Off the Wires

Trade Gap Shrinks More Than Forecast as U.S. Oil Imports Dry Up

January 7th, 2015  |  Source: Bloomberg

The trade deficit narrowed more than forecast in November as U.S. petroleum imports sank to the lowest level in more than five years.

The gap shrank 7.7 percent to $39 billion, the smallest since December 2013, from October’s $42.2 billion, Commerce Department figures showed today in Washington. The median forecast in a Bloomberg survey of 69 economists projected $42 billion. The smallest quantity ofcrude oil imports in more than two decades and the lowest prices in four years combined to limit the value of foreign-fuel purchases.

A combination of rising supply as domestic production picks up and slower growth overseas that’s reducing demand is leading to a rout in oil prices that has continued into 2015. Outside of fuel, Americans bought record amounts of consumer goods that shows the world’s largest economy is strengthening.

The drop in oil prices is “going to put some downward pressure on the trade deficit in the near term,” said Gus Faucher, an economist at PNC Financial Services Group Inc. in Pittsburgh, who projected a smaller trade gap. “Once oil prices stabilize, I think we’ll see the trade deficit expand a bit.”

Companies added more workers than forecast in December, indicating the job market was sustaining strength as 2014 drew to a close, another report showed today. Employment increased by 241,000 after a 227,000 gain in November, according to figures from Roseland, New Jersey-based ADP Research Institute.

Shares Climb

Stock-index futures rose, signaling equities may halt their worst start to a year since 2008, on the gain in employment and the narrowing of the trade gap. The contract on the Standard & Poor’s 500 Index maturing in March climbed 0.8 percent to 2,009.7 at 8:49 a.m. in New York.

Bloomberg survey estimates for the trade balance, or the difference between the value of imported goods and services and U.S. exports, ranged from deficits of $39 billion to $43.9 billion. The Commerce Department initially reported a $43.4 billion shortfall for October.

The deficit last year narrowed 11.4 percent to $476.4 billion, the smallest since 2009. Leading up to the last recession, the shortfall reached a record $761.7 billion in 2006.

Imports dropped 2.2 percent, the most since June 2013, to $235.4 billion from $240.6 billion in the prior month.

Oil Imports

The U.S. imported $23.1 billion worth of petroleum in November, the least since August 2009. The 189 million barrels of foreign crude oil purchased during the month were the fewest since February 1994, and the $82.95 average price per barrel was the lowest since December 2010.

Excluding petroleum, the trade gap would have been little changed in November at $27.6 billion compared with $27 billion the prior month.

Slower foreign demand is also holding back orders for U.S. products. Exports declined 1 percent to $196.4 billion from $198.3 billion in October.

After eliminating the influence of prices, which generates the numbers used to calculate gross domestic product, the trade deficit narrowed to $47.8 billion compared with $50.1 billion in October. The average so far in the fourth quarter is little changed from the previous three months, indicating trade won’t have much impact on GDP.

GDP Effect

A narrowing of the trade deficit in the three months ended in September added 0.8 percentage point to growth, the category’s biggest contribution in three quarters, according to Commerce Department figures.

GDP advanced at a 5 percent annual rate in the third quarter, the strongest gain in 11 years and up from a previously estimated 3.9 percent pace.

Similar contributions to GDP will be difficult to match in subsequent quarters as faster growth in the U.S. and slower demand among trading partners boosts imports and slows exports.

At the same time, companies including Dearborn, Michigan-based Ford Motor Co. are betting a slowing in exports amid waning global demand won’t spoil a U.S. trend of 3 percent growth or better this year.

“While the strong dollar does have the potential to put some damper on that, I don’t think it’s going to be a significant factor in terms of offsetting the other positive forces that are supporting overall economic growth this year,” Chief Economist Emily Kolinski Morris said on a Jan. 5 conference call, citing cheaper fuel and job gains among the factors boosting demand.

Gasoline Prices

Lower prices at the pump have been cushioning consumers’ balance sheets since September. The average cost of a gallon of regular gasoline was $2.19 as of Jan. 5, marking 103 consecutive decreases and the cheapest rate since May 2009, according to data from motoring group AAA.

Monthly employment gains are on pace to show their best performance in 2014 in 15 years, further propelling U.S. growth. An average 240,910 jobs were added each month last year through November. December figures from the Labor Department are scheduled for release Jan. 9.

Kids Who Sleep Near Smartphones Get Less Shuteye: Study

January 5th, 2015  |  Source: Bloomberg

Gave your kids smartphones for the holidays? You might want to reconsider their bedtime.

Children who slept in the same room as small screens such as smartphones got almost 21 fewer minutes of shuteye a night than those who didn’t, according to research published today by the journal Pediatrics. The two age groups studied -- about 9 years old and 12 years old -- also reported significantly less regular sleep with a phone nearby, possibly due to the buzz of text messages and Snapchats.

The paper joins a growing body of research finding that gadgets correspond to shorter, more fitful nights, as well as other health issues such as weight gain. As one study found last month, adults who used glowing e-readers before bed had worse sleep and more drowsiness than those with printed books. The evidence suggests that bright, blinking screens are affecting our biological timekeeper, the circadian clock.

While the Pediatrics study didn’t conclude that phones cause sleep deprivation, its lead author, Jennifer Falbe, said the case for clamping down on kids’ screen time is gaining strength.

Recent findings “caution against unrestricted access to media in children’s bedrooms,” Falbe, a researcher at the University of California at Berkeley, said in a phone interview. “The risks associated with shorter sleep duration and poorer sleep quality would include reduced academic performance, behavioral problems, possibly an increased risk for weight gain and possibly negative impacts on immunity.”

Circadian Rhythms

The human body uses light and darkness to influence circadian rhythms, the physical, mental and behavioral changes in a 24-hour cycle. The brain’s internal clock uses the amount of light to determine when to produce more melatonin, a hormone that brings on sleepiness. Charles A. Czeisler, a professor of sleep medicine at Harvard Medical School, estimates that since the advent of electricity-powered light, people’s internal sleep triggers have been pushed back six hours.

The study in Pediatrics, funded by the U.S. Centers for Disease Control and Prevention and the National Institutes of Health, surveyed more than 2,000 fourth- and seventh-graders in Massachusetts as part of a broader investigation into obesity in children. The majority of kids surveyed slept with a small screen by their side.

The 21 minutes lost with smaller screens exceeded the 18 minutes given up by children who slept in a room with a TV. Since small devices are held closer to the face, they may delay the release of melatonin more than TV light, the researchers said.

TV and video games were also associated with less sleep. Seventy-five percent of kids in the study said they slept in a room with a TV. Each hour of TV- or DVD-viewing a day corresponded with almost four fewer minutes of sleep, compared with five fewer minutes for gamers.

Firm Rules

More research is needed to determine if small screens are actually causing the lost sleep or if other forces are at play, Falbe said. Children with smartphones and those without might be very different, and may have different types of parents, she said.

Still, considering the potential long-term risks of sleep-deprivation, parents should keep an eye on the time their children spend staring at screens, Falbe said.

Kids need “realistic but firm rules around media,” she said.

2014 VICE News Awards: Climate Change Denier of the Year — James Inhofe

December 30th, 2014  |  Source: Vice News

In January, Republicans will take control of the Senate and Oklahoma Republican James Inhofe will likely get the nod from his party leadership to chair the Environment and Public Works Committee.

That's right: the man who called climate change the greatest hoax ever perpetrated on the American public will preside over any legislation dealing with air, water, and soil pollution, while also overseeing the US Environmental Protection Agency — the government regulator tasked with implementing nearly all of President Obama's climate change policies.

It's a scenario that has left environmentalists with mouths agape.

In describing a passage from his book The Greatest Hoax: How the Global Warming Conspiracy Threatens Your Future, Inhofe said: "[T]he Genesis 8:22 that I use in there is that 'as long as the earth remains there will be seed time and harvest, cold and heat, winter and summer, day and night.'"

It's a common refrain among deniers and Inhofe explains his interpretation, saying: "My point is, God's still up there. The arrogance of people to think that we, human beings, would be able to change what He is doing in the climate is to me outrageous."

Inhofe could tone down the climate denial, say some observers, knowing that many of his fellow Republicans have moderated their own positions on climate change, now preferring to say "I'm not a scientist," when queried about their views, rather than outright denying the scientific consensus. Why bring attention to themselves with flat-Earth theories, so the theory goes, when the GOP will control both houses of Congress, providing them with ample opportunities to attack the administration's climate policies. Think of it as a "death by a thousand [budget] cuts" strategy instead of one aimed at spinning conspiratorial tales of plots between the United Nations, climate scientists, and Hollywood liberals to tank the economy and torture Americans through excessive regulation.

But Inhofe might go full-on denier, using his bully pulpit to attack the veracity of climate science, like he's done in the past. After all, he has chaired the committee before and used it as a launching pad for some of the most egregious distortions of climate science and attacks on researchers and environmentalists who have called for action on climate change.

"Much of the debate over global warming is predicated on fear, rather than science," he said in 2003, reflecting on his role as committee chairman. "Global warming alarmists see a future plagued by catastrophic flooding, war, terrorism, economic dislocations, droughts, crop failures, mosquito-borne diseases, and harsh weather — all caused by man-made greenhouse gas emissions."

Looking back through 2014, it's an easy task to find each of those events and scientists who say climate change was a likely factor in their becoming more frequent and more extreme.

The most epic battles around US climate change policy will undoubtedly unfold in his committee in the coming years. Whether he moderates his denialism and chooses a more tactful path toward gutting greenhouse gas regulations, or unleashes his tried-and-true method of distorting science and attacking environmentalists, Inhofe will be front and center in 2015, influencing how the public perceives climate change and very likely blocking at every possible moment US action on climate change.

Taliban declare 'defeat' of U.S., allies in Afghanistan

December 29th, 2014  |  Source: Reuters

Taliban insurgents in Afghanistan on Monday declared the "defeat" of the U.S. and its allies in the 13-year-old war, a day after the coalition officially marked the end of its combat mission.

The NATO-led International Security Assistance Force is shifting to a support mission for Afghan army and police more than a decade after an international alliance ousted the Taliban government for sheltering the planners of the Sept. 11, 2001, attacks on American cities.

"ISAF rolled up its flag in an atmosphere of failure and disappointment without having achieved anything substantial or tangible," Taliban spokesman Zabihullah Mujahid said in an statement emailed on Monday.

About 13,000 foreign troops, mostly Americans, will remain in the country under a new, two-year mission named "Resolute Support" that will continue the coalition's training of Afghan security forces to fight the insurgents, who have killed record numbers of Afghans this year.

While the U.S. and its allies say the Afghan army and police have been able to prevent the Taliban from taking significant territory, violence has shot up as the insurgents seek to gain ground.

For Afghanistan's new president, Ashraf Ghani, keeping government control of territory and preventing security from further deteriorating is a top priority.

Vowing to restore their former hard-line Islamist regime, Taliban spokesman Mujahid vowed that "the demoralized American-built forces will constantly be dealt defeats just like their masters".

The Taliban have launched increasingly deadly attacks this year. Nearly 3,200 Afghan civilians were killed in the conflict between the militant group and the army in 2014, and more than 4,600 Afghan army and police died in Taliban attacks.

Since 2001, nearly 3,500 foreign soldiers have been killed in the war, including around 2,200 Americans.

Britain posts 41 million wills, including Princess Diana's

December 27th, 2014  |  Source: France24

Some 41 million British wills dating back to 1858, including those of Winston Churchill and Princess Diana, were made available in an online database Saturday.

The government's full archive of wills from England and Wales, stretching back more than 150 years, has been put on the website.

It includes the wills of World War II prime minister Churchill; novelist Charles Dickens; Diana, princess of Wales; children's writer A. A. Milne; code-breaker Alan Turing; writer George Orwell and author Beatrix Potter.

The digital copies of the wills cost £10 ($15.50, 12.75 euros) but basic details for some of them are available online.

"This fascinating project provides us with insights into the ordinary and extraordinary people who helped shape this country, and the rest of the world," said Courts Minister Shailesh Vara.

"It is a fantastic resource not only for family historians but also for anyone with an interest in social history or famous figures."

Previously the archives had only been publicly available to search in person.

In Churchill's will he gave £304,044 -- worth more than £5.1 million nowadays -- to his family.

When Dickens died in 1870 he left a will written in cursive script that laid out highly specific directions for his funeral.

"I emphatically direct that I be buried in an inexpensive, unostentatious, and strictly private manner," he wrote, adding that mourners must not wear scarves, cloaks, long hatbands, "or other such revolting absurdity".

Orwell, who died in 1950, insisted that his archive of papers be preserved, while economist John Maynard Keynes, who died four years earlier, wanted most of his papers destroyed.

Milne, who wrote "Winnie The Pooh", gave shares of his future royalties and copyright to his favourite London club and Westminster School when he died in 1956.

"Peter Rabbit" creator Potter left a lengthy and generous will reflecting her love for conservation and nature.

Though the archive has been converted into digital format, the original paper records will still be kept in a temperature-controlled environment.

Ruble Swap Shows China Challenging IMF as Emergency Lender

December 22nd, 2014  |  Source: Bloomberg

China is stepping up its role as the lender of last resort to some of the world’s most financially strapped countries.

Chinese officials signaled Saturday that they are willing to expand a $24 billion currency swap program to help Russia weather the worst economic crisis since the 1998 default. China has provided $2.3 billion in funds to Argentina since October as part of a currency swap, and last month it lent $4 billion to Venezuela, whose reserves cover just two years of debt payments.

By lending to nations shut out of overseas capital markets, Chinese President Xi Jinping is bolstering the country’s influence in the global economy and cutting into the International Monetary Fund’s status as the go-to financier for governments in financial distress. While the IMF tends to demand reforms aimed at stabilizing a country’s economy in exchange for loans, analysts speculate that China’s terms are more focused on securing its interests in the resource-rich countries.

“It’s always good to have IOUs in the back of your pocket,” Morten Bugge, the chief investment officer at Kolding, Denmark-based Global Evolution A/S who helps manage about $2 billion of emerging-market debt, said by phone. “These are China’s fellow friends and comrades, and to secure long-term energy could be one of the motivations.”

The ruble jumped 4.8 percent to 55.8470 per dollar as of 3:07 p.m. in New York after Hong Kong-based Phoenix TV cited China’s Commerce Minister Gao Hucheng as saying that expanding the currency swap between the two nations would help Russia.

Ukraine’s Allies

The ruble has gained 10 percent over the past two days, paring a selloff that’s made it the world’s worst performing currency over the past six months.

Unlike Ukraine, where the pro-west government received a $17 billion IMF-led bailout this year, Russia, Argentina and Venezuela are often at odds with the U.S. and its allies, essentially keeping them out of the reach of the Washington-based institution. At $3.89 trillion, China holds the world’s largest foreign-exchange reserves, allowing it to fill the void.

China and Russia signed a three-year currency-swap line of 150 billion yuan ($24 billion) in October, a contract that allows Russia to borrow the yuan and lend the ruble. While the offer won’t relieve the main sources of pressure on the ruble -- which has lost 41 percent this year amid plunging oil prices and sanctions linked to Russia’s annexation of Crimea -- it could bolster investors’ confidence in the country and help stem capital outflows.

In North Dakota, countdown looms for $5.3 billion oil tax break

December 19th, 2014  |  Source: Reuters

Tumbling U.S. oil markets hit an important if obscure milestone on Thursday, closing for the first time at a price that could trigger a $5.3 billion, two-year tax break for North Dakota oil drillers as soon as next summer.                       

Under a decades-old law, the state at the heart of the U.S. shale oil boom would waive its 6.5 percent oil extraction tax once the average monthly price of benchmark West Texas Intermediate (WTI) crude at Cushing, Oklahoma, falls below a certain threshold for five consecutive months.

For next year, that price is $55.08 per barrel. On Thursday, U.S. crude oil futures settled at $54.11 per barrel, the lowest close since May 2009 and the latest leg of a rout that has halved the price of crude since June.

It is unlikely that the clock would start ticking in December, since the average price is still above $61 a barrel. But if prices remain this low into next year, it could be a reality as soon as next June.

"We're really at the point where we could start calculating this," Ryan Rauschenberger, North Dakota's tax commissioner, said in an interview.

The hope of a future tax break will be cold comfort for North Dakota's beleaguered oil producers, including Continental Resources Inc and Oasis Petroleum Inc, which plan to spend less money in 2015.

The tax break "would be an important incentive for the industry to continue investing," said Ron Ness, president of the North Dakota Petroleum Council, an industry trade group.

The potential tax relief could make it difficult to know how much crashing oil prices are hurting the nation's oil producers. It also would muddy the waters to determine how quickly a slowdown in U.S. production affects a growing global supply glut.

While only about 3 percent of oil taxes go to fund the state's day-to-day operations, a reduction would wreak havoc with parts of the state's budget and crimp funding for new schools, water pipelines and other major projects in western oil-producing counties that have made North Dakota the second-largest U.S. oil producer.

Rauschenberger estimates that North Dakota would only take in $2.9 billion in oil taxes in the next two years without the oil extraction tax. With the tax, the projection is $8.2 billion.


The tax break was instituted in 1987, several years after North Dakota's second oil boom went bust. Oil prices had collapsed after Saudi Arabia flooded the market in a price war with other producers - a scenario some see repeating now.

The break was designed "to try and keep oil production occurring in the state in a low-price environment," said Rauschenberger, who was appointed tax commissioner last year and elected to a four-year term last month.

From 1987 until 2004, the trigger was in effect, meaning oil extraction tax collections were a pittance compared with, say, this past July, when $325 million in oil taxes rolled into state coffers, the highest monthly amount in history.

Here is how it works.

If the average price of crude is below an inflation-adjusted limit - set at $55.08 per barrel for 2015 - for five consecutive months, then the 6.5 percent oil extraction tax is waived for the first 24 months of a well's life.

After that 24 months is up, and if the average price of oil is still below $55.08 per barrel, the tax rate rises to 4 percent, not the original 6.5 percent.

The full 6.5 percent oil extraction tax only returns if the average price of oil rises above that $55.08 per barrel threshold each month for a five-month period. The break does not apply to wells already in production, however.

The state still imposes a separate 5 percent gross production tax as a type of property tax on each barrel, no matter what.

But a complete repeal of the 6.5 percent extraction tax would mean North Dakota's "overall oil tax rate would be effectively cut in half," Rauschenberger said.

Lawrence Summers' $28 Million Payday, Courtesy of Elizabeth Warren

December 18th, 2014  |  Source: Bloomberg

Senator Elizabeth Warren blocked his nomination and now he's smiling all the way to the bank.

Senator Elizabeth Warren famously declared "there is nobody in this country who got rich on his own.''

That truism presumably includes President Barack Obama's former economic chief Lawrence Summers, a man who just came into millions of dollars in the Lending Club initial public offering. For that good fortune, he can thank his political nemesis, Warren.

The Massachusetts Democrat helped lead a Senate uprising late last year that ended Summers's longtime hope of becoming chairman of the Federal Reserve. Janet Yellen, Warren's favored candidate, got the post.

Summers went back to teaching at Harvard University, a job that, unlike the Fed, allows him to serve on Lending Club's board. As a director, Summers has accumulated a little more than 1 million shares of the company's stock and options, priced at 70 cents a share, according to SEC filings. Since it began trading last week, the peer-to-peer lender's stock has risen to $27.90 a share—giving Summers a likely paper profit of roughly $28 million.

That's real money, even to Summers, an ex-Treasury Secretary, who padded his bank account by collecting large speaking fees from Wall Street banks and consulting for hedge fund D.E. Shaw before joining the Obama administration in 2009. At the time, he reported his net worth to be between $7 million and $31 million in the broad range denoted on federal financial disclosure forms.

Warren's office didn't respond to requests for comment. A spokeswoman for Summers declined to comment.

Nevertheless, if Summers is looking for a way to show some gratitude to his former Harvard colleague and home state senator, he could always cut her a check. A recent campaign mailing offers an end-of-the-year deal: a special edition T-shirt for a $25 contribution. It reads on the back, "The Best Senator Money Can't Buy.''

Cuba’s Half Century of Isolation to End

December 17th, 2014  |  Source: Bloomberg

Cuba and the U.S. will begin to normalize relations in a surprising move by the Obama administration that will loosen a trade and travel embargo that is among the last remnants of Cold War policy.

The action means not simply the opening of a U.S. embassy in Havanabut the lifting of restrictions that have limited commerce and kept aficionados from legally bringing Cuban cigars to U.S. soil.

The thaw, wrapped into the release of American aid worker Alan Gross and the exchange of a U.S. spy for three Cuban intelligence agents, was announced by President Barack Obama and Cuban leader Raul Castro speaking at about the same time.

“Today, the United States of Americais changing its relationship with the people of Cuba,” Obama said at the White House. “Neither the American nor Cuban people are well served by a rigid policy that’s rooted in events that took place before most of us were born.”

The change, while drawing criticism from some Cuban-American lawmakers, comes amid a shift in which the influence of aging anti-Castro hardliners -- many of them refugees who fled the island by boat in previous decades -- has given way to a younger, more pragmatic generation favoring liberalization.

The Cuban leader said “the progress achieved in the exchanges we’ve had shows that it’s possible to find solutions to many problems.”

“We have to learn the art of living together with our differences in a civilized way,” Castro said in Havana.

Cost of Afghanistan War nears $1Trillion

December 15th, 2014  |  Source: The

The war in Afghanistan has cost the United States nearly $1 trillion, according to a report published Monday. 

The calculation was by the Financial Times and independent researchers. They found that the war has cost nearly $1 trillion, and that most of that was spent under President Obama, who escalated the number of U.S. troops in Afghanistan upon taking office. 

The war began following the Sept. 11, 2001, terrorist attacks.

To put the total in perspective, Congress just passed a $1.1 trillion spending bill funding most of the federal government for the rest of the fiscal year.

The war in Iraq, by contrast, cost the U.S. $1.7 trillion, according to a Costs of War Project conducted by Brown University’s Watson Institute for International Studies.

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