Financial Review

Hack Attack

Sinclair Noe — December 29, 2016

Podcast: Play in new window | Download (Duration: 13:16 — 6.1MB)

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DOW – 13 = 19,819
SPX – 0.66 = 2249
NAS – 6 = 5432
RUT + 2 = 1363
10 Y – .03 = 2.48%
OIL – .29 = 53.77
GOLD + 16.70 = 1159.40

As expected, the Obama administration is fighting back against Russia for its hacking efforts to influence the election. The operation was broad, involving not only hacking the Democratic National Committee but scanning and intruding into state voter databases. The hackers leaked the pilfered e-mails in a bid to damage Clinton’s campaign, per U.S. intelligence agencies.

The administration sanctioned 2 Russian intelligence services, ejecting 35 Russian intelligence operatives from the US. The FBI and Homeland Security Department also released a report with technical evidence intended to prove Russia’s military and civilian intelligence services were behind the hacking to expose some of their most sensitive hacking infrastructure; a more detailed report will be released in 3 weeks, including malware and computer addresses.

Members of both parties in Congress have expressed alarm about the campaign hacking and vowed to conduct hearings into Russia’s role.

The number of Americans who applied for unemployment benefits in the week before Christmas fell by 10,000 to 265,000 – the lowest levels since last summer. Initial claims have been under 300,000 for 95 straight weeks, the longest streak since 1970. Just a reminder, the December Non-Farm Payroll report from the Department of Labor will be published on Friday, January 6; with early estimates running around 170,000 net new jobs in December.

Jobs are the lifeblood of the economy, and will give direction to the Federal Reserve moving into the New Year. We remember that last year the Fed was predicting 4 rate hikes for 2016; we ultimately got one increase in December. Now the Fed is predicting 3 rate hikes for 2017 as the economy inches toward full employment. So, the jobs reports are crucial data.

The trade deficit increased 5.5% in November to a seasonally adjusted annual $65 billion. Exports rose 1.0% to $121 billion, while imports totaled $187 billion, up 1.2% from October. Wholesale inventories edged up 0.9% to a level of $594 billion; that was 1.2% higher than a year ago. A bigger trade deficit is negative for GDP growth.

Sprint confirmed it would “create or bring back to America” 5,000 jobs, mostly in customer care and sales. President-elect Trump campaigned on bringing jobs back to the US but the 5,000 Sprint jobs confirmed Wednesday aren’t exactly new — they are part of a previously announced initiative led by Japan’s Softbank to create 50,000 jobs in the US.

Splitting from an earlier ruling, a federal appeals court has found that in-house courts at the Securities and Exchange Commission are unconstitutional. That marks a heavy setback for the agency’s enforcement efforts as it uses five administrative-law judges to handle most routine cases. A spokesman said the SEC is reviewing the decision and wouldn’t immediately have further comment.

The Food and Drug Administration released cybersecurity recommendations today for companies that manufacture internet-connected medical devices. The FDA says unsecured devices are subject to hacking and could prove fatal.

Alere is appealing a decision by the Centers for Medicare and Medicaid Services to revoke Medicare billing privileges for the health-care provider’s Arriva Medical diabetes business. CMS had alleged that Arriva submitted Medicare claims for patients who had died. Alere has denied an impropriety.

Sears just announced a fresh round of store closures. The company told employees on Tuesday that it will close 30 Sears and Kmart stores in early 2017. Most of the stores will start liquidation sales on January 6 and go out of business between late March and mid-April. This latest round of closures will bring the total number of stores that Sears has closed this fiscal year to more than 200.

That means the retailer will have fewer than 1,500 stores left by early 2017. That’s down nearly 60% from 2011, when Sears had more than 3,500 stores. The unofficial list of new store closures does not include Arizona stores. CEO Eddie Lampert, a hedge fund manager and Sears’s biggest investor, will offer a $200 million letter of credit to the department-store chain through affiliates of his firm, ESL Investments Inc. The amount could be expanded to as much as $500 million with the consent of lenders.

Apple and Samsung dominated Christmas wish lists this year but both had a luckluster holiday season. Yahoo’s Flurry Analytics looked at new phone and tablet “activations” between Dec 19 and Dec 25. Both Apple and Samsung still dominated but Apple saw a fall in share while Samsung saw a slight increase.

This year, 44 percent of activations globally were Apple devices, a decline from the 49 percent seen in a similar period in 2015, and 51 percent in 2014. Meanwhile, 21 percent of activations were Samsung devices, a tiny rise from 19.8 percent last year.

AirPods remain in short supply. If you want to buy a pair of the wireless earbuds from Apple, you won’t find them in the local Apple store; there is a 6-week waiting list. That’s what happens when you eliminate the headphone jack on the iPhone. During a visit to the New York Stock Exchange yesterday, CEO Tim Cook called the wireless earbuds “a runaway success,” and said Apple was “making them just as fast as we can.”

Meanwhile, Indian officials are meeting early next week to evaluate the incentives sought by Apple to manufacture its products in the country. The government is trying to promote local manufacturing under Prime Minister Narendra Modi’s “Make in India” campaign, but it remains to be seen whether they would agree to more concessions for Apple.

Toshiba shares dropped another 17% in Tokyo on worries about the company’s financial stability. The stock has fallen by more than 40% after the firm warned this week it’s expecting billions of dollars in losses from its takeover of a US-based nuclear construction business.

Toshiba cannot raise cash by issuing shares because of restrictions imposed by the stock exchange after last year’s accounting scandal. It looks more and more likely that the only solution is to sell off the core of the company. Meanwhile, share price is in a death spiral.

German pharmaceutical company Boehringer Ingelheim agreed to divest five types of animal health products to settle charges that a proposed asset swap with Sanofi would harm competition. The proposed asset swap involved Boehringer Ingelheim’s acquisition of Sanofi’s $13.5 billion animal care subsidiary and Sanofi’s obtaining the Germany company’s consumer health care business unit, valued at nearly $8 billion, plus $5.5 billion in cash.

The City of Madrid says all privately-owned cars with even-numbered registration plates will be banned from the Spanish capital’s roads today to curb rising air pollution. The move follows a dry, sunny stretch of weather which sent levels of nitrogen oxide, a poisonous gas which can cause respiratory problems such as asthma, soaring above European-Union-set limits. The restriction could alternate between odd and even number plates if high levels of contamination persist.

The World Economic Forum (WEF) has determined that in many parts of the world, solar energy is now the same price or even cheaper than fossil fuels for the first time. While the average global LCOE [levelized cost of electricity] for coal and natural gas is around $100 per megawatt-hour, the price for solar has plummeted from $600 a decade ago to $300 only five years later, and now close to or below $100 for utility-scale photovoltaic. For wind, the LCOE is around $50.

According to the WEF, more than 30 countries have already reached grid parity—even without subsidies. (“Grid parity” is the point when an alternative energy source, say solar, can generate power at a LCOE that’s equal or even less than the price of traditional grid power.)

The WEF highlighted how the unsubsidized LCOE for utility-scale solar photovoltaic—which was not competitive even five years ago—has declined at a 20 percent compounded annual rate, making it not only viable but also more attractive than coal in a wide range of countries.

Countries that have already reached grid parity include Chile, Mexico, Brazil and Australia with many more countries also on the same track. The WEF projects that two thirds of the world will reach grid parity in the next couple of years, and by 2020, solar photovoltaic energy is projected to have a lower LCOE than coal or natural gas-fired generation throughout the world.

This means that we have reached a tipping point for renewable energy, which is reflected in new installations. Through the end of September, solar accounted for 39 percent of all new electric generating capacity brought on-line in the U.S. Both utility-scale installations and residential installations grew strongly.

The United States solar market shattered all previous quarterly solar photovoltaic (PV) installation records. One megawatt of solar power was installed every 32 minutes in the U.S. from July to September, for a record total of 4,143 megawatts. That brings total installed solar capacity in the U.S. to 35.8 gigawatts, enough to power 6.5 million homes.

FINANCIAL REVIEW

A Grain of Salt

Sinclair Noe — February 5, 2015

Podcast: Play in new window | Download (Duration: 13:17 — 6.1MB)

DOW + 211 = 17,884
SPX + 21 = 2062
NAS + 48 = 4765
10 YR YLD + .02 = 1.82%
OIL + 2.26 = 50.71
GOLD – 4.40 = 1265.50
SILV – .11 = 17.32

More people sought unemployment benefits last week, but the number of applicants remained near historic lows in a positive sign for job growth. The Labor Department says that weekly applications rose 11,000 to a seasonally adjusted 278,000. The four-week average, a less volatile measure, fell 6,500 to 292,750. That average has plunged 15 percent over the past 12 months.

Worker productivity declined in the fourth quarter of 2014, while labor costs increased. Productivity, the amount of output per hour of work, fell at 1.8 percent rate in the fourth quarter after rising at a 3.7 percent rate in the third quarter. Labor costs increased at a 2.7 percent rate in the fourth quarter after having fallen at a 2.3 percent rate in the third quarter. The drop in productivity and rise in labor costs are reflected in the fact that the growth in overall output slowed in the fourth quarter.

The U.S. trade deficit jumped 17.1% in December to a two-year high. The nation’s trade gap jumped to a seasonally adjusted $46 billion in December from a revised $39 billion in the prior month.

If Anthem is your health insurer it may be time to change your passwords – all of them. Anthem said hackers broke into a database containing personal information for about 80 million of its customers and employees in what is likely to be the biggest data breach disclosed by a health-care company. Anthem said the breach exposed “names, birthdays, street addresses, social security numbers and employment information, including income data,” but added that no financial information, including credit card details, was compromised. Anthem said it would send a letter and email to everyone whose information was stored in the hacked database. It also set up an informational website, www.anthemfacts.com, and will offer to provide a credit-monitoring service.

This next item won’t do anything to prevent hacking, but it will mean that you have the same access to the internet as anybody else. FCC chairman Tom Wheeler is now officially on board supporting the strongest possible version of net neutrality. Wheeler said by placing broadband Internet providers such as Comcast and Verizon Wireless under a stricter regulatory regime, consumers would be ensured an open Internet under Title II. Under the new plan, broadband providers would be explicitly banned from blocking content or creating fast lanes for Web services that can pay for preferential treatment into American homes.

Title II is the law that currently regulates telephone networks as common carriers. Applying this to broadband internet gives the FCC extremely strong powers to guarantee free and equal internet access to everyone, just as they currently do for phone companies. The argument against doing this is that Title II has a lot of baggage designed specifically for phone companies; baggage that makes sense for telephones but not for internet connections. Wheeler recognizes this, and says that he plans to “modernize” Title II. A five member FCC panel will vote on Wheeler’s recommendation February 26th.

Industry lobbying groups such as Broadband For America argue that Wheeler’s proposal “could have spillover effects into the broader Internet ecosystem and threaten Silicon Valley companies that rely heavily on the Internet,” take that with a grain of salt. The markets certainly weren’t alarmed. Stocks for the big telecos went up today as market-watchers were relieved that the FCC said it wasn’t going to regulate what the cable and phone companies charge us for internet access.

Fifty years after the internet’s creation, about half the world now uses it to do almost anything and almost everything. The possibilities are only limited by our imagination. Why has the Internet worked so well? Because it’s a level playing field. Everyone has an equal opportunity to compete, to succeed or to fail, to put one’s best ideas or products forward and let the chips fall where they may.

Through a free and open Internet, an excellent idea or an individual can beat a powerful established institution. But we need rules to make sure that in the battle of content it is a fair fight, and that winners and losers are determined by the quality of the content and nothing else.

Late yesterday, the European Central Bank (ECB) announced that it would no longer accept Greek government bonds and government-guaranteed debt as collateral. Although Greece would still be eligible for other, emergency lending from the Central Bank, the immediate effect of the announcement was to raise Greek borrowing costs and squeeze its banks, and to increase financial market instability within Greece, maybe even bank runs.

Syriza, the newly elected political party in Greece took power with a promise to Greek voters to get rid of the anti-austerity programs that were part of an earlier IMF-ECB bailout. The Greeks had lived up to the bailout terms to the best of their ability but the economy did not improve, it only got worse. The Greek voters decided they had had enough.

Yesterday’s move by the ECB looks very much like a deliberate attempt to undermine the new government. They are trying to force the government to abandon its promises to the Greek electorate, and to follow the IMF program that its predecessors signed on to. Syriza’s leadership was unbowed by the ECB’s assault. They are not going to voluntarily leave the euro or even suggest the possibility. They are continuing to look for a debt restructuring plan. PM Alex Tsipras said today, “Greece won’t take orders any more, especially orders through emails. Greece is no longer the miserable partner who listens to lectures to do its homework. Greece has its own voice.”

A funny thing happened today. The Athens Stock Market General index dropped, by just over 3%; the markets took it with a grain of salt. That is a sizeable drop but not enough to instill fear in the Greeks; they’ve seen much worse in the past couple of years.

The move is seen as a definitive warning that the ECB is in no mood to give in to Athens’s request for a debt swap. For now it’s all part of the negotiations. Greek banks only have about €8 billion in Greek government debt used as collateral with the ECB. And the Greek economy is in such a bad way, they might not even notice if they ran out of cash for a few months. The crazy part is that the Greek debt is not a huge mountain; the Eurozone could easily afford restructuring. What they can’t afford is to cut off one of their own and leave them hanging out to dry.

And so, what happened yesterday was probably less of an effort by the ECB to force the Greeks into a deal, as it was to force the Germans into a deal; a wake-up call for Angela Merkel and the hard line austerian crowd that if Greece collapses, the entire Eurozone could collapse, and that would be very expensive. Or maybe the ECB is willing to turn Greece into a failed state out of what looks like sheer brutality. Time will tell.

If you were to head over to California to the neighboring ports of Los Angeles and Long Beach, you might typically see one or two of those huge container ships waiting offshore to load or unload. Today, you would see about 18 big ships sitting offshore, and nobody is quite sure how long it will take for them to load or unload. There has been a slowdown at the ports, which alone handle 40% of US container traffic. And contract negotiations with port workers threatens a lockout by employers, possibly within days. A port closure would likely result in losses of $1.5 billion to $2.5 billion per day.

CME Group, the world’s largest futures-market operator, is closing most of its futures trading pits in Chicago and New York as electronic trading has become the overwhelmingly dominant way futures contracts are bought and sold. The move will take effect by July 2. Remember those pictures of traders yelling and screaming and elbowing each other to get an order filled? Yea, they don’t do that anymore. Times change.

Facebook is up about 18 cents in afterhours trading. And that might just be enough. Once upon a time, John Pierpont Morgan created a banking behemoth; such a powerful force that it bailed out Wall Street; then went on to create the world’s largest company at the time, US Steel. The House of Morgan has been a financial leader for more than a century, and with a market cap of about $211 billion, it is a powerhouse to this day. Except, it looks like Facebook has just passed it in terms of market capitalization; not by much, maybe just a couple of hundred million.

On a related note, it’s time for today’s edition of “Banks Behaving Badly”: JPMorgan has agreed to settle a class action lawsuit for $500 million; this goes back to mortgage backed securities sold by Bear Stearns, which was acquired by JPMorgan. Among the plaintiffs in this case were the Public Employees’ Retirement System of Mississippi and the New Jersey Carpenters Health Fund. A judge must still approve the settlement.

Meanwhile, the Justice Department and the Federal Bureau of Investigation are examining Swiss bank UBS for allegedly helping its American wealth-management clients avoid taxes by putting their money into investments that are banned in the US; called bearer securities because they can be transferred without needing to register ownership. Authorities are also trying to determine whether anyone at the bank engaged in criminal efforts to cover up the alleged conduct once it became more widely known about within the bank. This isn’t the first time; in 2009, UBS acknowledged helping American clients evade taxes, and agreed to pay $780 million as part of a deferred prosecution agreement with US authorities. It looks like UBS has a recidivism problem; now, let’s see if the Justice Department has a spine.

FINANCIAL REVIEW

Game On

Sinclair Noe — December 4, 2014

Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)

DOW – 12 = 17,900
SPX – 2 = 2071
NAS – 5 = 4769
10 YR YLD – .03 = 2.26%
OIL – .61 = 66.77
GOLD – 3.10 = 1207.50
SILV + .06 = 16.59

Seven of the 10 main industries in the S&P 500 declined. Energy companies slumped 0.8%, following three days of gains. Chevron slid 1.3%, the most in the Dow, and Exxon Mobil declined 0.6%. Crude fell 18% last month and moves of that magnitude cannot be attributed to normal markets following supply and demand. There is manipulation in the oil market, and the question is really whether it will end well.

Initial jobless claims fell 17,000 in the week ended Nov. 29 to 294,000. In the prior week, new filings hit 314,000, the first reading above 300,000 since early September. Tomorrow is the monthly jobs report and the guesstimates are calling for 230,000 new jobs added and the unemployment rate steady at 5.8%. The November jobs reports are subject to some revisions, so don’t be surprised if that guesstimate is wildly off base. When the jobs report surprises to the upside, the S&P trades up two-thirds of the time, with growth sectors like industrials outperforming. When jobs miss, gold does well.

We’ll dig into the report tomorrow, but some of the important bits of data we will track includes where wages are going. There have been signs in recent months of higher employment costs, and workers did get a boost in October from a slightly longer workweek, but hourly earnings haven’t picked up, at least not yet. That means we’ll also watch where jobs are created; in decent paying jobs like manufacturing and construction or in lower paying sectors such as restaurants and bars. Then we’ll see if the jobs added in November are full-time or part-time; last month the U-6 unemployment rate, which tracks underutilized workers, dropped from 11.8% to 11.5%. And of course we’ll follow the participation rate, which ticked up a bit in October, to 62.8% from 62.7% in September; that might be a sign that discouraged, long-term unemployed workers are jumping back in the labor pool.

The US House has passed a $577 billion dollar measure to fund the Defense Department. The bill passed the House today, 300-119, without any changes. The Senate probably will follow suit next week. The annual defense policy bill sets military policy and spending targets for fiscal 2015, which started Oct. 1. While laws covering many other parts of the government routinely are allowed to lapse because of disagreements or disinterest, a defense authorization has been enacted for 52 consecutive years. Next week Congress will work on a funding bill to keep the government open.

The European Central Bank met today. Normally, when a major central bank holds a policy meeting you might expect policy, but that’s not how the ECB does it. You may remember 2 years ago, ECB President Mario Draghi said they would do “whatever it takes”, and then they thought about it. The European Central Bank, of course, has not been idle during the past two years. It has cut its benchmark interest rate seven times under Draghi to its current low of 0.05%, or effectively zero. Today, the central bank left the rate unchanged. It has taken the virtually unprecedented step of introducing a negative interest rate on money that commercial banks store at the central bank, to induce them to lend the funds rather than hoard them. And it has allowed banks to borrow money on extremely favorable terms for up to four years. The central bank is set to issue another round of cheap four-year loans next week. They have not embarked on quantitative easing, or a big bond buying program, like the Fed, or the Bank of Japan.

Today, Draghi said that the European Central Bank would reassess its stimulus measures “early next year” and that its governing council “remains unanimous in its commitment to using additional unconventional instruments within its mandate.” Which sounds like a few more words to say the familiar line “whatever it takes”. Stimulus is right around the corner, just not today. And the lack of action leaves the impression that bond buying might not help much; rates are already very low and further declines will have little traction on the economy unless they are matched by fiscal stimulus and reform measures to raise the growth potential of struggling European economies. Whether it will help or not, the ECB will have to take action sooner rather than later.

Also, an interesting development in London, where they have proposed what is being called a “Google tax”; actually a proposed 25% tax on multinational companies’ local profits. The idea is to stop multinationals from using complicated tax structures to move profits from their British operations to jurisdictions like Ireland or Luxembourg, where companies pay less corporate tax. The Google tax would go into effect in April and would force multinational companies to pay more tax in countries where they have large operations.

The tax would not just apply to Google; many other firms including Facebook and Apple have come under criticism for basing their extensive European businesses from Ireland. Google is just catching some extra flack lately, including an investigation by European antitrust authorities over its dominant role in search engines.

Meanwhile, the FBI is continuing to investigate the hack attack on Sony Pictures. Now they aren’t so sure it was North Korean hackers. Sony was hit by hackers on Nov. 24, resulting in a companywide computer shutdown and the leak of corporate information, employee information (including social security data and salaries) and a few films were stolen and posted on the internet. Meanwhile, Deloitte, the consulting and auditing firm, was hacked yesterday. Sony has worked with Deloitte. The leaked data is likely to raise embarrassing questions about Deloitte’s own insider-threat program. The firm has aggressively marketed its digital threat intelligence services and has been providing advice to corporations about how to protect data from employee leaks. Four months ago, Deloitte sponsored an article in The Wall Street Journal about how companies can more quickly identify employees who take internal data, the very issue it now finds itself addressing.

The hacking at Sony stands out because the hackers didn’t just sneak in and sneak out; they defaced the website; they posted pirated films online; they trashed the site and acted in a very brash manner. That’s different, and maybe a bit overconfident, but also maybe they were saying that the hackers are winning the cybersecurity wars. In other words, game on.

Security company Symantec reports there was a 62% increase in hack attacks over the past year. The threats are real and growing worse, and so far there doesn’t seem to be any particular urgency about making basic, fundamental changes to insure cyber security. Meanwhile, more and more commerce is moving online, everything from retail shopping to banking to the functioning of the electric grid to medical processing and recordkeeping to, well almost everything is now online.

In a speech two years ago, Leon Panetta, the former defense secretary, predicted it would take a “cyber-Pearl Harbor”, a crippling attack that would cause physical destruction and loss of life, to wake up the nation to the vulnerabilities in its computer systems. That hasn’t happened yet, not exactly. But there have been attacks. The Home Depot breach compromised over 50 million customers; don’t forget the breach at Target – 40 million credit cards and info on 70 million customers. Smaller hack attacks on the Pentagon, the White House (Even President Obama had to have his credit cards replaced because of a breach), CNN, JPMorgan, universities, hospitals, and scores of others, even the NSA. And the credit cards are small compared to the value of intellectual property hacked by foreign companies and foreign governments.

And part of the reason why this is a growing problem is that we don’t have national standards on security, and we haven’t really established liability in the courts; although there are some lawsuits that might work their way through the legal system and establish some precedent. Sometimes banks get stuck with the cost on fraudulent card usage, but that’s a small price compared to massive investment in security infrastructure. And if your credit card is hacked you may or may not be covered for losses. Most of the time, the only remedy for consumers is to cancel the card or change the password. Seriously. Not exactly a strategic solution.

Sure, there are companies trying to deal with the issue of cybersecurity and they are making progress, but the problem is that the hackers are progressing faster. And while I would like to tell you there are some great new technologies to protect you right around the corner, the reality isn’t quite so Pollyannaish. Five years ago, the Defense Advanced Research Projects Agency, or DARPA, decided to explore what the Internet might look like if we could rebuild the computer systems from the ground up, employing the hard lessons we have learned about security. It’s an interesting notion but it might be impossible. The internet was built for performance not security, and it is on the verge of extending to the Internet of Things, where we can control things like thermostats and lights and garage doors and refrigerators and cars all online. Or where we could lose control of all those things.

Our cyber infrastructure is not secure, and it won’t be until the economics of a breakdown are apparent and assigned. Just try and be careful out there.

NASA scrubbed the launch of its new Orion space capsule this morning after a series of delays caused by high winds and problems with the rocket. They’ll try again tomorrow morning.

FINANCIAL REVIEW

Paulson, Bernanke, and Geithner Walk Into a Courtroom

Sinclair Noe — October 6, 2014

0 0 

   

Financial Review

Podcast: Play in new window | Download (Duration: 13:15 — 6.1MB)

DOW – 17 = 16991
SPX – 3 = 1964
NAS – 20 = 4454
10 YR YLD – .02 = 2.42%
OIL + .05 = 90.39
GOLD + 16.10 = 1207.80
SILV + .49 = 17.45

Stocks erased early gains. The Russell 2000 Index of small cap stocks took a hit of nearly 1%. Earnings season is right around the corner. Alcoa kicks off the unofficial start of earning season on Wednesday, and we’ll get 8 companies from the S&P500 reporting this week. The average estimate for the S&P500 calls for right at 5% earnings growth; however there are concerns about the impact of a strong dollar on overseas revenue.

Not much in the way of economic data today. The economy added at least 200,000 new jobs in seven of the past eight months and all signs point to similarly strong hiring through the end of the year. The latest evidence? A ninth straight increase in the employment trends index produced by the Conference Board, a nonprofit economic-research firm. The index is now 6.1% higher than a year ago.

Slightly less optimistic is the new, broader, all-purpose employment index from the Federal Reserve, it’s called labor market conditions index; it was up 2.5 points last month after an increase of 2.0 in August. This is a new index the Fed has built that draws on 19 separate jobs-related measures to give a broad sense of the labor market; it includes data on labor force participation, average weekly hours and hourly earnings, and hiring and quit rates. As we have seen in many of the monthly jobs reports, the unemployment rate is more of a headline number that doesn’t always tell us if the labor market is tight or slack. This new index is designed to be more comprehensive. That’s about all I can tell you for now.

The Federal Open Market Committee releases minutes from its Sept. 16-17 meeting on Oct. 8.

The protests in Hong Kong have faded away. Protestors briefly blocked entrances to two government buildings, but faced with the prospect of government violence, combined with an agreement between government and protestors to hold formal talks in the future, the mass crowds have largely gone home. Tens of thousands of protestors are now just a few hundred stragglers. It’s difficult to keep up a mass protest for more than about one week.

World Bank experts say China’s economic growth is likely to slow slightly to 7.4% this year, and to lag even a bit more next year. A separate World Bank report says growth will accelerate in India, expanding at a 6 percent rate next year, and a bit faster in 2016.

Yesterday was election day in Brazil, at least the first round. Incumbent Dilma Rousseff and pro-business rival Aecio Neves, will face off in an Oct. 26 runoff to decide what has been Brazil’s most unpredictable election in decades. The incumbent of the Workers’ Party, or PT, had 42 percent of the votes yesterday, followed by Neves of the Brazilian Social Democracy Party, known as PSDB, with 34 percent. While Brazil’s inflation hovers around the 6.5 percent upper limit of the target range and the economy slid into recession in the second quarter, unemployment at 5 percent remains near record lows.

Last week, JPMorgan Chase disclosed that hackers had broken into their computer systems in a massive security breach affecting 76 million households. That’s a huge number, just shy of two-thirds of American households, making the breach the largest cyber-attack against a bank in history.

Yet the company has not disclosed a separate, presumably even larger figure: the number of individual customers whose personal information was compromised. JPMorgan has said that no account information was stolen by the hackers, but that they were able to access contact details like names, phone numbers and email and home addresses. Internal bank information, such as what types of accounts individuals held, was also stolen. The bank has argued that because contact information was stolen, as opposed to account details, the best way to measure the size of the hack is by households, not individuals.

Hank Paulson, Ben Bernanke, and Tim Geithner walk into a courtroom; it sounds like the making of a joke, but it is serious business about why some firms were bailed out and others were hung out to dry. Specifically, it is part of a lawsuit alleging the 2008 federal rescue of American International Group cheated shareholders of $40 billion. Former Treasury Secretary Hank Paulson testified for 2 hours today. Paulson said he valued stability above all else in regulating markets, followed by the need for market participants to be responsible for the consequences of their actions.

“It was important that terms be harsh because I take moral hazard seriously,” Paulson said, referring to the economic term for consequence-free risks. Paulson drew a distinction between AIG’s treatment and that of Citigroup, which he acknowledged received better terms than the insurer. Paulson said AIG had to be rescued because if it failed “the country faced a real disaster.” The government avoided punitive terms for Citigroup because it feared doing so would encourage shortsellers to attack other banks, further destabilizing the economy. There was no similar risk of a domino effect in the insurance market.

In a bit of a bombshell, Paulson said he talked with the Chinese government about investing in US firms as part of the rescue scheme; in AIG’s case, Paulson said he didn’t think the Chinese would be interested in a deal without a government guarantee. “The government couldn’t provide that assurance,” Paulson said. “The Chinese were very, very nervous” about investing in U.S. firms at the time.

Geithner is scheduled to testify tomorrow. Bernanke is scheduled to take the stand on Wednesday.

The FCC has extended its public comment timeframe for the proposed Comcast Time Warner Cable mega-merger. The $45 billion marriage was meant to be open for public comment and debate until Oct. 8, but that portion of the review has now been pushed back to Oct. 29; the agency expects its review of the deal to be done by Jan. 2016.

Hewlett-Packard said today that it plans to split into two separate companies, a personal-computer and printer business, and corporate hardware and services operations. Meg Whitman will lead Hewlett-Packard Enterprise, a business focused on corporate hardware and services, while Dion Weisler, the vice president in charge of Hewlett-Packard’s personal-computer and printer operations, will become CEO of that business. The HP split comes a week after eBay announced it would spin off PayPal to shareholders. This looks like another example of financial engineering. If HP hasn’t been able to right the ship after dozens of industry-spanning acquisitions and an inconclusive multiyear restructuring, the next logical step is to bust it up and hope the pieces are worth more than the whole.

Glencore Plc is laying the groundwork for a potential merger with Rio Tinto Group in the next year that would create the world’s largest mining company, worth about $160 billion. As a preliminary step, Glencore has reached out to Aluminum Corp. of China, the Chinese state-backed company that is Rio’s largest shareholder, to gauge its interest in a potential deal. A merger would catapult the combined company past BHP Billiton to become the largest mining group, combining Glencore’s commodity-trading operations with Rio’s portfolio of iron-ore projects.

The Spanish health minister reports a Spanish nurse who treated a missionary for Ebola at a hospital in Madrid, has tested positive for the disease. The female nurse was part of the medical team that treated a 69-year-old Spanish priest who died in a hospital last month after being flown back from Sierra Leone, where he was posted. The nurse is believed to have contracted the virus from that priest. The World Health Organization confirmed there has not been a previous transmission outside West Africa in the current outbreak. Spanish authorities said they were investigating how the nurse became infected at a hospital with modern health care facilities and special equipment for handling cases of deadly viruses.

Today, the White House announced the government would develop expanded screening of airline passengers for Ebola, both in the West African countries hit by the disease and the United States.

The 2014 Nobel Prize in Physiology or Medicine was awarded on Monday to American-British neuroscientist John O’Keefe, and Norwegian scientists May-Britt Moser and Edvard Moser. The Mosers are the fifth married couple to be awarded a Nobel Prize. The trio received the award for their discoveries of cells that constitute a positioning system in the brain, which was described as an “inner GPS.” In 2005, they discovered a type of nerve cell that generates a coordinate system and allows for precise positioning. Together, these discoveries explain how the brain creates a map of space and how we navigate our way through a complex environment. Now, here’s where it gets interesting; Alzheimer and dementia patients often have a hard time with location – they tend to get lost easily. Since these spatial cells are among the first to be hit in Alzheimer’s and other forms of dementia, understanding how they are degraded should shed important light on the disease process.

The Supreme Court today said it would not hear appeals from five states whose same-sex marriage bans had been invalidated by lower federal courts. The decision, issued without explanation, will lead to recognition of gay marriages in 11 more states. It also allows an avalanche of legal challenges to the remaining bans to keep going forward in state and federal courts, where gay and lesbian couples have overwhelmingly prevailed.

The court’s decision leaves unchanged 20 state laws blocking same-sex unions. Each is already under legal attack, facing challenges in state or federal court, and sometimes both. Challenges to marriage bans already have reached a handful of state appeals courts and in the federal Fifth, Sixth, Ninth and Eleventh circuit appeals courts. By letting gay and lesbian marriages go forward in 11 other states, the justices almost certainly made it harder to reverse course in the future. If they do, the court would have to do more than simply prohibit some couples from marrying; it would have to invalidate marriages that have already taken place. It will become very hard for the Supreme Court to take that back.