Mish's Global Economic Trend Analysis

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• White Knight Irony: IMF Threatens to Walk Away From Bailout Deal Citing Unsustainable Debt
• Deflationary Pressures Unabated; Another One-Hit Wonder; Transitory Tales
• Retail Sales Unexpectedly Sink Below the Lowest Economist's Estimate; September Hike? Really?

White Knight Irony: IMF Threatens to Walk Away From Bailout Deal Citing Unsustainable Debt Posted: 14 Jul 2015 02:46 PM PDT IMF to the Rescue? In the final minutes of the gunpoint "negotiation" between Greece and its creditors, the last two sticking points were IMF involvement and €50 billion in pledged Greek assets in return for another "bailout". Prime minister Alexis Tsipras said he could not give in on those demand. In the end, Tsipras bowed down and kissed the feet of German chancellor Angela Merkel and her finance minister Wolfgang Schäuble on those issues, and everything else they demanded as well. Ironically, it could very well be the IMF that comes to the rescue and sinks this inane deal. IMF Threatens to Walk Please consider IMF Signals it Could Walk Away from Greek Bailout Deal. In the three-page memo, sent to EU authorities at the weekend and obtained by the Financial Times, the IMF said the recent turmoil in the Greek economy would lead debt to peak at close to 200 per cent of economic output over the next two years. At the start of the eurozone crisis, Athens' debt stood at 127 per cent. "Greece's debt can now only be made sustainable through debt relief measures that go far beyond what Europe has been willing to consider so far," the memo reads. Under its rules, the IMF is not allowed to participate in a bailout if a country's debt is deemed unsustainable and there is no prospect of it returning to private bond markets for financing. The IMF has bent its rules to participate in previous Greek bailouts, but the memo suggests it can no longer do so. According to EU officials, Ms Merkel stood firm on the issue, telling the Greek premier there would be no bailout — and therefore "Grexit" from the eurozone — without a formal request made to the IMF for participation in a new programme. The final bailout deal states that "Greece will request continued IMF support" once its current IMF programme expires. If the IMF were to walk away from the Greek programme, it could cause significant political and financial problems for Berlin and other eurozone creditors. Without the IMF's imprimatur, German officials have said they would struggle to win approval for any new bailout funding in the Bundestag. German MPs must approve both the reopening of new talks and the final terms of the third bailout. In addition, an EU official said that of the €86bn in Greek financing requirements, the European Stability Mechanism — the eurozone's €500bn bailout fund — was expected to put up only €40bn-€50bn.  Under the terms of IMF participation in Greece's second bailout, eurozone officials had agreed they would take steps to ensure Athens debt fall go "substantially lower" than 110 per cent of gross domestic product by 2022. The new IMF memo said it is now projected to be at 170 per cent by 2022. It added that financing in a new programme would make Greece's bailout funding levels so large that they would exceed "the 15 per cent of GDP threshold deemed safe" under IMF rules, and would "continue rising in the long term". EU leaders have only proposed lengthening maturities on existing eurozone bailout loans rather than full-scale writedowns, which Berlin argues is against EU law. But the IMF memo said eurozone leaders needed to look at the issue more immediately and in amounts far larger than currently under consideration. Among the options it suggested was a "very dramatic extension" of repayment plans with a "grace period" another 30 years on the "entire stock of European debt" — meaning Greece would not make a single interest or principle payment on eurozone loans until 2053; it already has such a grace period until 2023. Alternatively, eurozone creditors would have to make "annual transfers to the Greek budget" — meaning eurozone grants to Athens — or "deep upfront haircuts", the IMF said. White Night Irony It would be fitting irony if the IMF saved Tsipras from himself. Even if Greek parliament foolishly accepts terms that cannot possibly be fulfilled economically, the IMF may walk away, killing the deal outright. Alternatively, the IMF may force the ball back in Germany's court. Musical Tributes Many songs with the word "walk" in them come to mind . In hope that the IMF does indeed walk away I offer ... I'm Walking Link if video does not play: I'm Walking - Fats Domino Walk Like a Man In contrast, Tsipras crawled like a helpless baby, at best. The next tribute is about what Tsipras should have done, but didn't. Link if video does not play: The Four Seasons "Walk Like a Man" Music Video Watch The Four Seasons "Walk Like a Man" music video from 1963. It features the foursome singing at a dance hall overlooking an interesting variety of energetic fans unleashing dance moves that could have only come out of the 1960s. During the recording sessions that produced the hit song, producer Bob Crewe would stop at nothing for the perfect take. After realizing that a fire had broken out in the room above the studio, he blocked the studio door and continued recording until firemen had to force their way in and pull Crewe out. For further discussion of the gunpoint deal and humiliating cave-in by prime minister Tsipras, please see .... Humiliation; Arrogance; Crucifixion; Demolition of Eurozone Project   Breathtaking Political Capitulation; Tsipras Should Resign; Tsipras Trades Royal Flush for Draw at Inside Straight 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.

Deflationary Pressures Unabated; Another One-Hit Wonder; Transitory Tales Posted: 14 Jul 2015 12:55 PM PDT Another One-Hit Wonder In spite of counterproductive attempts by the Fed and Central Banks to foster price inflation, debt overhang has stymied those efforts, at least in regards to consumer prices and import/export prices. Last month, following a surge in gasoline prices, import and export prices did rise a bit, but as with retail sales, the import/export price report was another "one-hit wonder". Missed Boat Again Bloomberg Econoday Economists again missed the boat. Cross-border deflationary pressures are not abating as import prices fell 0.1 percent in June with export prices down 0.2 percent. Year-on-year, import prices are down 10.0 percent with export prices down 5.7 percent. These rates are not showing any improvement from prior months with import prices not even getting much of a lift from the bounce back in petroleum prices as the ex-petroleum reading fell 0.2 percent in the month. Year-on-year, ex-petroleum import prices, and this is a core reading, are down 2.6 percent. Outside of monthly gains for petroleum components, negative signs sweep both the import and export columns with agricultural exports, at minus 1.5 percent in June, extending a deep run of declines. Year-on-year, agricultural export prices are down 16.7 percent in what is not good news for the nation's farming sector. A look at finished goods categories shows no price strength anywhere with import prices for capital goods, at a year-on-year minus 1.7 percent, and export prices for consumer goods, at minus 1.9 percent, especially weak. By country, import prices fell 0.5 percent with the NICs, down 0.4 percent with Japan, and down 0.1 percent with China. Prices rose 0.4 percent for Canada, up 0.2 percent for the EU, and up 0.1 percent for Latin America. The strength of the dollar is pulling down import prices but the decline in export prices points to a lack of global price pressures. This report is a reminder that inflation is not yet picking up steam toward the Fed's 2 percent goal and hints at similar results for this week's later releases of producer and consumer prices. Import-Export Prices Crude Oil From Mid-March to early May, the price of crude rose from $44.00 to a high of $63.61. Since then, the price of crude is down by about 17%. Gasoline Futures From Early March until Mid-June, gasoline futures rose from $1.70 to $2.15. Since then, gasoline futures have fallen about 10%. Deflationary Pressures Unabated Economists keep expecting consumers to spend elsewhere "what they save" on gasoline. Of course the idea that one can "save" this way is totally absurd. In practice, consumers have chosen to save, the only way they really can (by not spending in the first place and instead paying down debt). This is a consequence of a consumer that is still over-leveraged in debt. And as I have pointed out, it is only sub-prime auto sales that has propped up the consumer economy. (See Retail Sales Unexpectedly Sink Below the Lowest Economist's Estimate). Transitory Tales Today's import/export and retail sales reports are more flies in the ointment of the expected September rate hike thesis. The Fed insists the negative first quarter GDP is "transitory". Second quarter GDP will indeed rebound, but not as much as previously expected. Third quarter and fourth quarter will tell the story. Will the Fed hike before we know how the "transitory tale" ends? 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.

Retail Sales Unexpectedly Sink Below the Lowest Economist's Estimate; September Hike? Really? Posted: 14 Jul 2015 10:02 AM PDT A month ago, following the Expected Retail Sales Bounce, I stated "A sales snapback was coming at some point. May was the month following months of disappointments." Key Questions Here were my two key questions: Will the surge in spending continue? How Much Longer Can Subprime Auto Sales Lead? Economists Surprised Again The surge in spending did not continue. Today's report not only revised last month's sales numbers lower, this month surprised if not shocked economists, with negative numbers below any forecast in the Bloomberg Consensus Estimate. Economists predicted a rise in sales of 0.3%. Actual sales came in at -0.3 percent, a half-percentage-point below the lowest estimate, and another wrong sign for the economists. One month does not tell a story, but it may provide clues.   Advance Retail Sales Numbers Let's dive into the Census report for additional details on Advance Retail Sales for June. Business Percent Change June 2015 Advance From May 2015 Preliminary From May 2015 June 2014 April 2015 May 2014 Retail and food services total ……………………………….. -0.3 1.4 1.0 2.3 Total (excl. motor vehicle & parts) ….. -0.1 0.1 0.8 0.9 Retail ………………………..……….. -0.3 0.6 1.1 1.6 Motor vehicle & parts dealers ……… -1.1 6.5 1.8 8.0 Auto & other motor veh. dealers … -1.0 7.1 1.9 8.6 Furniture & home furn. stores ……… -1.6 4.1 1.4 6.7 Electronics & appliance stores ……. 1.0 -0.4 0.2 -1.5 Building material & garden supplies -1.3 -1.4 -0.4 2.3 Food & beverage stores……………… 0.0 2.4 0.5 3.6 Grocery stores ……………………. -0.2 2.2 0.6 3.4 Health & personal care stores ……… 0.2 1.3 -0.4 2.9 Gasoline stations …………………….. 0.8 -17.1 3.7 -18.8 Clothing & clothing accessories -1.5 1.9 1.4 4.1 Sporting goods, hobby, book & music 0.1 6.6 0.6 7.8 General merchandise stores………… 0.7 1.2 1.4 0.3 Department stores (ex. L.D.)………. -0.6 -1.7 1.9 -2.0 Miscellaneous store retailers ………. -0.2 2.9 -0.1 5.1 Nonstore retailers ……………………. -0.4 3.0 0.3 5.6 Food services & drinking places ….. -0.2 7.7 0.2 8.6 Economic Comparison If you are a Keynesian economist, that first column of numbers will look shockingly dismal.   If you are a normal human being with an ounce of common sense, you may come to the conclusion that spending money one does not have on junk one does not need is actually a good thing. Retail Sales vs. Last Month Retail Sales vs. Year Ago Subprime Auto Loans That last chart shows the real driver for retail sales: subprime auto loans. When that goes, it's likely all over. Was this the month? September Hike? Really? This report will undoubtedly shave a few tenths of a percent off second quarter GDP. It will also  raise questions about the strength of the economy. Unless we see a sharp economic rebound in the next two months, the Fed won't hike in September. 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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A Vision for Brand Engagement Online, or "The Goal" - Moz Blog

A Vision for Brand Engagement Online, or "The Goal"

Posted by EricEnge

Today's post focuses on a vision for your online presence. This vision outlines what it takes to be the best, both from an overall reputation and visibility standpoint, as well as an SEO point of view. The reason these are tied together is simple: Your overall online reputation and visibility is a huge factor in your SEO. Period. Let's start by talking about why.

Core ranking signals

For purposes of this post, let's define three cornerstone ranking signals that most everyone agrees on:

Links

Links remain a huge factor in overall ranking. Both Cyrus Shepard and Marcus Tober re-confirmed this on the Periodic Table of SEO Ranking Factors session at the SMX Advanced conference in Seattle this past June.

On-page content

On-page content remains a huge factor too, but with some subtleties now thrown in. I wrote about some of this in earlier posts I did on Moz about Term Frequency and Inverse Document Frequency. Suffice it to say that on-page content is about a lot more than pure words on the page, but also includes the supporting pages that you link to.

User engagement with your site

This is not one of the traditional SEO signals from the early days of SEO, but most advanced SEO pros that I know consider it a real factor these days. One of the most popular concepts people talk about is called pogo-sticking, which is illustrated here:

You can learn more about the pogosticking concept by visiting this Whiteboard Friday video by a rookie SEO with a last name of Fishkin.

New, lesser-known signals

OK, so these are the more obvious signals, but now let's look more broadly at the overall web ecosystem and talk about other types of ranking signals. Be warned that some of these signals may be indirect, but that just doesn't matter. In fact, my first example below is an indirect factor which I will use to demonstrate why whether a signal is direct or indirect is not an issue at all.

Let me illustrate with an example. Say you spend $1 billion dollars building a huge brand around a product that is massively useful to people. Included in this is a sizable $100 million dollar campaign to support a highly popular charitable foundation, and your employees regularly donate time to help out in schools across your country. In short, the great majority of people love your brand.

Do you think this will impact the way people link to your site? Of course it does. Do you think it will impact how likely people are to be satisified with quality of the pages of your site? Consider this A/B test scenario of 2 pages from different "brands" (for the one on the left, imagine the image of Coca Cola or Pepsi Cola, whichever one you prefer):

Do you think that the huge brand will get a benefit of a doubt on their page that the no-name brand does not even though the pages are identical? Of course they will. Now let's look at some simpler scenarios that don't involve a $1 billion investment.

1. Cover major options related to a product or service on "money pages"

Imagine that a user arrives on your auto parts site after searching on the phrase "oil filter" at Google or Bing. Chances are pretty good that they want an oil filter, but here are some other items they may also want:

• A guide to picking the right filter for their car
• Oil
• An oil filter wrench
• A drainage pan to drain the old oil into

This is just the basics, right? But, you would be surprised with how many sites don't include links or information on directly related products on their money pages. Providing this type of smart site and page design can have a major impact on user engagement with the money pages of your site.

2. Include other related links on money pages

In the prior item we covered the user's most directly related needs, but they may have secondary needs as well. Someone who is changing a car's oil is either a mechanic or a do-it-yourself-er. What else might they need? How about other parts, such as windshield wipers or air filters?

These are other fairly easy maintenance steps for someone who is working on their car to complete. Presence of these supporting products could be one way to improve user engagement with your pages.

3. Offer industry-leading non-commercial content on-site

Publishing world-class content on your site is a great way to produce links to your site. Of course, if you do this on a blog on your site, it may not provide links directly to your money pages, but it will nonetheless lift overall site authority.

In addition, if someone has consumed one or more pieces of great content on your site, the chance of their engaging in a more positive manner with your site overall go way up. Why? Because you've earned their trust and admiration.

4. Be everywhere your audiences are with more high-quality, relevant, non-commercial content

Are there major media sites that cover your market space? Do they consider you to be an expert? Will they quote you in articles they write? Can you provide them with guest posts or let you be a guest columnist? Will they collaborate on larger content projects with you?

All of these activities put you in front of their audiences, and if those audiences overlap with yours, this provides a great way to build your overall reputation and visibility. This content that you publish, or collaborate on, that shows up on 3rd-party sites will get you mentions and links. In addition, once again, it will provide you with a boost to your branding. People are now more likely to consume your other content more readily, including on your money pages.

5. Leverage social media

The concept here shares much in common with the prior point. Social media provides opportunities to get in front of relevant audiences. Every person that's an avid follower of yours on a social media site is more likely to show very different behavior characteristics interacting with your site than someone that does not know you well at all.

Note that links from social media sites are nofollowed, but active social media behavior can lead to people implementing "real world" links to your site that are followed, from their blogs and media web sites.

6. Be active in the offline world as well

Think your offline activity doesn't matter online? Think again. Relationships are still most easily built face-to-face. People you meet and spend time with can well become your most loyal fans online. This is particularly important when it comes to building relationships with influential people.

One great way to do that is to go to public events related to your industry, such as conferences. Better still, obtain speaking engagements at those conferences. This can even impact people who weren't there to hear you speak, as they become aware that you have been asked to do that. This concept can also work for a small local business. Get out in your community and engage with people at local events.

The payoff here is similar to the payoff for other items: more engaged, highly loyal fans who engage with you across the web, sending more and more positive signals, both to other people and to search engines, that you are the real deal.

7. Provide great customer service/support

Whatever your business may be, you need to take care of your customers as best you can. No one can make everyone happy, that's unrealistic, but striving for much better than average is a really sound idea. Having satisfied customers saying nice things about you online is a big impact item in the grand scheme of things.

8. Actively build relationships with influencers too

While this post is not about the value of influencer relationships, I include this in the list for illustration purposes, for two reasons:

1. Some opportunities are worth extra effort. Know of someone who could have a major impact on your business? Know that they will be at a public event in the near future? Book your plane tickets and get your butt out there. No guarantee that you will get the result you are looking for, or that it will happen quickly, but your chances go WAY up if you get some face time with them.
2. Influencers are worth special attention and focus, but your relationship-building approach to the web and SEO is not only about influencers. It's about the entire ecosystem.

It's an integrated ecosystem

The web provides a level of integrated, real-time connectivity of a kind that the world has never seen before. This is only going to increase. Do something bad to a customer in Hong Kong? Consumers in Boston will know within 5 minutes. That's where it's all headed.

Google and Bing (and any future search engine that may emerge) want to measure these types of signals because they tell them how to improve the quality of the experience on their platforms. There are may ways they can perform these measurements.

One simple concept is covered by Rand in this recent Whiteboard Friday video. The discussion is about a recent patent granted to Google that shows how the company can use search queries to detect who is an authority on a topic.

The example he provides is about people who search on "email finding tool". If Google also finds that a number of people search on "voila norbert email tool", Google may use that as an authority signal.

Think about that for a moment. How are you going to get people to search on your brand more while putting it together with a non-branded querly like that? (OK, please leave Mechanical Turk and other services like that out of the discussion).

Now you can start to see the bigger picture. Measurements like pogosticking and this recent search behavior related patent are just the tip of the iceberg. Undoubtedly, there are many other ways that search engines can measure what people like and engage with the most.

This is all part of SEO now. UX, product breadth, problem solving, UX, engaging in social media, getting face to face, creating great content that you publish in front of other people's audiences, and more.

For the small local business, you can still win at this game, as your focus just needs to be on doing it better than your competitors. The big brands will never be hyper-local like you are, so don't think you can't play the game, because you can.

Whoever you are, get ready, because this new integrated ecosystem is already upon us, and you need to be a part of it.

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Seth's Blog : The technology ratchet

The technology ratchet

Any useful technology that's successfully adopted by a culture won't be abandoned. Ever. (Except by top-down force).

The technology might be replaced by a better alternative, but society doesn't go backwards.

After books were accepted, few went back to scrolls.

After air conditioning is installed, it's never uninstalled.

Vinyl records, straight razors and soon, drivable cars, will all be perceived as hobbies, not mainstream activities.

This one-way ratchet is accelerating and it's having a profound effect on every culture we are part of. As Kevin Kelly has pointed out, technology creates more technology, and this, combined with the ratchet, has a transformative effect.

In a corollary to this, some technologies, once adopted, create their own demand cycles. A little electricity creates a demand for more electricity. A little bandwidth creates a demand for more bandwidth.

And the roll-your-own media that has come along with the connection economy is an example of this demand cycle. Once people realize that they can make their own apps, write their own words, create their own movements, they don't happily go back to the original sources of controlled, centralized production.

The last hundred years have also seen a similar ratchet (amplified, I'd argue, by the technology of media and of the economy) in civil rights. It's unlikely (with the exception of despotic edicts) that women will ever lose the vote, that discrimination on race will return to apartheid-like levels, that marriage will return to being an exclusionary practice... once a social justice is embraced by a culture, it's rarely abandoned.

Fashion ebbs and flows, the tide goes in and it goes out, but some changes tend to flow in one direction.

       

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