Links for Sept. 12 2016

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Large parts of the eurozone are slipping deeper into a deflationary trap despite negative interest rates and one trillion euros of quantitative easing by the European Central Bank, leaving the currency bloc with no safety buffer when the next global recession hits. The ECB is close to exhausting its ammunition and appears increasingly powerless to do more under the legal constraints of its mandate. It has downgraded its growth forecast for the next two years, citing the uncertainties of Brexit, and admitted that it has little chance of meeting its 2pc inflation target this decade, insisting that it is now up to governments to break out of the vicious circle.

ECB's Mario Draghi has run out of magic as deflation closes in The Comprehensive Case Against Donald Trump | RealClearPolitics

Central bankers think steady price increases are a good thing. After all, inflation makes it easier for employers to cut real labour costs and helps monetary policy boost the economy without having to lower (nominal) interest rates below zero. Whether or not you agree, we thought it would be interesting to look at which products explain the rise of American consumer prices since 1990. As it turns out, just as the bulk of the growth in employment can be attributed to a few sectors where productivity is either low or unmeasurable, a whopping 88 per cent of the total rise in the price level boils down to four sectors of the US economy

Least productive sectors only thing keeping inflation going | FT Alphaville

Could bonds and stocks fall together? Expectations for a hike in interest rates spelled trouble for both stocks and bonds on Friday, no doubt adding to investor jitters over the prospect that supposedly diversified portfolios could suffer a double whammy. Jangled nerves are justifiable given the breakdown in the traditional relationship between bond yields and stocks. Typically, stocks and bond yields move up and down together on the idea that good news for equities is bad news for bonds—pushing down prices and lifting yields—and vice versa. Treasury yields jumped Friday and extended their rise Monday as bond prices fell on concerns the Federal Reserve might aim to raise rates more aggressively than previously thought. Stocks on Friday posted their biggest one-day decline since the aftermath of Britain’s June vote to leave the European Union, but recouped some lost ground on Monday. The 20-day correlation between the S&P 500 SPX, +1.47%  and the U.S. 10-year Treasury yield TMUBMUSD10Y, -0.67%  on Friday hit minus 0.52—approaching the most negative in five years, according to Jim Reid, macro strategist at Deutsche Bank, in a Monday note. A correlation of positive 1 would mean that two assets move in lockstep, while a correlation of minus 1 would indicate their relationship is perfectly inverse.

Why stocks and bond yields aren’t moving in tandem - MarketWatch

Unhappy with your inheritance? Then you might find it difficult to read this. Ultra high-net-worth individuals will transfer $3.9 trillion to the next generation by 2026, according to “Preparing for Tomorrow: A Report on Family Wealth Transfers,” released Monday by global wealth consultancy Wealth-X and insurance brokerage and consulting firm NFP. This reflects a 5% decline from the report’s 2014 estimate of $4.1 trillion, but this is because the massive global wealth transfer among the world’s newest superrich has already begun. The biggest concern for the world’s superrich was “succession and inheritance issues” (67%), a recent survey by global real estate consultants Knight Frank found.

The largest wealth transfer in history has already begun - MarketWatch

There is no need for such hyperbole when the cold facts of Totti’s career have become so extraordinary. This is his 25th season in Serie A – matching a record held by Paolo Maldini. He is the first player in Italy ever to find the net in 23 consecutive top-flight campaigns. Rather than slowing down, he has carried his excellent form from the latter part of 2015-16 into this new season. Over his last eight Serie A appearances, Totti has scored five goals and provided the assist on three more. This despite not playing more than 45 minutes in any one of those games.

Francesco Totti emerges from Roma rain to cast more sunshine on career | Paolo Bandini | Football | The Guardian

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“Downdrafts in the SPX are associated with upmoves in the VIX, and I don’t think either move has come to its culmination yet. Volatility tends to follow periods of complacency, which you could argue was the case in August,” she said. Stockton thinks that the VIX could get to 28 before it reaches a tradable low. In other words, there may be more pain ahead for stocks before it gets better.

Wall Street’s ‘fear gauge’ shows it’s about to get ugly in the stock market - MarketWatch

There is a lot of talk out there about the auto-loan market right now. The default rates for auto loans in oil-producing regions in the US have been jumping, while hedge fund honcho Jim Chanos has said the auto-lending market should "scare the heck out of everybody.". John Oliver has used time on his show, "Last Week Tonight," to highlight the ways some used-car dealerships take advantage of people.
Now, in a presentation Monday at the Barclays Financial Services Conference, Gordon Smith, the chief executive for consumer and community banking at JPMorgan, has set out some eye-opening statistics on the market.

JPMorgan Gordon Smith on auto lending - Business Insider

Investors who think stocks and bonds are overvalued are in a record majority compared to those who think they're not, according to Bank of America Merrill Lynch.  On Tuesday, the bank published results of its Global Fund Manager Survey which found that on net, 54% of respondents say the combined valuation of both asset classes is close to all-time highs. The overvaluation of stocks is the highest since May 2000, the survey found. The tech-heavy Nasdaq lost nearly 78% of its value between March 2000 and October 2002 as the tech bubble burst.

Bank of America Merrill Lynch survey says stocks, bonds are overvalued - Business Insider

The ECB is close to exhausting its ammunition and appears increasingly powerless to do more under the legal constraints of its mandate. It has downgraded its growth forecast for the next two years, citing the uncertainties of Brexit, and admitted that it has little chance of meeting its 2pc inflation target this decade, insisting that it is now up to governments to break out of the vicious circle.

ECB's Mario Draghi has run out of magic as deflation closes in

Since his election, Duterte has continued to encourage the public to take the law into its own hands. "Please feel free to call us, the police, or do it yourself if you have the gun — you have my support," Duterte said in early June, according to the Associated Press. If a drug dealer resists arrest or threatens a citizen, Duterte went on, "you can kill him ... Shoot him and I'll give you a medal."

Philippines vigilante drug killings - Business Insider

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Big Problems/Big Thinkers features acclaimed journalist Terre Blair interviewing an extraordinary group of leaders to find solutions to some of the most urgent challenges facing humanity: global climate change, financial mayhem, nuclear attacks, cyber threats, political paralysis. Terre asks Warren Buffett, Ted Turner, Madeleine Albright, and others if a framework of ethics and values can help solve these grave threats to our future. What she discovers is sobering, thought-provoking, and ultimately, hopeful.

Big Problems/Big Thinkers With Terre Blair: The Most Urgent Challenges Facing Humanity

Investors spent the summer piling into technology and financial stocks as the economy showed signs of improvement, leading to speculation that the Federal Reserve would raise interest rates this month. Barclays Capital Plc. this week advised investors to put their money into safer stocks that will maintain their value as the market loses momentum. Disappointing economic data and the approaching presidential election have quelled any possibility of a rate hike before December.

Barclays: 33 Stocks That Will Help You Survive Weakening Economy

While Wall Street is focused on whether the Federal Reserve will raise interest rates or not, rising yields in the long end of the U.S. bond market in recent sessions have been directly related to the negative yield and bond-buying policies of both the European Central Bank and the Bank of Japan.

Why everyone needs to pay attention to the bond market

Scientific literature has long suggested a possible link between serious dehydration and decreased cognition. This might be intuitive: When we’re very thirsty, water becomes a matter of survival, and our bodies simply have more pressing concerns than reading reports and filling out forms. But recent studies suggest we don’t need to be crawling through the desert for dehydration to hinder our brains’ functioning. Even mild dehydration—just enough to make us feel a bit parched—can hurt our ability to reach peak productivity.

Drinking Water Can Make You More Productive - Bloomberg

Philippine President Rodrigo Duterte allegedly once shot dead a justice department agent with an Uzi submachine gun while serving as mayor of Davao. The allegation was made by Edgar Matobato, a self-confessed former death squad member, before a Senate inquiry on extra-judicial killings. Mr Duterte, he alleged, ordered him and others to kill about 1,000 criminals or political rivals over a 25-year period. One government minister called the allegations "lies and fabrications" Justice Secretary Vitaliano Aguirre said Mr Matobato was "obviously not telling the truth" while presidential spokesman Martin Andanar said investigations into the president's time as mayor had gone nowhere.

Philippines President Duterte 'once killed man with Uzi'

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The duration of the cold shower did not influence outcome as there was no significant difference between intervention groups. The only secondary outcome that showed a slight beneficial effect–on the short run–was quality of life (mental component summary) although this was deemed too small to be clinically relevant. Even though the vast majority of participants reported a variable degree of discomfort during cold exposure, the fact that 91% of participants reported the will to continue such routine (and 64% actually did) is perhaps the most indicative of any health or work benefit. The most commonly reported beneficial effect was an increase in perceived energy levels (including many reported comparisons to the effect of caffeine). The most common discomfortable related adverse reaction was persistent cold sensation in body, hands and/or feet in up to 13% of participants. Other related harmful effects were mild and uncommon.

PLOS ONE: The Effect of Cold Showering on Health and Work: A Randomized Controlled Trial

Christmas has come early for Intel (INTC) investors. Not only did the chip giant hike its third-quarter guidance and provide upbeat comments about a long-downtrodden PC market, but one of the first iPhone 7 teardowns indicates that iPhones sporting Intel modems also contain a few complementary chips. Intel announced Friday morning that it now expects third-quarter revenue of $15.6 billion, plus or minus $300 million. That's up from prior guidance of $14.9 billion, plus or minus $500 million, and a consensus analyst estimate of $14.9 billion. At the midpoint, the revised guidance implies 8% annual revenue growth. Gross margin guidance was also hiked. Intel says its new outlook is "primarily" due to PC supply chain inventory replenishment. But the company adds it's "also seeing some signs of improving PC demand." Intel was trading up 2.7% on Friday afternoon, touching new 52-week highs.

Intel's Guidance Hike Isn't the Only Good News for the Chipmaker Today - TheStreet

Fewer and fewer Americans are on food stamps, and the decline is only getting faster. According to Paul Trussell, an analyst at Deutsche Bank, the number of people utilizing the Supplemental Nutrition Assistance Program, or SNAP, in June 2016 was down 4.7% from the same month a year before, and the number of households using SNAP was down 5.2% year-over-year. "The month of June represents the biggest YOY decline in persons and households participating in SNAP in the program's history," Trussell wrote in a note to clients on Thursday.

Number of people on food stamps plummeting at its fastest rate - Business Insider

The EpiPen pricing controversy is enough to trigger mental anaphylactic shock. First, Mylan raised the list price of EpiPens to more than $600 a pair. When protests predictably erupted, Chief Executive Officer Heather Bresch went on TV to say that if she cut the price of EpiPens, some people wouldn’t be able to get them anymore. Which is weird, because usually a lower price makes things easier to get. Then, on Aug. 29, Mylan announced it will sell a generic version of EpiPens at half the price—but keep selling the identical brand-name version at full price. Because, um, some people will be happy to spend twice as much as everyone else for their EpiPens? None of this, including the original price hike, makes sense if you think of brand-name pharmaceuticals as normal products whose prices are set by the forces of supply and demand.

The EpiPen Drama Shows What’s Wrong With How Drugs Are Priced - Bloomberg

Yet its most important contribution is the reasoning behind the proposition that when an economy is operating below full employment, demand rather than supply determines the level of investment and national income. Keynes supposed there was a “multiplier effect” from changes in investment spending. A bit of additional money spent by the government, for instance, would add directly to a nation’s output (and income). In the first instance, this money would go to contractors, suppliers, civil servants or welfare recipients. They would in turn spend some of the extra income. The beneficiaries of that spending would also splash out a bit, adding still more to economic activity, and so on. Should the government cut back, the ill effects would multiply in the same way. Keynes thought this insight was especially important because of what he called “liquidity preference”. He reckoned that people like to have some liquid assets on hand if possible, in case of emergency. In times of financial worry, demand for cash or similarly liquid assets rises; investors begin to worry more about the return of capital rather than the return on capital. Keynes posited that this might lead to a “general glut”: a world in which everyone tries to hold more money, depressing spending, which in turn depresses production and income, leaving people still worse off. In this world, lowering interest rates to stimulate growth does not help very much.

Where does the buck stop? | The Economist

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Many of us have already become used to poor voice-recognition software and error-prone requests on our mobile devices. But Amazon started developing a high-precision microphone and more sophisticated voice recognition system a full 12 months before its competitors and has gained a significant headstart. The big difference with other AI assistants is that instead of a single piece of software, Alexa uses 300 of its own apps (which Amazon calls “skills”) to provide the device’s different capabilities. This creates a system that is far more integrated and sophisticated yet simple to use with minimal setup.

Amazon Echo will bring artificial intelligence into our lives much sooner than expected - Business Insider

Blaise, who is now 46 and an entrepreneur in Paris, says that for decades, only booze could ease his “pathological anxiety”. In his late 30s, at the height of his addiction, he would down between one and two liters of strong beer, followed by a bottle of wine and servings of vodka or whiskey. Sometimes he would wake up in the street or in hospital after a blackout. Finally, a doctor confronted him with enough force that Blaise believed him: he was a handful of years from death. Blaise tried AA, multiple medications, and three-week detox programs. Nothing worked. He and his partner – they have two children together – knew something drastic needed to be done. So on Christmas Day 2011, Blaise sat down at his computer and started typing, looking for help. Then, after scrolling through pages and pages, he found his holy grail: a medication called Baclofen. With nothing left to lose, he decided to turn himself into a guinea pig, reasoning that it was “more dignified to die during my own clinical experiment than it was to die of alcoholism”. In 2004, he started taking small, and then increasing doses of the drug. He was astonished when, a few weeks in, his cravings disappeared. He simply had no desire for a glass of wine any more. The Last Glass, the account of his miraculous recovery, came out 2008. Its publication turned him into something of an evangelist for Baclofen.

Baclofen: the controversial pill that could 'cure' alcoholism | Society | The Guardian

The inconveniences of air travel can range for disastrous to mildly irritating, whether it's a canceled flight or a seemingly endless security line. Thankfully, the good people of Reddit banded together and enlisted airport workers, from rampers to flight attendants, to reveal travel hacks straight from the source. Here are 14 of their best tips to help you navigate your next trip with ease.

Airport workers reveal 14 travel hacks - INSIDER

Polish weightlifter Tomasz Zielinski is set to receive an Olympic bronze medal despite finishing ninth at London 2012 - and being currently banned himself. Six other athletes from the men's -94kg final tested positive for performance-enhancing drugs when their 2012 samples were retested this year.

Weightlifter set for 2012 Olympic bronze despite finishing ninth - BBC Sport

Insulin has been around since 1923, so it came as a surprise in July 2015 when Cole LePere's doctor told his mother, Janine, to prepare to pay a lot at the pharmacy for it. Cole, who was 10, had just been found to have Type 1 diabetes, which commonly affects children. But even the pharmacist was shocked to see the price. Over and over, the pharmacist told Janine LePere, "This is really expensive." Each time she would respond, "I know, thanks, but I still need the medicine." The pharmacist finally gave the LePeres the supplies — and a bill for $1,550. That was after a $350 coupon. As lawmakers and the public scrutinize dramatic price increases for other old drugs — most recently with the Mylan-owned EpiPen, which saw its cost go up by 500% in the past nine years — the next flash point may be insulin, a drug both ubiquitous and complicated. And the story of why the LePeres are now paying as much as their mortgage payment on insulin, even though they have insurance and even though there are competing drugs on the market, is really the story of what has happened to the healthcare industry in America since the start of the century.

Rising insulin prices are taking a toll on parents of kids with Type 1 diabetes - Business Insider