Central Perk: 11 iun. 2012

luni, 11 iunie 2012

Mish's Global Economic Trend Analysis

Gap-and-Crap Comparison: Spain Ibex vs. S&P 500
An "Emperor Has No Clothes" Moment: ESM Has Failed Already
Modern Day Fairy Tale of 3 Economic Wizards (Except It's True)

Gap-and-Crap Comparison: Spain Ibex vs. S&P 500

Posted: 11 Jun 2012 01:48 PM PDT

Inquiring minds just may be interested in a gap-and-crap comparison of the the S&P 500 index, the Spain Ibex index, and the Euro.

Spain Ibex Stock Market Index

S&P 500 Cash Index

Above Charts From Yahoo! Finance Major World Indices
Annotations by Mish

Euro vs. US Dollar

Above 15 Minute Chart from Stockcharts.

The 6% gap-and-crap action as happened in Spain is not an everyday occurrence to say the least. Clearly, the bailout euphoria was totally unjustified, as called in advance.

For a look at the European bond market selloff, please see An "Emperor Has No Clothes" Moment: ESM Has Failed Already

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

An "Emperor Has No Clothes" Moment: ESM Has Failed Already

Posted: 11 Jun 2012 10:44 AM PDT

In what may become a historic "Emperor Has No Clothes" moment, the euro, stocks, oil, and European government bonds all quickly reversed course following initial euphoria of a Spanish bank bailout that is sure to do more harm than good.

For details of the bailout please see Rajoy Proclaims "Victory", Says It's Not a Bailout "It's a Credit Line"; Existing Bondholders Subordinated

S&P 500 Futures 5-Minute Chart

Notice the ramp late Friday. Someone knew before the announcement, this bailout was coming. Official news did not come out until Saturday.

The market gapped up this morning on the news, and those who bought on Friday likely dumped at the open.

Not only was the initial Monday morning gap up taken back, the late-day ramp job on Friday went down the drain as well.

Subordinated Bondholders

This is what I had to say on Sunday regarding Subordinated Bondholders

In the too stupid to make up category, Rajoy defends 'victory' for EU credibility

"Holders of the subordinated debt will probably have to accept losses". So who wants to hold that debt given what happened to Greece?

It will be interesting to see if there is initial euphoria in the bond markets. Regardless, sooner or later (probably sooner), selling pressure will eventually overtake any initial excitement of this alleged "victory".

Bond Selloff

Someone emailed on Sunday proposing the market would run for about six days. While not making a specific prediction, I suggested the rally might not even last a day, and that it all depended on European bonds.

Spain 10-Year Bond Yield 6.508%

In the initial misguided euphoria, the yield of Spanish 10-Year bonds fell 15 basis points. The yield is now up nearly 30 basis points.

Chart from Bloomberg.

Italy 10-Year Bond Yield 6.03%

Chart from Bloomberg.

"Emperor Has No Clothes"

Those bond movements are the "Emperor Has No Clothes" moment.

Who wants to hold Spanish or Italian debt if it is going to be subordinated by special deals made to governments from the ESM?

ESM Has Failed Already

Rather than calm the bond markets, Rajoy's alleged "victory" is going to strengthen the selloff. The ESM concept has already failed. Ironically, the ESM has not even been officially launched!

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Modern Day Fairy Tale of 3 Economic Wizards (Except It's True)

Posted: 11 Jun 2012 01:15 AM PDT

Once upon a time (today), in a land not so far away (USA), there lived a trio of economic wizards (economists), whose names shall remain anonymous (Paul Krugman, Greg Mankiw, Ben Bernanke).

A fourth wizard, Murry Rothbard, is no longer among the living but resides in the netherworld.

The above wizards seldom agree with each other because they come from competing schools of wizardry.

Three Schools of Economic Wizardry

Keynesian School of Fiscal Voodoo and Witchcraft
Monetarist School of Monetary Voodoo and Witchcraft
Austrian School of Sound Money, Sound Economic Principles and Common Sense.

"Dark Arts" Wizardry

The first two wizardry schools belong to a class of wizardry promoted to aspiring wizards as the "Dark Arts".

Philosophical Beliefs

Keynesian wizards believe governments can spend their way to economic health and although fiscal deficits may matter at some point in time, they never matter now, in practice.
Monetarist wizards believe money will cure any and every problem if enough is dropped from helicopters and interest rates held low.
Austrian wizards believe that economic problems are created by unsound money, haphazard loans, excessive debts, and government manipulations.
Keynesian and Monetarist wizards believe in the voodoo principle "the problem is the solution if only you do more of it". The former relies primarily on fiscal voodoo, the latter relies primarily on monetary voodoo.
Austrian wizards do not believe "the problem is the solution", no matter how many times it is repeated.

Grand Poobahs

Paul Krugman is the economic "Grand Poobah" of the Keynesian wizards.
The "Grand Poobah" of Monetarist Voodoo is Fed chairman Ben Bernanke.
Murray Rothbard, no longer alive, was the last great proponent of school of Sound Money, Sound Economic Principles, and Common Sense.

"Dark Arts" Schools Overflowing With Students

The "Dark Arts" are very enticing to modern day wizards-in-training because nearly everyone likes money from helicopters and deficit spending (even when they claim they don't).

In response to demand for voodoo economists, the "Dark Arts" schools for voodoo economics are overflowing with young wizards all hoping to win a Nobel Prize in Voodooism with "fresh thinking" and new voodoo proposals.

Voodoo Proposal Example - Purposely Make Money Go Worthless

Aspiring Grand Poobah Greg Mankiw (Professor of Economic Wizardry at Harvard University) put forth a proposal that caused a stir in both the real world and the world of wizards.

Mankiw proposed that purposely making money go worthless over time would be of great economic benefit.

No Demand for Common Sense

The average non-wizard, living in the real world, with an education level beyond 2nd grade, would quickly see the ridiculousness of making money go worthless.

However, at the highest political levels, there is virtually no demand for common sense, and shockingly high demand for voodoo wizardry.

For example, if you ever expect to make chairman of the president's Council of Economic Advisers or become an economic adviser to Mitt Romney (Wizard Mankiw did both), then common sense must go out the window.

Aspiring wizards hoping for careers in politics better quickly learn that politicians never want to hear they cannot spend money. Instead, politicians want to hear economic voodoo.

"Dark Arts" Feuds

Given Keynesian and Monetarist wizards both believe in voodoo, one might think the two schools would get along reasonably well. One would be wrong.

There have been numerous public squabbles between Mankiw and Krugman but the mother of all verbal wizardry battles came when Krugman went so deep into fiscal voodoo theory that Bernanke Called Krugman "Reckless"

Ivory Towers and Academic Wonderland

Unlike non-wizards, modern-day economic wizards do not live in the real world, in real cities. Instead, they live in ivory towers in secret villages for wizards only, typically tucked away in obscure corners of major U.S. universities.

Collectively, these secret villages are known as "Academic Wonderland".

"Academic Wonderland" is strictly off limits to non-wizards with the exception of "Dark Arts" wizards-in-training. It is even off limits to those few aspiring wizards who believe in Sound Money, Sound Economic Principles, and Common Sense.

Real World Experience

"Dark Arts" wizards of the Keynesian and Monetarist schools generally have never worked in the real world. Instead, they sit in their ivory towers and devise empirical formulas as to how they expect the real world to behave.

Occasionally the "Dark Arts" wizards surface in the real world, primarily to explain their mathematical formulas as to how the world functions.

It is seldom of concern to economic wizards if the real world does not follow their mathematical formulas.

Decision Making at Night

"Dark Arts" wizards are very concerned about such nebulous concepts as the "Decision Making at Night". Here is set of equations from an aspiring wizard-in-training.

"Decision making at night" is of course different from "decision making in the day". Both are distinctly different than "decision making with no news".

Voodoo Wizards Like Secrecy

The voodoo wizard-in-training making the above proposal is a big proponent of secrecy, believing that Grand Poobahs need to keep what they are doing a big secret lest it change real-world decision making processes of non-wizards during the day or night.

Austerity

No "Dark Arts" wizard worth his weight in salt would ever propose that any country live within its means.

For a recent example, Paul Krugman, the Grand Poobah of the Keynesian School of Fiscal Voodoo and Witchcraft writes about Estonian Rhapsody.

Since Estonia has suddenly become the poster child for austerity defenders — they're on the euro and they're booming! — I thought it might be useful to have a picture of what we're talking about. Here's real GDP, from Eurostat:

So, a terrible — Depression-level — slump, followed by a significant but still incomplete recovery. Better than no recovery at all, obviously — but this is what passes for economic triumph?

Left Unsaid

Here's what Grand Poobah Krugman failed to say about the Booming Estonia Economy.

Sixteen months after it joined the struggling currency bloc, Estonia is booming. The economy grew 7.6 percent last year, five times the euro-zone average.

Estonia is the only euro-zone country with a budget surplus. National debt is just 6 percent of GDP, compared to 81 percent in virtuous Germany, or 165 percent in Greece.

Shoppers throng Nordic design shops and cool new restaurants in Tallinn, the medieval capital, and cutting-edge tech firms complain they can't find people to fill their job vacancies.

Estonia's achievement is all the more remarkable when you consider that it was one of the countries hardest hit by the global financial crisis. In 2008-2009, its economy shrank by 18 percent. That's a bigger contraction than Greece has suffered over the past five years.

How did they bounce back? "I can answer in one word: austerity. Austerity, austerity, austerity," says Peeter Koppel, investment strategist at the SEB Bank.

Estonia vs. Fantasyland

Estonia is not Nirvana. Estonia is not "Academic Wonderland" either.

In contrast, Krugman is in "Academic Wonderland". The Grand Poobah clearly believes Estonia would be in better shape with helicopter drops of fiscal stimulus than a very nice partial recovery and no debt, in spite of the fact the eurozone in general is going to hell in a hand basket.

Debt Never a Problem

In modern-day ivory towers, with voodoo economics, debt is never a problem. The only thing that matters is GDP.

One might think that a Nobel prize winner would figure out that government spending will make GDP rise by definition (government spending is part of the equation) and the debt must be paid back. However, one would be wrong.

Bear in mind, Japan has tried both Keynesian voodoo and Monetarist voodoo for over 20 years. The result is a nearly unfathomable debt-to-GDP ratio of 220% and rising. Krugman would have you believe still more spending is the answer. Monetarists like Mankiw would propose making the Yen worthless.

Remember the Voodoo Motto!

Please remember the voodoo motto: If it doesn't work, keep doing more of it, even if that is what got you in trouble in the first place!

Anyone with an ounce of common sense would realize that artificial stimulus will always end, but the debt will remain, hanging like the Sword of Damocles over the economy.

Sadly, these modern-day economic wizards do not have the common sense of the average 6th grader who inherently knows that you cannot keep spending what you do not have.

Invalid Comparisons

No doubt Krugman will point to the misery in Spain and Greece. The comparison is invalid. Estonia is booming not solely because of austerity but rather because it did a number of common-sense things that Spain and Greece did not fully do.

Slashed public sector wages
Raised the pension age
Reduced job protection
Made it more difficult to claim health benefits

Keynesian wizards would be against all those things!

Was Krugman a Housing Bubble Proponent?

In a 2002 New York Times editorial Krugman said "To fight this recession the Fed needs…soaring household spending to offset moribund business investment. [So] Alan Greenspan needs to create a housing bubble to replace the Nasdaq bubble."

Krugman claims "that wasn't a piece of policy advocacy, it was just economic analysis."

For further discussion please see Krugman's Intellectual Waterloo

When wizards get into trouble they claim they were misquoted, someone did too much, someone did not do enough or any number of other excuses.

No, it was not "policy advocacy", it was simply economic voodoo that Krugman condoned.

Krugman a Panderer to Public Unions

One of the reasons Estonia is recovering is it had the common sense to slash public sector wages.

In contrast, Krugman is a strong backer of public unions as noted in Wisconsin Power Play.

The reasons Krugman supports unions should be obvious:

Krugman wants to waste as much money as possible (because that is what Keynesian voodoo economics is all about).
There is no better way to waste taxpayer money than overpay for services from public unions.

Wizards in ivory towers have not completely figured out that money to pay public unions has to come from somewhere (namely taxpayers in general). Of course liberal Keynesian wizards (the worst kind) have an answer for that as well: take from productive members of society and slosh it around to public unions.

Never mind that public unions have bankrupted numerous cities and even in economic la-la land (otherwise known as California), backlash against unions is justifiably high and rising.

Moral of the Story

The average non-wizard non-union employee has long ago figured out the moral of this story. Those in ivory towers in "Academic Wonderland" have not, so I need to spell it out.

It is indeed possible to have a genuine economic debt-free recovery, along with austerity, as long as other sound economic measures are incorporated at the same time.

Yes, there will be some short-term pain. However, any attempt to avoid pain via heaps of fiscal and monetary stimulus is nothing but voodoo economics and can-kicking witchcraft.

Mike "Mish" Shedlock
http://globaleconomicanalysis.blogspot.com
Click Here To Scroll Thru My Recent Post List

Identifying and Fixing Your Worst Landing Pages

Posted: 10 Jun 2012 01:55 PM PDT

Posted by robmillard

Lately, I’ve been working on a lot more conversion-based projects, and one of the easiest and quickest improvements is to pick out the landing pages that aren’t performing and give them an overhaul. This post explores a core process that I usually work from.

Finding your worst pages

I’m going to use Google Analytics in my examples because most of us have it, but I believe all of these reports can be replicated in the likes of Omniture, etc.

When I’m looking for landing pages that are underperforming, some of the metrics that I take into account include:

Bounce rate
Navigation summary
Conversion rates

Filtering

Before I talk more specifically about each of these metrics, I want to touch on the power of using filters in your web analytics. If you notice that similar pages have higher than average bounce rates, for example, you can use filters to test whether or not this trend is true across the whole page type. For example:

You could use /product/ as a filter in order to check your product pages.
You could use /2010/ to look at old articles if you have dates in your URLs.
Regular expressions can make this even more flexible. /200[0-9]/ would show you just articles from 2000-2009.
Use regex or statements like (ipad|iphone) to group words that you think might be related.
Use an expression such as ^/([^/]+/){3}[^/]*$ to include only deep URLs (3 slashes) as discussed in this post.

There’s a whole wealth of possibilities when filtering with regular expressions. Read up more here and here.

Bounce Rate

In order to get a quick overview of which landing pages have a poor bounce rate, you’ll need to:

Go to Content > Site Content > Landing Pages.
Select Comparison View from the icons at the top right of your data table.
Select Bounce Rate from the (compared to site average) drop down.

bounce rate comparison

Expand the number of rows shown to 500 and start to scan your list. You should look for individual pages with remarkably high bounce rates; high traffic means they are a good opportunity for improvement. Also look for running themes and think of some ideas on how to test those themes using filters as discussed above.

However, remember that bounce rate doesn’t necessarily have to be a negative metric. If your site has information pages such as “How to change a light bulb", a user might read that page and get all of the information they need, leaving them satisfied with their visit even if they don’t view any further pages. But if there’s a clear next action such as a Buy Now button, a high bounce rate is obviously a bad thing, so put yourself in the user’s shoes.

Navigation Summary

That’s not to say that bounce rate will tell you everything. What if, for example, users are hitting your landing page and going to your help section rather than purchasing a product? Or if they’re using the search box rather than clicking an article? You’ll see a low bounce rate, but users aren’t necessarily taking the desired action.

You might want to check out the navigation summary report for your key pages to see where users are going next:

Go to Content > Site Content > All Pages.
Click on the page name.
Select Navigation Summary from the top of the report.
Click (entrance) in the previous page path pane on the left so that we’re just looking at users who are landing there.

Now you should see where they’re heading in the right-hand pane. Is this what you were expecting? What is the URL of the main desired action on that page and is it prominent in this report?

Conversion Rate

Conversions can be thrown into the mix here to give you the full picture; after all, even if a page has an incredibly low bounce rate, it might be worth nothing to you if it doesn’t ultimately convert.

You have to do a little more work in GA to view landing pages with conversions by setting up a custom report:

Select Custom Reporting at the top of the GA interface.
Click New Custom Report and give your report a name.
In metric groups, add Visits first so that you can prioritise your report by how busy your pages are.
Add another metric, this time Conversion Rate for the goal that you think is most appropriate.
In dimension drilldowns, choose Landing Page and then hit Save.
Once your report has loaded, I typically go to comparison view and use Conversion Rate as the comparison metric to give you an easy-to-scan report.

Create a custom report

You’re looking for pages that should definitely be leading to conversions but aren’t, such as product pages. Remember to look for themes and use filters as appropriate.

5 things that might be wrong with your landing pages

1. Is the traffic source relevant to your business?

What are the expectations of the user when they come from a referring site or search term? Can you give them what they expect when they hit your site? If not, they’re probably going to bounce.

To view traffic sources to specific landing pages:

Click on a specific page in the Landing Page report.
Select Source as the primary dimension to see where traffic is coming from.
Or choose Keyword for search insights.

Do you have sites sending you traffic for products that you simply don’t sell? For example, if your product is high-end, but a price conscious forum is sending you traffic, you’ve got a clear mismatch. Often there’s little you can do in this situation apart from focus your efforts elsewhere; but obviously if you’re paying for the traffic through a display network or PPC, stop.

2. Is the traffic source relevant to that landing page?

On the other hand, there may be situations where the traffic source is relevant to your business, but you’re just not providing the right experience for the visitor on that specific page.

In these instances, you can:

Direct that traffic to an different, more relevant landing page.
If that doesn’t exist, create a new page.
Optimise the page for different search terms.

If you’re sure that your traffic sources are relevant to your business and to that landing page, you might have to look elsewhere.

3. Have you got show-stopping technical or usability problems?

This is worth checking out because often it’s one of the easiest things to fix. To identify any technical problems, you can use Google Analytics’ Custom Segments on the reports above. You could segment by:

Browsers to see if you have any compatibility issues.
OS to see if mobile or tablet users aren’t receiving an optimal experience.
Screen resolution, flash version, or java support.
Geography – perhaps your site loads dead slow in certain regions.

You could use a tool such as Adobe’s Browserlab to view your site in a range of different browsers to pinpoint problems. For example, Distilled’s header and navigation appears to render badly in IE6 :S

When it comes to usability, one of the easiest and most insightful techniques can be Guerrilla Usability Testing. This typically involves using a laptop and some random coffee shop dwellers to test the pages that aren’t performing well by giving them tasks to complete, such as “Could you show me how you would add this product to your shopping cart”. There’s a great article about it here, amongst many others you’ll find if you search for them.

Other tools that you can use to check the basic usability of your site include Usability Hub’s suite of tools, including The Five Second Test which asks random users online to answer questions about a page after five seconds of looking at it. This can be useful in assessing the impact of a page and hierarchy of information.

Another test of basic usability in this suite is The Click Test, which can be used to see if users can identify a given page element or next step.

Finally, you can use tools such as Crazy Egg, Usertesting.com, and Feedback Army to check if people can use your landing pages.

4. Are you observing basic landing page principles?

What makes an effective landing page can vary from market to market, but it’s worth checking that you’re employing some of the more basic techniques before anything else. Take KISSmetrics’ Anatomy Of A Perfect Landing Page as a starting point:

Have you got a strong, relevant headline? Do you have high quality multimedia? Is your call to action high contrast and clear? Do you communicate the benefits of your product effectively rather than just the features?

Check out these 21 tips from Unbounce too.

5. Are you speaking your potential customers’ language?

You might have all of these things in place – relevant traffic sources, impeccable usability, and all of the elements that make a landing page great – and still have lousy user engagement metrics. My last checkpoint is to make sure you’re talking to your users in the right way.

Do you know what they are looking for on this landing page? Are they price conscious? Or is convenience their priority? What are your competitors emphasising about their product? How does your brand compare to theirs?

A powerful technique I’ve used in the past is to survey your existing customers, as you should already have their email addresses and brand buy-in. You should ask them questions like:

What were your main considerations when looking to buy x product?
Did you look at any other x products? What were your reasons for not buying them?
What single thing convinced you to buy from us in the end?

You should be able to set up a simple survey using the likes of Google Forms or Survey Monkey to garner some useful insights.

If, for example, your customers are heavily price conscious, make a page that really emphasises how cheap your product is and split test it against your existing page. If they appear to be swayed by recommendations from friends, perhaps you could create a page that features social proof and testimonials heavily.

What next?

Make obvious improvements straight away

If your website is broken, there’s no point in split testing a working version against the original. Just roll it out! The same goes for glaring usability problems or terrible landing pages that aren’t really landing pages at all. Perhaps annotate your GA to show when you made the changes and review engagement metrics regularly, but you should use your common sense and know when it’s right just to deploy.

Testing new pages

More subtle improvements should be tested against the original to ensure that you’re taking positive steps. Typically, I wireframe new versions of pages for clients using Balsamiq along with annotations explaining some of the new page elements so that they can share and implement with their team. Remember to use basic landing page principles when wireframing and integrate feedback from your research. You might also want to read these tips about better wireframing.

There are a whole host of split testing tools out there with a range of benefits, such as Google Website Optimizer, which is free, and Visual Website Optimizer, which is easy to implement and empowers non-techies to create tests. I can’t tell you which is right for your site and organisation, so perhaps start with this handy comparison site and this guide to split testing.

Analysis and Iteration

Finally, once your tests are significant, dig into the results to find out what worked and why. From here you should be able to launch more tests across other pages or refine your current page with further ideas.

I hope this post gives you some ideas for improving your landing pages. If you’ve got any further ideas, tips, or useful tools let me know in the comments or give me a shout on Twitter.

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Interactive Timeline: America's Women Entrepreneurs

Your Daily Snapshot for
Monday, June 11, 2012

Interactive Timeline: America's Women Entrepreneurs

Women entrepreneurs are leading the way in helping our country succeed, and we've put together an interactive tool to introduce you to some of America's women small business owners.

As their stories make clear, women small business owners are an essential part of our economy. Forty years ago, women owned just 5 percent of all small businesses. Today, women own 30 percent, a total of 7.8 million companies generating $1.2 trillion a year in sales.

Check out the timeline and find out more about these women entrepreneurs:

Seth's Blog : How to succeed

How to succeed

You don't need all of these, and some are mutually exclusive (while others are not). And most don't work, don't scale or can't be arranged:

Be very focused on your goal and work on it daily
Go to college with someone who makes it big and then hires you
Be born with significant and unique talent
Practice every day
Network your way to the top by inviting yourself from one lunch to another, trading favors as you go
Quietly do your job day in and day out until someone notices you and gives you the promotion you deserve
Do the emotional labor of working on things that others fear
Notice things, turn them into insights and then relentlessly turn those insights into projects that resonate
Hire a great PR firm and get a lot of publicity
Work the informational interview angle
Perform outrageous acts and say obnoxious things
Inherit
Redefine your version of success as: whatever I have right now
Flit from project to project until you alight on something that works out very quickly and well
Be the best-looking person in the room
Flirt
Tell stories that people care about and spread
Contribute more than is expected
Give credit to others
Take responsibility
Aggrandize, preferably self
Be a jerk and win through intimidation
Be a doormat and refuse to speak up or stand up
Never hesitate to share a kind word when it's deserved
Sue people
Treat every gig as an opportunity to create art
Cut corners
Focus on defeating the competition
When dealing with employees, act like Steve. It worked for him, apparently.
Persist, always surviving to ship something tomorrow
When in doubt, throw a tantrum
Have the ability to work harder and more directly than anyone else when the situation demands it
Don't rock the boat
Rock the boat
Don't rock the boat, baby
Resort to black hat tactics to get more than your share
Work to pay more taxes
Work to evade taxes
Find typos