Central Perk: 20 mar. 2014

joi, 20 martie 2014

Mish's Global Economic Trend Analysis

Buffoon Bluffery; What are Sanctions Really About?
Reflections on the Yellen Taper-Hike Announcement; What Does the Fed Know?
Ukraine to Impose Wealth Tax on Deposits; Run on Ukrainian Banks Coming?
Rand Paul Takes Privacy Message to Bastion of Liberalism, Berkeley California, and Gets Standing Ovation

Buffoon Bluffery; What are Sanctions Really About?

Posted: 20 Mar 2014 04:40 PM PDT

Today, the US imposed more meaningless sanctions on Russia. Of course Russia responded in kind.

In Europe, where far more is to be lost than gained from sanctions, bickering amongst suggests no meaningful escalations in sanctions.

Here is a roundup of recent actions, counteractions, threats and counter-threats.

Meaningless Additional US Sanctions

The Financial Times reports US imposes sanctions on 20 more Russians.

The US has announced sanctions on 20 more senior Russian individuals over Moscow's takeover of Crimea and also singled out a bank which does business with the targeted individuals.

Moscow responded by banning nine American officials from entry to Russia.

Barack Obama, in a statement at the White House, said the US was moving "to impose additional costs" on Moscow by sanctioning more senior Russian officials and "other individuals with substantial resources and influence who provide material support to the Russian leadership."

He said he had also signed an executive order giving the US the authority to impose sanctions on key sectors of the Russian economy.

Americans banned from Russia include House Speaker John Boehner and senators John McCain and Harry Reid. Michael Steel, Mr Boehner's spokesman, said: "The speaker is proud to be included on a list of those willing to stand against Putin's aggression."

Obama's Bluff Will Be Called

Should Obama actually be dumb enough to impose sanctions on "key sectors of the Russian economy" Russia will respond with punishing sanctions on US interests as well as shutting off natural gas to Europe.

Putin clearly has the upper hand. I suspect European leaders are already relaying this message to Obama "Don't do anything stupid".

Of course, politics be what they are, stupidity happens all the time. And Senator McCain is indeed putting pressure on Obama to do something stupid. Meanwhile ...

US Companies Urge Restraint on Russia Sanctions

Sanction bickering started in Europe immediately. It has now spread to the US. Please consider US Companies Urge Restraint on Russia Sanctions.

US business, which has been quietly lobbying the administration to take a "circumspect approach" to the crisis, has in recent days made clear in meetings with the White House and Congress that it does not want to see an escalation in economic warfare with Moscow. US business groups have been trying to "educate" members of the Obama administration and lawmakers about the potential costs of additional Russian sanctions, even if they cannot mount a full-scale lobbying push because it could be interpreted as hindering Mr Obama's efforts to put pressure on Moscow.

"You don't want to sanction the people who buy American products," said one US business executive in Washington, adding: "That's targeting American exports, if that's what it is."

Myron Brilliant, head of international affairs at the US Chamber of Commerce, noted the importance of acting in concert with US allies, noting the "close co-ordination" with the EU as especially important as well as joint efforts with Switzerland, Turkey, Japan and Canada. But he warned: "A go-it-alone approach by the US could be both economically damaging and ineffective in accomplishing its goals".

European Tit-for-Tat Bickering Shows Sanctions Hopeless

In Europe, the French want to target Russian money in London while the British want sanctions to start with French defense contracts. The story gets pretty humorous at this point.

The Guardian reports France Warns Russia it Could Cancel Warships Deal.

Buffoon Bluffery

If you read the article, the French foreign minister supports sanctions "only if Britain also acted against Russian oligarchs in London."

Who's foolin' who with this kind of buffoon bluffery? Putin has a chance to respond "OK we cancel the deal. We don't want or need your stinkin' warships."

Indeed, Russia does not need warships. They are of zero practical use. Economically speaking, Putin should take this opportunity to cancel the deal.

Hollande would look like a fool, which of course he is.

Russia Halts Ukraine Imports

With the US engaged in meaningless sanctions, and France engaged in buffoon bluffs, Russia Puts Economic Squeeze on Ukraine.

Russia has started disrupting imports from Ukraine, raising fears that the two countries' stand-off over Crimea is spilling over into a fresh trade war.

Citing complaints from export-oriented businesses, Ukrainian agriculture consultancy APK-Inform reported that Russian customs officials had refused entry of all Ukrainian goods without explanation late on Wednesday.

"More than 200 cargo trucks are piled up at Bachivsk, one of the main border crossings for Ukrainian goods going into Russia," said Serhiy Astakhov, a spokesperson at Ukraine's state border guard service. He was not immediately able to comment on possible bottlenecks at other roadway border crossings.

Russia's food hygiene regulator has repeatedly warned of food imports from Ukraine over the past month, saying it had found a meat shipment with fake veterinary documentation, warning of risks of contaminated pork and claiming doubts as to whether its Ukrainian counterpart could do its job properly against the background of the recent political changes in Kiev.

Russia has repeatedly used non-tariff trade barriers to block imports from countries ranging from China to Norway, and extensively used such instruments to pressure Ukraine when Kiev was planning to sign an association agreement with the EU last year.

A Ukrainian government spokesperson said on Thursday the transport bottlenecks at the border looked "like a trade war".

What are Sanctions Really About?

Q: Are any of the sanctions doing anything to help Ukraine?
A: Obviously not

Q: Are the bluffs by Obama, Hollande, and others easily seen?
A: Remarkably easy

Q: Do further sanctions or trade wars many any sense?
A: Of course not. For further discussion, please see Negative Sum Game; Winners and Losers

Q: So, if sanctions are to the detriment of Ukraine, the US, and all of Europe, then what the hell are the sanctions really about?
A: Egos!

Obama has to preserve his precious ego. So does McCain, Boehner, Hollande, and everyone else promoting economic insanity. McCain in particular is prepared to destroy Europe economically to get his way.

Ultimately, and with thanks to pressure from Merkel and US business leaders, I expect common sense to prevail.

Yet, when dealing with fragile egos, one never knows how insane things can get. Nearly any outcome is conceivable.

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

Reflections on the Yellen Taper-Hike Announcement; What Does the Fed Know?

Posted: 20 Mar 2014 12:50 PM PDT

Yesterday everyone was gaga over the news Yellen might actually hike interest rates a few months earlier than they thought. Will she? Won't she?

It all depends on the state of the economy. What does the Fed know? The answer is a lot less than anyone thinks. Really, the Fed is clueless.

About the only comment regarding yesterday's FOMC announcement that I saw worth mentioning came today from Saxo Bank Chief economist Steen Jakobsen.

Via email, Steen pinged me with this comment earlier today.

The "surprise" in the FOMC announcement was that the consensus among FOMC members for hike seems to have moved forward to June 2015 (from September-December). Personally, I think it's more positioning creating volatility than actual belief in that FOMC projection. An excellent example of Fed's lack of reality during the 2008 crisis was released earlier this year and a nice summary was done by New York Times: The Fed's actions in 2008: What the transcripts reveal.

Please, do not think for one minute that FOMC have any clue about the economy six months from and even less so looking into 2015.

What Does the Fed Know?

I gave my own look into what the Fed knew or didn't in Hilarious Transcripts of Fed Minutes from 2008 Reveal Completely Clueless Fed.

Is the Fed any less clueless today than 2008?

Wine Country Conference II

Want to hear a live discussion of what Steen Jakobsen thinks about Europe, China, or US interest rates?

Then come to the second annual Wine Country Conference which will be held May 1st & 2nd, 2014.

We have an exciting lineup of speakers for this year's conference.

John Hussman: Founder of Hussman Funds, Director of the John P. Hussman Foundation which is dedicated to providing life-changing assistance through medical research
Steen Jakobsen: Chief Economist of Saxo Bank
Stephanie Pomboy: Founder of MacroMavens macroeconomic research
David Stockman: Ronald Reagan's budget director, best-selling author, former Managing Director of The Blackstone Group
Mebane Faber: Co-founder and the Chief Investment Officer of Cambria Investment Management
Jim Bruce: Producer, Director, and Writer of Money For Nothing: Inside the Federal Reserve
Chris Martenson: Reknown speaker and founder of Peak Prosperity
Mike "Mish" Shedlock: Investment advisor for Sitka Pacific and Founder of Mish's Global Economic Trend Analysis

Conference Details

For further details about the 2014 conference, please see Wine Country Conference May 1st & 2nd, 2014

Unlike other "for profit" conferences, every cent of money raised in this event goes to charity. This year's cause is autism.

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

Ukraine to Impose Wealth Tax on Deposits; Run on Ukrainian Banks Coming?

Posted: 20 Mar 2014 11:34 AM PDT

IndexToday has an interesting story on a Ukraine Wealth Tax.

The Prime Minister of Ukraine Arseniy Yatsenyuk proposed on Wednesday 19th of March 2014 the adoption of taxes on wealth of the richest Ukrainians in order to tackle the economic crisis in the country, clarifying that the law will apply to him as well.

The Ukrainian prime minister stated that the proposed tax measures should apply on deposits more than 50,000 hryvnia (less than 4,000 euros). The measure is expected to affect approximately 10% of the population.

During the ministerial council meeting, Arseniy Yatsenyuk cited his own tax return as an example showing that interest on his deposits amounted to 714,000 hryvnia (47,000 euros).

Mr Yatsenyuk specifically stated: "Rich people ought to share their wealth with the country. It is time for justice. It is time to help the country".

The online financial newspaper Ekonomitcna Pravda criticized this initiative with the fear of a massive withdrawal of deposits especially nowadays that the bank sector is in a difficult position because of the political and economic crisis.

The Ukrainian economy is in a terrible position with a public debt of €75 billion, which the country accumulated mostly during the last years, and a huge financial deficit.

Run on Banks Coming?

Certainly, if I had money in a Ukrainian bank I would want to get it out. If everyone could, and did, there would be a massive run on Ukrainian banks.

I picked this story up from ZeroHedge Ukraine Goes Cyprus 2.0, To Tax Deposits Over 100,000 Hryvnia (To Appease IMF?).

He only had these two lines, likely from an economic feed, with and no links.

*UKRAINE PROPOSES NEW TAX ON DEPOSITS EXCEEDING 100,000 HRYVNIA
*UKRAINE TAX PROPOSAL WOULD INCLUDE 1.5% OF ALL DEPOSITS

No Peep in Mainstream Media

This is significant news, but there was not a peep on the Financial Times, Wall Street Journal, Bloomberg, or the New York Times.

The only other reference I could find was Russian News on Rupaper.com: Ukrainian Authorities Suggested to Tax Large Deposits. This appears to be a translation and is somewhat garbled. I will post a paragraphs "as is".

Over 50 thousand hryvnias (5,1 thousand dollars) need to be taxed Interest income of deposits. About it as L_gab_znes_nform reports, the prime minister of the country Arseniy Yatsenyuk declared. According to him, the relevant bill is already submitted on cabinet consideration. Yatsenyuk noted that he is the opponent of a tax on all deposits without exception, and specified that 90 percent of Ukrainians have deposits for the sum up to 50 thousand hryvnias. "Other ten percent rich have to share with Ukraine, it is normal, so does the whole world" — the prime minister declared. Yatsenyuk gave the personal savings as an example. He told that last year gained 613 thousand hryvnias of interest income, and from him didn't levy "any hryvnia taxes". At the end of February of this year the National Bank of Ukraine had to enter restrictions on removal of currency deposits in local banks in an equivalent no more than 15 thousand hryvnias per day. Such decision was made in connection with a mass conclusion of means from banks. According to the Central Bank, only on February 18-20 Ukrainians discounted about three billion dollars. In September, 2012 the Independent association of banks of Ukraine reported that champions by the size of deposits in the country are inhabitants of Kiev. The average size of deposits among capital investors at that time made 26,6 thousand hryvnias. The smallest deposits appeared in Zhitomir area — 3,2 thousand hryvnias.

Capital Controls

As I said, if I had money in a Ukrainian bank, I would want to get it out. But the above article explains limits on withdrawals were placed in February.

I mentioned capital controls on February 28: Ukraine Limits Withdrawals to 15,000 Hryvnia per Day (about $1,500)

Smart individuals likely took out 15 thousand hryvnias per day since the end of February. Really smart (or well connected) individuals wired out everything in January before capital controls were placed.

Moral of the Story

Here's a hint, if you see capital controls, figure a wealth tax confiscation will soon follow. And here's the moral of the story: If you think capital controls may be coming, get your money out of banks now.

Addendum:

The headline links and the articles in question imply a wealth tax on deposits. This translation provided by reader Andrey suggests it is only income that is taxed, not deposits. Either way, the moral of the story does not change, but certainly a tax on income is far less severe than a tax on deposits.

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

Rand Paul Takes Privacy Message to Bastion of Liberalism, Berkeley California, and Gets Standing Ovation

Posted: 19 Mar 2014 11:50 PM PDT

It's early, but I am pleased to report enthusiasm for Rand Paul is growing, and in the right places. Please consider Rand Paul gets standing ovation at Berkeley: 'Your right to privacy is under assault'

Delivering a rare speech for a Republican at this bastion of liberalism, Kentucky Sen. Rand Paul on Wednesday was given multiple standing ovations by the left-wing audience after railing against government surveillance and warning the students: "Your right to privacy is under assault."

"I am here to tell you that if you own a cell phone, you're under surveillance," he told the crowd.

Paul's address at the Berkeley Forum on the campus of the University of California at Berkeley focused on the National Security Agency's collection of telephone metadata and the debate over privacy.

During his remarks, the potential 2016 Republican candidate discussed California Sen. Dianne Feinstein's claim that the CIA had spied on her congressional staff, and announced that he plans to call for a special committee on Capitol Hill to investigate the domestic spying by government agencies .

"No one should be allowed to invade your privacy," Paul said. "That's why I'm announcing today that when I return to Washington, I will push for a select committee styled after the Church Committee that investigated the abuses of power of the intelligence committee in the 70s. It should be bipartisan. It should be independent, and wide reaching. It should have full power to investigate and reform those who spy on us in the name of protecting us."

That Paul decided to take his libertarian-leaning message to one of the most liberal campuses in the country is no mistake. He is actively making an effort to appear before crowds that have not been supportive of Republicans to demonstrate his ability to appeal to a broader electorate.

To win in 2016, a Republican better do more than appeal to core Republicans who will never vote for Hillary Clinton or whoever the Democrat candidate is.

Republicans need independent voters for sure. Youth support would be icing on the cake. Thus, I like Paul's strategy a lot.

Hopefully Republican infighting does not take him down.

Time to rally around Paul!

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

Damn Cool Pics

Meet Gilberto Pauciullo, 10th Degree Black Belt Master In ‘Mixed Martial Arts’

Posted: 20 Mar 2014 07:39 AM PDT

Gilberto Pauciullo holds 22 10th degree black belts.

World’s Most Expensive Dog

Posted: 20 Mar 2014 07:10 AM PDT

The world's most expensive dog was sold for $2,000,000.

The Rhodes Ahead: The First Lady's Trip to China

Featured

The Rhodes Ahead: The First Lady's Trip to China

First Lady Michelle Obama is in China for an official visit, meeting with students and visiting historical and cultural sites across the country. Deputy National Security Advisor Ben Rhodes and Chief of Staff to the First Lady Tina Tchen sat down to preview the trip.

Learn more about her visit, and find out how you can participate and follow along.

New Title Tag Guidelines & Preview Tool

Posted: 19 Mar 2014 04:10 PM PDT

Posted by Dr-Pete

Google's recent SERP redesign may not seem like a big deal to the casual observer, but at least one change could have a real impact on SEOs. This post will explore the impact of the redesign on title tags, and define a new, data-driven length limit, but first, a new tool...

Title tag preview tool (2014 edition)

Pardon the reverse order of this post, but we wanted to put the tool first for repeat visitors. Just enter your title and the search query keywords (for highlighting) below to preview your result in the redesign:

Enter Your Full Title Text:

Enter Search Phrase (optional):

I'm really happy for you, and Imma let you finish, but Beyonce has one of the best

www.example.com/example

This is your page description. The font and size of the description has not changed in the latest redesign. Descriptions get cut off after roughly 160 characters ...

Note: Enter keyword phrases as natural queries, without commas. This preview tool only highlights exact-match text (not related concepts) and is only intended as an approximation of actual Google results.

How the redesign impacts titles

Google's redesign increased the font size of result titles, while keeping the overall container the same size. Look at the following search result both before and after the redesign:

The title on the top (old design) has a small amount of room to spare. After the redesign (bottom), it's lost six full characters. The old guidelines no longer apply, and so the rest of this post is an attempt to create a new set of guidelines for title tag length based on data from real SERPs.

It's harder than it sounds

You may be thinking: "Ok, so gimme the magic number!", but unfortunately it's not that easy. While we try to set a reasonable length limit as a rule of thumb, the reality is that Arial (the title font) is proportionally spaced. Put simply, different characters have different widths. For example, the following two titles are both exactly 40 characters long:

As you can see, these two 40-character titles cover a wide range. Let's break down what's going on here...

(1) Narrow letters are narrow

Ok, that's probably obvious, but let's just put it out there. The first title is full of lowercase l's and i's which take up relatively little space. Meanwhile, m's and w's take up quite a bit more space. In this font, three lowercase l's are actually narrower than one lowercase w.

(2) ALL CAPS take up more space

Capital letters are wider than lowercase letters â€" again, not a big surprise. All-caps titles also tend to be hard to read and are the visual equivalent of shouting. In some cases, like "LEGO" above, capitalization is important and necessary. In other cases, like "BRIDGEWATER COMMONS", it's just noise.

(3) Width varies with the query

Google highlights (bolds) the query keywords, so a longer query will bold more keywords. Bolded characters take up slightly more space. So, even if you found a title that just squeezed into the width limit, the actual display of that title would change depending on the keywords searchers use to find it.

(4) Cut-off titles have less characters

Google is cutting off titles with CSS, and the browser appends "â€¦" whenever a title is truncated. So, a title that's just slightly too long and gets cut will actually be shorter than a title that barely squeaks in under the width limit, due to the additional space required by "â€¦".

Data from real-life searches

In order to really understand what's happening to title tags in the wild, we need to collect the data. So, we set about looking at real searches to understand where title tags were getting cut off after the redesign. Before I get into the methodology, I'd like to thank Bernt Johansson, founder of Swedish SEO firm Firstly for his generous help in hacking together this particular jQuery monster.

We looked at page 1 search results for 10,000 queries. Since not all SERPs have 10 results, this resulted in 93,438 total search results. An encoding error caused some issues with special characters, requiring us to toss out some bad data â€" this left us with 89,787 titles to work with. Query highlighting was preserved from the original searches. This data was all collected from Google.com using English search queries.

Since Google is truncating the titles using CSS, we have to replicate them as rendered (not just look at source code). Once the titles were extracted, each of them was displayed in a browser (Chrome on Windows 7) at the same size and width as a Google desktop search (18-point Arial in a 512-pixel wide <div>). Then, a somewhat bizarre combination of JavaScript, jQuery, AJAX and PHP stored the display length for analysis. Due to minor variations, our display lengths could vary from Google's by Â±2 characters.

Means, distributions & confidence

Sorry, it's about to get mathy up in here. Let's look at just the titles that were truncated by Google, to find out how their lengths varied. This leaves 28,410 titles for analysis. I can tell you that the mean (average) length of those titles was 57.7 characters, but don't run off just yet. If the distribution of these lengths was normal, then setting the mean as a reasonable limit would mean that half of the titles at that length would still get cut off. That's hardly ideal. Also, this doesn't account for the titles that weren't cut off.

Just out of curiosity, though, let's look at the overall distribution of cut-off title lengths (post-cut-off):

The good news is that this distribution is roughly normal, peaking at about 57-58 characters. Post-cut-off title tags ranged in length from 42 to 68 characters. Here's a title cut off at 42 characters:

Again, all-caps titles take up more space, and the query ("anywho reverse lookup") is fairly long. Here's a title that makes it up to 68 characters after being cut off:

In this example, the query is short ("Giftster"), the title only has two capitalized words, and there are quite a few lowercase l's and i's in play. Keep in mind that all of the lengths in the graph above are after the cut-off. Gifster could probably get away with 1-3 more characters beyond what's displayed. We also need to consider the pre-cut-off length and account for the ellipsis.

So, how do we turn this all into something that's actually useful? What do we really want to know? Ultimately, we want to find a reasonable length at which we can be fairly confident our titles won't get cut off. At each length, I looked at what percentage of titles were cut off. Since the distribution is fairly normal, longer titles were (as expected) more likely to get cut off. Here are the cut-off lengths at five different levels of confidence:

80% - 57 characters (81.6%)
90% - 56 characters (91.6%)
95% - 55 characters (95.8%)
99% - 53 characters (98.7%)
99.9% - 49 characters (99.9%)

Since character lengths are integers, we can't hit the 80%, 90%, etc. marks right on the money, so these are the closest numbers (the actual percentages are in parentheses). Maybe I'm biased by my statistics background, but I tend to think 95% is a pretty reasonable level. Put simply, if all of your title tags were exactly 55 characters long, then you could expect about 95% of them to be left alone (1 in 20 would be cut off).

There's no magic number

I feel comfortable saying that 55 characters is a reasonable title-length limit under the new design, but keep in mind that your title lengths may vary quite a bit. In addition, a cut-off title isn't the kiss of death â€" Google still processes keywords beyond the cut-off (including for ranking purposes), and other formats, like vertical results and Google+, may display your full titles. Here's an example from Google news vertical results:

In this example, the first news result actually displays the full title of the article, whereas the second result is truncated. Ultimately, if you're really concerned about any given result, you need to see it for yourself. In some cases, a mysterious trailing "â€¦" may even make a title more clickable (I wouldn't bank on it, but it's possible).

In many cases, like blog posts titles, it's not worth going back and revising everything based on this new data. I'd look closely at your core pages, view the SERPs for your target keywords, and make sure that your snippets look the way you'd like them to. Use your judgment, and keep the guideline in mind for future SEO efforts, but don't start hacking at characters. Google could change the rules again.

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