Central Perk

sâmbătă, 12 aprilie 2014

Mish's Global Economic Trend Analysis

France Prohibits Sending Work Emails, Answering Cell Phones, Outside Working Hours

Posted: 12 Apr 2014 06:50 PM PDT

Events in France keep getting sillier and sillier. Wasn't these new Prime minister Manuel Valls supposed to be pro business?

So how does nonsense like this happen: France Prohibits Sending Work Emails Outside Working Hours

Via translation from La Vanguardia

Your boss sends you emails when you've already left work? Will you answer? In France, this is prohibited if the workday is finished.

This is stated in an agreement between the two unions, the French Democratic Confederation of Labour (CFDT) and the French Confederation of Managerial Staff Executives (CFE-CGC), and two sector employers technical consulting, engineering, computer services, human resources and consulting for an end to the endless day workers.

The advent of smartphones has been a positive change in many ways, but has also enabled the 'meddling' in our private lives of our working lives, something that the French authorities want to avoid.

Therefore, workers must turn off the phone and computer work for eleven hours and therefore have the right to ignore work emails sent out of hours. Meanwhile, companies are obliged to ensure that this measure is met.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Armed Men Seize Police Station in Slavyansk; Ukraine Prepares Armed Response; Ukraine Suspends Gas Payments to Russia

Posted: 12 Apr 2014 01:47 PM PDT

The crisis in Ukraine took a turn for the worse this weekend. Many distinct events are in play. Here are a few top headlines

Armed Men Seize Police Station in Slavyansk

The Wall Street Journal reports Pro-Russia Protests Spread, Police Station Seized.

Pro-Russia protests spread Saturday in eastern Ukraine as armed men, some in unmarked, military-style uniforms, moved to commandeer more government buildings—a dramatic escalation that the Ukrainian government and Washington tied to Moscow.

Ukraine's acting president called an emergency meeting of the country's top security officials in the capital, Kiev, as police clashed with attackers in several spots in the largely Russian-speaking, eastern part of the country.

Some 20 men wearing camouflage, some with military-style equipment and weapons, commandeered a police station and security-service office early Saturday in Slavyansk, a small city that previously hadn't seen the kind of pro-Russian fervor that erupted anew in the area last weekend.

Ukraine's Interior Minister Arsen Avakov said Saturday evening that police were fighting with attackers in the nearby town of Kramatorsk and had repelled a similar attack in a third town, Krasny Liman.

Saturday afternoon, police in Poltava Region said they had stopped several buses carrying what they said were pro-Russian activists carrying gasoline bombs and makeshift weapons. They were headed to Kharkiv, where protests were scheduled. Police detained about 70 of the activists.

Protesters remain barricaded Saturday in the regional government headquarters in Donetsk and the security-service offices in Luhansk, which they had occupied last Sunday. Authorities pushed a group out of a government building in Kharkiv earlier in the week.

Western officials say Moscow has tens of thousands of troops on its side of the border that could invade Ukraine in a matter of hours. Moscow denies that.

Ukraine Prepares Armed Response

Reuters reports Ukraine Prepares Armed Response as City Seized by Pro-Russia Forces.

Armed separatists took virtual control of a city in eastern Ukraine on Saturday and Kiev prepared troops to deal with what it called an "act of aggression by Russia".

Pro-Russian activists carrying automatic weapons seized government buildings in Slaviansk and set up barricades on the outskirts of the city. Official buildings in several neighboring towns were also attacked.

The developments have increased concerns of a possible "gas war" that could disrupt energy supplies across the continent.

Washington backed Kiev's assessment that Moscow was responsible. "Worrisome violence in ... Ukraine today. Russia again seems to be behind it," State Department spokeswoman Jen Psaki said on Twitter.

ROADBLOCKS AROUND CITY

On a road leading into Slaviansk, other members of the group, armed with automatic rifles, set up a roadblock and checked vehicles entering the city, a Reuters reporter said.

There was no sign of any Ukrainian law enforcement officials in the city.

Ukraine's Western-backed government warned of tough action if the militants did not lay down their weapons, but it was unclear if the local law enforcement agencies were taking orders from Kiev any more after the local police chief quit.

Kostyantyn Pozhydayev came out to speak to pro-Russian protesters at his offices in the regional capital, Donetsk, and told them he was stepping down "in accordance with your demands". Some of his officers left the building.

The occupations are a potential flashpoint because if protesters are killed or hurt by Ukrainian forces, that could prompt the Kremlin to intervene to protect the local Russian-speaking population, a repeat of the scenario in Crimea.

Ukraine's acting foreign minister, Andriy Deshchytsia, said he had spoken by telephone with Russian Foreign Minister Sergei Lavrov and demanded Moscow stop what he called "provocative actions" by its agents in eastern Ukraine.

Lavrov, in a statement issued by his ministry, said there were no Russian agents in the region and that it would be "unacceptable" if Ukrainian authorities were to order the storming of the buildings.

Ukraine Suspends Gas Payments to Russia

Reuters reports Ukraine Suspends Gas payments to Russia

Ukraine's state-run energy company Naftogaz has suspended gas payments to Russia until the conclusion of price talks, chief executive Andriy Kobolev was quoted as saying on Saturday.

Russian gas giant Gazprom earlier this month increased gas price for Ukrainian consumers to $485 per 1,000 cubic meters (tcm) from $268 for the first quarter, saying Kiev was no longer eligible for previous discounts.

"The question of repayment of debt is directly linked to the maintenance of gas prices at the level of the first quarter," Kobolev told the Zerkalo Nedely weekly in an interview, referring to the original price of $268 per tcm.

"We see no reason to revise the price. We consider the price at around $500 as non-market, unjustified and unacceptable. Accordingly, we have suspended payments for the period of the price negotiations."

Russian President Vladimir Putin warned on Thursday that Moscow could cut off gas to Ukraine, potentially threatening European supplies, but later played down the threat.

"I want to say again: We do not intend and do not plan to shut off the gas," he said on Friday.

Gas Wars

Given that Ukraine has suspended payments, I find Putin's statements puzzling. If Putin will not shut off the gas, then Ukraine has no incentive to pay.

Expect Putin to quickly change his mind about shutting the pipeline if Ukraine does indeed refuse to pay. He will have a legitimate reason.

As for market prices, Russia can charge what it wants in my opinion. Countries can either pay or not pay.

This is the consequence of being dependent on a single supplier.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

Ensuring Equal Pay for Equal Work

Featured

Weekly Address: Ensuring Equal Pay for Equal Work

In this week's address, the President underscored the importance of ensuring equal pay for equal work and highlighted the steps his Administration has taken to expand opportunity and narrow the pay gap that exists between men and women.

Click here to watch this week's Weekly Address.

Weekly Wrap Up

President Obama at Fort Hood: "Love Never Ends"

On Wednesday, President Obama spoke at a memorial service for the soldiers who lost their lives during last week's shooting at Fort Hood Military Base.

In his remarks, the President explained that we must honor their lives "not in word or talk, but in deed and in truth."

The President celebrated Equal Pay Day on Tuesday by doing something only he can: picking up his pen and signing two executive actions to help ensure equal pay for all.

The executive actions President Obama signed will protect federally contracted employees from retaliation if they broach the topic of unequal compensation and will require federal contractors to submit more data on employee compensation, making sure employers take proactive efforts to ensure fair pay for all their employees. Way back in January during the State of the Union address, the President said this would be a year of action, and these executive orders on equal pay are just another reminder that he is keeping that promise.

READ MORE

44 Honors 36

This year marks the 50th anniversary of President Lyndon Baines Johnson signing the Civil Rights Act. President Obama traveled to the LBJ Presidential Library in Austin, Texas to reflect on the historic piece of legislation and the legacy of the 36th president.

"Because of the Civil Rights movement, because of the laws President Johnson signed, new doors of opportunity and education swung open for everybody -- not all at once, but they swung open. Not just blacks and whites, but also women and Latinos; and Asians and Native Americans; and gay Americans and Americans with a disability," said President Obama. "They swung open for you, and they swung open for me. And that's why I'm standing here today -- because of those efforts, because of that legacy."

Vice President Biden met with Trevor, a Navy SEAL, and Chopper, the military dog who saved Trevor's life, this week. In this episode of Being Biden -- the audio series where the Vice President gives you a window into his daily life and shares some of his most memorable experiences -- he shares more about that meeting.

Can't get enough of the Vice President? Check out every episode of Being Biden.

READ MORE

We've Got Tools For You!

There are a lot of government agencies and web sites out there; sometimes it's hard to keep track. But scattered on those sites are some helpful resources that can make your life easier.

We've searched through the .gov websites out there to find some of the tools that you might just find useful. Head to WhiteHouse.gov/Tools and you can find the farmers' markets near you, determine if a hybrid car will save you money, and much more.

READ MORE

As always, to see even more of this week's events, watch this week's episode of West Wing Week:

WATCH NOW

Did Someone Forward This to You? Sign Up for Email Updates

This email was sent to e0nstar1.blog@gmail.com

Unsubscribe | Privacy Policy
Please do not reply to this email. Contact the White House

We're updating the White House privacy policy on April 18. Learn more.

The White House • 1600 Pennsylvania Ave NW • Washington, DC 20500 • 202-456-1111

Seth's Blog : Steal, don't invent

Steal, don't invent

Steal your business model. We don't have a shortage of business models, it's okay if you pick one that's already working for someone else.

Steal your web design. There will always be enough people brave enough to invent whole new ways of interacting online. But unless you're an interaction designer or your business model depends on something new, do us all a favor and use something that already works.

Steal your tools. You probably don't need to build a new email delivery engine, a new overnight shipping method or a new way to run payroll. Once someone has a reliable, cost-effective building block, feel free to use it.

When it comes down to the thing you will be known for, your uniqueness, your gift, your thing worth talking about--don't steal that. Writers shouldn't steal words from other writers, and chemists have no need to steal the research of other chemists. Sure, go ahead and invent.

For the rest, honor those that came before and use their work as a building block for yours.

• Email to a friend •

vineri, 11 aprilie 2014

Mish's Global Economic Trend Analysis

Reader Question on the Inevitable Los Angeles Bankruptcy; What About Chicago?
JPMorgan Earnings Drop 18.5%; Slowdown in Housing the Real Killer; Start of Mean Reversion in Earnings?
85% of Pension Funds to Fail in Three Decades

Reader Question on the Inevitable Los Angeles Bankruptcy; What About Chicago?

Posted: 11 Apr 2014 06:05 PM PDT

In response to LA Commission Studies Pension Crisis, Recommends New Commission; Bankruptcy Inevitable reader Daniel writes ...

Hello Mish,

Can you please explain why a home owner in a place like Los Angeles would be concerned with their city's future bankruptcy?

Will whatever happens not be short lived?

I understand that city workers will be affected and that unions and union workers will be affected as well, but how would your typical resident/homeowner be affected in such a situation?

Thanks for your wonderful blog!!

Daniel

Tax Hikes Coming

Hello Daniel

In a futile attempt to prevent the inevitable, the first thing LA politicians are likely to do is raise taxes, all kinds of taxes. They will probably invent new ones too.

Please compare LA's setup to Chicago.

Comparison to Chicago

Via email, Ted Dabrowski at the Illinois Policy Institutes writes ...

Gov. Pat Quinn is in a bind.

He's being asked to sign a Chicago pension bill that he knows has no real reforms and no way to pay for itself. By signing the bill, Quinn will give Mayor Rahm Emanuel his blessing to raise Chicago property taxes by $750 million over five years.

But that's just the beginning.

If the Legislature uses the same blueprint to "fix" the city and Cook County's other pension funds, Quinn will be blessing billions more in tax hikes.

The problem for Quinn is that he promised property tax relief to all Illinoisans in his state budget address just two weeks ago. Here's what he said:

"My comprehensive tax reform plan starts with providing every homeowner in Illinois with a guaranteed $500 property tax refund every year.

In Illinois, more is collected in property taxes every year than in the state income tax and state sales tax combined. In fact, Illinois has one of the highest property tax burdens on homeowners in the nation – more than 20 percent above the national average. The property tax is not based on ability to pay. The property tax is a complicated, unfair tax, hitting middle-class families the hardest.

For too long, Illinois has … overburdened its property taxpayers."

By signing a pension bill that helps Emanuel raise property taxes, Quinn will break yet another promise. The governor has already asked the Legislature to make the 2011 tax hike permanent, even though he originally promised it would be temporary.

But Quinn has a way out of his predicament. Besides the obvious political reasons to oppose the bill, Quinn has three good policy reasons not to sign it:

1. Property tax hikes won't solve Chicago's pension problem. Emanuel needs more taxes because his plan doesn't reform the broken pension system. Instead, it just props up a failed system run by the same politicians who bankrupted it in the first place.

What Emanuel and supporters of his pension bill won't tell you is that they'll be back for even more tax hikes. Emanuel's current plan calls for additional city contributions (above what the city pays today) to the municipal pension fund totaling $4.1 billion through 2025. But his proposed property tax hikes will raise only an additional $2.25 billion during that time period.

What Emanuel and supporters of his pension bill won't tell you is that they'll be back for even more tax hikes. Emanuel's current plan calls for additional city contributions (above what the city pays today) to the municipal pension fund totaling $4.1 billion through 2025. But his proposed property tax hikes will raise only an additional $2.25 billion during that time period.

That means the mayor's tax hike will be $1.9 billion short of the extra contributions needed through 2025. Without real reforms, he'll be back for more.

2. People and businesses will flee. Avoiding real reforms and raising taxes is a failed strategy. People and businesses will flee Chicago, just as they've been doing for years. Taxpayers will leave because they'll be paying more money for fewer services.

Each Chicago household is already on the hook for more than $61,000 in future taxes to pay down the massive long-term debt – more than $63 billion in bonds and pension shortfalls – that their city and county governments have racked up.

Tax hikes mean fewer people will stick around to pay a growing bill.

3. There is a plan to fix Chicago without tax hikes. The Illinois Policy Institute offers a reform plan that avoids tax hikes and immediately cuts Chicago's pension shortfall in half. The core of its solution is a hybrid retirement plan for city workers that gives them a self-managed plan and fixed, monthly Social Security-like benefits at retirement.

The plan makes the tough choices necessary to bring about real retirement security for Chicago's city workers.

Quinn and Emanuel's goal must be to end Chicago's pension crisis and to preserve Chicago's status as a world-class city.

Massive property tax hikes will do just the opposite and push Chicago further in the direction of Detroit.

Ted Dabrowski
Vice President of Policy

Everyone Affected

No one should assume they are unaffected by the pension crisis, even if they do not live in troubled cities. For starters, more cities are affected than admitted.

For discussion, please see 85% of Pension Funds to Fail in Three Decades.

Secondly, and equally important, Democrat controlled states like California and Illinois are dominated by union sympathizers. Of course that is precisely why those states are in serious trouble.

So even if you live in an unaffected city, states controlled by unions are also highly likely to raise all sorts of taxes to protect union interests.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

JPMorgan Earnings Drop 18.5%; Slowdown in Housing the Real Killer; Start of Mean Reversion in Earnings?

Posted: 11 Apr 2014 10:29 AM PDT

Stocks have been soaring mostly on investor sentiment. That sentiment was partially based on the belief earnings would continue to rise quarter after quarter, year after year. Investors also believe the Fed has their back. But what if the earnings thesis is not true?

The New York Times reports JPMorgan Earnings Fall 18.5% on Slowdown in Trading and Mortgage Lending

JPMorgan Chase reported an 18.5 percent slump in first-quarter earnings on Friday, as the nation's largest bank grappled with dual challenges: sluggish revenue from trading and lackluster mortgage lending.

The bank's stock dropped when the market opened on Friday morning, falling more than 4 percent.

Part of the slowdown came from a slowdown in revenue from fixed-income trading, which fell roughly 26 percent to $3.76 billion from $4.75 billion a year earlier.

JPMorgan's earnings also contained a number of bright spots, including an increase in average loan balances within the commercial banking business, along with an uptick in auto loans. Auto loans grew by 3 percent, to $6.7 billion from $6.5 billion a year earlier. Private banking was another rosy area for the bank, with revenue rising to $1.5 billion, up 4 percent from the same period last year. Credit card sales volume also grew, up 10 percent to $104.5 billion from the same period last year.

Still, the strength of those businesses could not completely offset the continued decline in trading revenue and mortgage refinancing, which had once been a particularly robust source of profit for JPMorgan and its rivals.

Now, the heady days of refinancing seem distant. Rising interest rates, coupled with an increase in housing prices, have damped homeowners' appetite to refinance. Mortgage loan originations also dropped to $17 billion, down 68 percent from a year earlier, and 27 percent from the previous quarter. That helped push net income down by $559 million to $114 million for the first quarter.

Asked whether the fall in mortgage loan originations might prompt the bank to broaden its lending to a wider swath of people — even those with tarnished credit scores — Mr. Dimon said on Friday that "our credit standards are pretty consistent." He added, "We feel pretty good about the risk that we are taking."

The comment reflects a deep timidity among the banks, which have focused their lending almost exclusively on borrowers with good credit. In part, the banks are reluctant to take on risk and are skittish about exposing themselves to litigation related to any questionable mortgages.

The Financial Times reports JPMorgan Misses Targets as Fixed Income Hit

JPMorgan Chase had its worst start to the year in fixed income trading since the depths of the financial crisis, causing the largest US bank to report a sharp decline in profits.

Revenues from trading bonds, currencies and commodities fell 21 per cent in the first quarter to $3.8bn, compared with the same period in 2013.

The first quarter is traditionally strong and the weak result – the worst since the start of 2008 – reverberated across Wall Street ahead of next week's results at Citigroup, Bank of America, Morgan Stanley and Goldman Sachs.

Earnings per share fell to $1.28 from $1.59 a year ago compared with analysts' forecasts of $1.38 a share.

JPMorgan had already warned in February that trading revenue was weak, but had then pointed to a 15 per cent decline. Other banks also issued gloomier updates from their trading floors. Overall markets revenue was down 17 per cent at $5.1bn with a smaller decline in equity trading.

Missing Ratcheted Down Expectations

It's rare for companies to miss expectations because of all the revised forward guidance. Typically companies guide to estimates they can beat by a penny.

That JPMorgan failed to do so, means that conditions deteriorated more than expected.

In this case, slowdown in fixed income and mortgages were way off the revised mark, and even further off the original estimates.

Bright Spots About to Dim

Supposedly autos are a bright spot. But are auto loans going to rise forever?

I think not. Rather, I suggest the demand for autos will soon peak if it hasn't already.

But it's that slowdown in housing that's going to be the real killer. A housing slowdown means a slowdown in other durable goods.

Looking ahead, a slowdown in durable goods, especially cars portends a decline in manufacturing hours or employment.

This is precisely what's wrong with taking a single indicator and projecting it forever into the future for "years to come" as economist Robert Shiller did recently with manufacturing hours.

For discussion, please see

Start of Mean Reversion in Earnings?

Those projecting future earnings explosion also play with fire. And if earnings expectation don't pan out (I suggest they won't), stocks are priced not for perfection, but well beyond perfection.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com

85% of Pension Funds to Fail in Three Decades

Posted: 10 Apr 2014 11:49 PM PDT

Bridgewater Associates did an analysis of pension funds recently and concluded 85% of them will fail if returns average 4%.

Bridgewater notes that public pensions have just $3 trillion in assets to invest to cover future retirement payments of $10 trillion over the next many decades. It would take an investment return of roughly 9% a year to meet those obligations.

With the 30-Year long bond yielding a mere 3.5% and with stock valuation through the roof, I expect negative returns for 7-10 years.

Stretched out over 30 years, 4% seems about right. 9% is out of the question.

CNBC has further analysis in Report: 85% of pensions could fail in 30 years

Influential and well-regarded hedge fund Bridgewater Associates Wednesday warns public pensions are likely to achieve 4% returns on their assets, or worse. If Bridgewater is right, that means 85% of public pension funds will be going bankrupt in three decades.

Bridgewater came to these conclusions by stress testing the nation's public pension plans, much the way banks need to be evaluated on what could happen given a wide range out outcomes.

Many pension observers make the claim pensions will achieve 7% to 8% returns. But even if that assumption is correct, which is unlikely, public pensions are looking at a 20% shortfall, Bridgewater says. A 4% return is much more likely, the firm says.

Bridgewater set up a sophisticated model to simulate many of the possible market environments to see how they would affect public pension's resources. In 20% of those scenarios, public pensions run out of money in 20 years. And in 80% of the scenarios, public pensions run out of money within 50 years, Bridgewater says.

Massive Number of Municipal Bankruptcies on Horizon

I wonder what Bridgewater's model would predict starting with losses for the next seven to ten years, because that is what I think is highly likely.

Given the only way to shed pension obligations is bankruptcy, one hell of a lot of municipal bankruptcies are on the horizon unless some other legal maneuver is found.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com