Mish's Global Economic Trend Analysis

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• Mish with Gordon Long: Video Interview on the Troubles in Illinois and Greece
• Tax Revenue Collapses in Greece; Government Denies Capital Controls; Citizens Pull €2bn in Three Days
• CPI Jumps 0.4% on Gasoline Prices, Still Flat From Year Ago; Debt Deflation Dynamics

Mish with Gordon Long: Video Interview on the Troubles in Illinois and Greece Posted: 18 Jun 2015 07:35 PM PDT A week ago, Gordon Long at Macro Analytics interviewed me for the third time on Financial Repression. Long made the interview available today. The subject this time is Illinois pensions and turmoil in Greece. I believe a minimum of seven Illinois cities are in serious and immediate trouble, unable to meet current obligations. Numerous others cities are in serious trouble over pensions eventually. We also discussed Greece. I stated, as I have on my blog, that it appears Greece is stringing the Troika along, purposely giving Greek citizens time to pull deposits. Today we learned Tax Revenue Collapses in Greece; Government Denies Capital Controls; Citizens Pull €2bn in Three Days. Link if video does not play: Mish Comes Out Swinging on State of Illinois, Public Pensions and Greece. Previous Interviews with Gordon Long April 20, 2015: America's Pension Problem: Gordon Long Interview of Mish October 2, 2014: Financial Repression (and How to Defend Yourself From It) Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Tax Revenue Collapses in Greece; Government Denies Capital Controls; Citizens Pull €2bn in Three Days Posted: 18 Jun 2015 08:40 AM PDT Knowing that a default is now inevitable, Greek citizens made a decision to stop paying taxes. The result was foreseeable: Greek Government Suffers Collapse in Revenue in May. The Greek government suffered a collapse in revenue in May after companies and individuals delayed filing tax returns amid fears that emergency levies were imminent in order to secure a deal with bailout creditors. The news of the sharp drop in receipts comes as eurozone finance ministers held a crunch meeting to discuss the country's bailout. Greek government revenues in May were €900m, or 24 per cent, short of the monthly target, according to preliminary budget figures. It had met projections for the previous three months. But Greece still ran a primary budget surplus — before making payments on the public debt — amounting to €1.5bn for the first five months after slashing payments to suppliers and outlays for public investment. "There appears to be a complete freeze on domestic payments apart from wages and pensions as the government rounds up cash to pay international creditors," a senior Athens banker said. "This is starting to have a knock-on effect on revenue collection." A government spokesman on Wednesday denied reports Greece was considering imposing capital controls, perhaps as early as next week. Cash withdrawals from local banks have picked up pace, with almost €2bn pulled out in the past three days, the same banker said. "This week's gloomy scenarios have affected depositors . . . We are back where we were in January [when about €10bn left Greek banks]," he said. Capital Controls? On one hand, we have an official denial. Please recall the expression: "Never believe anything until it's officially denied". On the other hand, it makes sense for Greece to allow citizens to pull cash as long as the ECB does not remove ELA. Sooner or later, either the ECB or the Greek government will impose capital controls. I suspect it will be the ECB that forces the issue. Meanwhile, my oft-repeated message takes on increased urgency: "Get your money out of Greek banks while you still can!" Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

CPI Jumps 0.4% on Gasoline Prices, Still Flat From Year Ago; Debt Deflation Dynamics Posted: 18 Jun 2015 07:43 AM PDT The headlines on today's CPI jump of 0.4% are all over the map. If you want a slant one way or another you can find it. For example: Reuters says U.S. consumer prices post largest gain in more than two years. Bloomberg says U.S. Consumer Prices Fall Short of Expectations at 0.4% In reality, this is pretty much an expected jump due to rising gasoline prices. The above Bloomberg headline is all the more interesting because the Bloomberg Consensus Estimate was nearly spot on at 0.5%. I have been mocking economists' estimates for most of the year, but it seems to me they got this one correct. The entire consensus range was reasonable for a change. From Bloomberg Econoday: Just about all the readings in the May consumer price report point to very soft price pressures with the overall monthly gain, at plus 0.4 percent, and the ex-food ex-gasoline core gain, at only plus 0.1 percent, at or near the low-end of the Econoday forecasts. The 0.4 percent overall gain may look a bit high compared with prior months including April's 0.1 percent rise, but it reflects an unsurprising jump in energy costs specifically gasoline which jumped 10.4 percent in the month. But energy prices are still very low, confirmed by the year-on-year rates which for all energy products are down 16.3 percent and for gasoline, down 25.0 percent (no misprint). But the look at the year-on-year rates shows one element of pressure, a plus 1.7 percent rate for the core. This is down from 1.8 percent in April but is still skating a bit close to the 2.0 percent hawk barrier at the Fed. The overall year-on-year rate, however, is as benign as can be at zero percent. Components of note include a second month of declines for apparel, down 0.5 percent in May after falling 0.3 percent in April which is not good news for the nation's retailers. Education & communication also fell, down 0.1 percent. Showing pressure is a 2.7 percent rise for transportation that reflects a jump in airfares. This follows, however, a 0.3 percent dip in transportation for April. Food costs and housing costs show no increase in May. The lack of pressure through most of this report gives the Fed plenty of waiting time before raising rates, especially given what have been even more benign rates in the more closely watched PCE index. Year-Over-Year CPI Debt Deflation Dynamics Year-over-year prices are benign, but the CPI ignores asset inflation in stocks, land, homes, bonds, etc. On that basis, inflation is hardly benign. Moreover health-care is hardly benign, and probably under-reported. Finally, one can and should question food substitution and other anomalies that suppress the stated rate. The real problem though is asset inflation. When various bubbles pop, rate hikes by the Fed are going to come much slower than economists expect. Even after the housing bust, few economists understand the dynamics of debt-deflation, bubbles popping, and the overall burden of debt itself. Round after round of counterproductive QE created asset bubbles, but most economists (including the Fed) will not see the problem until those bubbles pop. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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Damn Cool Pics

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Taking a Group Photo Is Not an Exact Science Posted: 18 Jun 2015 07:12 PM PDT

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The Colossus Update: Waking The Giant - Moz Blog

The Colossus Update: Waking The Giant

Posted by Dr-Pete

Yesterday morning, we woke up to a historically massive temperature spike on MozCast, after an unusually quiet weekend. The 10-day weather looked like this:

That's 101.8°F, one of the hottest verified days on record, second only to a series of unconfirmed spikes in June of 2013. For reference, the first Penguin update clocked in at 93.1°.

Unfortunately, trying to determine how the algorithm changed from looking at individual keywords (even thousands of them) is more art than science, and even the art is more often Ms. Johnson's Kindergarten class than Picasso. Sometimes, though, we catch a break and spot something.

The First Clue: HTTPS

When you watch enough SERPs, you start to realize that change is normal. So, the trick is to find the queries that changed a lot on the day in question but are historically quiet. Looking at a few of these, I noticed some apparent shake-ups in HTTP vs. HTTPS (secure) URLs. So, the question becomes: are these anecdotes, or do they represent a pattern?

I dove in and looked at how many URLs for our 10,000 page-1 SERPs were HTTPS over the past few days, and I saw this:

On the morning of June 17, HTTPS URLs on page 1 jumped from 16.9% to 18.4% (a 9.9% day-over-day increase), after trending up for a few days. This represents the total real-estate occupied by HTTPS URLs, but how did rankings fare? Here are the average rankings across all HTTPS results:

HTTPS URLs also seem to have gotten a rankings boost – dropping (with "dropping" being a positive thing) from an average of 2.96 to 2.79 in the space of 24 hours.

Seems pretty convincing, right? Here's the problem: rankings don't just change because Google changes the algorithm. We are, collectively, changing the web every minute of the day. Often, those changes are just background noise (and there's a lot of noise), but sometimes a giant awakens.

The Second Clue: Wikipedia

Anecdotally, I noticed that some Wikipedia URLs seemed to be flipping from HTTP to HTTPS. I ran a quick count, and this wasn't just a fluke. It turns out that Wikipedia started switching their entire site to HTTPS around June 12 (hat tip to Jan Dunlop). This change is expected to take a couple of weeks.

It's just one site, though, right? Well, historically, this one site is the #1 largest land-holder across the SERP real-estate we track, with over 5% of the total page-1 URLs in our tracking data (5.19% as of June 17). Wikipedia is a giant, and its movements can shake the entire web.

So, how do we tease this apart? If Wikipedia's URLs had simply flipped from HTTP to HTTPS, we should see a pretty standard pattern of shake-up. Those URLs would look to have changed, but the SERPS around them would be quiet. So, I ran an analysis of what the temperature would've been if we ignored the protocol (treating HTTP/HTTPS as the same). While slightly lower, that temperature was still a scorching 96.6°F.

Is it possible that Wikipedia moving to HTTPS also made the site eligible for a rankings boost from previous algorithm updates, thus disrupting page 1 without any code changes on Google's end? Yes, it is possible – even a relatively small rankings boost for Wikipedia from the original HTTPS algorithm update could have a broad impact.

The Third Clue: Google?

So far, Google has only said that this was not a Panda update. There have been rumors that the HTTPS update would get a boost, as recently as SMX Advanced earlier this month, but no timeline was given for when that might happen.

Is it possible that Wikipedia's publicly announced switch finally gave Google the confidence to boost the HTTPS signal? Again, yes, it's possible, but we can only speculate at this point.

My gut feeling is that this was more than just a waking giant, even as powerful of a SERP force as Wikipedia has become. We should know more as their HTTPS roll-out continues and their index settles down. In the meantime, I think we can expect Google to become increasingly serious about HTTPS, even if what we saw yesterday turns out not to have been an algorithm update.

In the meantime, I'm going to melodramatically name this "The Colossus Update" because, well, it sounds cool. If this indeed was an algorithm update, I'm sure Google would prefer something sensible, like "HTTPS Update 2" or "Securageddon" (sorry, Gary).

Update from Google: Gary Illyes said that he's not aware of an HTTPS update (via Twitter):

No comment on other updates, or the potential impact of a Wikipedia change. I feel strongly that there is an HTTPS connection in the data, but as I said – that doesn't necessarily mean the algorithm changed.

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New Features in OSE's Spam Score & the Mozscape API

Posted by randfish

This week, we launched a feature inside Open Site Explorer that I'm very excited about - the Spam Score Histogram, found by clicking on the "spam analysis" tab:

The histogram is particularly useful for visualizing the distribution of potentially spammy links that show up in a site's link profile. Above, for example, we're looking at Moz.com, with a strong distribution of sites that have 0-5 spam flags. According to our research, that means the vast majority of those sites are unlikely to be penalized or banned by Google.

For more detail on Moz's Spam Score, check out the original blog post and my Whiteboard Friday.

The new histogram view lets us do nice comparisons like these:

Houzz.com has a very large list of sketchy-looking sites linking to them (many seem to be very thin content sites from China, curiously).

Competitor (well, sort-of-competitor), Porch.com, has a much smaller link profile with a very different distribution. Their link profile looks even healthier than Moz's to me!

But, the new spam score histogram isn't the only new feature. We've also got a new power available to API users - the ability to query data from the previous index. If you want to know what a previous Domain Authority score looked like, or how many links we reported to a page in our last index, you can now do so using the Moz API. If you want to get started, check out the documentation here, or get in touch directly with Chris Airola (email chris.airola at moz.com), who manages paid API accounts and loves to help.

Many thanks to the Research Tools and Big Data teams at Moz, who've worked to make this possible. I'm happy to answer questions and will try to be in the comments here frequently. I wish you good spam exploring my friends!

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