joi, 3 decembrie 2015

Seth's Blog : Just passing through



Just passing through

Older guy walks into the service area on the parkway and asks one of the staff, "do you have a pay phone? My car broke down and I need to call my daughter." 

The staff person, killing time by checking his cell phone, is confused. He's not sure what a pay phone is, then he figures it out, and says, "no," before going back to his phone.

It never occurs to him to hand the phone to the man so he can make a call.

Part of it is the boss's fault. He's not paying much attention to hiring or training or incentives. He's paying as little as he can, and turnover is high. After all, every one of his customers is just passing through, no need to care.

And that message comes through to the staff, loud and clear.

Of course, at one level, all of us are just passing through.

From a more practical, business level, the ease of digital connection means that it's more and more unlikely that you can be uncaring or mistreat people and not be noticed. 

But most of all, life is better when we act like we might see someone again soon, isn't it?

       

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miercuri, 2 decembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Obamacare "Observations" and the Elusive Search for Improvements; Seniors Beware!

Posted: 02 Dec 2015 04:11 PM PST

Obamacare "Observations"

Team Obama brags that the readmission rate of patients to hospitals has been dropping. It has. And that was one of the goals of Obamacare. 

Are congratulations in order?

Not exactly. Medicare enacts a penalty on hospitals that do not meet readmission goals. To meet the new goals, hospitals readmit patients, but they don't label it "readmission", they label it "observation".

Elusive Search for Improvements

The Wall Street Journal explains how Medicare Rules Reshape Hospital Admissions.
At Banner Health's general hospitals, the rate of heart-failure patients who wind up admitted to the hospital again soon after leaving has been dropping significantly, according to a Wall Street Journal analysis of Medicare billing data. So has the readmission rate for patients treated for pneumonia and three other serious conditions.

The Obama administration has cast such results as a triumph of the Affordable Care Act, which penalizes hospitals that have too many readmissions within 30 days of an inpatient stay. The goal is to encourage better follow-up treatment so patients can stay out of the hospital—keeping them in better health and whittling down the cost to the government.

But this seemingly good news isn't as encouraging as it appears. At Banner, based in Phoenix, and at hospitals around the country, more patients are entering or re-entering hospitals under something called "observation status"—a category that keeps them out of the readmission tallies.

Patients on observation status can remain in the hospital for days, and typically receive care that is indistinguishable from inpatient stays, experts say. But under Medicare billing rules, the stays are considered outpatient visits, and as such, don't trigger penalties under the health law.

The Journal's analysis of Medicare billing data shows that increases in observation stays can skew the readmission numbers, letting hospitals avoid penalties even if patients continue to have complications and return for repeat visits.
Readmissions vs. Observations



The above chart shows the top 319 hospitals compared to all the hospitals.

For the top 319 hospitals and all hospitals in aggregate, readmission rates fell while "observation" rates rose.

Who Pays for Obamacare "Observations"?

Medicare does not pay for observations. If patients don't spend three days under formal inpatient admission in the hospital, the federal program won't pay for a subsequent nursing-home stay. So patients pay out of pocket, and it can be very costly.

Shocking?
"We were shocked," said Bob Wellentin, 87 years old, a retired teacher in Puyallup, Wash., who said he had never heard of observation stays before his wife spent four days in a hospital after a fall in June 2014. She recuperated for more than two months in a nursing home, costing the couple more than $20,000, according to billing records and receipts. To pay the bills, the couple liquidated a life-insurance policy and cashed in certificates of deposit set aside to pay for their burials.
Seniors Beware!

Please note that the Wellentin case does not even appear to be a readmission, but rather an initial stay after a fall!

That increases the need for awareness. Make sure you are being "admitted, not observed". The difference can set you back $20,000 or more.

Shocking or not, I strongly suspect we still have not seen the end of these types of "improvement" revelations by the Obama administration.

Mike "Mish" Shedlock

Yellen Yap: Dollar Briefly Takes Out March High, Surging to Level Last Seen March 2003; For What It's Worth

Posted: 02 Dec 2015 12:37 PM PST

As Fed Chair Janet Yellen yapped about the strength of the US economy in a speech to the Economic Club of Washington, the US dollar index briefly surged above a level set in March, to a high last seen in April of 2003.

US Dollar Weekly



As noted by the last red candle, the US dollar index is now down for the week. The last time the dollar touched as high as it did today was in March of 2003.

US Dollar Monthly



Speech Highlights
Thank you to the Economic Club of Washington for inviting me to speak to you today. I would like to offer my assessment of the U.S. economy, nearly six and half years after the beginning of the current economic expansion, and my view of the economic outlook.

The U.S. economy has recovered substantially since the Great Recession. The unemployment rate, which peaked at 10 percent in October 2009, declined to 5 percent in October of this year. At that level, the unemployment rate is near the median of FOMC participants' most recent estimates of its longer-run normal level. The economy has created about 13 million jobs since the low point for employment in early 2010, and total nonfarm payrolls are now almost 4-1/2 million higher than just prior to the recession.

I anticipate continued economic growth at a moderate pace that will be sufficient to generate additional increases in employment, further reductions in the remaining margins of labor market slack, and a rise in inflation to our 2 percent objective. I expect that the fundamental factors supporting domestic spending that I have enumerated today will continue to do so, while the drag from some of the factors that have been weighing on economic growth should begin to lessen next year. Although the economic outlook, as always, is uncertain, I currently see the risks to the outlook for economic activity and the labor market as very close to balanced.

Turning to the factors that have been holding down growth, as I already noted, the higher foreign exchange value of the dollar, as well as weak growth in some foreign economies, has restrained the demand for U.S. exports over the past year. In addition, lower crude oil prices have reduced activity in the domestic oil sector. I anticipate that the drag on U.S. economic growth from these factors will diminish in the next couple of years as the global economy improves and the adjustment to prior declines in oil prices is completed.

Although developments in foreign economies still pose risks to U.S. economic growth that we are monitoring, these downside risks from abroad have lessened since late summer. Among emerging market economies, recent data support the view that the slowdown in the Chinese economy, which has received considerable attention, will likely continue to be modest and gradual. China has taken actions to stimulate its economy this year and could do more if necessary. A number of other emerging market economies have eased monetary and fiscal policy this year, and economic activity in these economies has improved of late. Accommodative monetary policy is also supporting economic growth in the advanced economies. A pickup in demand in many advanced economies and a stabilization in commodity prices should, in turn, boost the growth prospects of emerging market economies.

A final positive development for the outlook that I will mention relates to fiscal policy. This year the effect of federal fiscal policy on real GDP growth has been roughly neutral, in contrast to earlier years in which the expiration of stimulus programs and fiscal policy actions to reduce the federal budget deficit created significant drags on growth.

Regarding U.S. inflation, I anticipate that the drag from the large declines in prices for crude oil and imports over the past year and a half will diminish next year. With less downward pressure on inflation from these factors and some upward pressure from a further tightening in U.S. labor and product markets, I expect inflation to move up to the FOMC's 2 percent objective over the next few years. Of course, inflation expectations play an important role in the inflation process, and my forecast of a return to our 2 percent objective over the medium term relies on a judgment that longer-term inflation expectations remain reasonably well anchored. In this regard, recent measures from the Survey of Professional Forecasters, the Blue Chip Economic Indicators, and the Survey of Primary Dealers have continued to be generally stable. The measure of longer-term inflation expectations from the University of Michigan Surveys of Consumers, in contrast, has lately edged below its typical range in recent years. However, this measure often seems to respond modestly, though temporarily, to large changes in actual inflation, and the very low readings on headline inflation over the past year may help explain some of the recent decline in the Michigan measure.

Let me now turn to the implications of the economic outlook for monetary policy.

In the policy statement issued after its October meeting, the FOMC reaffirmed its judgment that it would be appropriate to increase the target range for the federal funds rate when we had seen some further improvement in the labor market and were reasonably confident that inflation would move back to the Committee's 2 percent objective over the medium term. That initial rate increase would reflect the Committee's judgment, based on a range of indicators, that the economy would continue to grow at a pace sufficient to generate further labor market improvement and a return of inflation to 2 percent, even after the reduction in policy accommodation. As I have already noted, I currently judge that U.S. economic growth is likely to be sufficient over the next year or two to result in further improvement in the labor market. Ongoing gains in the labor market, coupled with my judgment that longer-term inflation expectations remain reasonably well anchored, serve to bolster my confidence in a return of inflation to 2 percent as the disinflationary effects of declines in energy and import prices wane.

Committee participants recognize that the future course of the economy is uncertain, and we take account of both the upside and downside risks around our projections when judging the appropriate stance of monetary policy. In particular, recent monetary policy decisions have reflected our recognition that, with the federal funds rate near zero, we can respond more readily to upside surprises to inflation, economic growth, and employment than to downside shocks. This asymmetry suggests that it is appropriate to be more cautious in raising our target for the federal funds rate than would be the case if short-term nominal interest rates were appreciably above zero. Reflecting these concerns, we have maintained our current policy stance even as the labor market has improved appreciably.

However, we must also take into account the well-documented lags in the effects of monetary policy. Were the FOMC to delay the start of policy normalization for too long, we would likely end up having to tighten policy relatively abruptly to keep the economy from significantly overshooting both of our goals. Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into recession. Moreover, holding the federal funds rate at its current level for too long could also encourage excessive risk-taking and thus undermine financial stability.

It is thereby important to emphasize that the actual path of monetary policy will depend on how incoming data affect the evolution of the economic outlook. Stronger growth or a more rapid increase in inflation than we currently anticipate would suggest that the neutral federal funds rate is rising more quickly than expected, making it appropriate to raise the federal funds rate more quickly as well; conversely, if the economy disappoints, the federal funds rate would likely rise more slowly. Given the persistent shortfall in inflation from our 2 percent objective, the Committee will, of course, carefully monitor actual progress toward our inflation goal as we make decisions over time on the appropriate path for the federal funds rate.
For What It's Worth

In the "For What It's Worth" category, that's what Yellen believes.

Q: What's it worth? 
A: Absolutely nothing.

A seven-year recovery is quite long by any reasonable measurement stick. Inflation targets are very damaging. In striving to hit those targets the Fed blew huge asset bubbles once again, while bragging about being diligent about "excessive risk taking".

The number of jobs did indeed take out the 2007 high, not because of Fed policy, but primarily because of population growth.

US fiscal policy and deficit spending is a wreck waiting to happen. Inflation expectations are meaningless. And this recovery is the weakest on record. 2% growth has been the norm.

Finally, the idea that a bunch of bureaucrats can divine where interest rates should be is absurd. Bubbles of increasing amplitude over time, for which the Fed has never apologized, are proof enough.

Mike "Mish" Shedlock

Triumph of Trumpism and LePenism; Waiting for a Volunteer Mouse

Posted: 02 Dec 2015 11:10 AM PST

Waiting for a Volunteer Mouse

Recall the tale of the mouse who had a brilliant idea to tie a bell on a the cat's tail so they would know when the cat was around? The mouse who hatched the plan called for volunteers. No one stepped up.

And so it is with the Republican party. Everyone sees the need to take on a cat named Trump, but no volunteers can be found.

Cat and Mouse Game

The New York Times phrases the cat and mouse game this way: Wary of Donald Trump, G.O.P. Leaders Are Caught in a Standoff.
For months, much of the Republican Party's establishment has been uneasy about the rise of Donald J. Trump, concerned that he was overwhelming the presidential primary contest and encouraging other candidates to mimic his incendiary speech. Now, though, irritation is giving way to panic as it becomes increasingly plausible that Mr. Trump could be the party's standard-bearer and imperil the careers of other Republicans.
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Many leading Republican officials, strategists and donors now say they fear that Mr. Trump's nomination would lead to an electoral wipeout, a sweeping defeat that could undo some of the gains Republicans have made in recent congressional, state and local elections. But in a party that lacks a true leader or anything in the way of consensus — and with the combative Mr. Trump certain to scorch anyone who takes him on — a fierce dispute has arisen about what can be done to stop his candidacy and whether anyone should even try.

That has led to a standoff of sorts: Almost everyone in the party's upper echelons agrees something must be done, and almost no one is willing to do it.

"You have to deal with Trump berating you every day of the week," explained a strategist briefed on the thinking of both groups [hedge fund billionaire Paul Singer and another led by the industrialists Charles G. and David H. Koch].

"I think it would play into his hands and only validate him," said Senator Lamar Alexander, Republican of Tennessee. "A 'Stop Trump' effort wouldn't work, and it might help him."
Triumph of Trumpism

Financial Times writer Edwards Luce proclaims Trumpism has Triumphed, Whoever Wins the Republican Nomination.
Sinclair Lewis, the American novelist, is supposed to have said: "When fascism comes to America it will be wrapped in the flag and carrying the cross". It has long been easy — far too easy — to write off Donald Trump as a self-promoting celebrity with little chance of winning the White House. His chances remain low (Nate Silver, the guru of election data, puts them at 10 per cent, which is nevertheless five times more than when he started). But our lens is still too rosy. Whether Mr Trump defies the odds, or eventually fizzles out, is beside the point. The outrageousness of his success has paved the way for others to try. Mr Trump's invective has disrupted the character of US politics. It will be hard to change.

For proof of that, look no further than Mr Trump's "moderate" rivals in the Republican race. Instead of offering an alternative, mainstream candidates are moving ever closer towards Mr Trump's nativism. Jeb Bush, the original establishment favourite, now believes the US should only accept Syrian refugees if they are Christian. This year Mr Bush referred to children of undocumented aliens as "anchor babies" — so named because the illegal immigrants allegedly come to the US to ensure their unborn will have citizenship. Contrast this to what he said in February before Mr Trump entered the race: "We should welcome all immigrants," Mr Bush told the Chicago Council on Global Affairs. "[As Americans] we come in 34 different flavours."

Chris Christie, the ultimate moderate, since he governs the Democratic state of New Jersey, believes the US should accept no Syrian refugees at all regardless of religious background, even if they are "three-year-old orphans".

Meanwhile, John Kasich, the governor of Ohio, and ultimate insider, last week said that the US should set up a federal agency to promote Judeo-Christian values. Until Mr Trump, most Republicans rejected the "clash of civilisations" view of the world. Now it is normal.

With rivals such as this, does Mr Trump need friends? It will become ever harder for the likes of Messrs Bush, Christie and Kasich to disown what they have said. All three have tried to qualify their various Trumpist lapses. But such straying is occurring more often and few notice their qualifications. Moreover, their self-editing reinforces Mr Trump's contention that the Republican establishment is run by a bunch of mealy-mouths who lack conviction.

One lesson of Mr Trump's rise is that voters reward clarity. Having already muddied the waters, moderates are in little position to bring Mr Trump down when they think he goes too far. Last week, Mr Trump said there should be a database of Muslim Americans. He even hinted that they should carry identity cards. Few paid attention to his rivals' tut tutting. The Republican establishment is paralysed with fear. Appeasing him makes him worse. ... His brand of politics has already been validated.
Triumph of LePenism

In France, voters on the left and center-right think Marine Le Pen's National Front (FN) party would be a disaster for the country. FN has never won a regional election. Care to guess who is leading the polls?

Breitbart reports Marine Le Pen And Front National Surge In French Regional Elections.
Ms. Le Pen is now the overwhelming favourite to capture north-western France and the Marseille-Nice region in elections set for the next two weekends, according to polls published yesterday. Such is the backing for the party that it might harvest as many votes as its conservative and centrist rivals combined.

The FN is also running neck-and-neck with Nicolas Sarkozy's centre-right party, Les Républicains, in the Burgundy-Franche-Comté region in eastern France.

A series of regional polls by BVA on Sunday, and published by the Independent, showed the FN gaining between 4 and 7 per cent compared to similar polls before the terrorist assault on Paris.

The FN has never won a regional government before. The regional elections are the first political test for French President Francois Hollande since the Nov. 13 terrorist attacks in Paris that killed 130 people. With the country reeling from that violence and grappling with border controls, FN candidates are showing "a significant increase" in support across the country, BVA said.

The FN would get 28 per cent of votes in the first round of elections starting Saturday, the same as a combination of parties including the Republicans and the centrist MoDem, according to an Ifop opinion poll published in Le Journal du Dimanche newspaper.

Her opponents try and define her message as "racist" and "xenophobic" when she says: "The absolute rejection of Islamic fundamentalism must be proclaimed loudly and clearly" but voters are listening in ever increasing numbers.

Ms. Le Pen would become a representative for the North Pas de Calais-Picardie region if the latest polls prove correct. Her niece, Marion Maréchal-Le Pen, is the party's candidate to lead the Provence-Côte d'Azur region.
Le Pen Blasts EU

RT reports Marine Le Pen blasts EU for 'Blind Relationship with Islamist States'
Marine Le Pen, the leader of the French National Front party, has slammed the EU's handling of foreign and migrant policy, saying that current problems in France stem from a lack of foresight in geopolitics and 'blind conformity in relations with Islamist states.'

Le Pen said that problems in France are rooted in the country's "crazy immigration policy, made without discernment, and with the abandoning of the principle of assimilation."

Le Pen went on to remark that "clandestine people and those who spread hatred should be systematically expelled to their countries of origin."

"The government and its president are confined to symbols. They don't fear a paradox when they call people to wave the national flag, to invoke the nation but always appeal to post-national logic, meaning anti-national from Brussels."

Le Pen is currently on trial in Lyons facing hate speech charges for comments made at a rally in 2010, when she compared Muslims praying in the streets to the Nazi occupation. She has denied any wrongdoing, but could face up to a year in prison if found guilty of inciting racial hatred.
Middle Ground Anywhere?

Voters in the US have to choose between the likes of Clinton (who will carry on Obama's open door refugee policy), and someone like Donald Trump, or even worse yet, John Kasich, the governor of Ohio, who said the US should set up a federal agency to promote Judeo-Christian values.

In Germany, Merkel's open door policy has led to "Peak Merkel" and increasing support for the Euroskeptic, anti-immigration AfD party. Even members of Merkel's party are fed up with her stance.

In France, the established parties are waiting for someone to take on Le Pen, while increasingly promoting anti-immigration policies she supports.

Not a mouse can be found in the US or in France, willing to tie a warning bell on the lead cat's tail. Voters are caught in the middle, having to choose between extreme candidates on every issue from abortion to immigration to war-mongering to torture.

Trump's increasingly extreme message, coupled with his announcement he supports totally discredited torture procedures such as waterboarding, makes Trump hard to take? But what is the alternative?

The Choice


And that's just one issue.

Do you want Warmonger Clinton on the left? Warmongers Cruz, Rubio, or Graham, on the right?

Abortion with no restrictions? No abortions at all?

Extremism Sells

In retrospect, it's not so much a triumph of Trumpism, but rather a triumph of extremism on nearly every issue, on both sides of the aisle. There is not much of a middle ground on anything. Immigration just happens to be the hot button at the moment.

None of the Above

My preferred choice would be a Libertarian like Ron Paul. But a middle-of-the-road candidate with moderate views on tax hikes, spending cuts, welfare, military spending, abortion, etc., would likely win a presidential election by a landslide except for one not-so-small problem: only extreme candidates can get nominated.

Mike "Mish" Shedlock

Damn Cool Pics

Damn Cool Pics


Things You Can Say To Completely Ruin A First Date

Posted: 02 Dec 2015 01:01 PM PST

If you're trying to make sure that you don't get a second date just say any of these phrases out loud. They should do the trick.


















Seth's Blog : Running out of room (length vs. density)



Running out of room (length vs. density)

A reporter recently hacked an interview he did with me, turning 17 emailed sentences into two and changing both the message and the way it was delivered.

That used to make sense, when papers involved column inches, but it was for an online article.

Why make things shorter than necessary if you're not paying for paper?

Why make make a podcast or a talk 18 minutes long... the internet isn't going to run out of reels of tape.

As we've moved from books to posts to tweets to thumbs up, we keep making messages shorter. In a world with infinite choice, where there's always something better and more urgent a click away, it's tempting to go for shorter.

In fact, if you seek to make a difference (as opposed to gather a temporary crowd), shorter isn't what's important: Dense is.

Density is difficult to create. It's about boiling out all the surplus, getting to the heart of it, creating impact. Too much and you're boring. Not enough and you're boring.

The formula is simple to describe: make it compelling, then deliver impact. Repeat. Your speech can be two hours long if you can keep this up.

And if you can't, make it shorter!

Long isn't the problem. Boring is.

If someone cares, they'll stick around. If they don't care, they don't matter to you anyway.

       

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marți, 1 decembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Retaliation and Claims 101: Beneficiaries and the Failure to Think Ahead

Posted: 01 Dec 2015 07:09 PM PST

Claims and counterclaims are the order of the day between Turkey and Russia. The US and Syria stand not side-by-side, but rather on each side, most of the time, but not all of the time.

Background for this post is the deliberate shooting down by Turkey, a Russian aircraft attacking ISIS and alleged moderate rebels in Syria.

At most, Russian aircraft were over Turkey for a matter of seconds. But Russia claims its aircraft were not over Turkey at all.

Then came the unbelievable lie Turkey Says It Had Not Recognized the Aircraft as Russian When it Shot it Down.

Putin angrily dismissed Turkey's claim as "impossible" and said Russia had provided the US with information on the time and location of its sorties.

The Claim

Russia claims Turkey shot down plane to protect oil trade with ISIS.

The Response

Turkish president Recep Tayyip Erdogan responded He Will Resign if Putin Can Prove the Claim.

The Counter-Challenge

Next, Erdogan Challenged Putin to Resign if he Can't Prove Turkey Buys Oil from ISIS.

Alleged Proof

Meanwhile, RT claims Russia has 'More Proof' ISIS Oil Routed Through Turkey.

The article did not adequately detail the alleged proof.

Question of Semantics

Without a doubt, ISIS oil is flowing through Turkey. But there's a huge semantics question in play.

Does proof require the Turkish administration bought ISIS oil? Or is it sufficient that some smugglers in Turkey do just that?

The Need to Think Ahead

Who is the winner here?

In Turkey was protecting ISIL oil Smuggling; Russia urges Assad-Kurdish Alliance, Yuan Cole at Informed Comment offers an option that I largely agree with, but he did miss one significant aspect.
Putin has a much more effective way of bringing the pain to Erdogan.

The PYD and its paramilitary arm, the YPG (People's Protection Unites) are considered by Turkey to be branches of the separatist Kurdish terrorist organization the PKK (Kurdistan Workers Party), but the US and Russia do not agree, and have been willing to cooperate with the leftist Kurds in Syria against Daesh (ISIS, ISIL).

Putin is attempting to shore up the government of Bashar al-Assad, while Turkey hopes to see it overthrown by Muslim fundamentalist rebels. Putin is angling for an alliance of the leftist Kurds with the Baath regime against Daesh Radikal notes (BBC Mon. trans.):

Nothing would anger Turkey's government more than for Russia to give military support to the Syrian Kurds in their quest to establish a connected territory, "Rojava," linking the three major Kurdish cantons in northern Syria.

Semih Idiz of the Cumhuriyet ("the Republic), a left of center Turkish paper, revealed (BBC Monitoring trans.) that in response to the shoot down of the Russian fighter jet:

"The Russian General Staff Chief has also stated that they are going to provide aerial escorts to the jets carrying out the bombing campaign against the Turkmens, which they are going to step up substantially, "in order to protect them from behind."

Idiz, in an article on how al-Assad is the main beneficiary of the shootdown, concluded:

"When we look at the political sphere, Moscow is going to try to render Turkey as ineffective as possible in the Syrian negotiations. It is useful to recall that the United States and Russia are spearheading the negotiations in question. And it is also useful to keep in mind that Turkey, because of a series of strategic mistakes, is one of the weakest links of the Syrian table. Now if you were [Syrian President Bashar] Al-Asad, would you not be rejoicing on account of Turkey's having shot down the Russian plane?"
The Beneficiaries

The primary beneficiary of this mess is neither the US nor Turkey. Here they are.

  1. The Kurds
  2. Syrian President Bashar Al-Asad
  3. Russia - for a guaranteed place at the table
  4. Iran - who backs Al-Asad

The biggest loser is Turkey, arguably followed by the US for its inane backing of alleged moderate Al Qaeda rebels.

Of course, the US goal of overthrowing Al-Asad without having any reasonable replacement is so ridiculous, the US is in reality an inadvertent winner.

Who Controls What?



The above map ties everything together nicely. It's from the Financial Times article US Urges Turkey to Seal Border with Syria

Sealing the border between Turkey and Syria and also between Turkey and Greece is exactly what I have been calling for.

Turkey may be unlikely to cooperate because it would rather deal with ISIS than the despised Kurds who may seek their own territory in Turkey.

Warmongers Win

There is one more winner that needs to be addressed: US warmongers.

In response to the shootdown of the Russian aircraft by Turkey, Russia Arms Fighter-Bombers in Syria with Air-to-Air Missiles.
Russia announced Monday that a class of its fighter-bombers in Syria has been armed for the first time with air-to-air missiles for "defensive purposes" in a move that posed a potential risk to U.S. and coalition warplanes flying missions against the Islamic State.

The provocative action followed warnings from Russian President Vladimir Putin that Turkey would pay a price for shooting down last week a Russian Su-24 Fencer frontline bomber in which a Russian pilot was killed and a Russian marine died in a rescue attempt near the Turkish-Syrian border.

The U.S. has six air superiority F-16C fighters at the Incirlik airbase in Turkey that could counter the Russians, but those aircraft have seen limited duty, Pentagon officials said.

The F-16Cs were originally sent to Incirlik in October with the intention of helping the Turks guard their airspace, but the F-16s "have not to date flown any CAPs (Combat Air Patrols)," said Navy Capt. Jeff Davis, a Pentagon spokesman.
Tension

The Mideast tension between a multitude of players increases the likelihood of an "accident" or an "accidentally on purpose" type of incident between Russian and Turkey or Russia and the US.

Warmongers would cheer such events.

Finally, I offer an opinion that Turkey did not shoot down the Russian jet over oil per se, but rather because Turkey would rather deal with ISIS than the Kurds.

Chancellor Merkel is downright idiotic to be supporting Turkey in this set of circumstances, but here we are.

In this aspect, Turkey is a big winner and the EU a big loser if Turkey gets the German/EU concessions it seeks. 

Mike "Mish" Shedlock

GDPNow Forecast for 4th Quarter Dips to 1.4% Following Weak ISM and Strong Construction Reports

Posted: 01 Dec 2015 11:27 AM PST

Construction Spending Hits 8-Year High

US News reports US Construction Spending Jumps to 8-Year High, Lifted by Home Building, Federal Government.
The construction of single-family homes and apartments climbed 1 percent in October, also reaching their highest level since December 2007. Manufacturers boosted their construction spending by 3 percent. And federal government building soared 19.2 percent, the biggest increase since October 2006.

Americans are staying in rental apartments for longer, rather than buying a home. That spurred a nearly 28 percent jump in apartment and condo construction in October from a year earlier. Nearly a third of buildings completed so far this year were apartments and condos, compared to just 27 percent before the recession began in late 2007.

Public construction of schools, highways and other infrastructure rose 1.4 percent in October to its highest level in five years. It has risen 6.6 percent in the last 12 months
Construction Spending Beats Estimates

The consensus estimate for construction spending was +0.6% but the actual month-over-month reading was +1.0%.
Construction is one of the highlights of the 2015 economy with spending up a solid 1.0 percent in October for the best rate since May. Despite mixed signals from the housing sector, spending on residential construction is very solid, up 1.0 percent in October for a seventh straight gain and all of them convincing. Year-on-year, residential construction is up 16.6 percent vs 13.0 percent for total spending.

The monthly gain in the residential component is led by the key subcomponent of single-family homes, up a very strong 1.6 percent for a seventh straight gain. New multi-family homes, which have been leading the residential component all year, rose 1.4 percent. And these gains are not tied to remodeling which dipped slightly in the month.

Private non-residential spending rose 0.6 percent in October with the year-on-year rate at plus 15.3 percent. Strength here is led by outsized gains for manufacturing that are offset in part by weakness in the power and especially the commercial subcomponents.

Public spending is holding down totals with educational construction unchanged in the month though Federal spending did jump, up 19.2 percent for the largest gain in nine years that takes the year-on-year rate to plus 10.7 percent. This is the best rate among the public subcomponents. The highway & street subcomponent was also very strong in the month, up 1.1 percent for what is still a comparatively soft year-on-year gain of 6.0 percent.

The housing data in this report are not only favorable but the pop higher in related permits, in data previously released with the housing starts & permits report, hints at further gains ahead. This report points to a solid fourth-quarter contribution from construction.
Construction Contribution to GDP

As noted earlier today, this morning's ISM report was a disaster. (See Manufacturing ISM Contracts; Lowest Reading Since June 2009; Glimmers of Hope Extinguished). But the construction report looked good.

Like Bloomberg, I would have expected construction to add to GDP, in isolation.

Combined with ISM spending, I would have expected the net result of today's reports to be an overall small minus.

Actual GDPNow Forecast Results were dramatically different.

GDPNow Forecast Sinks 0.4 Percentage Points to 1.4 Percent



Construction Subtracts From GDP vs. Prior Estimate



Compared to the November 27 report that included new home sales, construction appears to have subtracted approximately 0.09 percentage points and ISM roughly another 0.31 percentage points. Other reports in between may have contributed but those should be the main factors.

I have a question into the Atlanta Fed regarding construction contribution to GDP.

Mike "Mish" Shedlock

Manufacturing ISM Contracts; Lowest Reading Since June 2009; Glimmers of Hope Extinguished

Posted: 01 Dec 2015 09:24 AM PST

After flirting with contraction for three months, the Manufacturing ISM fell into negative territory with a 48.6 reading, below the lowest Econoday estimate of 49.7. The Econoday Consensus guess was 50.5, an improvement over the October reading of 50.1
After skirting right at the breakeven 50 line since September, ISM's manufacturing index broke below in November to 48.6 which is more than 1 point below Econoday's low-end estimate for the lowest reading since June 2009. The decline includes a significant dip for new orders which are down 4.0 points to 48.9 and the lowest reading since August 2012. At 43.0, backlog orders are in a six-month streak of contraction. With orders down, ISM's sample cut back on production, down nearly 4 points to 49.2, and cut back on inventories, down 3.5 points to 43.0. Employment firmed but remains soft at 51.3.

A convincing detail in the report is the breadth of weakness with only five of 18 industries reporting composite growth in the month. Transportation equipment, getting a boost no doubt from aircraft and motor vehicles, is among those in the plus column while the negative column includes petroleum as well as a number of capital goods industries including machinery, primary metals, and fabricated metals. Weakness in these industries points to weakness in business expectations.

Exports have been the Achilles heal [heel] of the factory sector all year. New export orders in this report held steady at 47.5 for the sixth straight sub-50 reading. Another weak detail is a second month of contraction for import orders (49.0) which are suffering their worst run in four years. Prices paid remains in deep contraction at 35.5.
Glimmers of Hope Extinguished

The ISM index came in at 50.2 last month, vs. a consensus estimate of 50.0, providing economists with glimmers of hope.

Economists then did what they normally do, which is take the prior reading and expect the next month to be better, explaining this month's consensus guess of 50.5.

ISM 2007-2015



That was the lowest reading since June 2009. But don't worry, there's no recession warning here, just glimmers of hope.

And with that hope, let's further dive into the numbers straight from the ISM Report.

IndexNovOctPP ChangeDirectionRate of ChangeTrend in Months
PMI®48.650.1-1.5ContractingFrom Growing1
New Orders48.952.9-4.0ContractingFrom Growing1
Production49.252.9-3.7ContractingFrom Growing1
Employment51.347.6+3.7GrowingFrom Contracting1
Supplier Deliveries50.650.4+0.2SlowingFaster4
Inventories43.046.5-3.5ContractingFaster5
Customers' Inventories50.551.0-0.5Too HighSlower4
Prices35.539.0-3.5DecreasingFaster13
Backlog of Orders43.042.5+0.5ContractingSlower6
Exports47.547.5+0.0ContractingSame6
Imports49.047.0+2.0ContractingSlower2

Key Points

  • New orders, production, PMI Index in contraction
  • Backlog of orders in contraction 6 months
  • Exports in contraction 6 months
  • Prices in contraction 13 months

There's nothing in the ISM report to make the Fed want to hike, but the Fed will do what they want.

Mike "Mish" Shedlock