Mish's Global Economic Trend Analysis

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• Auto Originations Hit 10-Year High, Subprime Loans Fuel Growth; Party About Over?
• Terrorist Mastermind Killed in Raid; France Blames Belgium; Criticized Belgium Locks Barn Door Read
• Philly Fed Slightly Positive After Two Months of Contraction, but New Orders and Shipments Negative, Workweek Collapsed
• Nifty-Fifty Becomes Fab-Five; Return of the "Four Horseman"; Ozone Layer

Auto Originations Hit 10-Year High, Subprime Loans Fuel Growth; Party About Over? Posted: 19 Nov 2015 01:01 PM PST A New York Fed study notes a huge surge in subprime auto loans after taking into account a newer, more accurate methodology. The new approach takes into consideration new originations as opposed to new accounts. The result was an upward shift in the volume of newly originated auto loans by 25 to 30 percent. Newly Originated Loans A credit score of 660 is the generally acknowledged line between good and poor credit. Scores below 620 are outright awful. With those numbers in mind, let's see how things stack up. Originations by Credit Score Originations hit $156.8 billion in the third quarter, the highest level in a decade. Loans to borrowers with scores below 620 jumped to nearly $40 billion in the second quarter. Loans to borrowers with credit scores below 660 are the highest since 2005. The reports notes "With the surge in the second quarter, the total number of subprime originations has since reached a ten-year, pre-crisis high, only surpassed by the unique periods in 2005 that were associated with 'employee pricing' promotions and record sales for the auto manufacturers." Will "employee pricing" once again mark the last hurrah? Auto Finance Companies vs. Banks and Credit Unions Note the jump in truly awful credit score originations Delinquencies Tick Up The uptick in delinquencies is modest so far. Nonetheless, some banks have become concerned. For example, the New York Times reported in March Wells Fargo Puts a Ceiling on Subprime Auto Loans. Wells Fargo, one of the largest subprime car lenders, is pulling back from that roaring market, a move that is being felt throughout the broader auto industry. From Our Advertisers The giant San Francisco bank, known for its stagecoach logo and its steady profits, has been at the center of the boom in making loans to people with tarnished credit scores. Wall Street, meanwhile, has been bundling and selling such loans as securities to investors, reaping big profits while allowing millions of financially troubled borrowers to buy cars. But now, amid signs that the market is overheating, Wells Fargo has imposed a cap for the first time on the amount of loans it will extend to subprime borrowers. The bank is limiting the dollar volume of its subprime auto originations to 10 percent of its overall auto loan originations, which last year totaled $29.9 billion, bank executives said. Party About Over? Typically banks react too late, after most of the damage has been done. It's the same every cycle. By the time credit is available to those on the bottom rung, the party is about over. Regardless, and as I have pointed out numerous times, the surge in autos is one of the few things holding up consumer spending and is also the only bright spot at all of manufacturing. What cannot go on forever won't. And it's nearly the end of the line for autos. Repercussions will be deeper than economists expect. 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.

Terrorist Mastermind Killed in Raid; France Blames Belgium; Criticized Belgium Locks Barn Door Read Posted: 19 Nov 2015 12:00 PM PST Terrorist Mastermind Killed The Financial Times reports Terrorist Ringleader Killed in Raid Abdelhamid Abaaoud, the Belgian described as the ringleader of the group behind the attacks in the French capital that killed at least 129 people, died during the seven-hour siege in Saint-Denis. Confirmation that Abaaoud, 27, was in Paris will prompt fresh questions about intelligence leading up to the attacks. The Belgian national had been presumed to be in Syria, where he had joined the Islamist militant group Isis. "We have to be extremely careful," Laurent Fabius, France's foreign minister told France Info radio before the confirmation. "If Abaaoud has been able to travel from Syria to France, it means that there are failings in the whole European system." Failings in Whole European System That there could be "failings in the whole European system" is shocking news. Just look at the massive number of controls in place that should have prevented this tragedy. Chancellor Merkel and EU President Jean-Claude Juncker welcome refugees from war-torn countries with open arms. Millions of refugees allowed entry. Fake passports not detected. Belgium, France and other countries allow citizens to go to Syria and fight alongside ISIS and return as if nothing meaningful transpired. France receives multiple terrorist warnings from Turkey but ignores them. Germany intercepts massive weapons cache headed for Paris but essentially does nothing. Surely, at least one of those strong controls should have worked. Alas, things slipped through the cracks, and we are now faced with the shocking revelation by Laurent Fabius that there may be "failings in the whole European system." Mish readers are undoubtedly as shocked by this revelation as I am. France Blames Belgium In the wake of unforeseen and unknowable in advance security failings, Belgium Cries Foul Over French blame Game. The Belgian government issued a private diplomatic protest to France this week over what it perceives as the French leadership's unfair blaming of Belgium for Friday's terrorist attacks in Paris, saying that homegrown jihadism is as much a problem for France as it is for Belgium. The protest, made by Prime Minister Charles Michel's chief diplomatic adviser to the French ambassador to Belgium on Tuesday, comes after international scrutiny has focused on the Brussels neighbourhood of Molenbeek, home to at least three of the attackers and the militant believed to be the plot's architect. Belgian officials said only one of the three teams that carried out the Paris attack was linked to Molenbeek, and that France was attempting to point the finger at Belgian failings to cover up its own domestic lapses in countering Islamic extremism. In a speech to parliament on Thursday morning, Mr Michel came to the defence of his security services, saying they were not to blame for what happened in Paris. "I do not accept the criticism which are aimed at denigrating the work of our security services," he said. One official said Brussels was particularly irked at the claim by Bernard Cazeneuve, French interior minister, that the attacks had been organised in Belgium. Criticized Belgium Locks Barn Door Although Belgium security or lack thereof had little to do with the problem, Belgium Strengthens Counter-Terrorism Measures. Belgians who return from fighting in Syria face jail as part of a host of measures unveiled by the country's government aimed at stemming criticism of its handling of counter-terrorism. Prime Minister Charles Michel announced an extra €400m for Belgium's security services, which have been slammed for a series of blunders in the run-up to last week's attacks in Paris. Belgium has more foreign fighters per capita than any other EU country, with the bulk of these coming from just a handful of communities in cities such as Brussels and Antwerp. At the moment, few of the suspected 500 Belgian citizens who have traveled to fight in Syria are in jail. Mr Michel said: "The rule must be clear. For jihadis returning, their place is in prison." Reflections on Barn Door Locking Gee, who coulda possibly thunk letting jihadis go to Syria and return unabated was a bad idea? This is yet another one of those unforeseeable things you have to find out for yourself after problems occur. However, we can take comfort that some of the 500 Belgian citizens who traveled to Syria to fight alongside ISIS are in jail. How many of the 500 are in jail? Answer "a few". And the rest? I suspect they have fled the country or soon will. Meanwhile, neither Angela Merkel nor Jean-Claude Juncker have rescinded their open arms policy. After all, massive security measures are in place. And those existing security measures coupled with new security measures like barn door locking provide assurances that no one will again sneak in from Syria, through Greece, on a fake passport and make their way to Paris. 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.

Philly Fed Slightly Positive After Two Months of Contraction, but New Orders and Shipments Negative, Workweek Collapsed Posted: 19 Nov 2015 10:38 AM PST In what likely amounts to a bit of economic noise, the Philadelphia Fed regional manufacturing report posted a rise of 1.9, slightly beating the economic consensus of 0. Unlike Monday's Empire State report which is pointing to out-and-out weakness for the November factory sector, the Philly Fed's November report is no worse than flat and points to little month-to-month change for a sector, however, that continues to struggle. The Philly Fed index ended two months of contraction with a small gain of 1.9 which is near enough to the Econoday consensus for no change. But new orders are not in the plus column, at minus 3.7 for a second straight negative score. Shipments are also in the wrong column, at minus 2.5 for what is also a second straight negative month. The average workweek is down very sharply in the Mid-Atlantic factory sector, at minus 16.2 which doesn't point to strength ahead for employment. But employment is one of the positives in the November report, at plus 2.6 and up from minus 1.7 in October. Still, this is a small gain. But one indication pointing to employment strength ahead is the first upturn in backlogs since June, at plus 2.4. Also pointing to employment strength is a strong 6.7 point gain for the six-month outlook to 43.4 where the future employment component is very strong, up more than 14 points to 28.2. There's good news and bad news in this report but compared to the report's own trend, the news is mostly good and underscores Tuesday's strong bounce in the manufacturing component of the industrial production report. Not strong at all, however, have been some other regional Fed reports with Kansas City to give its November update tomorrow. Philly Fed General Activity Indexes The above graph and table below from the Philly Fed November 2015 Manufacturing Business Outlook Survey. Philly Fed November Stats The positive number in unfilled orders likely reflects the huge decline in the average workweek. The positive general activity is not consistent with a hugely declining workweek, contracting shipments, or contracting new orders. Most likely, the positive general activity number is random noise or a meaningless improvement. The best one can say is "things are getting worse at a decreasing pace, except of course for the workweek collapse." 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.

Nifty-Fifty Becomes Fab-Five; Return of the "Four Horseman"; Ozone Layer Posted: 19 Nov 2015 12:59 AM PST Anyone recall the logic in the 1960s and 1970s that suggested there were only 50 stocks one needed to look at, and those 50 stocks could never go wrong? That theory was labeled the "Nifty-Fifty". Nonetheless, the long bear market of the 1970s that lasted until 1982 caused valuations of the nifty fifty to fall to low levels along with the rest of the market, with most of the Nifty-Fifty under-performing the broader market averages. The "Nifty-Fifty" of the 1960s gave way to the "Four Horseman" of the tech era: Microsoft, Dell, Cisco and Intel. Microsoft Microsoft opened the year 2000 at $41.19. It is now $53.85. Congratulations, you are ahead, but it did take 14 years. Counting dividends, you are now well ahead. Dell Historically Dell last traded at $13.73 on 10/29/2013. It opened the year 2000 at $50.40. You are seriously underwater and will never catch up. Dell is now private. Intel Intel opened the year 2000 at $29.65. It is now $33.16. Congratulations, you went ahead in 2014. Does it feel like it? Cicso Cisco opened the year 2000 at $47.43.  It is now $27.12. You are seriously underwater still. If you bought the hype-of-the-day "Four Horseman" in 2000 and held on, you are still underwater fifteen years later. Recall that EMC, Oracle, Sun Microsystems, and Juniper Networks were all regarded as must own for the long haul "gorillas". New Four Horseman On January 6 2012, GeekWire proclaimed Meet the new 'four horsemen' of tech: Sorry, Microsoft, Dell, Cisco and Intel. Oh, how the technology landscape has changed.  Ten years ago, the industry was dominated by names such as Microsoft, Intel, Dell and Cisco. Fast forward to 2012, and the makeup looks quite different. CNN recently surveyed 30 technology experts and thousands of readers to come up with what it dubbed the Four Horsemen of tech. Respondents were asked to choose only from publicly-traded companies, so Facebook didn't make an appearance. Apple easily was the top vote getter, followed by Google, Amazon.com and — an oldie, but a goodie — IBM. IBM, Apple and Amazon certainly could qualify as comeback stories, while Google has yet to really be tested in terms of its market dominance in Internet search. (Possibly signaling a fall). Nonetheless, what's fascinating is how Microsoft no longer makes the cut. (In reader polling, IBM edged out Microsoft with 67 percent of the vote). Microsoft is still a juggernaut, but as CNN's editors point out "the PC is no longer driving technology growth." Final Four, Elite Eight, Sweet Sixteen Amazon, Google, Apple, and IBM were billed as the new four horsemen in 2012. Oracle, Salesforce,  Microsoft, and Cisco were in the "elite eight" with Qualcomm, Verizon, VMware, Samsung, Nuance, eBay, ARM, and Dell rounding out the "sweet sixteen". Really? Yes, really. Giddy Up! In July of 2015, CNN Money proclaimed Why you need to own the Four Horsemen of Tech. Move aside IBM, you were replaced by Facebook as a "need to own". Fab-Five On November 16, Yahoo Finance reported How A Monster Year For Amazon, Google And Facebook Is Carrying The Stock Market. There are 500 companies* in the S&P 500, but 2015 has been a year for the top 1%. Five companies -- Amazon.com, Alphabet/Google, Microsoft, Facebook and General Electric -- have collective returns that account for more than the entire return of the index year-to-date, according to a note from Goldman Sachs. Excluding the aforementioned quintet, the S&P 500 would be down 2.2% this year, instead of being virtually flat, up 0.1%. Goldman's chief U.S. equity strategist and the firm's portfolio strategy research team note that narrow market breadth, with just a handful of strong performers carrying the load for a slew of weaker performers, tends to favor high-quality stocks with strong balance sheets and lower volatility. Netflix also warrants mention, as the S&P 500's top performer for the year. But even with its stock up 120% in 2015, Netflix is far smaller than the companies above and its $46 billion market cap dims its influence on the cap-weighted S&P. Notably absent from the list is Apple, which has returned just 3.7% in 2015, and Wal-Mart, down 33% and suffering through its worst year in stock performance terms since 1973. Fab-Five Drive S&P Warnings Signs Breadth is a huge warning sign. That fewer and fewer stocks participate in rallies is synonymous with topping action. Netflix Key Stats Check out the Netflix Key Stats. Trailing PE: 319 Forward PE: 462 Market Cap: $51.53 billion Book Value: $5.07 per share Share Price: $120 Price/Book: 23.09 Amazon Key Stats Trailing PE: 950.63 Forward PE:  117.65 Market Cap: $311.04 billion Book Value: $26.50 per share Share Price: $663.54 Price/Book: 24.27 Facebook Key Stats Trailing PE: 108.20 Forward PE:  37.68 Market Cap: $304.77 billion Book Value: $14.72 per share Share Price: $107.77 Price/Book: 7.14 Hey, no problems there! After all, Facebook and Amazon are "need to own" stocks according to CNN Money. Ozone Layer Momentum players ignored the PE warts, thereby pushing the market higher and higher so that it's now well into the ozone layer. GMO Forecast In contrast to mainstream media "must own" analysis, GMO just came out with its Seven Year Forecast. GMO's Disclaimer "The chart represents real return forecasts for several asset classes and not for any GMO fund or strategy. These forecasts are forward‐looking statements based upon the reasonable beliefs of GMO and are not a guarantee of future performance. Forward‐looking statements speak only as of the date they are made, and GMO assumes no duty to and does not undertake to update forward‐looking statements. Forward‐looking statements are subject to numerous assumptions, risks, and uncertainties, which change over time. Actual results may differ materially from those anticipated in forwardlooking statements. U.S. inflation is assumed to mean revert to long‐term inflation of 2.2% over 15 years." Real Returns GMO depicts "real" inflation adjusted returns. If one assumes 2% inflation and the forecast holds true, then seven years from now, the stock market will be where it is today. But the stock market will not be flat for seven years. It is far more likely to look like this. Greater Fools Game I actually believe GMO is overly optimistic. Only those playing the greater fools game (whether they realize it or not) are investing in stocks at these prices. Nifty-Fifty Becomes Fab-Five A friend of mine pinged me with this comment in regards to the "Fab Five": I think this is another one of those instances where the extreme nature of the topping process (and the market advance has thinned out to an incredible extent) probably hints at the significance of the top being formed. The only other time a topping process took this long was during the last stage of the tech bubble. If the future rhymes with the handful of previous cycles we have to guide us, the "real" stock prices we see today may not be seen again for another 20-30 years. Valuations Matter There is never a point in which a handful of stocks or even a basket of 50 stocks are "must own" and you can put them away and forget about them. Valuations must be taken into consideration along with changing times and changing technology. Yet, here we go again, with the same theories telling people they can do precisely that. Today's version of the "Nifty-Fifty" is now called the "Fab-Five". And another set of "Four Horsemen" are galloping again .... for now. 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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Mish's Global Economic Trend Analysis

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• Australia Considers Paperless Passports Based on Fingerprints, Face Recognition, Eye Scans; We Know Who You Are!
• Tracking Manufacturing's Perpetual Overoptimism
• Housing Starts Plunge 11% to 7-Month Low: Single-Family Down 2.4%, Multi-Family Down 25%; Hidden Strength?

Australia Considers Paperless Passports Based on Fingerprints, Face Recognition, Eye Scans; We Know Who You Are! Posted: 18 Nov 2015 03:18 PM PST Australia, New Zealand Consider Paperless Passports In the wake of fake passports and people smuggling in the EU refugee crisis, here's a potential solution from Australia: The Cloud Could Soon Let Aussies Travel Without a Passport. Australians could soon leave their old paper passports at home if a new proposal endorsed by Foreign Affairs Minister Julie Bishop goes ahead. The digital passport would include identity and biometrics data, according to the outlet, meaning Australians could easily be recognised at the border without showing any documents. "We're in discussions with New Zealand and if we're able to put in place the appropriate requirements, including security, then it's something we'd like to trial and implement," Bishop told the media on Thursday. She also advised new technologies could assist in making passports even more secure. "Australia prides itself on having one of the most secure passports in the world, but by embracing and harnessing new technologies, we might be able to do better," she said. Australians currently have access to ePassports, which have been issued since 2005. An ePassport contains a chip storing information about the passport holder such as their photo, name, sex and passport number. Combined with Australia's SmartGate technology in many local airports, it allows people to enter the county without speaking to a customs officer after a machine compares a live image of the traveller with the one stored on the passport. It's unclear at this point how the government would address concerns about hacking and privacy breaches that are an unfortunate byproduct of any type of cloud storage. Whether the photos or biometrics of Australian citizens could be stored by foreign customs agencies, or even passed onto foreign law enforcement, is also an issue that would have to be addressed. The use of images culled from passports and drivers licenses for purposes beyond their original intention is already a matter of debate in Australia. In September, the government announced it would be spending A$18.5 million (US$13.1 million) on the National Facial Biometric Matching Capability. This program allows agencies and law enforcement around the country to examine millions of photographs of Australians held in existing databases to put "a name to the face" of criminal suspects. We Know Who You Are! Link if video does not play: Scene from Goodfellas. Cloud Passports Coming Lost passports would become a thing of the past under a cloud system. But do you trust the government or the cloud as a safe-keeper of your personal data? Foreign Minister Julie Bishop admitted security standards would have to be met to store personal information in the cloud, but hopes the idea could go global. Absolute Security? Australians are assured of "Absolute Security" reports SBS News. The risk of impersonation via copy of facial features, fingerprints, and eye data seems remote, but a hacker who modified stored data could cause a traveler to be locked out of returning home. Total Tracking Most importantly, the government will know who you are, where you have been, when you were there, and how much you spent, etc., no matter where you are, once all tracking mechanisms are fully in place. Like it or not, it's pretty clear such systems are coming. 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.

Tracking Manufacturing's Perpetual Overoptimism Posted: 18 Nov 2015 11:17 AM PST On Monday, the Fed regional reports kicked off with the Empire State report, a survey of manufacturing conditions in the general New York region. The survey asks manufacturers about activity, new orders, hiring, workweek hours, prices paid, prices received, inventory levels, and overall conditions. For details please see Empire State Manufacturing Negative Fourth Month, Work Week Lowest Since Mid-2011. The survey also asks manufacturers what they think general conditions will look like in six months. Here is the chart presented in the Empire State Survey. Current Business Conditions vs. Expected Conditions Six Month From Now To see if there is any merit in tracking future projections, I downloaded the data, and shifted the projections ahead by six months to plot current conditions vs. what the manufacturers expected to happen. Current Business Conditions vs. Expected Business Conditions (For Now - Made Six Month Ago) Perpetual Overoptimism The perpetual overoptimism is impossible to miss. Here are the readings for 2015. Month/Year Current Conditions Expected Conditions 1/2015 7.78 46.10 2/2015 6.90 46.08 3/2015 -1.19 42.39 4/2015 3.09 46.84 5/2015 -1.98 39.31 6/2015 3.86 48.35 7/2015 -14.92 25.58 8/2015 -14.67 30.72 9/2015 -11.36 37.06 10/2015 -10.74 29.81 In 167 months, nearly 14 years of data, there were only five months (just under 3% of the time) in which current conditions exceeded projections made six months previous! Month/Year Current Conditions Expected Conditions 2/1/2002 13.80 -11.92 6/1/2009 0.28 -3.65 7/1/2009 12.56 -5.55 8/1/2009 20.93 3.53 9/1/2009 33.68 28.27 Recession History The above pattern should not be hard to spot. Overoptimism only dies at or near recession troughs. Useless Survey Projections  It's amazing how much focus is on totally useless "expectations". Rare pessimism seems to mark bottoms, but the rest of the time the look-ahead projections are only good for those in need of a laugh. By the way, I expect another "Peak" line at the top of the above table sometime reasonably soon.   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.

Housing Starts Plunge 11% to 7-Month Low: Single-Family Down 2.4%, Multi-Family Down 25%; Hidden Strength? Posted: 18 Nov 2015 10:33 AM PST The crowing over last month's rise in multi-family starts is over (or at least it should be over). Here's a September recap, followed by this month's surprise to the downside. In September starts jumped 6.5% led by multi-family starts which surged 18.3%.  Single-family starts were up 0.3%. See Housing Starts Surprise to Upside Led by Multi-Family, Permits Surprise to Downside for more details. Housing Starts Plunge 11% to 7-Month Low October wiped away all of September's good news and then some with an extremely weak 1.060 million (SAAR Seasonally Adjusted Annualized Rate) coupled with aggregate lower revisions to September data. 1.060 million starts was far below Econoday Consensus Estimate of 1.162 million SAAR and also well below the lowest estimate of 1.125 million. Pulled down by a big drop in multi-family homes, housing starts fell a steep 11.0 percent in October to a 1.060 million annualized rate that is far below Econoday's low estimate. Starts for multi-family homes, which spiked in September following a springtime jump in permits for this component, fell back 25 percent in the month to a 338,000 annualized rate. Single-family starts fell a much less severe 2.4 percent to 722,000. And there is important good news in this report. Permits are up, rising 4.1 percent to a 1.150 million rate that hits the Econoday consensus. Single-family permits are up 2.4 percent to a 711,000 rate with multi-family up 6.8 percent to 439,000. Housing completions fell back in October, down 6 percent to a 965,000 rate that reflects lower work in the Northeast and Midwest. Homes under construction rose 0.9 percent to a recovery best 938,000 rate and are up a very strong 16.4 percent year-on-year, pointing, despite the slip in starts, to ongoing strength for construction spending, at least for October. But the big drop in starts is definitely a negative for the near-term construction outlook, though the rise in permits points to subsequent strength. Hidden Strength? Bloomberg points out "important good news". Let's sort out the reality. Last month permits were down 5% this month they are up only 4.1%. last month's starts were revised lower from 1.206 million to 1.191 million (a 15,000 -1.24% negative revision) Last month's permits were revised up whereas permits were revised higher, to 1.105 million from 1.103 million, but that is only a positive revision of 2,000 and it's on activity that is not even taking place. Temporary Setback Using similar analysis as Bloomberg, Reuters writer Lucia Mutikani says U.S. Housing Starts Hit Seven-Month Low; Setback Seen as Temporary. U.S. housing starts in October fell to a seven-month low, weighed down by a steep decline in the construction of multi-family homes, but a surge in building permits suggested the housing market remained on solid ground. Rapidly rising household formation, mostly driven by young adults leaving their parental homes and a strengthening labor market, is supporting the housing sector. Economists had forecast housing starts dropping to only a 1.16 million-unit pace last month. Many viewed the weakness in October as being related to land and labor shortages, constraints that have been flagged by home builders. "Structural issues including a shortfall in immigrant labor are inhibiting construction. The supply shortage in the single-family market is not likely to be alleviated any time soon," said David Nice, an economist at Mesirow Financial in Chicago. Labor Shortage? If there is a shortfall in labor, how come it did not affect last month? I suppose one could say last month's surge caused this month's labor shortage, so let's investigate that idea in pictures. Pay particular attention to the third chart below that shows single-family construction below the average in the 1960s! Permits, Thousands of Units Permits, Percent Change From Year Ago Single Family Starts, Thousands of Units Single Family Starts, Percent Change From Year Ago Questions Am I alone in failure to see the "important good news" as well as the alleged "rapidly rising household formation, mostly driven by young adults leaving their parental homes."? Is Mutikani reading Bloomberg on permits, scripting the NAR on housing shortages and household formations, or did she arrive at those conclusions on her own? Women Not Leaving the Nest For another perspective on nesters not leaving the nest, please see Women Not Leaving the Nest in Record Numbers; Marriage and Kids, Who Can Afford 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.

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Is your e-commerce site ready for Black Friday?

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Is your e-commerce site ready for Black Friday? Posted: 17 Nov 2015 06:00 AM PST Black Friday is nearing, but is your website ready for the influx in traffic? Before I get started on how to ensure your site is ready for Black Friday, I wanted to set the scene and tell you what happened last year and what is predicted to happen this year. What happened last year? What's predicted to happen this year? It's not only the shoppers that are fighting for the products; retailers are fighting for sales. Luckily for you I have put together a list of tips that can act as a handy check list to make sure your site is ready for the cyber rush that is Black Friday. Create a dedicated Black Friday landing page Based on last years' findings, the top 20 keywords last year (excluding retailers) were targeted towards phrases including the term 'Black Friday'. Needless to say this emphasises the importance of having a dedicated landing page to feature your Black Friday deals. This is because customers tend to carry out research on big sales events like this prior to the event to see what deals retailers are offering so they know exactly what to buy on the big day. What to include on your black Friday landing page: Date the sale starts Countdown clock & timer Invitation to register for email alerts Collection and delivery methods Returns policy Price promises If your Black Friday page isn't live yet, get it live ASAP and added to your XML sitemap so Google has time to crawl and index the site and get your page ranking in Google. Get your homepage ready Your homepage is the hub for displaying all your offers, and guide visitors around your site to the pages they need. The homepage should feature the key offers and departments so visitors can quickly navigate to the products. You will also need to rethink your navigation and include a temporary link to your Black Friday page so shoppers can easily find your Black Friday page. Prepare your site Page Speed Optimising your page speed time is now more important than ever. Thousands of shoppers will visit websites on one day which is great but can your site handle the sudden influx of traffic? Speed is of the essence; visitors not only want to grab a bargain, they want to shop with a retailer that provides a good experience, meaning they don't want to be waiting for pages to load. There are a number of tools you can use, like Load Impact to check your server capacity, and Google’s PageSpeed tool to check your page load times. Focus on the pages that receive the highest levels of traffic and your key conversion pages as these are the ones likely to be visited. Queuing system Like you would in a shop, it's gracious to notify shoppers if there will be delays, and apologise for the inconvenience. Last year, a number of e-commerce sites displayed notifications to inform shoppers that there was a huge demand and they were going to be placed in a queue. This is a good way to reduce overload, and improve user experience. Optimise for mobile In 2014, 60% of traffic on Black Friday came from mobile devices and this is expected to continue to increase this year. Due to the nature of the sale, visitors need to act quick, therefore your site needs to work seamlessly. Make sure your website can be viewed easily on a mobile device and people can check out quickly on a mobile device. There are a few simple checks you can take to ensure your site is optimised for mobile devices: Optimise your page speed Don't block CSS, Javascript or images Don't use flash; instead use HTML5 Avoid using pop-ups during this busy time Increase the size of your buttons Rectify broken URLs No one wants to land on a broken page at the best of times, more so when they are in a hurry and want to grab a bargain. Broken pages not only provide a bad user experience, they are also a profit eater. Now is a good time to crawl your website using tools like Screaming Frog to identify any broken pages that might contain a product that is on offer. These could be caused by changing a URL but not setting up a redirect, but they are still referenced either on the site or on an external domain. I am not suggesting you fix them all at once, prioritise the pages based on the visits the page receives and if they are a top performing landing page. Once you've identified these you can redirect the page to the suitable replacement and mark them as fixed in Search Console so Google knows they are fixed. A/B test your site Tweaking the language used or changing images or graphics and testing the effect both designs have is a great way to see how your customers respond. Doing this each year will help you understand your audience better and the way they behave on Black Friday. It is important to remember that shoppers browsing and decision making habits will be affected by the fact that there is added pressure on to find the product and check out as quickly as possible before someone else snatches the deal. Know Your Keywords Now is a great tme to reach out to those customers looking for special buys on Christmas gifts and Christmas related merchandise like furniture and appliances to make their holiday season special. It's useful to do some keyword research for some of your main landing pages to drive seasonal traffic. Shoppers might be searching for seasonal and discount related terms like Christmas gifts, black Friday deals, special discounts, sale – those kind of terms. Making small tweaks to the wording and keywords you are targeting on your best selling product pages can have a good impact on your rankings and help to increase click through rate. Once you have confirmed the keywords you should be targeting it's time to review the current meta data and optimise your meta titles and descriptions so they are geared towards the seasonal and special offer terms. Speed Up Your Checkout Process Time is of the essence; visitors need to add items to their basket and check out quickly before these items go. The registration process needs to be drawn back for this day so shoppers can purchase quickly. If you haven't already done so, consider offering the option to check out as a guest to help speed up the checkout process and reduce cart abandonment rates. Keep Features Simple and Call to Actions Clear Use simple and short language that will catch the attention of those customers that scan the page for words that appeal to them. Phrases like ‘grab a bargain now’, and ‘hurry – limited stock’, are great to catch the eyes of shoppers and entice them into making a quick decision. People will be in a hurry, so it is great opportunity to take advantage of this and guide an undecided visitor into making a purchase. Another great way to do this is to display the stock levels on the product pages so visitors know how many products are left. If they don't buy the item now they might miss the opportunity. Create Interactive Graphics Create eye catching images that get your offers noticed. You don't need to be a designer to creative simple but effective banners. These graphics can be created for free on tools like Canva, which allows you to quickly create a template, or use one provided. You can use these graphics to build anticipation before Black Friday to get customers excited and tease them with what's to come. There are four key touch points that you can create graphics for; I have listed these below: Prior to Black Friday to give them a peek at what will be on offer The day to announce that the sale has started During Black Friday to promote your products that are on offer After the event to update people on returns policies and delivery dates Raise Awareness and Spread the Word There are various journalists and bloggers that will want to know about the deals you have to offer so they can share them with their audience. Have key information to hand with high quality imagery. Optimise Images Optimising your images is just as important as your landing pages. Some users may look for products through Google Images so you are missing out on traffic if your alt tags aren't optimised to reflect Black Friday related terms. Create Abandoned Cart Emails Shopping on Black Friday tends to be a little crazy and as a result visitors tend to be frantic in their purchase behaviour. A study last year revealed that the average cart abandonment rate in 2014 on Black Friday was a whopping 65%. To help reduce the rate you can send abandoned cart emails that gently remind the visitor that they have left items in their basket that are waiting for them when they are ready to purchase. Combining great copy with images of the product will help to rekindle the positive emotions that the shopper felt when they first looked at the product. Ramp Up Your PPC Campaigns PPC is a great way to draw attention to your offers and create a sense of urgency. Preparation is key when it comes to getting your ads ready. There are a number of steps and tweaks you can make to get ready. Increase budgets and bids Tailor campaigns for mobile users Re-write ads so they contain 'Black Friday' phrases Schedule campaigns at your busiest times Dedicated PPC landing pages Update your ad extensions Create a remarking campaign For more information on how to get your PPC account ready for Black Friday check out my colleague Lizzie's blog post for all the top tips. The post Is your e-commerce site ready for Black Friday? appeared first on White.net.

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Seth's Blog : Saying vs. doing

Saying vs. doing

Does this group have a loyalty oath?

Brittle organizations are focused on which end of the egg you open. Are you wearing the team jersey the right way, saying the incantations each time, saluting properly...

Resilient organizations are more focused on what you produce, and why.

Petty dictators care a lot about words, about appearances, about whether everyone is genuflecting in precisely the same way.

The problem with words is that they easily lose their meaning. Say something often enough and it becomes a tic, not an expression of how you actually feel. Not only that, but words rarely change things. Actions do.

It turns out that it's a lot easier to sign up for a tribe that doesn't ask you to think, or take responsibility for your actions. But, in the long run, those are the very things that lead to the changes we seek.

"Use your best judgment, care about your impact, do work that matters..." are significantly more powerful instructions than, "Do it this way. Say it this way. Behave the way I told you to."

       

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