as the right way forward for the U.S., Latin America, Europe and Asian countries, including proper allocation of resources to best serve the needs of working people. For example the 13 billion euros is equal to all of Ireland's healthcare budget, and 66% of its social welfare budget.    ...

LyrArc Article Gist
The U.S. Labor Department report shows 156,000 jobs added in September 2016. The unemployment rate increased by a tenth of a percentage point to 5.0%, because of the increase in the total pool of workers, The labor force increased by 3 million workers over the first 9 months of 2016. The labor force participation rate was up by half a percentage point to 62.9% for the year 2016, as it drew more workers who were earlier discouraged to look for work. Wages grew by 2.6% over the year.

LyrArc Article Gist
The ruble goes from a low of 80 to the dollar in Dec. 2014 to 50 to the dollar by May 2015. The euro also strengthens against the dollar with weakening economic conditions in the U.S. leading to a reversal in the strength of the dollar.

LyrArc Article Gist
Former Fed Governor Kevin Warsh's views on the need for greater transparency and disclosure from the large U.S. banks and the risks to the financial system from "too-big-to-fail" banks in 2012-2013. He says the U.S. should not be dependent on the Basel standards for capital requirements and use its own system of stricter requirements similiar to the UK and Switzerland. His views are that the Dodd-Frank law puts too much dependence on regulators doing the right thing, information transparency is lacking for markets to impose discipline, and delegates too much to Basel standards which are not rigorous enough for protecting the U.S. economy.

LyrArc Article Gist
Warren Stephens, head of Stephens Inc, in Little Rock, Arkansas, says repeal of the Glass-Steagall Act was a mistake. U.S. banks should have a 5% cap on holdings of total deposits in the U.S., and no "grandfathering" of banks over the 5% limit. Five institutions controlling 50% of the deposits in the U.S. creates too much systemic risk in another financial crisis. Banks should be expected to be one or the other, commercial banks or investment banks, not both. These recommendations are not new. Bank of England Governor, Mervyn King, called for breaking up the largest banks or shrinking the size of the largest banks during the global financial crisis in 2008. This position for banks that are smaller in size is supported by veteran bankers Paul Volcker, Thomas Hoenig and other experts.

LyrArc Article Gist
James Glassman, has published a new book, "Safety Net." In the book he makes an admission that he was wrong in his theory and understanding of the stock market described in his earlier book, "Dow 36,000," published in 1999. That book called for stocks to triple in value in 5 years. Glassman wrote then, at the height of the tech boom, that stocks could immediately double, triple or even quadruple as was happening at that time for tech stocks going public, and they would still not be too expensive. Part of the arguments rely on a definition of risk. Glassman said in his earlier book that stocks and bonds are equally risky in the long run, because stocks had never lost money over the long term and over long periods of time their returns were constant. But Glassman is using a technical definition of risk as how much returns can deviate from the average. What investors face in the real world is a common sense definition of risk, which is- what are the chances you will lose money? This point says Jason Zweig, is clearly stated in Howard Marks coming book, "The Most Important Thing." And what about the point about stocks never losing money, the central point in Glassman's thesis? Here research from Dimson, Marsh and Staunton of London Business School is useful. This research shows that in France from 1912 through 1977, stocks lost money after inflation. The upshot of this is to emphasize the need for looking at risks as real in the real world, where things have changed to the point where the current stock market rally is attributed by the Fed chairman to vigorous efforts to fight a downturn in the economy. For investors these risks are not going away with a sudden surge in stock prices....

LyrArc Article Gist
John Cochrane of the University of Chicago points out that slight deflation of 1-2% may not be pernicious in 2014-2015.

LyrArc Article Gist
This WSJ editorial says AFL-CIO union leader Trumka's questions about the Lew nomination at Treasury are appropriate even though they come 2 years later. The questions relate to clauses in bank contracts that allow accelerated vesting of equity awards for executives who may be likely to join the government- looking towards favorable treatment of the banks by these executives that join the government. In this case it is Citicorp where Treasury Secretary Lew worked before becoming Treasury Secretary. The original Lew employment contract with Citicorp had a bonus guarantee if Lew left the bank for a "high level position with the United States government or regulatory body." The revolving door has a pernicious effect on America's regulatory system especially for financial markets and bank regulation by permitting behavious that would otherwise be discouraged or penalized.

LyrArc Article Gist
U.S consumer spending declines by 0.9% in Dec. 2014 over the prior month, according to the Commerce Department. Consumer spending was up in Nov. 2014 by 0.4%. Excluding auto sales and falling gas prices the Dec. 2014 decline in consumer spending was 0.3%. This shows that consumers are saving most of the money saved as a result of gasoline at about $2 a gallon, or using it to pay off debt. Analysts had estimated a significant increase in retail spending which turned out not to be happening.