Charlie’s month-end reading list

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This month we came across several articles from zerohedge.com and HealthAffairs.org that we thought were worthwhile.

One article from Zero Hedge, “If things are so great, why is this chart so bad,” highlights information sourced from Bloomberg Brief that shows drastic job cuts in the financial sector. From 2009 to 2013, the graph shows a marked uptick in the amount of staff fired from financial institutions. This is striking to us, especially as the overall economic outlook is improving, because it seems the only way banks can grow earnings is by firing people at rates similar to 2009. The best driver of a better bottom line for bankers is loan growth, and we’re just not seeing it at levels which justify current staffing.

The next article weighs in on the games corporate managers play to beat analyst earnings estimates. The piece, titled “How CEOs play ‘Beat the Wall Street Estimate,’” reviews four tools (wage reduction, productivity increases, labor suppression and stock buybacks) used to boost earnings, and explains how they could potentially negatively impact investors and the economy. Click here to read the full article.

Author Jim Stafford of zerohedge.com interviews Chris Faulkner, CEO of Breitling Energy Companies, about the US oil boom and the impact on Saudi Arabia. The article spotlights fracking advancements expected in coming years, and our nation’s future role as a net natural gas exporter. Read the full Q&A here.

Our final suggested reading has authors John Holahan and Stacey McMorrow of HealthAffairs.org questioning health care spending growth in “Is the recent health care spending growth slowdown sustainable over the long term?” The piece speculates on causes for the recent slowing in the growth of health care spending, and provides forecasts for future trends.

Be sure to check Ramparts regularly for more articles of interest to investors.

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