miercuri, 8 octombrie 2014

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


RoboTrucks from Mercedes-Benz to Hit US Highways Within 10 Years; Mish Supply Chain Proposal

Posted: 08 Oct 2014 06:55 PM PDT

Mercedes-Benz has announced "Future Truck 2025″, a self-driving truck that it expects to be on the streets by that date. I expect sooner and will give my reasons in just a bit.

First, please consider Mercedes Is Making a Self-Driving Semi to Change the Future of Shipping by Wired.Com.
The latest truck concept from Mercedes-Benz doesn't look like anything crazy. Its design is a bit unusual, and it's loaded up with LEDs instead of headlights and cameras instead of side mirrors. But those modest tweaks to conventional design hide the fact that this is a serious bid to revolutionize the trucking industry. That's because the "Future Truck 2025″ drives itself. And while it's a prototype, Mercedes is serious about spending the next decade getting it—and us—ready for commercial use.

Autonomous driving is nothing new for trucks in agricultural and military applications, and should be available for passenger cars by 2020. But trucks that share our highways are tempting candidates for shedding their human component: Highway driving is easy for computers but dangerous for us, especially when big machines are involved. In 2012, according to NHTSA, 333,000 large trucks were in crashes in the US. Those accidents killed nearly 4,000 people, the vast majority of whom were riding in passenger vehicles. Regulators have trouble ensuring that drivers get adequate rest, and the trucking industry has fought back against regulation.

With the idea that humans who drive less cause less trouble, Mercedes equipped the Future Truck 2025 with the "Highway Pilot" automated system. "It never gets tired. It's always 100 percent and sharp. It's never angry; it's never distracted," says Dr. Wolfgang Bernhard, the Daimler board member for trucks and buses. "So this is a much safer system."

For an autonomous system, highway driving is far easier than navigating cities. There are no cyclists or pedestrians to watch out for, speeds are steady, and turns are minimal. The "Highway Pilot" system combines several established technologies that will maintain lane position and following distance using cameras and radar. The sensors have been fitted to provide full coverage of the truck's surroundings, and the assistance systems are linked.

The big addition vehicle-to-vehicle communication technology connecting the truck to other cars on the road, providing their exact locations and speeds. The truck doesn't need this data to drive autonomously, but it's helpful for things like moving aside for emergency vehicles or detecting stopped vehicles up ahead.

In the Future Truck, which Mercedes unveiled at a commercial vehicle conference last month, the driver becomes a "transport manager." He gets the truck onto the highway and merges into traffic. At 50 mph, he's prompted to activate the "Highway Pilot" and relax.
Time Flies Faster Than Expected

Mercedes-Benz calls the project "Future Truck 2025″. I confidently predict much sooner.

Wired states "Autonomous driving is nothing new for trucks in agricultural and military applications, and should be available for passenger cars by 2020."

The primary benefit to autonomous cars is elimination of the taxi driver. Otherwise, who wants to pay the cost of all the radar, mirrors, etc.?

I am sure such costs will come down over time because price of technology is the one thing the Fed and governments have the least influence over.

But where's the payback?

The primary payback is cost elimination. And where is that? It's in delivery. Delivery of pizzas, transporting people, and transporting trucks.

When it comes to pizza, costs dictate that mini-drone helicopters will win out over  autonomous cars. For delivering people to destinations,  autonomous taxis are in order.

But the biggest cost efficiency is in trucks.

Truck drivers make $40,000 to $80,000 a year. You can buy a lot of radar, cameras, and other driving technology for that price.

Wired says the driver will get the truck onto the highway , then at 50 mph, activate the "Highway Pilot" and relax. I suggest not quite.

Mish Supply Chain Proposal

  1. A paid driver will drive a loaded truck to a trucking hub near an expressway.
  2. The autonomous robo-driver will drive the truck to a trucking hub exit spot on an expressway or major highway near the final destination point.
  3. A paid driver will navigate city traffic and take the truck to its final destination, unload the truck, then return the truck to the closest expressway trucking hub.
  4. The autonomous robo-driver will drive the truck to its next pickup location on some other expressway where a paid driver takes over, driving the truck to its loading point. 
  5. Drivers report to the hub in their own vehicle. They only get paid to drive truck between the hub and local destinations.

The advantages of the above scheme are obvious as well as bullet-proof. All the miles truck drivers drive on expressways will soon vanish. Truck hubs will form near every major city and every major roadway.

At most, trucking jobs will consist of  driving trucks from hubs to final destinations and from final destinations back to the hubs.

Eventually, but it may take a lot more time, technology will be good enough to eliminate drivers altogether.

Regardless, truck driver jobs, as we know them now, will soon vanish .

For pizza delivery and bank services, please consider What Will Your Bank Look Like 5 Years From Now? How Will Pizzas Be Delivered? Do You Tip a Drone?

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

New Home Prices: Are they Really Up this Year? Homebuilder Freebies: Reduced Closing Costs, Free Pools; Housing Has Peaked This Cycle

Posted: 08 Oct 2014 01:30 PM PDT

Thanks to ultra-low interest rates, massive all-cash purchases by private equity funds, and Fed-sponsored financial speculation, home prices are now back in bubble territory.

Yet, builders that had an easy time of things for a few years now offer Freebies as U.S. Housing Markets Cool.
Joseph Beben wasn't in the market for a house until he heard about a year-old community in suburban Phoenix where 10 homebuilders are offering buyers incentives such as swimming pools, built-in barbecues and subsidized mortgage rates.

Beben, a 33-year-old general manager at Best Buy Co. (BBY), visited three of the sales offices flanking the main corridor of The Bridges at Gilbert, whose 17 subdivisions are among the about 200 locally that have opened since early last year. He settled on Woodside Homes' community within The Bridges after the builder agreed to cover as much as $10,000 of his closing costs, and throw in another extra he liked.

"When I saw this deal, it looked like a good business decision," said Beben, who will pay $332,000 for a 3,000-square-foot.
Not a Business Decision at All

It may, or may not turn out to be a good speculative move, but Beben is seriously misguided if he equates personal decisions as "business decisions" unless asset speculation is his business (which it clearly isn't).

Major City Sales Slowdown
"Phoenix is very slow, Sacramento is spotty," said John Burns, a housing consultant based in Irvine, California. "The investors came in and pushed prices a little too high. And then FHA rocked the new-home market really hard."

"Phoenix is a cautionary tale about raising prices too aggressively and opening up communities too aggressively," said Alex Barron, senior research analyst at Housing Research Center LLC in El Paso, Texas. "It's a bad combination where affordability got out of control and the FHA limit went down. Homes are unaffordable now, and all of a sudden there's a ton of supply."
FHA Reduced Limits
In January, the federal government, which is reducing its share of the mortgage market to lure back private capital, cut FHA loan sizes in 652 high-cost U.S. counties. In Phoenix, the limit dropped to $271,050 -- about $24,000 below the median prices of a new home -- from the previous maximum of $346,250. The limit shrunk by 28 percent in the Las Vegas region, and 18 percent in the Sacramento area.

"We were having a nice robust recovery and then that happened," said Buddy Satterfield, president of the Arizona division for Shea Homes, which has two communities in The Bridges and is opening one in Eastmark. "When you take the FHA limit down to $271,000, you hit us right in our sweet spot."

After jumping 32 percent in 2013, new-home sales in the Las Vegas area in the first eight months of this year fell 26 percent from a year earlier, he said. Smith said he recently spoke with a builder who lost a sale in the Las Vegas area to a competitor who cut the price by $17,000 and covered closing costs.

"It's a big adjustment," Smith said. "It's hard for builders to cut their pace when they've been trying to rejuvenate their numbers over the past five years."

In Phoenix, the supply increased 26 percent. Existing-home prices in the area rose 4.4 percent in August from a year earlier, compared with an increase of 6.4 percent nationally, property-information provider CoreLogic Inc. (CLGX) reported today.
Housing Has Peaked This Cycle

Supposedly, prices are up 4.4% from a year ago in Phoenix and over 6% nationally.

I have a question: Does that include reduced closing costs, free barbecues, and free $20,000 pools?

Downturns start with rising building inventory, competition, and freebies that do not immediately show up as price reductions.

I think this rebound in new home prices has peaked nationally even if  prices purportedly show nominal price increases for a while. 

In Beben's case, he got $10,000 off on closing costs and $22,000 towards a swimming pool pool according to Re/Max Solutions agent Tim Ehlen.

That's $32,000 off a home that would have sold last year for $364,000, a decline of 8.8%.

Taking freebees into consideration, it's safe to conclude new home prices in Phoenix are not up 4.4% on the year as reported. I suggest prices are likely down somewhere between 5% and 10%.

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

IMF Warns of Financial Crisis, Admits Low Interest Rates Spurred Asset Speculation Not Investment

Posted: 08 Oct 2014 12:19 PM PDT

The IMF finally had a "duh" moment in what should have been obvious years ago. The IMF finally realizes that almost zero borrowing costs has encouraged speculation rather than  a hoped-for pick up in investment.

Now, the IMF warns period of ultra-low interest rates poses fresh financial crisis threat.
The Washington-based IMF said that more than half a decade in which official borrowing costs have been close to zero had encouraged speculation rather than the hoped-for pick up in investment.

In its half-yearly global financial stability report, it said the risks to stability no longer came from the traditional banks but from the so-called shadow banking system – institutions such as hedge funds, money market funds and investment banks that do not take deposits from the public.

José Viñals, the IMF's financial counsellor, said: "Policymakers are facing a new global imbalance: not enough economic risk-taking in support of growth, but increasing excesses in financial risk-taking posing stability challenges."

Viñals said the IMF had analysed 300 large banks in advanced economies, making up the bulk of their banking system. It found that institutions representing almost 40% of total assets lacked the financial muscle to supply adequate credit in support of the recovery. In the eurozone, this proportion rose to about 70%.

"And risks are shifting to the shadow banking system in the form of rising market and liquidity risks," Viñals said. "If left unaddressed, these risks could compromise global financial stability."
IMF Wants More Regulation

Amusingly, the IMF concludes "The best way to safeguard financial stability and improve the balance between economic and financial risk taking is to put in place policies that enhance the transmission of monetary policy to the real economy – thus promoting economic risk taking – and address financial excesses through well-designed macroprudential measures."

The IMF wants tougher supervision of banks, requirements on them to hold more capital, and curbs on lending to specific sectors such as housing.

Curiously, low interest rates were the problem but the solution is low interest rates and more macro controls including "policies that enhance the transmission of monetary policy to the real economy – thus promoting economic risk taking".

It's a financial axiom that central banks can make money available and set the rates, but they cannot dictate were it goes. Yet, the IMF just now seems to be figuring that out.

As for central bank sponsored "risk taking", haven't we seen enough already?

Where the Money Went

  1. Junk bond speculation
  2. Stock market speculation
  3. Stock market buybacks at ludicrous prices
  4. Robots in lieu of hiring
  5. Free profit for banks thanks to interest on "excess reserves"
  6. Private equity firms buying up houses
  7. In Europe, banks loaded up on their own allegedly risk-free bonds
  8. In China, property bubbles and profitless SOEs

Where the Money Didn't Go

  1. Higher wages
  2. Infrastructure
  3. Investment

What Now?

Not only was the IMF late in figuring out central banks did little but encourage asset speculation, it remains clueless in regards to what to do about it.

Curiously, the IMF argues for raising the VAT in Europe which will take money out of the hands of people who will spend it. The IMF also has concerns about price deflation when the whole world could use lower prices.

The IMF still has not figured out it is asset deflation and speculative loans made on assets that is the problem, not price deflation on consumer goods.

To get money to flow where it perceives best, the IMF wants more regulation over what projects banks can or cannot lend to.

Want efficient allocation of capital? Then how about trying a free market in goods and services with a free market in interest rates as well?

Instead, the IMF proposes more central intervention as the solution. The IMF's proposal is economic stupidity at its finest.

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

gamer4ever: "Chick Can Fly Android/iOS Gameplay (Flappy Bird's Alternative)" and more videos

gamer4ever: "Chick Can Fly Android/iOS Gameplay (Flappy Bird's Alternative)" and more videos

Mihai, check out the latest videos from your channel subscriptions for Oct 9, 2014.
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Damn Cool Pics

Damn Cool Pics


Crazy Cats on a Catnip Overdose

Posted: 08 Oct 2014 04:47 PM PDT

It might be time to throw these cats in rehab.















Scary Missing Eye Makeup DIY

Posted: 08 Oct 2014 04:16 PM PDT

Halloween season is upon us and everyone is getting ready to put a costume together. These pictures should provide you with a little bit of inspiration if you're trying to go the scary route.













Breaking Down Vaporizers [Infographic]

Posted: 08 Oct 2014 03:26 PM PDT

What are the different kind of vaporizers and why is vaping such a hot topic? The following infographic shows the top vaporizing methods and how people are benefiting from them in today's world. Vape on!

Click on Image to Enlarge.

Via: Got Vape

The Future of Link Building

The Future of Link Building


The Future of Link Building

Posted: 07 Oct 2014 05:17 PM PDT

Posted by Paddy_Moogan

Building the types of links that help grow your online business and organic search traffic is getting harder. It used to be fairly straightforward, back before Google worked out how to treat links with different levels of quality and trust. However, the fact that it's getting harder doesn't mean that it's dead.

What does the future hold?

I'm going to talk about links, but the truth is, the future isn't really about the links. It is far bigger than that.

Quick sidenote: I'm aware that doing a blog post about the future of link building the week of a likely Penguin update could leave me with egg on my face! But we'll see what happens.

Links will always be a ranking factor in some form or another. I can see the dials being turned down or off on certain aspects of links (more on that below) but I think they will always be there. Google is always looking for more data, more signals, more indicators of whether or not a certain page is a good result for a user at a certain moment in time. They will find them too, as we can see from patents such as this. A natural consequence is that other signals may be diluted or even replaced as Google becomes smarter and understands the web and users a lot better.

What this means for the future is that the links valued by Google will be the ones you get as a result of having a great product and great marketing. Essentially, links will be symptomatic of amazing marketing. Hat tip to Jess Champion who I've borrowed this term from.

This isn't easy, but it shouldn't be. That's the point.

To go a bit further, I think we also need to think about the bigger picture. In the grand scheme of things, there are so many more signals that Google can use which, as marketers, we need to understand and use to our advantage. Google is changing and we can't bury our heads in the sand and ignore what is going on.

A quick side note on spammy links

My background is a spammy one so I can't help but address this quickly. Spam will continue to work for short-term hits and churn and burn websites. I've talked before about  my position on this so I won't go into too much more detail here. I will say though that those people who are in the top 1% of spammers will continue to make money, but even for them, it will be hard to maintain over a long period of time.

Let's move onto some more of the detail around my view of the future by first looking at the past and present.

What we've seen in the past

Google didn't understand links.

The fundamental issue that Google had for a long, long time was that they didn't understand enough about links. They didn't understand things such as:

  • How much to trust a link
  • Whether a link was truly editorially given or not
  • Whether a link was paid for or not
  • If a link was genuinely high quality (PageRank isn't perfect)
  • How relevant a link was

Whilst they still have work to do on all of these, they have gotten much better in recent years. At one time, a link was a link and it was pretty much a case of whoever had the most links, won. I think that for a long time, Google was trying very hard to understand links and find which ones were high quality, but there was so much noise that it was very difficult. I think that eventually they realised that they had to attack the problem from a different angle and  Penguin came along. So instead of focusing on finding the "good" signals of links, they focused on finding the "bad" signals and started to take action on them. This didn't fix everything, but it did enough to shock our industry into moving away from certain tactics and therefore, has probably helped reduce a lot of the noise that Google was seeing.

What we're seeing right now

Google is understanding more about language.

Google is getting better at understanding everything. Hummingbird was just the start of what Google hopes to achieve on this front and it stands to reason that the same kind of technology that helps the following query work, will also help Google understand links better.

Not many people in the search industry said much when Google hired this guy back in 2012. We can be pretty sure that it's partly down to his work that we're seeing the type of understanding of language that we are. His work has only just begun, though, and I think we'll see more queries like the one above that just shouldn't work, but they do. I also think we'll see more instances of Googlers not knowing why something ranks where it does.

Google is understanding more about people.

I talk about this a little more below but to quickly summarise here, Google is learning more about us all the time. It can seem creepy, but the fact is that Google wants as much data as possible from us so that they can serve more relevant search results—and advertising of course. They are understanding more that the keywords we type into Google may not actually be what we want to find, nor are those keywords enough to find what we really want. Google needs more context.

Tom Anthony has talked about this extensively so I won't go into loads more detail. But to bring it back to link building, it is important to be aware of this because it means that there are more and more signals that could mean the dial on links gets turned down a bit more.

Some predictions about the future

I want to make a few things more concrete about my view of the future for link building, so let's look at a few specifics.

1. Anchor text will matter less and less

Anchor text as a ranking signal was always something that works well in theory but not in reality. Even in my early days of link building, I couldn't understand why Google put so much weight behind this one signal. My main reason for this view was that using exact match keywords in a link was not natural for most webmasters. I'd go as far as to say the only people who used it were SEOs!

I'm don't think we're at a point yet where anchor text as a ranking signal is dead and it will take some more time for Google to turn down the dial. But we definitely are at a point where you can get hurt pretty badly if you have too much commercial anchor text in your link profile. It just isn't natural.

In the future, Google won't need this signal. They will be much better at understanding the content of a page and importantly, the context of a page.

2. Deep linking will matter less and less

I was on the fence about this one for a long time but the more I think about it, the more I can see this happening. I'll explain my view here by using an example.

Let's imagine you're an eCommerce website and you sell laptops. Obviously each laptop you sell will have its own product page and if you sell different types, you'll probably have category pages too. With a products like laptops, chances are that other retailers sell the same ones with the same specifications and probably have very similar looking pages to yours. How does Google know which one to rank better than others?

Links to these product pages can work fine but in my opinion, is a bit of a crude way of working it out. I think that Google will get better at understanding the subtle differences in queries from users which will naturally mean that deep links to these laptop pages will be one of many signals they can use.

Take these queries:

"laptop reviews"

Context: I want to buy a laptop but I don't know which one.

"asus laptop reviews"

Context: I like the sound of Asus, I want to read more about their laptops.

"sony laptop reviews"

Context: I also like the sound of Sony, I want to read more about their laptops.

"sony vs asus laptop"

Context: I'm confused, they both sound the same so I want a direct comparison to help me decide.

"asus laptop"

Context: I want an Asus laptop.

You can see how the mindset of the user has changed over time and we can easily imagine how the search results will have changed to reflect this. Google already understand this. There are other signals coming into play here too though, what about these bits of additional information that Google can gather about us:

  • Location: I'm on a bus in London, I may not want to buy a £1,000 laptop right now but I'll happily research them.
  • Device: I'm on my iPhone 6, I may not want to input credit card details into it and I worry that the website I'm using won't work well on a small screen.
  • Search history: I've searched for laptops before and visited several retailers, but I keep going back to the same one as I've ordered from them before.

These are just a few that are easy for us to imagine Google using. There are loads more that Google could look at, not to mention signals from the retailers themselves such as secure websites, user feedback, 3rd party reviews, trust signals etc.

When you start adding all of these signals together, it's pretty easy to see why links to a specific product page may not be the strongest signal for Google to use when determining rankings.

Smaller companies will be able to compete more.

One of the things I loved about SEO when I first got into it was the fact that organic search felt like a level playing field. I knew that with the right work, I could beat massive companies in the search results and not have to spend a fortune doing it. Suffice to say, things have changed quite a bit now and there are some industries where you stand pretty much zero chance of competing unless you have a very big budget to spend and a great product.

I think we will see a shift back in the other direction and smaller companies with fewer links will be able to rank for certain types of queries with a certain type of context. As explained above, context is key and allows Google to serve up search results that meet the context of the user. This means that massive brands are not always going to be the right answer for users and Google have to get better at understanding this. Whether a company is classified as a "brand" or not can be subjective. My local craft beer shop in London is the only one in the world and if you were to ask 100 people if they'd heard of it, they'd all probably say no. But it's a brand to me because I love their products, their staff are knowledgeable and helpful, their marketing is cool and I'd always recommend them.

Sometimes, showing the website of this shop above bigger brands in search results is the right thing to do for a user. Google need lots of additional signals beyond "branding" and links in order to do this but I think they will get them.

What all of this means for us

Predicting the future is hard, knowing what to do about it is pretty hard too! But here are some things that I think we should be doing.

  1. Ask really hard questions
    Marketing is hard. If you or your client wants to compete and win customers, then you need to be prepared to ask really hard questions about the company. Here are just a few that I've found difficult when talking to clients:
    • Why does the company exist? (A good answer has nothing to do with making money)
    • Why do you deserve to rank well in Google?
    • What makes you different to your competitors?
    • If you disappeared from Google tomorrow, would anyone notice?
    • Why do you deserve to be linked to?
    • What value do you provide for users?

    The answers to these won't always give you that silver bullet, but they can provoke conversations that make the client look inwardly and at why they should deserve links and customers. These questions are hard to answer, but again, that's the point.

  2. Stop looking for scalable link building tactics

    Seriously, just stop. Anything that can be scaled tends to lose quality and anything that scales is likely to be targeted by the Google webspam team at some point. A recent piece of content we did at Distilled has so far generated links from over 700 root domains—we did NOT send 700 outreach emails! This piece took on a life of its own and generated those links after some promotion by us, but at no point did we worry about scaling outreach for it.

  3. Start focusing on doing marketing that users love

    I'm not talking necessarily about you doing the next Volvo ad or to be the next Old Spice guy. If you can then great, but these are out of reach for most of us.That doesn't mean you can't do marketing that people love. I often look at companies like Brewdog and Hawksmoor who do great marketing around their products but in a way that has personality and appeal. They don't have to spend millions of dollars on celebrities or TV advertising because they have a great product and a fun marketing message. They have value to add which is the key, they don't need to worry about link building because they get them naturally by doing cool stuff.

    Whilst I know that "doing cool stuff" isn't particularly actionable, I still think it's fair to say that marketing needs to be loved. In order to do marketing that people love, you need to have some fun and focus on adding value.

  4. Don't bury your head in the sand

    The worst thing you can do is ignore the trends and changes taking place. Google is changing, user expectations and behaviours are changing, our industry is changing. As an industry, we've adapted very well over the last few years. We have to keep doing this if we're going to survive.

    Going back to link building, you need to accept that this stuff is really hard and building the types of links that Google value is hard.

In summary

Links aren't going anywhere. But the world is changing and we have to focus on what truly matters: marketing great products and building a loyal audience. 


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