sâmbătă, 25 aprilie 2015

Seth's Blog : Terroir

Terroir

You can taste it.

Heinz ketchup has no terroir. It always tastes like everywhere and nowhere and the same. A Dijon mustard from a small producer in France, though, you can taste where it came from. Foodies seek out this distinction in handcrafted chocolate or wine or just about anything where the land and environment are thought to matter.

But we can extend the idea to you, to your work, to the thing you're building.

Visit the City Bakery in New York. Every square inch contains the DNA of the whole place. The planking of the floor. The sound as you sit on the balcony. The parade of people coming in and out. The staff. It's not like anyplace else. It's not like everyplace else. It's like the City Bakery.

Consistent doesn't mean, "like everybody else." Consistent in this case means, "like yourself." If we took just one drop of your work and your reputation and the trail you leave behind, could we reconstruct the rest of it?

The pressure on each of us to fit in, to industrialize, to be more like Heinz--it's huge. But to do so is to lose the essence of what we make.

       

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vineri, 24 aprilie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


New Problem, Old Tracks

Posted: 24 Apr 2015 07:26 PM PDT

The San Francisco Bay Area Region Transportation system (BART) has a major problem: aging tracks that border on unsafe.

The San Francisco Chronicle details the problem in BART has New Problem: Old Tracks.
The nearly half-century-old system needs to replace its worn steel rails and cross ties. The problem has produced derailments, a drop in train speed in several trouble spots, and a repair schedule that will close the tracks in Oakland over an estimated 11 weekends.

Track maintenance is nothing new for transit systems as equipment and track wear out. But the scale of the problem and BART's essential role in carting nearly 400,000 daily riders to work, school and appointments make the task important. It's imperative that the system focus on improving service as quickly as it can — or risk public concerns about safety and reliability.
Rail Refresher Solution

The following video sent by reader Justin is the exact solution. Meet the "Rail Refresher"



That is one of the most amazing pieces of equipment I have ever seen.
How many workers will it replace?

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

ECB Buys Negative Yield Covered Bonds; Trade Guaranteed to Blow Up

Posted: 24 Apr 2015 11:32 AM PDT

In a move 100% guaranteed to blow up at a later date, the ECB Said to Start Buying Covered Bonds With Negative Yields.
The European Central Bank started buying covered bonds with negative yields as its asset-purchase program reduces the supply of the highly rated debt, according to two people familiar with the matter.

The central bank bought the debt in the past two weeks, said the people, who asked not to be identified because the information is private. The notes were from Germany, one of the people said.

The ECB has bought 69.7 billion euros ($75.5 billion) of covered bonds since October as part of its latest measures designed to stimulus growth in the euro area. The accumulation of assets is driving down yields and the central bank now holds about 15 percent of the market, according to ABN Amro Bank NV.

"The ECB has caused this situation by being a big buyer and has exacerbated the already negative net supply of covered bonds," said Joost Beaumont, a fixed-income strategist at ABN Amro in Amsterdam. "If the ECB buys more, yields will go still lower and that's going to affect the ECB itself."

The ECB, which is also buying government bonds and asset-backed debt, has said it will buy negative-yielding securities up to its cash deposit rate of minus 0.2 percent.

An ECB spokesman declined to comment on its covered debt purchases.

"Supply in positive yields is getting scarce and the ECB may have no other choice to fulfill its targeted purchase volume than to buy negative-yielding bonds," said Tobias Meyer, an analyst at Norddeutsche Landesbank in Hanover, Germany.
Trade Guaranteed to Blow Up

I agree with Beaumont's comment this is "going to affect the ECB itself".

In fact I will go one further and suggest this is a "trade guaranteed to blow up", I just cannot say when or even in precisely what ways.

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

Durable Goods Orders Up but Core Capital Goods Negative Again

Posted: 24 Apr 2015 10:08 AM PDT

Durable goods orders are somewhat of a mixed bag today, but beneath the headline rise, weakness is easy to find.

The Bloomberg Consensus was for a 0.5% rise, and the actual result was a whopping 4% gain due to transportation.

Yet, transportation for last month was revised lower, and excluding transportation durable goods orders shrank.

More importantly, core capital goods orders declined for at least four consecutive months.

Let's dive into the Census Report on Durable Goods for more details. Here is a table of key items I made from the report.

ItemMarFebJanFeb-Mar %ChgJan-Feb % ChgDec-Jan % Chg
Total New Orders240,175230,911234,272 4.0-1.41.9
Ex-Transportation Orders159,917160,174162,227-0.2-1.3-0.9
Ex-Defense Orders228,119222,394224,6522.6-1.02.2
Transportation Orders80,25870,73772,04513.5-1.88.9
Capital Goods Orders89,67385,58886,7234.8-1.37.1
Non-Defense Capital Goods Orders80,21377,50479,2143.5-2.2-0.3
Defense Capital Goods Orders9,4608,0847,509177.7-6.3
Core Capital Goods Orders68,18968,53770,062-0.5-2.2-0.3
Core Capital Goods Shipments69,61169,88969,789-0.40.1-0.6

Line items (except the last line which shows shipments) are new orders, in millions of dollars, seasonally adjusted. Core capital goods exclude defense and aircraft.

Once again this was another weak economic report excluding aircraft orders that have long lead times and are frequently cancelled.

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

Supersaturation and Store Cannibalization: McDonald's to Close 700 Stores, 350 Already Took Place First Quarter

Posted: 24 Apr 2015 12:34 AM PDT

McDonald's is closing 700 stores this year, 350 of which took place first quarter. That sounds like a lot but it pales in comparison to the 32,500 stores in the chain.

Still it is a sign of Multiple Problems for McDonald's
On Wednesday, McDonald's had reported an 11% decrease in revenue and a 30% drop in profit for the first three months of year, a continuation of its troubles in the last two years as it has struggled to compete with new U.S. competitors, a tough economy in Europe and a food safety scare in Asia.

McDonald's CFO Kevin Ozan told analysts that the shuttered stores in China, where comparable sales fell 4.8% in the first quarter, had been underperforming for years. In Japan, where McDonald's is still reeling from the food safety scare last summer, the closed stores were "heavy loss maker restaurants." As for the U.S., comparable sales were down 2.3%, one of their biggest drop in years as chains like Chipotle ate into sales.

In the last few months, it has made a few moves that telegraph where it is heading, though it is pretty clear how big the challenge will be for the Golden Arches.

For instance, earlier in April the company announced it is testing out a larger, pricier, third-of-a-pound burger for $5, two years after dropping the similar Angus burger line because they were too pricey for McDonald's diners. Despite that earlier failure, new CEO Steve Easterbrook expressed confidence his customers would go for premium burgers.

But he faces an uphill battle in winning over the millions of burger-eaters in the U.S. that have a dim view of McDonald's offerings: Nation's Restaurant News published a survey this month rating 111 limited-service chains on 10 attributes including food quality, and McDonald's was ranked No. 110, ahead only of Chuck E. Cheese. In-N-Out Burger topped the list.

And he also has to get the thousands of franchisees, who own 80% of McDonald's locations, on board as he works to transform the company, even as many are still smarting from his decision to raise wages at company-owned U.S. restaurants.
Low Quality at Premium Prices

Can you sell low-quality "premium" burgers in a place that looks like crap? Other than its breakfast menu there is almost nothing I will touch at McDonald's.

Fools cheered when McDonalds and Walmart raised wages.

Here is the other side of the coin: Is McDonalds or any chain going to expand rapidly if wage pressures mount?

Store Cannibalization

Every hike in wages is another marginal store that won't make it, or will not get built in the first place. All these chains do is cannibalizing each other's business.

Every market share gain by Chipotle is a loss by McDonald's, Applebees, Burger King, or someplace else.

Supersaturation

Cities are supersaturated with fast food junk. Saturation also applies to grocery stores, sporting goods stores, Target, Home Depot, Lowes, etc.

I keep wondering when it ends.

I don't have the answer, but it will, and I actually suspect soon. The trigger could easily be the rise in wages. When it happens it will be sudden and "unexpected".

Expect another round of "no one could possibly see this coming".

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

Damn Cool Pics

Damn Cool Pics


This Device Draws Blood Without Using A Needle

Posted: 24 Apr 2015 02:55 PM PDT

People who hate needles are sure to be thrilled about this new device. The device is able to draw blood by using a vacuum and it only takes about to two minutes for the blood to be drawn.



The company who makes it was just granted an additional $3 million from DARPA and the device will hopefully be on the market next year.

Before And After Pictures Show How A Nose Job Can Change Your Face

Posted: 24 Apr 2015 02:48 PM PDT

A good nose job can make all the difference when it comes to a person's looks.

















via imgur

An Awesome Tribute To The Legendary Andre The Giant

Posted: 24 Apr 2015 02:08 PM PDT

Andre The Giant was the most legendary giant of all time. His impact on entertainment and pop culture in general will never be forgotten.


























Extract SEO Value from SERPs with Knowledge Graph and Answer Boxes - Whiteboard Friday - Moz Blog


Extract SEO Value from SERPs with Knowledge Graph and Answer Boxes - Whiteboard Friday

Posted on: Friday 24 April 2015 — 02:16

Posted by randfish

Many SEOs are frustrated by the ever-expanding repertoire of answer boxes and results from the Knowledge Graph on Google's SERPs. One thing we can be sure of is that they're not going away anytime soon, so in today's Whiteboard Friday, Rand offers some strategic advice (as well as several tactics) for getting SEO value from those SERPs, and even from those boxes.

For reference, here's a still of this week's whiteboard. Click on it to open a high-resolution image in a new tab!

SERPS in Knowledge Graph Whiteboard

Howdy, Moz Fans!

...and welcome to another edition of Whiteboard Friday. This week we're talking about the rich answers, instant answers, direct answers, whatever you want to call them, that Google and Bing are providing in search results, that are taking away a lot of clicks from those search results that people look for.

4 Types of challenging results

I think the big four that SEOs are concerned about are what I'm going to walk through first, and then we'll talk about some tactical ways that marketers can actually work around them or even take advantage of them.

#1 - Customized instant answer (a.k.a. answer boxes)

So the first one here is what I'm calling the "customized instant answer." This is where Google has essentially said, "Hey, we're going to custom-build something for this type of a query that shows this kind of an answer box." You can see these for math equations, for weather kinds of searches.

The one I'm showing here is specifically around sports and schedules. So I search for Seattle Mariners, the local baseball team here in Seattle, who today, as of filming, it is their opening day, April 7. So Seattle Mariners' schedule is actually showing. Well, it's actually showing the score in real time, since the game's going on as I'm filming, but below that it shows scores and schedules. It says, "4-6 versus the Angels, live at the bottom of the 6th, 4-7 versus the Angels 7:10 p.m." etc., etc.

Then, it actually goes all the way down here, and if you click on any of these, you'll get more detail about where the game's being hosted and where you can watch it on television. Google's essentially said, "Hey, you know what? No one should ever have to click on any results to get all of the key information about the schedule." If you're looking for far-out scheduling stuff or very specific kinds of things, maybe you might go to there, but they even have links in here directly to buy tickets online. So really, they're taking away a lot of the clicks here.

#2 - Knowledge Graph answer

Second, the Knowledge Graph answer. This is where Google essentially is using their Knowledge Graph to provide a specific answer. You can think of this as connecting up with entities or concepts, brands, those kinds of things. I search for "Mariners mascot," Google will give me this little box from their Knowledge Graph that says, "Mariner Moose, the Seattle Mariners, mascot," and they have a little logo there. They don't actually show a picture. I have to scroll down if I want to get images. But the next link there, of course, is the Mariner Moose webpage on Seattle.Mariners.mlb.com, that's a lot of sub-domains, Major League Baseball, but we'll deal with that later.

#3 - Knowledge Graph sidebar

Then the third one, Knowledge Graph sidebar, this is probably what we're most accustomed to when it comes to the Knowledge Graph, where I search, I get a list of results, but then there's also a Knowledge Graph piece on the right-hand side. This one is showing Seattle Mariners baseball team. There's the logo, arena, location, our manager, some details about the team, where some of this data is extracted from, etc. Typical Knowledge Graph kind of result off to the side.

#4 - Extracted instant answers

Then fourth, and potentially most perturbing, I think for many SEOs, many marketers, is the extracted instant answer. This is an answer that Google has pulled from a website, potentially your website, and they're showing right in the results that full answer, without a searcher needing to visit the page. Most of the time they will cite the page. Some of the time they don't even cite where the page, where the answer came from, which means you don't even have an opportunity to earn that click. Even more insanely frustrating.

But in this case I've searched for baseball, how many players on a baseball team. You can phrase this query in a bunch of different ways, and you will get Major League Baseball rosters, a roster of players able to play, blah, blah, blah, blah, the 25-man roster, and the 40-man roster. Do there are two different kinds of rosters in baseball, and Google is building a big, long answer to try and explain this and then sending you to the Wikipedia page if you need more detail.

So these four kinds of things are causing a ton of consternation in our field. There was a study from Stone Temple Consulting, out in Boston, that Eric Enge and Mark Traphagen put together, where they looked and saw that over a large quantity of search results, I believe it was 800,000 search results set, almost 20%, 19% of those had rich answers in some format, direct answers in the SERPS, like one of these, and I think that even excluded number three here, the Knowledge Graph. So that's a lot of queries where Google is taking away, potentially, a ton of traffic.

You might say "Hey, well, in the long tail and in the chunky middle, it's probably not as bad as it is in the fat head of query demand." But this is still very significant for a lot of folks. So there are two ways to think about this. One is strategically, and one is tactically.

Strategic plans to consider

My first advice is on the strategy side of SEO. So when you're thinking about Knowledge Graph and instant answers and these kinds of things, how they affect your results, I'd ask;

#1 - Decide whether branding is worth it

"Is the branding of extracted answers a worthwhile SEO investment?" If you get this, like Wikipedia has here, is that actually worthwhile for you? Or is that something where you say, "You know what? We're not going to concentrate on it?" Therefore from saying, "Hey, that's not an investment for us, any time we start to see these types of results, we're no longer going to make a considerable SEO investment there. We don't really care if our competition gets it. We'd rather focus our energy, attention, dollars, people, time on the organic results, where we think we can earn a higher click-through rate and actual traffic, rather than just the brand association." Or you might say, "Brand association matters hugely. We want very much to be associated with baseball. We're trying to build this up. It would be great if we could replace Wikipedia here. We'd be thrilled even if we didn't get the traffic."

Then, you need to go through the step of actually building some analytics. We need to say, "Hey, how are we going to measure, when we get these kinds of results, the potential volume that's going on there, and then how are we going to record that as a success?" You won't be able to see it in your visitor analytics or in any metric that is directly associated with your website.

#2 - Evaluate the likelihood of Google replacing your content

What kinds of content investments could Google replace with instant answers? Content investments that we are making or that we are planning to make. If they could replace them, how likely do we think that is, and does that change our strategy around what we want to invest in from a content perspective, from an SEO perspective, for the future?

If we say "Hey, you know what? We are in the online printing business, and we think that Google will soon have a price comparison, in-search, direct answer kind of a thing, like they have for flight search, in our field. You know what? Maybe we want to shy away from that, and we want to go down a different avenue for the content that we're going to create." That could be something that goes into your calculus around decision-making. I would urge you to at least consider the possibility and know where your threat vectors are from a "Google taking us over in the SERPS" perspective.

#3 - Decide if customized answers will help or hinder your plans

Do we want more customized answers? If you're Major League Baseball or the Seattle Mariners, this is actually probably a godsend. This is a wonderful thing, reason being it helps folks directly find, so fast, where they can watch it on television, where to buy tickets online. This is actually probably wonderful for the Seattle Mariners. They don't actually care that much, at least from a strategic perspective and overall perspective, whether this is costing them a lot of traffic to their website, because it's bringing great value to the brand. Google is sending folks directly to the authoritative site. So this means, from an SEO perspective, you don't get spammers or manipulators or ticket resellers, who are taking over this search space for them.

So depending on the kind of brand you are, the kind of organization you are, instant answers might be a great thing, in which case you might want to think about, "How can we partner more deeply with Google? What can we provide in a structured format? How do we get that information to them in that kind of way, where they will, hopefully, replace a lot of these fat-head queries with exactly what we're hoping they do in a fast, efficient manner for searchers?"

Tactical plans to consider

Next up is tactical plans to consider, and I think the first one's most important here.

#1 - Evaluate SERP opportunity

When you are doing your keyword research and your keyword evaluation, I think one of the things that many, many folks are still missing from this is a column that looks at keyword opportunity. So historically, we've had a bunch of things when we do keyword research. Here's our keyword column. We look at difficulty. We might look at volume. We might look at potential value to the business. Maybe we're looking at how successful it was when we purchased that keyword and what the conversion rates were like, all those kinds of things, path to conversion, etc., etc.

But one of the things we have not historically focused on is keyword opportunity, meaning the click-through rate opportunity. You could do something like a bucket -- high, medium and low. I put HML here. You could say something like, "Hey, we think that this alters the click-through rate curve, random guess 30%, 40%, whatever it is," and use some numbers to classify those so that when you're actually doing keyword research and choosing which keywords to consider, you make the right kinds of decisions, because a lot of the time you might see, hey, this has high volume, the difficulty's not that bad, oh shoot, but Google has an instant extracted answer that is taking up 30% of the above-the-fold space or 40% of the above-the-fold space. SERP number one is probably getting 20% of the click-through rate that it would ordinarily get if that instant answer weren't there. So that needs to be a part of our calculations going forward.

#2 - Identify content and intent gaps in Knowledge Graph and answer boxes

What kinds of content and kinds of event are searchers who are not satisfied by the Knowledge Graph or instant answer listing, what are they searching for and how? That is an opportunity for us to get around this problem. If I search for "Seattle Mariners schedule," but what I'm actually looking for is I only want to see away games that are in three states that I'm going to be visiting, well, you know what? Actually, this isn't enough. I need to go directly to the page, and so that might be an intent that I'm going to try and serve very easily from a user experience perspective on the page that ranks first that's on seattle.mariners.mlb.com.

That question, if you can answer that effectively and find a bunch of those, you may, in fact, over time be able to get rid of those instant answers. You've probably seen, there have been examples, where Google had an instant answer, had a Knowledge Graph, got rid of it, and my perception is that a big reason for that is that searchers weren't clicking those. They weren't taking advantage of them and instead they were choosing results below the fold, below the instant answer, and so Google got rid of it. So nice thing there.

#3 - Decide if structuring data for Google helps or hurts your cause

Should we be creating or avoiding structured data for Google to use, and will our competition do that? So you need to make a decision. Hey, should we create structured data that Google can easily pull into Knowledge Graph, easily pull into instant answers? If we don't do it, will our competition do it? Do we care if they do it, if we don't do it? It's a little bit of prisoner's dilemma sometimes, but you've got to make the call there, and I think that's something SEOs should do in their tactical plan around keywords.

#4 - Create control data (where possible) for search traffic analytics

Next, do we need to control for search traffic changes with Knowledge Graph and instant answers in our analytics or our forward-looking estimates? So if you say to yourself, "Hey, we started seeing some tests here. We expect Google's going to roll this out in our space, around our site. How is that going to impact us, and what does that mean for our year-over-year search estimates for SEO, traffic estimates for SEO? Or what does it mean for how much we think we can grow this year or in the future, that kind of thing?" Looking backwards, if this has been introduced, how much did that change our results sets and our traffic, and do we think that could happen more or less? Have we put that into our analytics so that we recognize, hey, our SEOs did great work. Google just took a lot of the traffic away from us, from an opportunity perspective?"

#5 - Focus on longer-tail searcher intent

Then the last one I think we need to think about is very deep in the tactical trenches, but that is: Did the titles, descriptions, and even the keyword targets that were focused on, those need to focus on longer-tail or more specific types of questions and searcher intent. So we might say, "Hey, you know what? I'm willing to sacrifice ranking for 'Mariners mascot', but I really want to rank for 'Mariner Moose videos.' Or I really want to rank for 'Mariner Moose costumes.' I really want to rank for whatever those extra intents, those things deeper down the funnel, and those long-tail parts of the query might be." That could change the types of content and keywords that you invest in.

All right everyone, I know Knowledge Graph and instant answers can sometimes be very frustrating for us. But I hope you'll apply these tactics and recommend some more in the comments and that we'll see you again next week for another edition of Whiteboard Friday. Take care.

Video transcription by Speechpad.com


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Seth's Blog : Reckless abandon (is neither)

Reckless abandon (is neither)

It's not reckless, because when we leap, when we dive in, when we begin, only begin, we bring our true nature to the project, we make it personal and urgent.

And it's not abandon, not in the sense that we've abandoned our senses or our responsibility. In fact, abandoning the fear of fear that is holding us back is the single best way not to abandon the work, the pure execution of the work.

Later, there's time to backpedal and water down. But right now, reckless please.

       

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joi, 23 aprilie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


Spain's Unemployment Rate Increases to 23.7%; 114,300 Jobs Vanish in First Quarter, Public Sector Jobs Rise

Posted: 23 Apr 2015 03:28 PM PDT

The economic recovery in Spain has gone from jobless to jobloss. Spain shed 114,300 jobs in the first quarter of 2015.

Via translation from El Pais, Spain's Unemployment Rate Rose Slightly in the First Quarter.

The economic recovery has not been enough to create jobs. In the first three months of the year, the economy shed 114,300 jobs. The result has been a slight increase in the unemployment rate from 23.7% to 23.78% according to the Labour Force Survey (EPA) published by the National Employment Institute.

The rise in unemployment could have been higher if not for the significant decline in the labor force. This group has fallen by 127,400 people to 22.9 million.

As was the case in the previous quarter, again, the labor kick is a decline in private employment (143,500), since the public has grown to 29,200 jobs.

Spain Unemployment Rate



Key Points

  • Employed: 17.454 million
  • Unemployed: 5.444 million 
  • Labor Force: 22.9 million
  • Unemployment Rate: 23.78%
  • Youth Unemployment: 50.1%

Those are horrific numbers. The unemployment rate would be higher except for a decline in the labor force coupled with public sector hiring (likely an election ploy given national elections this Autumn).

The only way Spain can grow and hit budget deficit targets is via numbers like these. In fact, I strongly suspect Spain will miss its budget deficit target because of public sector spending.

How long before Spanish citizens have had enough? The next national election may be telling.

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

Kansas City Fed Manufacturing Report: Nearly a Clean Negative Sweep; US Dollar Effect in Spotlight

Posted: 23 Apr 2015 10:27 AM PDT

Inquiring minds are digging into the Federal Reserve Manufacturing Report for the 10th District Region.

10th District Summary



Note the near clean sweep in the negative sense. Actually, inventories of materials rising in the midst of a decline in orders is not a good thing either.

New orders, backlog of orders, employment, and length of workweek have all crashed. Prices paid and received are deflationary.

US Dollar Effect in Spotlight

Effect of the strength of the US dollar is notable in the comments

  1. We are experiencing more volatility on revenue monthly. One month may be much higher than previous month or year and then the next month may be much lower, etc.
  2. The durable goods sector just isn't very good, impacted mightily by the price of oil. We are reducing headcount and spending where possible in an effort to withstand this phase of the economy for however long it lasts.
  3. Competition for business is fierce especially with the low cost labor and better logistics from Mexico. We are finding more and more customers moving manufacturing operations to Mexico.
  4. The manufacturers in the energy producing states are struggling to make adjustments given the speed at with oil prices dropped.
  5. Raw material suppliers have announced large increases in price, however, they keep moving the effective dates back. These announced increases are not supported by actual cost increases. Their sales are down so we are not taking the announced increases are seriously. If they do go into effect, our larger inventories will be a cushion.
  6. West coast port disputes have us out of stock on key items. No information available on when we will receive products. We will look at reducing our employee count next month if we do not receive goods in April.
  7. We import dry bulk cement from Asia and Europe so the strong dollar has given us more buying power. We also export the same type products to Canada where the strong dollar has hurt our margins and made it harder to compete.
  8. The strong dollar is good in that it's driving down commodity prices, but bad because it is making us less competitive globally. We're making fewer products but making more money on them. It has been bad for our employees because we have less work (and fewer employees). Overall , it's a negative for us.
  9. The stronger dollar is undoubtedly creating more opportunity for foreign manufacturers. The impact has only begun to be felt in our bookings.

Comments number two, three, and nine are telling.

Recession?

I stick with my assessment made in January and commented on twice recently.


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

New Home Sales Down 11.4% Overall, 15.8% in South; Median Price Declines

Posted: 23 Apr 2015 08:58 AM PDT

The Bloomberg consensus estimate for new homes sales was an overly-optimistic 518,000. Instead, it's bad news again as new home sales fell a very steep 11.4 percent to a 481,000 annual rate.

  • New home sales -11.4%
  • New homes sales in South -15.8%, West -3.4%, Midwest +5.6%, -33.3% Northeast
  • Median price fell 1.5% to $277,400.
  • Year-on-year, the median price is down 1.7%.
  • Sales are up 19.4% year over year, a discrepancy that points to price discounting by builders
  • Today's report echoes last week's housing starts & permits data and points to stubborn weakness in the new homes market.

New Home Sales in Thousands



The Northeast contributes the least. The South contributes the most followed by the West so weather is not a significant factor.

Above New Home Sales table from Census.Gov.

Single Family Home Sales



Everyone seems to expect a return to the bubble years even though it's pretty clear where the range really belongs.

Demographically speaking, as boomers age, their houses will add to existing supply as they downsize, then pass away.

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

Seven Year Negative Returns in Stocks and Bonds; Fraudulent Promises

Posted: 23 Apr 2015 12:05 AM PDT

It is extremely refreshing to see a large, prominent, and historically accurate fund manager lay it on the line.

GMO does that quarter after quarter, with no-nonsense projections.

As of March 31, their 7-Year Asset Class Real Return Forecast is as follows.



Serious Question for Pension Plans

Given pension plan assumptions of 7-8% annualized returns how many of them can survive negative returns for seven years? It's important to note that GMO is talking about "real" inflation-adjusted returns with an assumption of mean-reversion inflation to 2.2% over 15 years.

Still, that leaves US equities at zero to -1% returns and US bonds at negative 2.4% returns.

Even if GMO is wrong by say 3%, many pension plans will be in deep serious trouble at those returns.

Illinois Pension Plans

I keep harping about this issue, but it's an important one. In the state of Illinois, and in spite of an enormous rally in the stock market since 2009, Illinois pension plans are only 39% funded.

A "Special Pension Briefing" last November, shows the Illinois State Retirement Systems are in dismal shape.

Unfunded Liabilities

  • Teachers' Retirement System (TRS): $61.6 Billion
  • State Retirement Systems (SERS): $26.2 Billion
  • State Universities Retirement System (SURS): $21.6 Billion
  • Judicial Retirement System (JRS): $1.5 Billion
  • General Assembly Retirement System (GARS): $0.3 Billion

The above numbers show actuarial (smoothed) asset valuations.

Liability Trends - Not Smoothed




In spite of the massive stock market rally, Illinois liabilities increased every year since 2011.

For still more details, please see Illinois Pension Plans 39% Funded; Taxpayers On the Hook for $105 Billion in Liabilities; It Will Get Worse!.

Any notion that pension shortfalls can be balanced on the backs of Illinois taxpayers needs to vanish now.

How did Illinois plans became so underfunded?

In general, by promising far more than can possibly be delivered.

Summary of Liabilities and Unfunded Ratios




click on any chart for sharper image

Congratulations go to the Illinois General Assembly Retirement System (GARS) for having one of the worst, (if not the worst) pension plan in the entire nation. It is 16% funded.

No doubt, that increases the pressure of the General Assembly to put the burden of bailing out the system on the backs of Illinois taxpayers.

Fraudulent Promises

Pension promises were not made in good faith.

Rather, pension promises were the direct result of coercion by public unions on legislators, mayors, and other officials willing to accept bribes because they shared in the ill-gotten gains of backroom deals at taxpayer expense.

Illinois taxpayers cannot be held accountable for coercion of public officials by public unions. Fraudulent promises will be held "null and void" in any "non-stacked" court of law in the nation.

Given the 31% funding of the Illinois Judicial Pension Plan (JRS), the sorry state of Illinois pensions is likely headed to federal courts.

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