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duminică, 3 august 2014

Mish's Global Economic Trend Analysis

Top Gun Style Aerial Chicken With Russia Sends US Spy Plane Into Swedish Air Space Without Permission
Steen Jakobsen Short Dax, Long Treasuries, Sees Major Buy Signal for Gold, Silver, Mining
Florida Obamacare Blues

Top Gun Style Aerial Chicken With Russia Sends US Spy Plane Into Swedish Air Space Without Permission

Posted: 03 Aug 2014 10:24 PM PDT

In an attempt to avoid Russian radar and a Russian fighter jet, a US Official Admits Spy Plane Flees Russian Jet, Radar; Ends Up Over Sweden.

The Cold War aerial games of chicken portrayed in the movie "Top Gun" are happening in real life again nearly 30 years later.

A U.S. Air Force spy plane evaded an encounter with the Russian military on July 18, just a day after Malaysia Airlines Flight 17 was downed by a suspected surface-to-air missile that Ukraine and the West allege was fired by pro-Russia rebels in eastern Ukraine.

The RC-135 Rivet Joint fled into nearby Swedish airspace without that country's permission, a U.S. military official told CNN. The airplane may have gone through other countries' airspace as well, though it's not clear if it had permission to do so.

The U.S. plane had been flying in international airspace, conducting an electronic eavesdropping mission on the Russian military, when the Russians took the unusual action of beginning to track it with land-based radar.

The Russians then sent at least one fighter jet into the sky to intercept the aircraft, the U.S. official said Saturday.

The spy plane crew felt so concerned about the radar tracking that it wanted to get out of the area as quickly as possible, the official said. The quickest route away from the Russians took them into Swedish airspace. The U.S. official acknowledged that was done without Swedish military approval.

As a result of this incident, the United States is discussing the matter with Sweden and letting officials know there may be further occurrences where American jets have to divert so quickly they may not be able to wait for permission.

"We acknowledge a U.S. aircraft veered into Swedish airspace and will take active steps to ensure we have properly communicated with Swedish authorities in advance to prevent similar issues before they arise," the U.S. State Department said.

Questions of the Day

If you cannot wait for permission, are you where you are not supposed to be in the first place?
Is this how stupid wars start? Or is that exactly what the US wants? How about both?

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

Steen Jakobsen Short Dax, Long Treasuries, Sees Major Buy Signal for Gold, Silver, Mining

Posted: 03 Aug 2014 07:04 AM PDT

Steen Jakobsen, chief economist and CIO of Saxo Bank is back from a Tour De France and summer holiday and says "it's time for status on macro view and a look into what rest of 2014 gives us".

Steen shares his views in a Trading Floor post Steen's Chronicle: Three things can't be hidden long: The sun, the moon and the truth (Buddha).

This week saw US GDP rebound an impressive 4.0% taking the run rate for GDP in 2014 to 2.3%, still shy of the ambitious 3.0% the consensus firmly believe in. Wall Street is busy selling strategies on how to hedge the coming hike in policy rates from Fed and we are, again, told how rates will explode.

This narrative will implode and shortly, if I look at Saxo Bank's JABA models:
Main Macro and Market calls:

Saxo Bank Main Macro and Market Calls

Fixed income will outperform all assets class' in 2014 – View established in Q4-2013. Long 1.5% Danish Government bond, Long Bunds futures, Long 10 Year USA.
US Dollar will sell off in H2 of 2014 – NEW VIEW. Long EURUSD and adding short
USDJPY. Targets: 1.40+ and 96.00 USDJPY. Yield in US will accelerate to downside in Aug-Nov.
Germany will reach negative growth by Q1-2015 & France will be in recession.
Euro growth reach zero again. 2014 another lost year in economics and non-reforms
Inflation expectations will bottom in Q4 – major buy signal for gold, silver and more importantly mining.
Short Dax since 10.000 - and still believe in 25-30% correction in H2-2014 as projected all year.
Geopolitical risk will see keep energy prices elevated – leaving the consumer with less disposable income and companies with thinner profit margins.

Alpha Positions

ALPHA Positions: (all of which is more than three month old except EURUSD and Crude)

Fixed income: Long Bunds since November 2013 / Long 10 Y since April – adding IEF on this "Fed scare"
Equity: Short DAX only
Commodities: Long Sep. WTI Crude (since two weeks ago)
FX: Long EUR/USD from yesterday just below 1.3500 in Sep. Futures, Short AUDUSD Sep
Futures (one month old), short ZAR calls – and looking to sell USDJPY

Beta Positions

Long 80% fixed income since Q4-2013 – mainly Danish government bonds, Bunds and IEF.
Long 15% long equity: AA, INVN, VALE – looking to buy mines, insurance companies and utility in Germany. Major short position not confirmed yet.
Cash 5%

More in report. Brief synopsis of Steen's views: Short the German DAX, long US treasuries and German Bunds, gold and silver major buy signal coming up, US dollar topping vs. Euro, energy firm.

As a proxy for 10-year US treasuries Steen mentions IEF the Barclays 7-10 year duration US treasury ETF. The play appears to be intermediate-term, citing "inflation expectations" in the 4th quarter.

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

Florida Obamacare Blues

Posted: 02 Aug 2014 11:52 PM PDT

Florida has the aging healthcare Obamacare blues as older citizens who previously had no healthcare insurance demand more services than ever before after enrolling

As a result, Florida's largest health insurer, Florida Blue, is raising exchange rates an average of 17.6 percent.

Florida Blue, the state's largest health insurer, is increasing premiums by an average of 17.6 percent for its Affordable Care Act exchange plans next year, company officials say.

The nonprofit Blue Cross and Blue Shield affiliate blames higher health costs that are a result of attracting older adults this year who previously lacked coverage and are using more services than expected.

Florida insurance regulators plan to release rate information for all companies next week. The exchange plans cover individuals who are not covered by employer-based policies.

Florida Blue offers many plans. The 40 percent of its individual policyholders who chose "narrow network" plans called BlueSelect — which limit coverage to fewer doctors and hospitals — will see rates rise by an average of 13 percent.

Critics of the health law have predicted big rate hikes in the second year of the online marketplaces. Florida Blue CEO Patrick Geraghty noted that premiums in the individual market have been going up for years. "In the individual market, this type of average rate increase is typical," he told Kaiser Health News. "It is not aberrant."

Next year will mark the fourth consecutive year Florida Blue has increased premiums by an average of at least 11 percent for people under 65 who buy coverage on their own. Florida Blue increased rates an average of 16.5 percent in 2014, 16 percent in 2013 and 11.5 percent in 2012, the company said.

Florida Blue signed up 339,000 customers through the Affordable Care Act's federal marketplace this year — about 34 percent of the almost 1 million who enrolled in the state, the company said. Florida does not operate its own exchange.

Several factors related to the health law are driving up rates for next year, Geraghty said, including a paucity of younger and healthy enrollees and a greater-than-expected surge of people seeking expensive health services. The law prohibits insurers from rejecting people with health problems or charging them higher premiums. That meant that many unhealthy people who had not been able to get coverage before were able to obtain policies in 2014.

"No one can claim in good conscience that a 10-percent rate increase or more would signal the advent of something new and unprecedented," said Greg Mellowe, policy director of the consumer group Florida CHAIN. "For years, this was standard practice in Florida."

Standard Practice

No need to worry. This is nothing new or unprecedented. Rates have been going up 10 percent a year, as "standard practice".

Let's do the compound math on a typical $300-$400 per month policy, assuming a midpoint of $350 per month and a "standard practice" hike of 10% a year.

The above chart appears shocking, but there is absolutely nothing to fear.

As we all know, deficits don't matter and besides, Obamacare will pick up the tab. If the tab grows unexpectedly, we can tax the rich and the poor, and the young and the old (especially the young who we already make overpay for insurance). And if that doesn't work, the Fed can simply print the money.

The fallback options are so enormous, one can only wonder why healthcare is not free to everyone on the planet.

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

Seth's Blog : Short term, long term

Short term, long term

The best way to change long-term behavior is with short-term feedback.

The opposite is not true. We rarely change short-term behavior with long-term feedback.

That's why sanctions rarely work well in international politics, and why cigarette taxes are the best way to keep people from getting lung cancer.

Sure, intelligent adults should be smart enough to figure out the net present value of a lifetime of cigarette purchases, plus the long-term health costs. And some are. But not enough.

And students should be smart enough to realize that extra effort and expense in college might pay off in income or happiness in a few decades. And some are. But not enough.

If you want to reward (or punish) short-term behavior, don't do it down the road. Advances turn more heads than royalty streams do.

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sâmbătă, 2 august 2014

Mish's Global Economic Trend Analysis

Afghanistan a How-To Lesson in Perfect Stupidity: 54,000 Paid Ghosts, Vanishing Firearms, Warlord Protection Rackets

Posted: 02 Aug 2014 11:56 AM PDT

Thank president Bush, vice president Dick Cheney, and president Obama for working together to create a how-to map of perfect foreign policy stupidity.

The Telegraph has details in Afghanistan has cost more to rebuild than Europe after Second World War

American taxpayers have provided £61.5 billion since 2002 and Britain about £890 million, for hundreds of development projects.
The military operation has cost America a further £296 billion and Britain £22 billion.
Nearly 13 years after the Taliban were overthrown, the US and other donors continue to fund 60 per cent of the Afghan national budget and are pledged to underwrite a further "decade of transformation" in the country.
"Large areas of the country will soon be off limits to US personnel due to base closures and troop withdrawals," the report by the Special Inspector General for Afghan Reconstruction says. About 80 per cent of the country is already beyond the reach of US government monitors, according to an estimate last October.
Senior members of the Afghan government have accrued vast wealth since 2001 including members of President Karzai's family.
A US army analysis made public in April said: "Corruption directly threatens the viability and legitimacy of the Afghan state."
Western forces are "trapped in a warlord protection racket"
Despite $7.6 billion spent on counter-narcotics operations, opium production has increased for the past three years and is now at record levels.
America and the EU spent more than $3 billion on building up the Afghan police force, yet 54,000 of those policemen are "ghosts" — non-existent but being paid each month.
Mr Sopko found that 16 Italian-built C27 transport planes worth $486 million had been left to rot next to the runway at Kabul airport.
The US had provided 747,000 firearms to Afghan security forces worth $626 million. They found that 43 per cent have disappeared from official stock lists that track their whereabouts in Afghanistan.

What some see as "perfect stupidity" others (especially the industrial-military complex) see as a "job well done", complete with arms to the Taliban to ensure that the war on terrorism goes on and on.

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

It's Time for Congress to Help the Middle Class

Featured

Weekly Address: It's Time for Congress to Help the Middle Class

The President discusses the new monthly jobs report and the fact that our economy created over 200,000 new jobs in July for the sixth straight month – the longest streak since 1997. To ensure this momentum can be sustained, the President is pressing Congress to act to create jobs and expand opportunity from raising the minimum wage, to helping people pay back their student loans, to fair pay and paid leave. These are steps that would continue to make things better for the middle class, which has always been his priority. But Republicans in Congress have repeatedly blocked these important measures.

As Congress is about to go on vacation, the President encouraged Americans to reach out to their elected officials and let them know that they must pass these measures when Congress returns to session. And in their absence, the President will continue to do everything he can, working with all stakeholders who are willing, to create jobs, strengthen our economy, and expand opportunity for all Americans.

Click here to watch this week's Weekly Address.

Seth's Blog : Pleasing a person who is not in the room

Pleasing a person who is not in the room

One reason organizations slow and stumble is that teams of well-meaning people form committees and go to meetings, determined to please the boss.

What they do, instead, is assume that the boss is far more conservative than she actually is. They buff off the edges, dilute the goodness and quench their curiosity. They churn out another version of what's already there, because they're imagining the most risk-averse version of their boss is in the room with them.

It's the boss's job to continually ask, "is this the most daring vision of your work?"

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vineri, 1 august 2014

Mish's Global Economic Trend Analysis

Wrong Time, Altered Videos, More Lies From Kiev
Employment Perspective in Pictures: Only 25% of Decline in Fulltime Employment Attributable to Aging Workforce
Nonfarm Payrolls 209,000, Unemployment 6.2%, Employed +131,000

Wrong Time, Altered Videos, More Lies From Kiev

Posted: 01 Aug 2014 04:53 PM PDT

Since the crash of MH17, Ukraine has stated repeatedly it had no weapons capable of downing the aircraft. The claims are blatant lies as noted in the video below by Ukrainian citizen, Anatole Sharyi.

I wish I had English subtitles to the video, but a translation from Jacob Dreizin, a US citizen who speaks Russian and reads Ukrainian, will have to suffice.

"Chas Ch" - H Hour

From Dreizin ...

Sharyi has found a clip that was broadcast on the Ukranian TV program "Chas Ch" ("H Hour") showing a Ukrainian Buk launcher (en face and then in profile) and attendant Kupol radar along with--around 52-54 seconds, off to the right--what appears to be some box-type, high-altitude SAM launcher, possibly a "Tor" variant.

The caption on the broadcast reads: "Servicemen of the Ukranian armed forces patrolling a locale in the Anti-Terrorist Operation zone."

Sharyi claims that the broadcast was from July 16th, 2014, the day before MH17 was downed.

Claims Then Denial

There you have it, Ukraine was bragging about and even showing videos of Buks in the area, then next day denyied them.

If someone can put reliable English subtitles on that video, I would appreciate it.

Second Video

Here's a link to an even a longer 10-minute video, complete with a militarist patriotic intro.

From Dreizin ...

In this video, the caption at the top (within the video) also reads July 16th. While it's not possible to conclusively verify from the program itself as to the date of the video, the voice-over near the beginning--which mentions place names near the Russian border where battles are occurring, as well as an accusation that artillery over the border in Russia has been bombarding Ukrainian forces--makes clear that it was broadcast this month, and probably mid-month. Thus, I have no reason to believe that this was not broadcast on July 16th.

Also, not surprisingly given the content of the program (including the first few seconds, which are very air-defense focused), the original clip appears to have been taken down from YouTube.

One day after the crash, Ukrainian "defense expert" Dmitri (Dmytro) Tymchuk, whose blog and Facebook page have been quoted or cited in U.S. media stated that Ukraine has no air defenses in the area.

The US would rather believe a Facebook page that says what the US wants to hear, rather than a direct claim and videos of Ukrainian Buks in rebel territory published the day before the attack.

Buk System

By the way, please take another look at that first video, even if you cannot understand it. All media reports focus on the missile launcher. However, a Buk system takes at least three tank-sized components to operate.

Buk System Components

Missile launcher
Command center
Radar vehicle
Logistics vehicle

The first three units all have to be present in the area, functional, and must be in communication-radio line-of-sight.

The logistics vehicle carries supplies and reload missiles.

Wikipedia explains "In general, the system identifies potential targets (radar), selects a particular target (command), fires a missile (launcher) at the target, and resupplies the system (logistics). The missiles require a radar lock to initially steer the missile to the target until the missile's on-board radar system takes over to provide final course corrections. A proximity fuse aboard the missile determines when it will detonate, creating an expanding fragmentation pattern of missile components and warhead to intercept and destroy the target."

Thus, a launcher by itself rolling around the countryside does not do much on its own accord. The "Chas Ch" video (first one) shows that well enough.

Wrong Time, Altered Images

It should not take two weeks to produce satellite images. But it did. And they were very sloppy. Please consider 'Wrong Time, Altered Images': Moscow Slams Kiev's MH17 Satellite Data.

Satellite images Kiev published as 'proof' it didn't deploy anti-aircraft batteries around the MH17 crash site carry altered time-stamps and are from days after the MH17 tragedy, the Russian Defense Ministry has revealed.

The images, which Kiev claims were taken by its satellites at the same time as those taken by Russian satellites, are neither Ukrainian nor authentic, according to Moscow's statement.

The Defense Ministry said the images were apparently made by an American KeyHole reconnaissance satellite, because the two Ukrainian satellites currently in orbit, Sich-1 and Sich-2, were not positioned over the part of Ukraine's Donetsk Region shown in the pictures.

Moscow claims weather and lighting conditions in the images were not possible at the dates and times Ukraine claims they were made, the Russian ministry said.

Moscow Statement

Rather than rely on RT, inquiring minds may wish to see Images and Analysis of Satellite Imagery Released by Ukraine, official analysis as released by Russian Ministry of Defense.

Russia claims that Ukraine did not have satellites over that area at the time. The US did. And the images appear to be sloppily doctored, if you believe Russian analysis.

Perhaps you don't want to, but I suggest Russian analysis appears far more professional, and timely than anything Ukraine or the US puts out.

Regardless, it's clear both sides have engaged in tremendous amount of propaganda.

Even if you do not believe Russia, there is absolutely no reason to believe a parade of lies from Kiev, 100% in plain sight.

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

Employment Perspective in Pictures: Only 25% of Decline in Fulltime Employment Attributable to Aging Workforce

Posted: 01 Aug 2014 12:04 PM PDT

Here's a series of charts from reader Tim Wallace on various aspects of employment, labor force, and population. The charts use seasonally unadjusted data, July of 2014 compared to July in prior years.

click on any chart for sharper image

Age 16 and Over

Age 16 and Over Full-Time Employment Percentage

Age 25-54

Age 25-54 Full-Time Employment Percentage

Age 55 and Over

Age 55 and Over Full-Time Employment Percentage

Mish Notes

Because of the aging workforce, the first chart in each series has a slight negative bias. For example: Note a relatively small decline in population in age group 25-54 from 125,715,000 to 124,500,000. That decline accounts for 1,215,000 of the drop in full-time employment from 99,912,000 to 95,098,000 (a drop of 4,814,000).

The normalized drop in full-time employment is thus 4,814,000 - 1,215,000 or 3,599,000 which is still a pretty damning statistic.

Here's another way of looking at things: Only 25% of the decline in full-time employment in the 25-54 age group can be attributed to the aging work force. The rest is overall economic weakness.

The second, fourth, and sixth charts showing percentage changes provide an overall accurate view.

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

Nonfarm Payrolls 209,000, Unemployment 6.2%, Employed +131,000

Posted: 01 Aug 2014 08:11 AM PDT

Initial Reaction

Counting the upwardly revised 298,000 nonfarm payroll report in June (originally reported as 288,000), this was a decent report.

Yet, digging into the details, the household survey showed a gain in employment of only 131,000. Thus, for the second consecutive month, the household survey was substantially weaker than the headline number.

The unemployment rate rose by 0.1% (by 197,000) thanks to a rise in the labor force greater than the rise in employment.

May BLS Jobs Statistics at a Glance

Nonfarm Payroll: +209,000 - Establishment Survey
Employment: +131,000 - Household Survey
Unemployment: +197,000 - Household Survey
Involuntary Part-Time Work: +275,000 - Household Survey
Voluntary Part-Time Work: -33,000 - Household Survey
Baseline Unemployment Rate: +0.1 at 6.1% - Household Survey
U-6 unemployment: +0.1 to 12.2% - Household Survey
Civilian Non-institutional Population: +209,000
Civilian Labor Force: +329,000 - Household Survey
Not in Labor Force: -119,000 - Household Survey
Participation Rate: +0.1 at 62.9 - Household Survey

Additional Notes About the Unemployment Rate

The unemployment rate varies in accordance with the Household Survey, not the reported headline jobs number, and not in accordance with the weekly claims data.
In the past year the working-age population rose by 2,226,000.
In the last year the labor force declined by 330,000.
In the last year, those "not" in the labor force rose by 1,939,000
In the past year, the number of people employed rose by 2,067,000 (an average of 172,250 a month)

Please note that over the course of the last year, the working-age population rose by more than the number of people employed. In normal times, the unemployment rate would have gone up slightly. Instead, the unemployment rate fell from 7.3% to 6.2%. Over 100% of the decline in unemployment was due to people dropping out of the labor force, rather than strength in the economy!

July 2014 Employment Report

Please consider the Bureau of Labor Statistics (BLS) July 2014 Employment Report.

Total nonfarm payroll employment increased by 209,000 in July, and the unemployment rate was little changed at 6.2 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, manufacturing, retail trade, and construction.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted

Nonfarm Employment January 2003 - July 2014

click on chart for sharper image

Nonfarm Employment Change from Previous Month by Job Type

Hours and Wages

Average weekly hours of all private employees has been flat for five months at 34.5 hours. Average weekly hours of all private service-providing employees was flat at 33.3 hours.

Average hourly earnings of private workers rose $0.04 to $20.61. Average hourly earnings of private service-providing employees rose $0.03 to $20.39.

For discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I keep this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.

Table 15 BLS Alternate Measures of Unemployment

click on chart for sharper image

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 6.2%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 12.2%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Labor Force Factors

Discouraged workers stop looking for jobs
People retire because they cannot find jobs
People go back to school hoping it will improve their chances of getting a job
People stay in school longer because they cannot find a job
Disability and disability fraud

Were it not for people dropping out of the labor force over the past several years, the unemployment rate would be well over 9%.

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

Watch Live at 2:35 ET: President Obama Makes a Statement

Happening Now

Watch President Obama Live at Today's Briefing

At 2:35 p.m. ET today, the President will deliver a statement from the Press Briefing Room here at the White House.

TUNE IN LIVE

Featured

The First Time This Has Happened Since 1997:

It's the first Friday of the month, so you know what that means. (Or you might not, that's ok too.) It's Jobs Day, and we saw another month of encouraging trends in the labor market.

In July, the private sector gained 198,000 jobs, and total job growth has exceeded 200,000 jobs for six straight months -- the first time that has happened since 1997. And, we've seen 53 straight months of job growth, which is the longest streak on record.

This is good news, but we've still got work to do. See how the economy is continuing to improve as a result of the President's policies.

duminică, 3 august 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : Short term, long term

Short term, long term

More Recent Articles

sâmbătă, 2 august 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

It's Time for Congress to Help the Middle Class

Seth's Blog : Pleasing a person who is not in the room

Pleasing a person who is not in the room

More Recent Articles

vineri, 1 august 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Watch Live at 2:35 ET: President Obama Makes a Statement

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