Mish's Global Economic Trend Analysis

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Fed Cites Weather, "Transitory" Factors in FOMC Statement; No Hat Tricks; What About Consumer Sentiment? Posted: 29 Apr 2015 01:02 PM PDT Don't worry. The First Quarter GDP Disaster, released this morning is transitory. How do I know? The Fed says so. Here is the FOMC Statement from today. Emphasis mine. Information received since the Federal Open Market Committee met in March suggests that economic growth slowed during the winter months, in part reflecting transitory factors. The pace of job gains moderated, and the unemployment rate remained steady. A range of labor market indicators suggests that underutilization of labor resources was little changed. Growth in household spending declined; households' real incomes rose strongly, partly reflecting earlier declines in energy prices, and consumer sentiment remains high. Business fixed investment softened, the recovery in the housing sector remained slow, and exports declined. Inflation continued to run below the Committee's longer-run objective, partly reflecting earlier declines in energy prices and decreasing prices of non-energy imports. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable. Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. Although growth in output and employment slowed during the first quarter, the Committee continues to expect that, with appropriate policy accommodation, economic activity will expand at a moderate pace, with labor market indicators continuing to move toward levels the Committee judges consistent with its dual mandate. The Committee continues to see the risks to the outlook for economic activity and the labor market as nearly balanced. Inflation is anticipated to remain near its recent low level in the near term, but the Committee expects inflation to rise gradually toward 2 percent over the medium term as the labor market improves further and the transitory effects of declines in energy and import prices dissipate. The Committee continues to monitor inflation developments closely. To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress--both realized and expected--toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. The Committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction. This policy, by keeping the Committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions. When the Committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2 percent. The Committee currently anticipates that, even after employment and inflation are near mandate-consistent levels, economic conditions may, for some time, warrant keeping the target federal funds rate below levels the Committee views as normal in the longer run.  Voting for the FOMC monetary policy action were: Janet L. Yellen, Chair; William C. Dudley, Vice Chairman; Lael Brainard; Charles L. Evans; Stanley Fischer; Jeffrey M. Lacker; Dennis P. Lockhart; Jerome H. Powell; Daniel K. Tarullo; and John C. Williams. No Hat Trick of Dissent There were no dissents. My, how things change. At the December meeting there was a Rare Hat Trick of Dissent But this time, the rationale for opposition changed. Dallas Fed leader Richard Fisher cast a no vote because he believes economic data suggests rate rises will need to come sooner than his colleagues currently expect. Philadelphia Fed chief Charles Plosser remains uncomfortable with language in the Fed statement that suggests the outlook for rate increases is to some degree driven by a calendar date, rather than by the economy's performance. Meanwhile, Narayana Kocherlakota of the Minneapolis Fed continues to believe it's a mistake for the Fed to contemplate interest rate increases at a time when inflation is falling so far short of the central bank's official 2% goal. The breadth of the dissent ties up neatly with the challenging outlook for the monetary policy. The Fed has been greeted with an extended run of solid growth and hiring data that it broadly expects it to continue. At the same time, inflation remains persistently below the 2% price target central bankers say they will defend from both the high and low side. Put another way, one side of the outlook favors rate increases, while the other argues for sticking to an ultra-easy money stance. Unanimously Transitory If the Fed is unanimous, they all have to be right. Right? Consumer Sentiment Plunges And what about that high consumer sentiment? I am glad you asked, because the consumer confidence report came out yesterday and based on the FOMC statement today that "consumer sentiment remains high", it appears the Fed was not even watching. The Bloomberg Consensus estimate for consumer confidence was 103. The range was 100.5 to 104. he actual index plunged to 95.2 from 101.3. Consumer confidence has fallen back noticeably this month, down more than 6 points to a much lower-than-expected 95.2. This compares very poorly with the Econoday consensus for 103.0 and is even far below the Econoday low estimate of 100.5. The weakness, ominously, is the result of falling assessments of the jobs market, both the current jobs market and expectations for the future jobs market. The second quarter, which is expected to be much stronger than the weather-depressed first quarter, isn't likely to get off to a fast start, at least as far as this report goes. The most striking weakness in April is the assessment of future conditions with the expectations component down 8.5 points to 87.5 for the weakest reading going all the way back to September. And the most striking weakness among the sub-components is employment, where fewer see more jobs opening up 6 months from now and more see fewer jobs available. This spills over into income where fewer see an increase ahead and more see a decrease. But also weak is the present situation component which is down more than 2-1/2 points to 106.8 for its weakest reading since December. Here the most closely watched sub-component is the jobs-hard-to-get reading which is up nearly 1 full percentage point to 26.4 percent. This reading will hold back expectations at least to some degree for a big bounce back in the April employment report from a very weak March. Inflation expectations are down sharply this month, 4 tenths lower to 4.8 percent which is one of the lowest readings of the recovery. Gas prices have been edging higher but are still low, the latter no doubt a major factor behind the latest reading. Buying plans are mixed with automobile and vacation plans down but not home plans which are up. But home buying won't be a featured activity for consumers if their expectations for employment are weak. Today's report, showing weakness in the jobs assessment and in inflation expectations, won't be pulling forward expectations for the Federal Reserve's first rate hike. Well, who cares if the Fed is watching consumer sentiment or not? Confidence is meaningless because weakness is unanimously transitory. By the way, there were Only 560 Words In Today's FOMC Statement, Fewest Since October 2012, yet they could not even get the statement correct. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com  Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Real Q1 GDP 0.2% vs. Consensus 1.0%; Disaster in the Details Posted: 29 Apr 2015 10:32 AM PDT The first quarter real GDP estimate of 0.2% was released today. In spite of all the extremely week economic reports lately, economists still could not figure out GDP was going to be near zero. The Bloomberg Consensus estimate was for 1.0%. Note the lowest estimate was 0.2%. No one predicted negative. Who was it that predicted 2.4%? What planet is that person on? So what else is there to do but blame the weather? Heavy weather and the strong dollar took their toll on first-quarter GDP which, at only plus 0.2 percent, came in at the very low end of the Econoday consensus. This compares with an already soft fourth quarter which is unrevised at plus 2.2 percent. Exports were the heaviest drag on the first quarter reflecting the strong dollar's effect on foreign demand. The heavy weather of the quarter contributed to an outright contraction in business spending (nonresidential fixed investment) and an abrupt slowing in consumer spending (personal consumption expenditures). Price data, reflecting lower energy prices, are soft with the GDP price index at minus 0.1 percent vs the Econoday consensus for plus 0.5 percent. Prices were also soft in the fourth quarter at an unrevised plus 0.1 percent. Details include an unwanted surge in inventories tied to lower demand and also possibly to shipment constraints tied to the quarter's West Coast port strike. Imports, likely limited by the port strike, did pull down GDP but to a much lesser extent than the prior quarter (imports are a subtraction in the GDP calculation). Federal Reserve policy makers, in this afternoon's FOMC statement, may downplay first-quarter weakness as temporary. Nevertheless, the complete lack of punch underway in early second-quarter indicators, together with the softness of the fourth quarter when there were no special factors not to mention the lack of inflationary pressures in the economy, offer plenty of fuel for the doves at the Fed who want to hold off the first signals of a rate increase. Exports Gee, who could have predicted Exports would be the heaviest drag? Let's take a January 31, 2015 flashback look: Diving Into the GDP Report - Some Ominous Trends - Yellen Yap - Decoupling or Not? Exports added 0.37 percentage points to fourth quarter GDP. But note the trend. Because of the rising US dollar, export growth is dwindling. Will exports add or subtract to GDP next quarter? I suggest the answer is subtract. Not only are US exports getting more expensive relative to Europe and Japan, the entire rest of the global economy is slowing rapidly. Our biggest trading partner is Canada and Canada is in recession, with a rapidly sinking loonie (Canadian dollar) on top of it. US Recession The US won't decouple, just as China did not decouple from the global economy in 2008-2009 (a widely-held thesis I also knocked at the time). Indeed, now that virtually no economist expects a US recession, I believe we are finally on the cusp of one, just as the Fed seems committed to hike. GDP Details Let's dive into the First Quarter 2015 (Advance Estimate) report for details. The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE) and private inventory investment that were partly offset by negative contributions from exports, nonresidential fixed investment, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased. The deceleration in real GDP growth in the first quarter reflected a deceleration in PCE, downturns in exports, in nonresidential fixed investment, and in state and local government spending, and a deceleration in residential fixed investment that were partly offset by a deceleration in imports and upturns in private inventory investment and in federal government spending. The price index for gross domestic purchases, which measures prices paid by U.S. residents, decreased 1.5 percent in the first quarter, compared with a decrease of 0.1 percent in the fourth. Excluding food and energy prices, the price index for gross domestic purchases increased 0.3 percent, compared with an increase of 0.7 percent. Real personal consumption expenditures increased 1.9 percent in the first quarter, compared with an increase of 4.4 percent in the fourth. Durable goods increased 1.1 percent, compared with an increase of 6.2 percent. Nondurable goods decreased 0.3 percent, in contrast to an increase of 4.1 percent. Services increased 2.8 percent, compared with an increase of 4.3 percent. The change in real private inventories added 0.74 percentage point to the first-quarter change in real GDP after subtracting 0.10 percentage point from the fourth-quarter change. Private businesses increased inventories $110.3 billion in the first quarter, following increases of $80.0 billion in the fourth quarter and of $82.2 billion in the third. Real final sales of domestic product -- GDP less change in private inventories -- decreased 0.5 percent in the first quarter, in contrast to an increase of 2.3 percent in the fourth. Inventories, PCE, Negative Price Deflator   Over time, inventories trend to zero. So the fact that inventories added 0.74 to GDP is not a positive. Personal consumption expenditures added 1.9% to GDP. Expect that to hold up? Were it not for a highly questionable negative price deflator, first quarter GDP would have been negative. With gasoline prices rising, there will be no miracle deflators next quarter. If I can brag a bit, I nailed this back in January, and economists could not figure it out in spite of weak report after weak report for three more months! The second estimate of Q1 GDP comes out on May 29. Any number of changes could send Q1 negative. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Damn Cool Pics

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Behind The Scenes Facts About Your Favorite Movies Posted: 29 Apr 2015 08:57 AM PDT Sometimes what goes on behind the scenes is just as interesting as what happens on the screen. via 22words

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An Introduction to Schema.org Markup for Emails - Moz Blog

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An Introduction to Schema.org Markup for Emails Posted on: Wednesday 29 April 2015 — 02:14 Posted by kristihines If you are a Gmail user, you have likely received some emails that stand out from the rest with a call to action button within the subject line. If you've booked a flight recently, your airline may have sent you an email that includes an interactive way to view your travel plans. Similarly, Google Inbox app users might have seen emails that look like this. These calls to action are courtesy of Schema.org markup for email. Just like Schema.org markup for web pages helps web pages stand out in search results, Schema.org markup for emails helps certain emails stand out from the rest in your inbox. The goal of email markup is to allow people to take action on emails as quickly and simply as possible. For marketers, there are both pros and cons of this feature. In this post, we're going to look at the email markup options currently available, who can use it, and if it's worth it. Should you use email markup? Email markup is currently available for Gmail email recipients only. The number of Gmail users was over 350 million in 2012. To determine whether you should use it, you shouldn't go off a three-year-old statistic, but rather a survey of your own email list or customer database. Most email service providers (like GetResponse, shown in the example below) allow you to search your subscriber list for specific criteria. Search yours for emails containing Gmail to determine the number of Gmail addresses your emails reach. Of course, this isn't the whole picture. There are likely more people that use Gmail for business with their own domains. So although their emails do not say Gmail, they open their emails in the Gmail web browser or app. Another consideration for using email markup is tracking. If you rely heavily on the ability to track email opens and clicks to trigger autoresponders and other marketing automation actions, you may not want to give your subscribers the option to bypass opening your email and clicking on your link. Once you've determined the approximate number of Gmail users you reach and whether you need the ability to track email actions, your next job is to see if you qualify to use email markup. Register for email markup with Google Before you can use email markup, you must register with Google. Google will check to make sure you meet email sender quality guidelines, bulk sender guidelines, and action / schema quality guidelines. Here are some of the key guidelines you need to know. Emails must be authenticated via DKIM or SPF. The domain of your from email must match the signed-by or mailed-by header. You must send a minimum of a hundred emails per day to Gmail users for a few weeks before applying. Google will want to see that you have a very, very low rate of spam complaints from Gmail recipients. Bulk email guidelines include using the same IP address to send bulk mail, using the same from email address, only adding subscribers to your list that have opted in (preferably with a double opt-in or confirmation), and allowing list members to unsubscribe easily. These guidelines will not only help you get approved for use of email markup, but will also help your emails get delivered to more Gmail users without being marked as spam. Action / schema guidelines boil down to making sure you use the appropriate action markup when possible. When an action markup is not available, or the process is more complex than can be handled inside Gmail, a go-to action should be used. Go-to actions should link directly to a page where the email recipient can complete the action as labeled on the call to action button. An introduction to email markup actions Actions created by email markup allow email recipients to interact with your business, product, or service within Gmail. There are currently four types of actions to choose from using email markup. One-click actions One-click actions are those where a task can be completed with one click within Gmail or Inbox. For example, when someone signs up for an email list, they need to confirm their subscription. One-click actions are broken into two categories: confirm actions and save actions. The above example is a confirm action. Save actions can include adding an item to a queue or saving a coupon. Both confirm and save actions can only be interacted with once. RSVP actions RSVP actions allow email recipients to confirm whether they will attend an event using an invite from Google Calendar. Your email will include the event card you usually see in emails from meeting invites. Having people confirm their attendance to your event will help ensure that they don't forget by getting it on their calendar. Review actions Review actions allow email recipients to add a star and comment review for your business, products, and services right from the subject line of their email in Gmail. You can see an end-to-end example of the scripting necessary to create a review action for a restaurant to get reviews from a Gmail user's inbox to the Datastore using Python. Go-to actions Actions that do not fall under the above types are considered go-to actions. These are used when you need to take an email recipient to your website to complete an action that is too complex to be handled within the recipient's Gmail or Inbox app. All of the following are examples of go-to actions that take email recipients to do things on another website. The call to action on these can be customized, so you are not limited to just viewing orders, tracking packages, and opening discussions. You can tailor them for specific uses, such as resetting a password, reviewing questionable transactions on your credit cards, and updating payment information. An introduction to email markup Highlights Another use for email markup is Highlights. Highlights summarize key information from specific types of email for users of the Inbox app. For example, Highlights are used for these order confirmations to show the products ordered. Another example is this flight reservation using Highlights to show the round-trip flights purchased. Specifically, there are six Highlights that businesses can use. They are as follows: Flight reservations - Includes options for displaying basic flight confirmation information, boarding pass, check-in, update a flight, cancel a flight, and additional options. This Highlight is also supported in Google Now. Orders - Includes options for displaying basic order information, view order action, and order with billing details. Parcel deliveries - Includes options for displaying basic parcel delivery information and detailed shipping information. Hotel reservations - Includes options for displaying basic hotel reservation information, updating a reservation, and canceling a reservation. This Highlight is also supported in Google Now. Restaurant reservations - Includes options for displaying basic restaurant reservation information, updating a reservation, and canceling a reservation. This Highlight is also supported in Google Now. Event reservation - Includes options for basic event reminders without a ticket, event with ticket & no reserved seating, sports or music event with ticket, event with ticket & reserved seating, multiple tickets, updating an event, and canceling an event. This Highlight is also supported in Google Now. Note that while Highlights are a great feature, they only work for Gmail Inbox users. If Google continues to push Gmail users to using Inbox, this user base will grow exponentially. Test email markup before sending While you are waiting to be registered with Google, or prior to sending out emails with Schema.org markup, you should run some initial tests to ensure that your markup is correct. You can start by copying and pasting your code into the Email Markup Tester to check for basic errors. You can also add email markup to emails you send from and to yourself on Gmail. It's important to test as one of the action / schema guidelines is a low failure rate and fast response for action handling. You can learn how to send test emails to yourself in this tutorial using script.google.com. The tutorial gives you some simple code you can copy and paste as directed. When you save and run the project as directed, you will immediately get the following result: You can then begin to experiment with the code for the email markup you want to use. Run your script again and again to produce new emails. Any approved business can use the go-to actions to link the subject line of their email to any portion of their website. As you continue to experiment, think of new ways to engage your audience with email markup. Final questions to answer Here are some final questions you need to answer before you invest in email markup are the following. Will you get more of your desired results by adding Schema.org actions to your emails? For example, if you use the review action, will you actually get more reviews for your business? How much time will it take to revise your emails if / when Google standardizes email markup with Schema.org? It might pay to wait until email markup has been standardized and make the time and coding investment all at once. Will email actions be supported by other email platforms in the future? Schema.org is a collaboration between Google, Bing, Microsoft, Yandex, and Yahoo. So while not guaranteed, it can be assumed that all of the major email platforms on the web could embrace email markup in the future. If, after answering these questions, you can see a real need for email markup, then find out if you meet the guidelines set by Google to use it and register. If your business uses email markup, be sure to share your experiences and results in the comments! Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

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