Central Perk: 20 sept. 2015

duminică, 20 septembrie 2015

Mish's Global Economic Trend Analysis

Tsipras Wins Reelection in Low Turnout, Same Coalition to Govern; Rule Number One

Posted: 20 Sep 2015 11:23 PM PDT

Syriza party leader Alexis Tsipras who resigned in the wake of his cave-in to the troika is back in office following Sunday's snap elections.

The election was supposed to be extremely close, but it wasn't.

Greek polls are notoriously unreliable. Tsipras won his first election by a huge vote even though polls were close. On Sunday the result was the same.

Pollsters had New Democracy running neck-and-neck but in a low turnout Syriza received 35.5 per cent of the vote to 28 percent for New Democracy.

Greek election rules give a huge block of parliament to the plurality vote, so in parliament the score is 145-75 out of a total of 300.

145 is short of a majority, but close enough so Tsipras can form a coalition with the Independent Greeks party (Anel), just as Syriza did after the last election.

Syria Wins Again

145 + 10 = 5 seat majority.

Whether the coalition proves stable is anyone's guess.

The Financial Times provided the above chart (purple highlights mine) and this commentary.

Alexis Tsipras's radical left Syriza party secured a clear victory in Sunday's Greek general election, suggesting his gamble on snap elections after striking a deal on a new €86bn bailout had paid off.

With 90 per cent of the votes counted, Syriza was on 35.5 per cent of the vote, giving it 145 seats in the 300 member parliament, well ahead of centre-right New Democracy on 28 per cent and 75 seats.

Mr Tsipras's win cements his place as the pre-eminent figure in Europe's far-left anti-austerity movement and is likely to galvanise sympathisers including Spain's Podemos and Jeremy Corbyn, the hard-left leader of Britain's Labour party.

Mr Tsipras insisted Syriza would govern for a full four-year term, even though his revived coalition with the small nationalist Independent Greeks party (Anel), announced on Sunday night, looks far from stable with only a six-seat majority in parliament.

But he warned there would be no easy exit from the country's six-year recession. His first task as re-elected prime minister will be to implement more tough austerity measures demanded by creditors in return for a new €86bn rescue package.

Early results put turnout at only 55 per cent, suggesting many young leftwing voters angered by Mr Tsipras's decision to capitulate to Greece's creditors and accept more harsh austerity measures in return for a new bailout had declined to take part, as experts had predicted.

Radical Left?

The above comments by the Financial Times in regards to Tsipras being the "pre-eminent figure in Europe's far-left anti-austerity movement" should have every one laughing or gagging. Take your pick.

Tsipras first ran on a radical left platform, but this time his platform was virtually indistinguishable from that of "center right" New Democracy.

I have no sympathy for radical leftists (or leftists of any kind actually, but I also have no sympathy for blatant liars and hypocrites.

Rule Number One

The number one rule for politicians is "Say or even do anything necessary to stay in office".

With that comment, I congratulate Tsipras for pulling it off, while noting that his problems have really just begun. Good luck with that five-seat majority Alexis, you will need it.

Mike "Mish" Shedlock

Parade of Fed Parrots Squawk About Rate Hikes This Year; Toss Out the Script

Posted: 20 Sep 2015 11:13 AM PDT

In an effort to convince the market that rate hikes are coming, an amusing parade of Fed parrots squawked in full force over the weekend, within an hour or so of each other.

St. Louis Fed President James Bullard

Bullard Squawks: Bullard Says He Argued Against Fed's Call to Leave Rates on Hold.

"The case for policy normalization is quite strong, since Committee objectives have essentially been met," Bullard said in slides prepared for a speech in Nashville, Tennessee. "I argued against the decision at the FOMC meeting."

Bullard is not a voting member of the policy-setting Federal Open Market Committee in 2015, but will vote in 2016.

Richmond Fed Jeffrey Lacker

Lacker Squawks: Fed's Lacker Says Economy Strong Enough for Higher Rates.

"Such exceptionally low real interest rates are unlikely to be appropriate for an economy with persistently strong consumption growth and tightening labor markets," Lacker said in a statement.

He was the lone dissenter among the 10 Fed officials who voted at the meeting. Lacker said the Fed's target should rise by a quarter point.

Lacker has a history of dissent in Fed policy meetings. In 2012, he voted against eight straight policy decisions by the central bank. At the time he was urging the Fed to wind down asset purchases that were aimed at stimulating the economy.

San Francisco Fed President John Williams

Williams Squawks: Fed's Williams Still Sees 2015 Rate Hike After 'Close Call'

An interest rate hike will likely be appropriate this year given the U.S. Federal Reserve's decision last week to stand pat was a "close call," a top Fed policymaker said on Saturday.

John Williams, a centrist and president of the San Francisco Fed, said the arguments for and against beginning to tighten U.S. monetary policy are about balanced now that the economy is on solid footing, giving him confidence in continued economic and labor market growth.

Balancing Act

If the arguments for and against the hike are "balanced" and the case for a hike "quite strong" then why was the vote 9-1?

By the way, wasn't the case even stronger a year ago? If not, why?

The answer to that is the Fed had a script that said "hike in 2015".

These economic illiterates not only ignore obvious asset bubbles, they actually believe a quarter of a point hike can sink the real economy. They also did not want to surprise the market with early hikes.

Why All the Squawking?

The Fed parrots are out in force, loudly squawking the same tune, because Yellen really wants to hike, provided of course the market goes along. Lately however, the market has had other ideas.

The market did not go along with a hike in September so that forced Yellen to come up with a basket of excuses for not hiking. In response, the market has moved the hike odds to 2016, but the parrots don't like that.

Toss Out the Script

Bloomberg says Wall Street Tosses Out Bond-Trading Script After Fed Meeting

Neil Bouhan at BMO Capital Markets expected the Federal Reserve to raise interest rates this week. Now he's questioning all his views on the central bank.

He's not the only one. Strategists and traders across Wall Street are re-examining their approach to predicting the Fed's moves after officials kept their target near zero Thursday and released an unexpectedly dovish policy statement. Fed Chair Janet Yellen cited a range of concerns -- from slowing growth in China to global market volatility -- to explain the decision to hold the benchmark overnight rate at historic lows.

The tone of her comments in a press conference after the announcement surprised the bond market, fueling the biggest rally in two-year Treasuries since March 2009, when the Fed said it was expanding its bond-buying program. It also left many prognosticators struggling to pinpoint how to trade in the lead-up to the next policy meeting less than six weeks away.

"There is really no way to look at this market if you can't handicap Fed policy, and they've made that much more difficult," said Bouhan, a Chicago-based strategist at BMO. He doesn't expect the central bank will raise interest rates until 2016.

Lesson Learned

"What we learned from yesterday is that Treasuries are a buy either way," Guy Haselmann, head of capital market strategy with Scotiabank, wrote in a note to clients Friday.

John Briggs, head of strategy for the Americas at RBS Securities Inc., echoed the plea for more clarity. He compiled a list of 10 broad economic concerns that Yellen cited in the press conference, including energy prices, U.S. financial conditions and weaknesses in emerging markets.

"It's not common for the Fed to name all these things," he said from the firm's Stamford, Connecticut, office. "Where do they rank? Now we don't even know what to look at to determine whether they will raise rates or not."

Shifting Odds

Following the FOMC meeting, I reported Rate Hike Odds Shift to January 2016; 16.1% Chance of Hike in October.

The parrots are not happy with this shift in opinion, so they are squawking. They should have tried squawking at the meeting or before the meeting instead of now.

As a result, anyone with any bit of common sense wonders if the Fed will hike at all.

I concluded "By December, the economic data is likely to be weakening so much, that the Fed may not hike until the next recession is over."

Mike "Mish" Shedlock

Seth's Blog : Pathfinding

Pathfinding

Some simple arithmetic will show you how much time you're spending on finding the path:

[The amount of time it took you to do it last time] minus [the amount of time it will take you next time]

If you come up with something close to zero, then you're running the path, doing it consistently and spending almost no time at all finding a path. You've already found one.

On the other hand, if the first time it took you to write that novel was 8 years, and retyping it would take five days, you're spending virtually all of your time finding out where you're going, not actually typing. Which is why writing novels is more difficult than commuting to work.

A few things to consider as you develop your skills as a pathfinder:

If the value you create is in finding the path, are you being patient and generous with yourself as you hack your way through the weeds? You're not a typist, you're an explorer.
Are others significantly more efficient and productive at finding paths in your industry? If so, it probably pays to learn what they've figured out.
If you're not spending much time at all on pathfinding, what would happen if you did?

Lots of people run paths. Very few have the guts to find a new one.