The German federal election is on September 22, just over a month away. Merkel's CDU/CSU party will without a doubt receive the most votes. However, winning is not what matters unless there is an outright majority and CDU/CSU is not close to a majority.
The next chancellor will be the one who can put together a majority coalition. On that score, nearly every party is in denial about who they would be willing to form a coalition with.
For more background on the German political parties and what they stand for, please see Understanding German Politics.
Tale of Colours
Currently, not only is every political party short of a majority of votes, every likely coalition is short of votes. I have commented on this before, with input from reader Bernd (not AfD party chairman Bernd Lucke).
Although Angela Merkel is the most popular politician in Germany, and her Christian Democratic Union is the front-running political party, it would be an extraordinary upset for the CDU – with its Bavarian sister party, the Christian Social Union – to win an outright majority. It is currently earning steady 40 per cent support in opinion polls, some 6-7 per cent short of the threshold required to gain outright control of the Bundestag.
At this point in the election campaign, however, the game politicians play is to deny they have any intention of taking part in any coalition other than their first preference.
So Ms Merkel is adamant that she wants to keep her present centre-right coalition with the liberal Free Democrats, although its record over the past four years has been very patchy. Constant bickering, especially between the FDP and the conservative CSU, has made the "black-yellow" coalition (named after the respective party colours) much less popular than its constituent parts.
On the left, the Social Democratic party (SPD) and the environmentalist Greens insist that a "red-green" coalition remains their absolute ambition, even though they are currently polling a combined 40 per cent, well short of the majority threshold.
The man who has now put the cat among the pigeons is Gregor Gysi, the sharp-witted and silver-tongued former Communist lawyer who leads the radical Linke – the Left party – in the election campaign. He declared last week that he would happily take part in a "red-red-green" alliance to replace Ms Merkel.
A "grand coalition" of CDU and SPD is the one most Germans (52 per cent in a recent poll) would favour – and most of the outside world. Mr Steinbrück admits it is what Washington, London and most of the rest of the EU would like to see. But he is flatly against it.
From the start of the campaign, he has said he would not serve under Ms Merkel in such a "black-red" alliance, although he was finance minister in the grand coalition she headed from 2005-09. He also fears it would split the SPD.
But if neither black-yellow nor red-green coalitions has a clear majority, what is the alternative?
The only potential coalition that might see Mr Steinbrück as chancellor would be a so-called "traffic light" coalition of SPD, Greens and FDP (red, green and yellow). If a grand coalition is out, and so is black-green and red-red-green, it might be the one workable option.
Wildcards
There are two wildcards in the election.
FDP - Merkel's current coalition partner
AfD - Alternative für Deutschland (Alternative for Germany) a eurosceptic party
Political parties need to garner 5% of the vote to be represented in parliament. FDP (Merkel's current coalition partner) is right on the bubble, polling close to 5%.
AfD is polling only 2%. However, Bloomberg quotes AfD chairman Bernd Lucke who said "We believe that we're very close to the 5 percent hurdle". Of course no politician will ever deny hope.
Perhaps more realistically, Bloomberg notes "Allensbach, the company that most accurately predicted the 2009 election outcome, had the party edging up 0.5 percentage point to 3.5 percent support in a July 12 survey."
I have not seen a more recent poll other than unreliable online surveys, so it's hard to assess the chances.
In April, reader Bernd said it was likely AfD would get over 10%. I hopped on that bandwagon myself. But unlike the surge for Beppe Grillo in Italy, AfD just never caught on.
Still 5% is doable for AfD and less than 5% for FDP is also doable (if not likely). Should both happen, it will be even harder for any coalition to put together a majority.
As I have noted before, the price for forming a coalition might easily be the ouster of Merkel or perhaps an agreement that she will step down in two more years.
This election is a lot more open than Merkel supporters would have you believe.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
The Census Bureau reports retail sales rose for a fourth consecutive month, up 0.2% in July. Retail sales missed economist expectations of a 0.3% rise, but June month was revised up.
Retail Sales vs. Previous Months
July 2013 Retail Sales vs. July 2012
I am not sure how much longer auto sales will lead retail sales, but sooner or later, a huge plunge is in store.
With mortgage rates generally tied to the 10-year treasury yield, housing is already under pressure from the rise in treasury yields.
Treasury Yields
Overall, retail sales were strong enough to push treasury yields back towards the July high.
The next three charts show treasury yields multiplied by 10. Shift the decimal point one digit to the left for an accurate read.
$TNX 10-Year Treasury Yield
$TYX 30-Year Treasury Yield
$FVX 5-Year Treasury Yield
Historical Perspective
Curve Watchers Analysis captured the following chart this morning.
Federal Reserve Chairman Ben S. Bernanke in September will trim the Fed's monthly bond buying to $65 billion from the current pace of $85 billion, according to a growing number of economists surveyed by Bloomberg News.
Half of economists held that view in the July 18-22 survey, up from 44 percent in last month's poll.
After today's rise in treasury yields, that number is likely more than 50% and/or the expected tapering amount greater than $20 billion.
It will be interesting to watch the Fed's reaction when housing and autos slump, the stock market takes a hit, and treasury yields continue to rise in the next few months.
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com
Professor Zhang Lin has built a dream mountain villa on top of a Beijing apartment block. He has spent six years shifting rocks and rubble to the roof to create this mountaintop penthouse. The people underneath aren't too happy because cracks and leaks appeared throughout the apartment block. The construction will be demolished if deemed unsafe.
Movies and motorcycles go together like PB&J – but not every use of the wonderful two-wheeled drive has been beneficial. In fact, some movies seem hell bent on besmirching the cool factor of the motorcycle and we're just not going to stand for it. The jury has passed their verdict on the very best and worst motorcycle movies the world has to offer. Question is, do you agree with our sentencing?
It might be a little early to start with the annual compilation videos, but Vine's offered up so many goodies, there isn't time to wait. Check it out to start your week off with a laugh, but keep the volume down for some NSFW.
As someone who has been involved in the search industry for over a decade, one of the things that really bothers me is how Google is slowly but inevitably taking all of the “above the fold” organic search result space and giving it to paid results, Google web properties, and to the Google Knowledge graph. […]
National Security Advisor Susan E. Rice briefs President Barack Obama during his Presidential Daily Briefing in Chilmark, Mass., Aug. 12, 2013. (Official White House Photo by Pete Souza)
As members of Congress go home to their districts for the August recess, they are hearing directly from Americans of all political stripes who are calling for a vote on commonsense immigration reform.
Severe weather is the number one cause of power outages on the nation’s electric grid, which serves as the backbone of the nation’s infrastructure that delivers electric power to millions of Americans in homes, schools, offices, and factories across the United States.
On Saturday, the President and First Lady spoke at the Disabled American Veterans (DAV) National Convention in Orlando, FL. Founded in September of 1920, the DAV celebrates 92 years of service to disabled veterans and their families with this three-day event.
If you want to see how your competitors are gaining a strategic advantage, one of the best tactics to overtake them is to take a deep dive into their backlinks. They leave breadcrumbs behind that reveal their best tactics. Then pivot (no pun intended), glean ideas from their brilliance, and do it even better!
Required skill: pivot tables
If you don't know how to use pivot tables, you need to check out this video walkthrough. I teach you everything you need to know and then some.
Download example pivot table
I redacted my client's data from the pivot table in the Excel sheet, but you can get an idea of how I pulled together the data in the "Raw Data" tab and then see how I organized my pivot table in that tab. You can, of course, organize yours however you feel is best. But hopefully this will provide a good jumping-off point. I also sorted my pivot table by domain authority in descending order and then filtered out links from [free-subdomain].wordpress.com.
Step 2: Add another column and label it "Site." What I typically do is add the domain (without the http:// or www to minimize noise) and double-click the bottom-right corner of the cell to fill down to the bottom of the data set. Rinse and repeat each time you add a new batch of backlinks. When you finish, you'll have a single table that contains a mashup of backlinks.
Step 3: Extract the domains from the backlink URLs using the LEFT and SEARCH functions. If you haven't done this before, I demonstrate how in this video tutorial. (Or you can download the demo workbook from the post and just copy the formulas.)
Step 4: Create your pivot table using these settings:
Step 5: As a general rule, I don't like how Excel merely indents rows in the default, "Compact" pivot table format. In our data set here, where we have three different values pulled down in rows (Domain, Site, and URL). This can cause your rows to get really congested, and it can be hard to differentiate them. For this reason, if I pull multiple values into the Rows field list, I prefer the Outline layout. You can check it out in the Excel file download.
To set your pivot table to "Outline," click on any cell in the pivot table and go to Pivot Table Tools > Design tab > Layout > Report Layout > Show in Outline Form (Mac: PivotTable tab > Design > Layout > Outline Layout).
Step 6: I pulled individual observations into text boxes to the left of the pivot table. I used text boxes for a couple reasons:
I didn't want to mess up the heights of rows inside my pivot table.
I could attach links to the text boxes that linked to the individual cells in the pivot table.
Step 7: Dive into the data and start reverse-engineering strategies (using the observations I pulled out as a template, if you'd like). I can assure you there are many more to excavate from that data set!
Video tutorial
For you visual learners out there, I pulled together a 10-minute video walkthrough of some of the key steps I took to organize the data for analysis.
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