Central Perk

sâmbătă, 26 decembrie 2015

Seth's Blog : Very good results (and an alternative)

Very good results (and an alternative)

Hard work, diligence and focus often lead to very good results. These are the organizations and individuals that consistently show up and work toward their goals.

But exceptional results, hyper-growth and remarkable products and services rarely come from the path that leads to very good results. These are non-linear events, and they don't come from linear effort or linear skill.

It's tempting to adopt the grind-it-out mindset, because that's something we know how to do, it's a method that we can model, it's a sort of work ethic.

But by itself, the grind-it-out mindset isn't going to get us a leap. It's not going to lead to a line out the door or 15% monthly growth. That only comes from giving up.

We need to give up some of the truths that are the foundation of our work, or give up on some of the people we work with, or give up on the conventional wisdom. Mostly, we need to give up on getting approval from our peers.

Of course, we still have to keep showing up and grinding out. But we have to do it with a different rhythm, in service of a different outcome.

More hours in the practice room doesn't turn a pretty good musician into a jazz pioneer. More hours in front of the computer doesn't make your writing breathtaking.

Sure, the work might be just as hard, but it's work of a different sort.

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vineri, 25 decembrie 2015

Mish's Global Economic Trend Analysis

Fed a Creature of Financial Markets; The Draghi PUT; Global Crisis Coming Up

Posted: 25 Dec 2015 12:20 PM PST

Creature of Financial Markets

Stephen Roach, former Chairman of Morgan Stanley Asia and the firm's chief economist, blasts the Greenspan Fed, the Bernanke Fed, and the Yellen Fed in his latest post The Perils of Fed Gradualism.

After an extended period of extraordinary monetary accommodation, the US Federal Reserve has begun the long march back to normalization. It has now taken the first step toward returning its benchmark policy interest rate – the federal funds rate – to a level that imparts neither stimulus nor restraint to the US economy.

A majority of financial market participants applaud this strategy. In fact, it is a dangerous mistake. The Fed is borrowing a page from the script of its last normalization campaign – the incremental rate hikes of 2004-2006 that followed the extraordinary accommodation of 2001-2003. Just as that earlier gradualism set the stage for a devastating financial crisis and a horrific recession in 2008-2009, there is mounting risk of yet another accident on what promises to be an even longer road to normalization.

The problem arises because the Fed, like other major central banks, has now become a creature of financial markets rather than a steward of the real economy. This transformation has been under way since the late 1980s, when monetary discipline broke the back of inflation and the Fed was faced with new challenges.

The challenges of the post-inflation era came to a head during Alan Greenspan's 18-and-a-half-year tenure as Fed Chair. The stock-market crash of October 19, 1987 – occurring only 69 days after Greenspan had been sworn in – provided a hint of what was to come. In response to a one-day 23% plunge in US equity prices, the Fed moved aggressively to support the brokerage system and purchase government securities.

In retrospect, this was the template for what became known as the "Greenspan put" – massive Fed liquidity injections aimed at stemming financial-market disruptions in the aftermath of a crisis. As the markets were battered repeatedly in the years to follow – from the savings-and-loan crisis (late 1980s) and the Gulf War (1990-1991) to the Asian Financial Crisis (1997-1998) and terrorist attacks (September 11, 2001) – the Greenspan put became an essential element of the Fed's market-driven tactics.

The Fed had, in effect, become beholden to the monster it had created. The corollary was that it had also become steadfast in protecting the financial-market-based underpinnings of the US economy.

Largely for that reason, and fearful of "Japan Syndrome" in the aftermath of the collapse of the US equity bubble, the Fed remained overly accommodative during the 2003-2006 period.

Over time, the Fed's dilemma has become increasingly intractable. The crisis and recession of 2008-2009 was far worse than its predecessors, and the aftershocks were far more wrenching. Yet, because the US central bank had repeatedly upped the ante in providing support to the Asset Economy, taking its policy rate to zero, it had run out of traditional ammunition.

Today's Fed inherits the deeply entrenched moral hazard of the Asset Economy. In carefully crafted, highly conditional language, it is signaling much greater gradualism relative to its normalization strategy of a decade ago. The debate in the markets is whether there will be two or three rate hikes of 25 basis points per year – suggesting that it could take as long as four years to return the federal funds rate to a 3% norm.

But, as the experience of 2004-2007 revealed, the excess liquidity spawned by gradual normalization leaves financial markets predisposed to excesses and accidents. With prospects for a much longer normalization, those risks are all the more worrisome.

Only by shortening the normalization timeline can the Fed hope to reduce the build-up of systemic risks. The sooner the Fed takes on the markets, the less likely the markets will be to take on the economy. Yes, a steeper normalization path would produce an outcry. But that would be far preferable to another devastating crisis.

Beholden to Financial Markets

Roach provides a nice historical perspective but he misses the boat in regards to risks.

Not only is the Fed a creature of the Financial markets, it is beholden to the markets. For some treasury durations, the Fed became the market.

Unfortunately, it's not just the Fed.

Global Crisis Coming Up

Global imbalances have never been worse.

The Bank of Japan is the only market for Japanese government debt. And in Europe, government debt trades at preposterously low and sometimes negative yields. The "Draghi PUT" is at least as big as any PUT by Greenspan.

The risk is not that the Fed (central banks in general) will spawn more asset bubbles. It's far too late to raise that concern. Massive bubbles in equities and bonds have already been blown.

Banks that were "too big to fail" are far bigger now than ever before.

Beggar-thy-neighbor competitive currency debasement is the order of the day in China, Europe, and Japan.

Let's not pretend we have a choice that will prevent another devastating financial crisis. We don't. Only the timing is in question.

Mike "Mish" Shedlock

Merry Christmas!

Posted: 25 Dec 2015 10:15 AM PST

Economic reports will commence in just a bit. First things first. Merry Christmas!

Mike "Mish" Shedlock

Seth's Blog : Let's build a school

Let's build a school

Consider a last-minute donation to Room to Read. They will facilitate the building of a school in a village that has no school.

Imagine growing up in a place with no school...

And your donation will be matched dollar for dollar. It's difficult to overestimate the long-term impact of literacy. I've been a supporter for years, and it always feel good.

And.. Some of my colleagues have stepped up and started the Compassion Collective, an urgent cause supporting those most in need from the refugee crisis. Please consider adding your support.

Also: If you get some downtime this vacation, you might want to check out two thank you gifts from me:

My course on business models. It's free for the first 2,000 people who take it this week, happy holidays.

And the persistently popular, if a little low-fidelity, Startup School podcast, recorded live a few years ago.

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joi, 24 decembrie 2015

Mish's Global Economic Trend Analysis

Google, Ford Enter Partnership on Self-Driving Cars

Posted: 24 Dec 2015 10:27 AM PST

Self-driving cars are the wave of the future, sooner, not later. The trend is now impossible to deny. The only question that remains pertains to the speed of the rollout.

2020 is no longer a pipe dream as many thought. 2030 is far too distant.

The breathtaking speed of possibilities can be seen in a non-exclusive announcement Google Partners with Ford on Self-Driving Vehicles.

Citing sources familiar with the matter, Yahoo Autos reports the partnership is equally beneficial for both parties, with Ford getting a boost in self-driving software development and Google gaining access to invaluable automobile manufacturing expertise.

Ford just this month announced plans to begin field tests of prototype self-driving vehicles in California. Google, on the other hand, has a fleet of 53 cars that have together clocked more than a million miles on public roads in San Francisco and Austin, Texas.

Google's tie-up with Ford is not exclusive, the report notes, meaning deals with other car makers could be in the works.

The world's largest and most profitable tech company, Apple, is also rumored to be working on its own automobile project in secret. Dubbed Project Titan, AppleInsider sources indicate Apple's skunkworks initiative is currently operating out of a secret lab near the company's Cupertino, Calif., headquarters.

While Apple has yet to comment on Titan - CEO Tim Cook actively dodged questions in a "60 Minutes interview" - the company has made numerous hires from the auto industry, including former Tesla engineers and software developers working on autonomous technologies.

The big splash will not be personal vehicles, but rather the loss of millions of long-haul truck jobs and short-haul taxi jobs to automation.

Those jobs will vanish by 2025 at the latest. Something between 2020 and 2022 seems more likely, and even 2020 would not be much of a surprise given the speed of announcements.

Mike "Mish" Shedlock

Seth's Blog : Powering a digital future

Powering a digital future

Only twenty years ago, when we first started figuring out the digital landscape, there were no tools. None.

Sending 400 emails was a feat, and having a website was a little like having a pet monkey. Rare, expensive and difficult.

Now, there are tools. (Scroll down to the see the huge list). Thousands of them. Most cheap, most vibrant, all of them interesting signposts on one version of the road to where we're heading next.

I've spent about ten hours going through this list. Data moves back and forth, information is presented in dozens of ways, systems are robust and can be used by organizations of any size.

The last decade were about everyone becoming a publisher (blogs, photos,videos). Now, everyone is also a digital marketer/data wizard.

Even if you don't use these tools to spread your message or manage your time, know that someone else is going to.

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sâmbătă, 26 decembrie 2015

Seth's Blog : Very good results (and an alternative)

Very good results (and an alternative)

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vineri, 25 decembrie 2015

Mish's Global Economic Trend Analysis

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Seth's Blog : Let's build a school

Let's build a school

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joi, 24 decembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Powering a digital future

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