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Mish's Global Economic Trend Analysis |
One Hell of a Round Trip: Chinese Stocks Crash 8.45%, Give Up 60% Gains This Year Posted: 23 Aug 2015 10:25 PM PDT Chinese stock plunged another 296.55 points today (8.45%) to 3211.20. The market was once up over 60% on the year in June, but is now negative. $SSEC Shanghai Index ![]() click on chart for sharper image I added that last red bar because Stockcharts reflects last Friday. One Hell of a Round Trip From 3264 to 5178 to 3211 is one hell of a round trip, especially for a stock market index. Bloomberg notes State Support Fails to Stop Rout.
Crash Explained Please consider the Vox article China's Latest Stock Market Crash, Explained. China's stock market had a debt-fueled boom, followed by a crashTrue Origin of Crash What Vox failed to mention is the boom was fueled by ridiculously loose monetary policy, culminating with a massive real estate boom followed by an equity bubble with kids who did not even graduate from high school, buying stocks on margin. US equities and corporate bonds are also in a huge bubble. There are so many bubbles that one has to be nearly blind to not see them. Mike "Mish" Shedlock 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. |
Another Asia-Pacific Equities Bloodbath Posted: 23 Aug 2015 06:57 PM PDT Another Asia and South Pacific equity bloodbath is underway this evening (morning or afternoon to those areas). Here is a chart from roughly 8:30 PM central. ![]() click on chart for sharper image Mike "Mish" Shedlock 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. |
Huge Glut in European Dairy Cows and Milk Coming Up Posted: 23 Aug 2015 11:59 AM PDT Spain is truly going off the deep end in numerous areas lately. As noted previously, citizens have received huge fines for being disrespectful of police (See Progression of the Police State Spanish Style; Law of Simmering Social Pots). In another recent example, a citizen was fined for posting on Facebook, the image of a police car parked illegally. Today, let's discuss dairy cows. There are so many dairy cows in Spain that farmers have not been able to make any money. There is a glut of milk. The government solution, amazingly, is to Give 300 Euros Per Cow to Farmers With Insufficient Profitability. The Minister of Agriculture, Food and Environment, Isabel García Tejerina, announced on Saturday that the Ministry will grant direct aid of 300 euros per cow for those farms that are selling milk below profitability. The measure will benefit 2,500 to 3,000 farms according to estimates by the Ministry.Too Many Cows, Too Much Milk Any rational person would suggest there are too many dairy cows and perhaps too many farms. But instead we see articles like this one from El Confidencial: Do you buy milk at less than 60 cents? This is what you're doing to farmers. The prices in the dairy sector have plummeted in recent months by the combination of several factors. Historically Europe produces more milk than it consumes and therefore dependent on international markets to survive. Especially Asians. And China has stopped buying milk in recent months. To this must be added the effects of Russia's veto imports of fresh products. The result is that the European market does not absorb all the milk generated and there is an excess of 'stock' that brings down prices.Count the Cows Mind you, closure of farms is precisely what needs to happen (given the inane sanctions on Russia). By country, here is a Dairy Cows Count for every country in the EU. As of 2013, Spain has 857,000 cows. Assuming there are no more cows in Spain now than in 2013, the cost of the guarantee would be €257,100,000. Pity the Farmers? Instead of blaming farmers for producing too much milk, and instead of blaming inane sanctions on Russia, the government and news outlets blame people for paying too little for milk. "This is what you are doing to farmers," states the inane headline on El Confidential. Given there is already a glut of milk and cows, guaranteeing a profit on cows is a 100% surefire way to ensure the glut further expands. In a free trade setup, unprofitable farms would go out of business, but there would also not have been a ridiculous set of sanctions on Russia in the first place. Mike "Mish" Shedlock 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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If you're doing something important, you're working to make change happen.
But change is difficult, often impossible. Are you trying to change your employees? A entire market? The attitude of a user?
The more clear you can be about the specific change you're hoping for (and why the people you're trying to change will respond to your actions) the more likely it is you'll actually achieve it.
Here are two tempting dead ends:
a. Try to change people who are easy to change, because they show up for clickbait, easy come ons, get rich quick schemes, fringe candidates... the problem is that they're not worth changing.
b. Try to change people who aren't going to change, no matter what. The problem is that while they represent a big chunk of humanity, they're merely going to waste your time.
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Mish's Global Economic Trend Analysis |
Sweet Deals and Cookie Crumbles; Sugar, Sugar Posted: 22 Aug 2015 07:24 PM PDT Nearly every week I receive emails from readers asking me to explain my stance against tariffs. The typical claim I hear is that we need tariffs to preserve jobs. I respond that tariffs don't protect jobs, they cost jobs. Take steel for example. Yes, tariffs will save a few hundred or a few thousand steel manufacturing jobs. But at what cost? US car manufacturers have to pay more for steel as do US manufacturers of any product that contains steel. And consumers have to pay more. That's money consumers would otherwise spend elsewhere but cannot. Get Me the Hell Out of Here I recently spoke of manufacturing leaving Chicago. Indeed, six corporations fled in July, and another business did so in August. I mentioned the companies in my August 13 post Get Me the Hell Out of Here. One of the companies that fled Illinois was Mondelez International, maker of Oreo Cookies. Back in May, WGN noted Oreos Maker to Decide between Chicago, Mexico for New Investment. Chicago is competing with Mexico to land a plant that makes Oreos and Chips Ahoy cookies.Chicago Unions, Illinois Taxes, Sugar Dealing with Chicago unions and Illinois taxes is bad enough. The decision to leave Chicago was sound enough on that basis alone. And poof ... 600 to 1,000 jobs will vanish. There is another aspect of the deal that has not been discussed much: sugar tariffs How the Cookie Crumbles Please consider How US Sugar Policies Just Helped America Lose 600 Jobs. The manufacturer of Oreo cookies recently announced plans to move production of Oreos from Chicago to Mexico, resulting in a loss of 600 U.S. jobs.Sweet Deals As I have stated, tariffs costs jobs. Yet we hear asinine cries to "raise tariffs" to protect jobs. Such sweet deals preserve a few jobs (in this case of overly expensive sugar production that is really far better suited to the tropics), at the huge expense of any manufacturer in the US that needs sugar. Net-net sugar tariffs have cost the US countless jobs. And in the sweet deal Obama worked out in the Trans-Pacific Partnership protects among other things sugar. For details please
Mish's Proposed Free Trade Agreement To call TPP a "free trade" agreement is ridiculous. An excellent free trade agreement would consist of precisely one line of text. I propose "All tariffs and all government subsidies on all goods and services will be eliminated immediately." Sugar vs. Sugar Unlike oil, where there are differences between grades, sugar is pretty much sugar. But there are two futures prices. Sugar #11 (the global price), and sugar #16, the US price thanks to tariffs.
US sugar costs 135% more than other countries pay! And economic fools, including unions, want more tariffs to "protect US jobs". Sugar, Sugar As some might have expected, I have a musical tribute to this madness. Link if video does not play: Sugar, Sugar - Archies Job Flight Out of Illinois Finally, it's safe to say that inane policies cost Illinois those jobs. And it's equally safe to say they fled Illinois to Mexico rather than to another state because of inane tariffs. High Fructose Corn Syrup For icing in the cake, please note that sugar tariffs and corn support are behind the use of high fructose corn syrup in US manufactured candy, cookies, and crackers instead of sugar. Still like them tariffs? Mike "Mish" Shedlock 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. |
Don't Worry, IMF Says "Premature" to Speak of Chinese Crisis Posted: 22 Aug 2015 10:40 AM PDT Growth in China is slowing rapidly. How rapidly is a subject of much debate. Today, a senior IMF official says 'Premature' to Speak of Chinese Crisis. China's economic slowdown and a sharp fall in its stock market herald not a crisis but a "necessary" adjustment for the world's second biggest economy, a senior International Monetary Fund official said on Saturday.Crisis Talk Premature? Is crisis talk premature? The answer depends on what "crisis" means. It may depend on growth estimates as well. While, I concur this is a "necessary" adjustment, necessary does not imply "no crisis". For example, the US housing crash was a necessary adjustment as well. Another crash or lengthy correction in equities is coming as well. Does that constitute a crisis? It certainly will to pension plans that are still hugely underwater despite the massive rally in equities globally. And what about the IMF forecast for a 6.8 percent expansion in the Chinese economy this year? That estimate I believe we can all laugh at. Actually, nearly all IMF growth forecasts are laughable. And no one, except apparently the IMF, remotely believes China's stated GDP numbers in recent years. Looking ahead, four percent or even two percent growth are more likely than 6.8 percent (no matter what numbers China officially says). Would four percent growth constitute a crisis? Two percent? It depends on your definition, but it will likely come with a very "necessary" (and steep) correction in global equities and junk bonds. Don't Worry But hey, don't worry yet. Wait until it's universally clear a crisis is underway. Then worry. That's the apparent message from the IMF. Mike "Mish" Shedlock 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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