miercuri, 9 februarie 2011

How Small and Local Businesses Can Use Facebook Graywolf's SEO Blog

How Small and Local Businesses Can Use Facebook Graywolf's SEO Blog


How Small and Local Businesses Can Use Facebook

Posted: 09 Feb 2011 07:27 AM PST

Post image for How Small and Local Businesses Can Use Facebook

If there’s one aspect of social media that mainstream press seems to love, it’s Facebook. For this post we’re going to be talking with Greg Finn of Cypress North, Victoria Edwards of Linkshare, and Marty Weintraub of aimClear about how small businesses can use Facebook.

1) It was recently reported that Facebook was the most visited website in 2010, beating out Google for the first time. Do you think that there is value there for small businesses or is just part of the social media hype?

Greg Finn
I honestly don’t think that Facebook Marketing is hype at all, and I think that many businesses are hesitant due to the perception that Facebook is a friend-to-friend network. Now with Facebook pages showing up directly into a user’s stream, businesses can have highly visible messages displayed to their fans – and it is far more than just advertising.

The fact that Facebook users are regular users is really the biggest upside to me, and it’s not just kids using it anymore. Facebookers really are adamant about checking the site frequently, whereas Twitter is used very differently (outside of our industry). Sure, Twitter has 15 million users, but according to a study from Edison Research, only 33% of users use Twitter once a day whereas 50% of users log on to Facebook in any given day. I have seen traffic stats mirror this research as well.

I also love the format that Facebook provides, allowing for easy communication, fan interaction, and sharing. Take a look at this post from the UFC – it not only has a link, but a description, video and comments/likes as well.

Whereas the same thing on Twitter looks like this:


I really look at Facebook as the most popular RSS feed in the world, pulling in information from friends and businesses. I would say that Facebook marketing may be the furthest thing from hype as Pages allow for businesses to post directly into arguably the best and most popular stream – the Facebook wall.

Victoria Edwards
I think there is great value in small businesses adding Facebook to their online marketing initiatives, as it's a great way to promote a business in an area that essentially is free. While some may think it is hype, it has become an additional way to benefit from an organic perspective, as well as acquiring a larger audience for your brand. The trick is having a proper strategy with detailed and measurable KPI's so you can track your success, so it does not become a time suck.

Marty Weintraub
I’ll focus on Facebook Ads, because we’ve been in the space since 2007. Paid Facebook is an incredible small business tool, both b2b and b2c. For perspective, 2 years ago it was already easy to recruit local plumbing businesses to up for Yellow Page products by serving ads reading “Free Internet Listings for Your Plumbing Business” to hundreds of SMB owners interested in “Master Plumber.” They signed up in droves across a number of local business segments as early as 2008.

A quick look shows that 30,580 people living in the United states “like” master electrician, master mechanic, master plumber, small business owners, business owner, or business development. FB rocks for many types of small business marketing assignments.

For instance, circumvent Groupon-type services to accomplish the same types of objectives for a much lower cost.

2) There are some businesses that are a natural fit for Facebook, and other businesses that don't make too much sense. Can you give me some examples of who should definitely be spending time on Facebook and who shouldn't?

Greg Finn
As a rule of thumb, if your business doesn’t have a kick-ass web presence, you probably have other things to worry about than Facebook. I do believe that most companies can achieve some facet of their overall goals on Facebook, but obviously some niches fit more than others. Companies that should be involved 100% are:

  • Restaurants
  • Retailers
  • Ecommerce Sites
  • Media/News/Blogs
  • Destinations
  • Charities

Types of companies that may benefit less & analyze their goals before participation:

  • Highly Specialized B2B
  • Industrial
  • “One-Time Client” Services – i.e. Dishwasher Repair in Phoenix

With that being said, I do think that these companies can still find value if used correctly – just not as much. For example, a specialized widget manufacturer may not appeal to the majority of users, setting their Facebook page up as a news source for reps could be beneficial in keeping relationships. By updating their Facebook page with new products, company happenings, and industry news, a useful and informative destination would be created that could reach customers off of the main website. This type of communication is still valuable, just at a smaller scale than a post about a sweater sale at Old Navy.

Victoria Edwards
I feel anyone who is trying to gain a broader audience with their service, product, or brand has potential in utilizing Facebook as a robust online marketing channel.

Businesses that should not be on Facebook are the ones who have created a Facebook page, but have either left it on auto pilot or have forgotten about it. Not only does it make your brand look lazy and unprofessional, but it also leaves a window open for potential brand damage.

Marty Weintraub
Branding using FB actually lifts direct response search CTR in Google and Bing, because marketers can make any product a household name to the right users. Understanding that KPIs are sometimes secondary is key for SMBs. Anyone who’s been around the block will say that marketing famous brands is a much easier than unknown brands. The ability to tightly brand what you’re selling to highly specific social segments using Facebook Ads, at CPMs that are often still below 40 cents (a fraction of the cost of AdWords) is an opportunity that you should not miss while it’s still cheap. The price is going up and will continue to do so.

Therefore, anywhere marketers are successful in direct response search PPC, FB Ads is a natural build out. FB Ads ads are still much less expensive than AdWords. For SMBs and local business, understanding this dynamic opens up fabulous opportunities at dirt cheap prices. The barrier to entry is that FB, as grass roots as it is, requires savvy marketers to leverage for local. That’s the reason things are sometimes hard for local businesses.

3) Let's stop talking theory and dig in. Are there any small businesses that you think are doing a good job on Facebook?

Greg Finn
Here are a few (and what I like about them):

YouTube

They do a great job communicating regularly using their own media. I think it is really clever how they post, and it is always topical. They also have perfect frequency and relevancy for their audience in my opinion.

UFC

I think that the UFC does an exemplary job in pushing their branding with Facebook. They work fans into regular photo updates, feature exclusives with fighters, and also let fans know what’s coming up. Best yet, they make users feel like they are important and somewhat of a VIP just for following. It would be hard to find a better event & branding example than the UFC.

WebProNews

This is hands down, no questions asked the best Facebook page in the Search space currently, and should be a model for any news source/blog. Instead of just spitting out info from their sites, regular posts include group questions/discussions, links to relevant stats/posts (not on WebProNews), company updates, and of course links to their content! It is a great job all around of not just broadcasting their news, but creating a valuable destination for marketers.

Boca Java

This is a good example of how a smaller retail company can not only promote product, but have a good time doing it. From asking questions to showing people at work to hosting events, Boca Java does a great job at updating fans. They also do a great job of creating unique Facebook only specials that provide fans with that VIP feel!

Victoria Edwards
Example #1: WUSLU http://www.facebook.com/wuslu

WUSLU is a 'deal of the day' site focusing on home furnishings. Not only does this Facebook page make use of the FBML to bring in the brand, the individual constantly monitors and engages with their fans, in addition to utilizing 3rd party applications, like Wildfire, to bring in contests that further engage the audience.

Example #2: http://www.facebook.com/horsetreats
As mentioned before, anyone who has creativity can be on Facebook and also find like minded people within this platform to engage with. Here is another great case and point. Horsetreats.com is exactly what is says: a website/Facebook page dedicated to selling treats specifically made for horseses…HEY…sorry bad joke.
What is so great about this page is seeing how many people are sharing pictures of their horses on the Facebook page, in addition to incorporating a tab that shows some of their products. This is great because it's giving an additional bonus by incorporating conversion opportunities in Facebook.

A few other small businesses that I feel are doing a good job in Facebook, whether
from an engagement stance or by incorporating customization and conversion areas:
http://www.facebook.com/pointofviewcameras
http://www.facebook.com/Vamplet
http://www.facebook.com/mezstudio

Note: These are not clients, but I have gotten approval from these individuals to use them as examples.

Marty Weintraub
Sure. aimClear does not have any very small clients. We tend to work for large, multi-national type clients…SO this is a local business that I patronize and respect. Sammy’s Pizza, a small regional chain of mom and pop pizza shops, has over 8,000 fans with engagement and community involvement. Friends range from the Mayor of Duluth to the elderly and their grand kids who have been patronizing the shop for generations. I love the way the owners and their shrewd local agency drive traffic to MySammys.com, which turns public participation into actual equity for the website they own. There are only about 80,000 people that live in Duluth, maybe another 10,000 in the other communities Sammy’s serves. We’re talking about 7.2% of the population that has fanned Sammy’s!

4) I understand that lots of businesses are hesitant to publish metrics, but what are realistic goals that you have seen people achieve from Facebook?

Greg Finn
Obtainable Facebook goals should really mimic your overall website goals in my opinion (with the exception of e-commerce on Facebook). Whether it be increase in branding, increase in engagement, increases in site traffic, or increase in website sales, these can all be achieved on Facebook. In regards to traffic, I have consistently seen Facebook send 10% of the Daily Users to one’s website (the Daily User stat can be found within Facebook Insights in the Users section).

Victoria Edwards
I have seen a page surpass its 10,000 fan mark within a 4-5 month period without doing any advertising; however that number could have been reached in half the time if they were doing Facebook ads, as they are a well known brand & are a great fit for Facebook.

I think realistic goals must be set if a business wishes to do Facebook marketing but does not want to invest in Facebook ads. One must communicate that it will be a long, slow process by not adding Facebook advertising into the mix.

Marty Weintraub
For Facebook Ads, expect that for every 300K user segments targeted with average overlap, we can serve about 10 million impressions a month. It’s common to have 3/10th of a percent CTR, ranging as high as 1.2%. Costs can be as low as $.10 and can cost well over $1.00. Conversion to realistic KPIs is often over 3.5% and sometimes up over 10%, rivaling search. The key here is setting realistic KPIs.

5) For a small business who is getting ready to get involved on Facebook, what are three tips or actionable items you can share?

Greg Finn
1) Use the “visible-to-connection” tag Whether you are Kayne & Jay-Z or a retailer, you can entice users to like your page in return for an exclusive offer. By implementing this tag on a custom Facebook tab (full details here), you can give users a reason to like you, but keeping them after that is up to you…
2) Make it Easy
This seems like it is a no brainer, but you would be surprised by just how many sites overlook the placement of Facebook buttons and widgets on a homepage. Facebook has both share and like buttons as well as community widgets. A few simple things:

3) Leverage Off-Line & Other Marketing to Help Promote Page
The easiest and quickest way to grow your page (with useful fans) is by utilizing your existing customers. There is no shortcut. To speed this process up, leverage as much offline as you can and include messaging in your other marketing as well. Not only will you have a high conversion rate, but the fans will be of the utmost quality – they already like you and are customers! This is one of the big resolutions that I talked about this year … even Wal-Mart is doing it.

6) They say that you learn more from your mistakes than your successes. Care to share a mistake you made or that you saw a small business make on Facebook?

Greg Finn
One of the biggest mishaps that I have been a part of involved a mishap with a promotion due to technical issues on the behalf of a website. I learned that while promotions can be a big positive for your page (now with less restrictions as of Dec 1st!) you should try to envision what will happen if everything goes wrong and devise a failsafe. If you are generating a coupon code – have a backup plan where you can identify winners; if you are using an app – make sure it is tested and can handle the traffic; if you are offering a giveaway – make sure you have enough supply for all of the demand. Issues do occur – especially on sites that you don’t own and control. By taking 15 minutes to virtually troubleshoot issues that will arise, you will absolutely save yourself from massive headaches.

Victoria Edwards
It was not a huge mistake but regardless I learned from it was trying to implement content, monitor and manage multiple pages for businesses. Reason why is that it was very time consuming and not very scalable if you're doing it alone. Also, when questions on the page were customer service related, I would have to ask the client as I was not aware of the correct answer.

Another lesson learned was how slow of a process it was to increase various key performance indicators, for example fans acquisition, without leveraging Facebook ads. I became quickly aware how slow the process can become, in addition to realizing that if you have a client who does not want to do ads on Facebook, you MUST communicate how the process is much slower rate at which you increase like, fans etc. Set a realistic expectation and make sure they are communicated to your client if they do not add Facebook advertising.

Marty Weintraub
When trolls are incorrigible, it’s important not to take them on and ban them. Though I’m a big believer in letting the mob have it’s say, knowing when to end a conversation is a valuable skill that is out of most SMBs league. You can’t reason with a crazy person.I’ve seen simple complaints escalate into Better Business Bureau complaints and lawsuits as SMBs mismanaged trolling jerks in public, viral, and Google-indexed space. The biggest mistakes I’ve ever seen is when SMBs don’t call professional reputation managers when they’re in over their heads.

A big thank you to Greg, Victoria, and Marty for taking the time to participate and share your knowledge. There’s a lot of actionable advice that hopefully the readers can put into place.


Greg Finn

Greg Finn

Greg Finn is the Chief Marketing Officer for Cypress North, a company that specializes in social media and search marketing services and web-based application development. He has been in the Internet marketing industry for 7+ years and has managed social media campaigns for clients of all shapes and sizes.

In addition to Cypress North, he is a regular blogger on mainstream search engine blogs and has spoken about Internet Marketing in a variety of marketing conferences. You can also find Greg on Twitter (@gregfinn) or LinkedIn.

Victoria Edwards

Victoria Edwards

Victoria Edwards has been working in Search Engine Optimization (SEO) and Social
Media Optimization (SMO) for the past two-and-a-half years. Through her various online marketing experiences, Victoria realized that, no matter whether you are a small, local business or a medium-to-large corporation, search engine optimization along with social media should be an integral part of your marketing efforts. Victoria also has hosted several educational SEO and Social Media webinars as well panel discussions talking to small businesses on the importance of SEO and how to intermingle your SEO and social media efforts. Victoria also has written blog posts for Search Engine Journal and ONE AWESOME blog post for this site ;) If you need to find Victoria on the interwebs, she uses the name TallChickVic, because that is what she is.

Marty Weintraub

Marty Weintraub

Marty Weintraub is president of aimClear, an internet focused Advertising Agency with offices in Minnesota. aimClear provides natural search optimization (SEO), traditional & social pay-per-click (PPC) management, and social media/feed marketing (SMO) services to national clients. aimClear SEO clients include cherished enterprise publishers including international brands, .edu properties, travel, and entrepreneurs of all sizes & newspapers. aimClear’s specialty is cutting edge demographic research to span all search disciplines. An avid blogger, Marty has written about search marketing for aimClear Blog, SEORoundTable, SearchEngineWatch & SearchEngineLand. Speaking engagements (always rousing) have included SEMpdx Searchfest (Portland), SES New York, SMX Advanced, SES Toronto, SMX LoMo, PubCon, SMX East, SMX West, SES New York, SES San Jose & PubCon. Marty brings internet Marketing experience dating back to 1992. His career spans traditional and online channels. Previous positions include A&R Executive/PolyGram International Publishing, Creative Director/Minnesota CBS Affiliate, Record Label Founder, & VP Marketing / TerraAura. Industrial video and music clients have included Northwest Airlines, CBS, Pizza Hut, General Mills, Dayton Hudson, Planters Peanuts, Sony Publishing and many others.
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How Small and Local Businesses Can Use Facebook

Are Search Engines Using ClickStream Data

Posted: 08 Feb 2011 08:14 AM PST

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Recently there was a big kerfuffle over Bing copying Google results, Bing denying it, the Google FUD machine in full force, and some nice conspiracy theory about who is pulling the strings and why. While this makes for some exciting drama and fun twitter banter, there is some actionable information for SEO’s: paying attention to and using clickstream data.

According to the Bing response they are 100% using click stream data from sources such as IE toolbars and factoring that data into their ranking algorithms. In fact, that click stream data is at the heart of Google’s accusation that Bing is copying them. What REALLY happened is that Google engineers set up some fake SERP’s for made up words and made sure Bing got the data by sending clicks to Bing. While it’s technically not the clickfraud that Bing frames it as (since PPC wasn’t involved), it was artificial data, convincing enough that Bing believed 10% of it.

In my opinion the days of being able to ignore or dismiss social as a fad or not a part of SEO are over…
The real question you need to be asking yourself is, does Google use click stream data as part of their ranking algo? If you set the wayback machine to 2002, GoogleGuy (aka Matt Cutts) felt using Toolbar data could help provide better SERPs (hat tip MattMcGee). To the best of my Knowledge at the time this post was written, Google hasn’t disclosed if toolbar clickstream data is or is not used in ranking data (if Matt Cutts or any other rep wants to comment or drop me a link to an official comment, I’ll append this post). That said, in my testing I have seen a lot of evidence pointing to toolbar click stream data being used–at least on a short term basis. Pages with a lot of social proof (aka tweets, stumbles, reddits, etc) will pop into SERP’s for extremely competitive terms and then fade away when the clickstream data stops.

In my opinion the days of being able to ignore or dismiss social as a fad or not a part of SEO are over. Any serious SEO should also have a social component as part of their strategy, unless it’s a strictly B2B play or something “unsocial” like a funeral home.

So what are the takeaways from this post:

  • Bing is using clickthrough data as part of their ranking methodology; it’s likely Google is as well
  • Look for ways to get your URL into the data stream of toolbar users
  • Social websites like twitter provide an easy way to spoon feed data to search engines
  • Clickstream data isn’t a leading factor in the ranking and probably never will be, but it is part of the equation
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Are Search Engines Using ClickStream Data

Bringing High-Speed Rail to America

The White House Your Daily Snapshot for
Wed., Feb. 9,  2011
 

Photo of the Day

Vice President Joe Biden points out landmarks to Secretary of Transportation Ray LaHood as they ride an Amtrak train through Claymont, Del., where the Vice President grew up, on the way to Philadelphia, Pa., Feb. 8, 2011. (Official White House Photo by David Lienemann)

In Case You Missed It

Here are some of the top stories from the White House blog.

Bringing High-Speed Rail to America
Vice President Biden travels to Philadelphia to announce a comprehensive plan to help the nation reach President Obama’s goal of giving 80 percent of Americans access to high-speed rail within 25 years.

Supercomputers, Semi Trucks, and America’s Clean Energy Future
The Department of Energy is helping small businesses create jobs by making its Jaguar Supercomputer available for innovative companies. One company is using the data to make trucks more aerodynamic and improve fuel economy.

Happy, Healthy Text4baby Turns One
If you are pregnant or a new mom and haven’t heard of text4baby, it’s time you got to know a happy and healthy public-private partnership that is celebrating its first birthday this month.

 Today's Schedule

All times are Eastern Standard Time (EST).

10:15 AM: The President and the Vice President receive the Presidential Daily Briefing

10:45 AM: The President meets with senior advisors

12:30 PM: The President and the Vice President have lunch with Speaker Boehner, Republican Leader Cantor and Republican Whip McCarthy 

12:30 PM: Briefing by Press Secretary Robert Gibbs WhiteHouse.gov/live

2:30 PM: The Vice President meets with Prime Minister Borut Pahor of Slovenia

3:45 PM: The President and the Vice President meet with Secretary of State Clinton

WhiteHouse.gov/live  Indicates events that will be live streamed on WhiteHouse.gov/live.

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Seth's Blog : Autarky is dead

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marți, 8 februarie 2011

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


How the Junk Bond Bubble Supports Rising Equity Prices

Posted: 08 Feb 2011 03:49 PM PST

Yesterday, I was asked about statements I have made on numerous occasions that the recovery of the junk bond market helps explain the rise in equity markets. Here is the specific question:
Mish,

Can you explain why you frequently say that the corporate bond market supports the equities market? I don't see why it would have the major effect you seem to claim it does.
Let's go over the reasons once again.

  • Companies that cannot get financing go out of business.

  • In March of 2009 many corporations poised to go under because they could not get financing had exceptionally low stock market valuations. Even GE was on that list. Those stocks rose many multiples after Bernanke managed to revive the junk bond market.

  • When companies issue long-term debt at lower and lower yields, their interest expense drops.

  • The entire atmosphere of chasing yields lower is a sign of increased speculation across the board. One should expect stock prices to at least be firm in such conditions.

Everything changed when Bernanke stabilized junk bonds. Interestingly, Bloomberg discussed this situation today in Top Stories.

Maturity Wall Crumbles as $482 Billion of Debt Refinanced
The wall of bonds and loans maturing through 2014 has crumbled by $482 billion, or 44 percent, since 2009, reducing the threat of defaults and allowing companies to bring riskier deals to market. The amount of debt due in the next four years dropped to $671 billion, from $1.2 trillion in 2009, according to JPMorgan Chase & Co.

Some $163 billion of bonds and loans come due in 2011 and 2012, or about 60 percent of the refinancing activity in 2010. Clear Channel Communications Inc. said it plans to sell $750 million of bonds to repay $500 million of short-term loans.

Stronger economic growth and the Federal Reserve´s decision to keep benchmark interest rates at almost zero, while pumping $600 billion into the financial system by purchasing Treasuries, have driven down yields and spurred demand for low-rated debt. That´s allowed companies to seek new borrowings with fewer provisions that protect investors.

"The wall of worry has been greatly reduced," said Sabur Moini, the high-yield money manager at Los Angeles-based Payden & Rygel, who oversees about $2 billion of speculative-grade debt. "You've had a big rally for the last two years and that's allowed companies and underwriters to be more aggressive."
How much better can things get, especially with treasury yields soaring?

I believe junk bonds are priced for perfection and equities priced well beyond perfection.

Please see Negative Annualized Stock Market Returns for the Next 10 Years or Longer? It's Far More Likely Than You Think for details.

As I have said many times, when this all matters is anyone's guess.

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


China Hikes Rates Another Quarter Point; How will this Affect China's Stock Market and Property Bubbles?

Posted: 08 Feb 2011 11:49 AM PST

China hopes to dampen inflation with another quarter point hike. Can China's strategy of baby-step rate hikes work given credit is expanding at 35% a year with GDP rising less than a third of that?

Please consider China hikes interest rates again to damp inflation
China's central bank raised interest rates for the second time in just over a month in a bid to dampen high inflation and guide blistering economic growth to a sustainable level.

The People's Bank of China announced Tuesday on its website that the benchmark 1-year deposit rate would rise by a quarter percentage point to 3 percent and the 1-year lending rate would increase by the same amount to 6.06 percent. The increases are effective Wednesday.

In January, the central bank signaled that fighting inflation would receive priority this year, saying in a report issued after an annual planning meeting that "stabilizing price levels will receive more prominent status."

Last year's rapid growth was driven by a flood of investment in property and other areas. Analysts have urged Chinese authorities to do more to rein in the lavish lending by state-run banks that is driving investment, a large chunk of which is believed to be in speculative property deals.

In January, the banking regulator again ordered banks to tighten risk controls after the country's biggest state-run commercial banks splashed out nearly 240 billion yuan ($36.4 billion) in new loans in the first 10 days of the year.

Authorities are also considering ways to penalize banks for flouting orders to cut back lending.

Borrowing for real estate development and other projects is the lifeblood for the sales by local governments of land use rights that provide a huge share of their revenues. Such sales rose 70 percent in 2010, helping push property prices 6.4 percent higher compared with a year earlier.
China's Real Estate Bubble Continues to Expand

Hiking rates a quarter point a pop reminds me of Greenspan's policy of hiking rates at a measured pace. US speculation in residential real estate went on for another three years, followed by another 18 months of commercial real estate speculation.

In theory, China has other options given the nature of its command economy. Then again practice is a different matter given China's expectation to grow 9-10% a year.

Currently it is taking credit growth 3-4 times GDP growth to achieve China's growth target.

Something has to give. Can China grow 10% without huge investment-driven growth, without rampant credit expansion? What about speculation in the stock market?

Michael Pettis at China Financial Markets expects the Chinese stock market to be firm until President Hu Jintao and Premier Wen Jiabao retire next year.

I am not so sure. It is quite possible a series of hikes weighs on the market. Besides, stock market rallies per se will not help China achieve its GDP targets.

In a newsletter Pettis writes ...
I am moderately bullish, but not because of GDP growth. I am bullish about stocks mainly because it seems to me that hot money inflows, rapid credit expansion, and the impact of still-rising inflation on real interest rates (which are already negative) will mean that money continues flowing into asset markets.

In addition, the single most important player in the market, the government, is able and very likely to behave in ways that are not subject to economic or value analysis. One consequence of this is that local markets do a poor job of rewarding companies for decisions that add economic value over the medium or long term.
When Do Imbalances Matter?

At some point, China will be forced to address massive imbalances in its investment-driven growth model, make numerous market-driven changes in its banking system, and address the untenable nature of its growth targets in general.

Will the stock market and China's economy wait for a leadership change or will the market force some changes via CPI spikes before then?

I suspect the latter. Moreover, it's entirely possible the series of quarter point baby steps hikes weighs on the equity markets sooner than expected, especially if the frequency of those hikes increases faster than expected, even if credit growth continues unabated.

Regardless, long term growth targets of 10% that take credit expansion 35% a year is not a sustainable situation.

Nonetheless, when China's imbalances matters is a subject of speculation. That the imbalances will be addressed by China voluntarily, or the markets forcibly, is not. China bulls have not factored this setup into their models.

Mike "Mish" Shedlock
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Florida Gov. to Overhaul Medicaid, End Defined Benefit Plans for New Public Workers, Require 5% Contributions from Existing Employees

Posted: 08 Feb 2011 02:25 AM PST

Florida Governor Rick Scott is planning sweeping changes that has public unions howling but corporations thrilled.

Budget Plans

  • Cut property and corporate income taxes by $2 billion
  • Transfer Medicaid recipients to managed-care plans
  • Require existing public employees to contribute 5% of their salaries to the retirement system
  • Put new public employees in 401K plans

The Wall Street Journal has more details in Florida Governor Seeks Cuts in Budget
Gov. Rick Scott called Monday for overhauling Florida's Medicaid program, curbing its pension system and trimming government services as he detailed a budget proposal he had promised would be full of big cuts.

Mr. Scott proposed transferring Medicaid recipients to managed-care plans, a move he estimated would save about $2 billion a year on average.

The savings would come mainly from reduced administrative costs and cuts to reimbursement rates for providers, according to people familiar with the budget. Several Florida counties are already experimenting with such a system, and the governor would like to expand it statewide.

In one of his more controversial recommendations, the governor proposed pension-system changes that would require public employees to contribute 5% of their salaries to the retirement system and would direct new hires into 401(k)-style plans. He estimated the changes would save about $1.4 billion a year.
Battle shaping up over pension proposal

The Miami Herald has some additional details in Battle shaping up over pension proposal
Florida's pension system is currently funded by state and local governments contributing the equivalent of between 9 and 10 percent of an employee's income toward retirement. In the case of high-risk workers like police and firefighters, the percentage is higher.

Scott has talked of a 5 percent buy-in by employees -- basically splitting the difference with the state.

"It's only fair that if you're going to have a pension plan, you're going to do just like the private sector does,'' Scott said.
Right Moves

These are exactly the right moves. I commend the budget plan. Scott's plan will put money in the hands of taxpayers via lower property taxes and require public union workers to pay their share.

Hopefully Governor Scott can get all of his proposals passed and other states follow.

Mike "Mish" Shedlock
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