Central Perk

luni, 12 ianuarie 2015

How to Have a Successful Local SEO Campaign in 2015

Posted: 11 Jan 2015 04:15 PM PST

Another year in search has passed. It's now 2015 and we have seen some major changes in local ranking factors since 2014, which I also expect to change greatly throughout 2015. For some a new year means a fresh starting point and yet for others it's a time of reflection to analyze how successful your campaign has been. Whatever boat you're in, make sure to sit down and read this guide.

In this guide we will cover how you can have a successful local SEO campaign in 2015 starting with the basics and getting down to five action items you should focus on now. This is not limited to Google My Business and also includes localized organic results.

Now the question is where do you start?

Since Pigeon has now rolled out to the US, UK, Australia, and Canada it's important to make sure your strategies are in line with this no matter what part of the world you're in. A successful local SEO Campaign in 2015 will be much more successful if you put more work into it. Don't be fooled though. More work by itself isn't going to get you where you need to be. You need to work smarter towards the goals which are going to fuel your conversions.

For some industries that might mean more localized content, for others it may mean more social interaction in your local area. Whatever it ends up being, the root of it should be the same for most. You need to get more conversions for your website or your client's website. So with this in mind let's make sure we're on the same page as far as our goals are concerned.

Things you need to know first

Focus on the right goals

Recently I had a conversation with a client who wanted to really nail in the point that he was not interested in traffic. He was interested in the conversions he could track. He was also interested to see how all of these content resource pieces I recommended would help. He was tired of the silly graphs from other agencies that showed great rankings on a variety of keywords when he was more interested to see which efforts brought him the most value. Instead, he wanted to see how his campaign was bringing him conversions or meaningful traffic. I really appreciated this statement and I felt like he really got it.

Still, however, far too often I have to talk to potential clients and explain to them why their sexy looking traffic reports aren't actually helping them. You can have all of the traffic in the world but if it doesn't meet one of your goals of conversions or education then it's probably not helping. Even if you make the client happy with your snazzy reports for a few months, eventually they're going to want to know their return on investment (ROI).

It's 2015. If your clients aren't tracking conversions properly, give them the help they need. Record their contacts in a CRM and track the source of each of these contacts. Track them all the way through the sales funnel.

That's a simple and basic marketing example but as SEOs your role has transformed. If you can show this type of actual value and develop a plan accordingly, you will be unstoppable.

Second, don't get tunnel vision

You may wonder why I started a little more basic than normal in this post. The fact is that in this industry there is not a full formal training program that covers all aspects of what we do.

We all come from different walks of life and experience which makes it easy for us to get tunnel vision. You probably opened this article with the idea of "How Can I Dominate My Google Local Rankings?" While we cover some actionable tips you should be using, you need to think outside of the box as well. Your website is not the only online property you need to be concerned about.

Mike Ramsey from Nifty Marketing put out a great study on measuring the click-through rates from the new local stack. In this study he measured click-through rates of users conducting several different searches like "Salt Lake City Hotel" in the example below. With so many different options look where the users are clicking:

They're really clicking all over the place! While it's cool to be number one, it's much better if you get clicks from your paid ad, organic result, local result, and barnacle SEO efforts (which we'll talk about a little later).

If you combine your conversion marketing data with your biggest priorities, you can put together a plan to tackle the most important areas for your industry. Don't assume it's a one-size-fits-all approach.

Third, some spam still works. Don't do it and rise above it.

There's no doubt that some spammy tactics are still working. Google gets better everyday but you still see crap like this example below show up in the SERPs.

While it sucks to see that kind of stuff, remember that in time it disappears (just as it did before this article was published). If you take shortcuts, you're going to get caught and it's not worth it for the client or the heartache on your site. Maintain the course and do things the right way.

Now let's get tactical and prepare for 2015

Now it's time for some practical and tactical takeaways you can use to dominate your local search campaign in 2015.

Practical tip 1: start with an audit

Over the years, one of the best lessons I have learned is it's OK to say "I don't know" when you don't have the answer. Consulting with industry experts or people with more experience than you is not a bad thing and will likely only lead to you to enhance your knowledge and get a different perspective. It can be humbling but the experience is amazing. It can open your mind.

Last year, I had the opportunity to work with over ten of the industry's best minds and retained them for site audits on different matters.

The perspective this gives is absolutely incredible and I believe it's a great way to learn. Everyone in this industry has come from a different background and seen different things over the years. Combining that knowledge is invaluable to the success of your clients' projects. Don't be afraid to do it and learn from it. This is also a good idea if you feel like your project has reached a stalemate. Getting more advice, identifying potential problems, and having a fresh perspective will do wonders for your success.

As many of the experts have confirmed, ever since the Pigeon update, organic and local ranking factors have been more tied together than ever. Since they started going this direction in a big way, I would not expect it to stop.

This means that you really do need to worry about things like site speed, content, penalties, mobile compatibility, site structure, and more. On a side note, guess what will happen to your organic results if you keep this as a top priority? They will flourish and you will thank me.

If you don't have the budget or resources to get a third party opinion, you can also conduct an independent audit.

Do it yourself local SEO audit resources:

How To Preform Ultimate Local SEO Audit by Casey Meraz
Local SEO Audit Template by Dan Leibson
Local SEO Diagnostics by Phil Rozek

Do it yourself organic SEO audit resources:

Alternatively if you're more in the organic boat you should also check out this guide by Steve Webb on How To Perform The World's Greatest SEO Audit.

Whatever your situation is, it's worth the time to have this perspective yearly or even a couple times a year if possible.

Practical tip 2: consider behavioral signals and optimize accordingly

I remember having a conversation with Darren Shaw, the founder of Whitespark, at MozCon 2013 about his thoughts on user behavior affecting local results. At the time I didn't do too much testing around it. However just this year, Darren had a mind-blowing presentation at the Dallas State of Search where he threw in the behavioral signals curve ball. Phil Rozek also spoke about behavioral signals and provided a great slide deck with actionable items (included below).

We have always speculated on behavioral signals but between his tests and some of Rand's IMEC Lab tests, I became more of a believer last year. Now, before we go too deep on this remember that your local campaign is NOT only focused on just your local pack results. If user behavior can have an impact on search results, we should definitely be optimizing for our users.

You can view Phil Rozek's presentation below:

User Behavior Affects Local Rankings. Now What? from Phil Rozek

Don't just optimize for the engines, optimize for the humans. One day when Skynet is around this may not be an issue, but for now you need to do it.

So how can you optimize for behavioral signals?

There is a dark side and a light side path to this question. If you ask me I will always say follow the light side as it will be effective and you don't have to worry about being penalized. That's a serious issue and it's unethical for you to put your clients in that position.

Local SEO: how to optimize for behavioral signals

Do you remember the click-through study we looked at a bit earlier from Nifty Marketing? Do you remember where the users clicked? If you look again or just analyze user and shopper behavior, you might notice that many of the results with the most reviews got clicks. We know that reviews are hard to get so here are two quick ways that I use and recommend to my clients:

1. Solicit your Gmail clients for reviews

If you have a list of happy Gmail clients you can simply send them an email with a direct link to your Google My Business Page. Just get the URL of your local page by pulling up your URL and copying and pasting it. A URL will look like the one below:

Once you have this URL, simply remove the /posts and replace it with:

/?hl=en&review=1

It will look like this:

If your clients click on this link via their logged-in Gmail, they will automatically be taken to the review page which will open up the box to leave a review which looks like the example below. It doesn't get much more simple than that.

2. Check out a service like Mike Blumenthal's Get Five Stars for reviews

I recently used this with a client and got a lot of great feedback and several reviews.

Remember that these reviews will also help on third-party sites and can help your Google My Business ranking positions as well as click-through rates. You can check out Get Five Stars Here.

Another way outside of getting reviews is to optimize the appearance of your Google My Business Page.

3. Optimize your local photos

Your Google My Business page includes photos. Don't use generic photos. Use high quality photos so when the users hover over your listing they get an accurate representation of what they're looking for. Doing this will increase your click-through rate.

Organic SEO: Optimize for Behavioral Signals

The optimization for click-through rates on organic results typically focus on three areas. While you're likely very familiar with the first two, you should not ignore them.

1. Title tags: optimize them for the user and engine

Optimize your meta title tags to increase click-through rates. Each page should have a unique title tag and should help the viewer with their query. The example below (although fabricated) is a good example of what NOT to do.

2. Meta descriptions: optimize them for the user

Optimize your meta description to get the user to click on the search result. If you're not doing this just because Google may or may not pull it, you're missing opportunities and clicks.

3. Review Schema markup: add this to appropriate pages

Reviewing Schema markup is still a very overlooked opportunity. Like we talked about above in the local section, if you don't have reviews coded in Schema, you could be missing out on getting the orange stars in organic results.

Practical tip 3: don't ignore barnacle SEO

I firmly believe that most people are not taking advantage of barnacle SEO still to this day and I'm a big fan. When I first heard Will Scott introduce this term at Pubcon I thought it was spot on. According to Will Scott's website Search Influence, barnacle SEO is "attaching oneself to a large fixed object and waiting for the customers to float by in the current." In a nutshell, we know that if you're trying to rank on page one of Google you will find others that you may be able to attach to. If Yelp results come up for a lot of your search terms you might identify that as an opportunity. But there are three main ways you can take advantage of this.

1. You can try to have the most visible profile on that third party page

If Yelp is ranking for LA Personal Injury Attorneys, it would suit you to figure out how the top users are showing up there. Maybe your customers are headed there and then doing some shopping and making a selection. Or maybe they're using it for a research platform and then will visit your website. If your profile looks great and shows up high on the list, you just gave yourself a better chance at getting a conversion.

2. You can try to get your page to rank

Hey, just because you don't own Yelp.com or whatever similar site you've found, doesn't mean you shouldn't put in the effort to have it rank. If Google is already showing you that they trust a third party site by ranking it, you can use similar organic ranking techniques that you would use on your own site to make your profile page stronger. Over time you might add this to your bio on interviews or other websites to earn links. If you increase the visibility of your profile on search engines and they see your website on the same page you might increase conversions.

3. You can help your Google My Business

If the site you're using passes link juice and you earn links to the third party profile page, you will start to see some strong results. Links are a big factor in local since Pigeon this year and it's an opportunity that should not be missed.

So how can you use this advice?

Start by finding a list of potential barnacle SEO partners for your industry. As an example, I did a search for "Personal Injury Attorneys" in Los Angeles. In addition to the law firms that showed up in the results on the first page, I also identified four additional places I may be able to show up on.

Yelp
Thumbtack
Avvo
Wikipedia

If you were attorney, it would be worth your while to explore these and see if any make sense for you to contribute to.

Practical tip 4: earn some good links

Most people get too carried away with link building. I know because I used to do it. The key with link building is to change your approach to understand that it's always better to get fewer high quality links than hundreds or thousands of low quality links.

For example, a link like this one that one of our clients earned is what I'm talking about.

If you want to increase your local rankings you can do so by earning these links to your associated Google My Business landing page.

Do you know the URL you entered in your Google My Business page when you set it up? That's the one I'm talking about. In most cases this will be linked to either a local landing page for that location or the home page. It's essential to your success that you earn solid links to this page.

Simple resources for link building

33 Links and How to Get Them by Justin Briggs
Event Link Building - Build links by hosting an event.
HARO - Help reporters with their inquires. Get interviews and earn links.

Practical tip 5: have consistent citations and remove duplicates

Identifying and correcting incorrect or duplicate citations has been getting easier and easier over the years. Even if you don't want to pay someone to do it, you can sign up for some great do-it-yourself tools. Your goal with any citation cleanup program is this:

Ensure there are no duplicate citations
Ensure there are no incorrect citations with wrong phone numbers, old addresses, etc.

You can ignore small differences and inconsistencies like St vs. Street. I believe the importance of citations has been greatly reduced over the past year. At the same time, you still want to be the least imperfect and provide your customers with accurate information if they're looking on third party websites.

Let's do good things in 2015

2014 was a tough year in search altogether. We had ups like Penguin refreshes and we had downs like the removal of authorship. I'm guessing 2015 will be no different. Staying on the roller coaster and keeping with the idea of having the "least imperfect" site is the best way to ring out the new year and march on moving forward. If you had a tough year in local search, keep your head up high, fix any existing issues, and sprint through this year by making positive changes to your site.

Sign up for The Moz Top 10, a semimonthly mailer updating you on the top ten hottest pieces of SEO news, tips, and rad links uncovered by the Moz team. Think of it as your exclusive digest of stuff you don't have time to hunt down but want to read!

Seth's Blog : Failure imagined (24 variations)

Failure imagined (24 variations)

Cancelled

Fired

Called out

Humiliated

Embarrassed

Crashed

Unfunded

Indicted though innocent

Typos found

Unappreciated

Late

Underbid

Found out

Outclassed

Defeated

Satired

Criticized

Out of cash

In debt

Underdressed

Out of tune

Underwhelmed

Out of your league

Unprepared

Feel free to avoid all of these things by doing nothing, by second guessing yourself, by being your own worst critic, always ready to describe the apocalypse waiting on just the other side of shipping.

Either that or you can risk the narrative and risk the fear and make a difference.

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duminică, 11 ianuarie 2015

Mish's Global Economic Trend Analysis

Biggest Bubble: Central Bank Credibility; Cautionary Tale of Global Gloom from Down Under

Posted: 11 Jan 2015 09:28 PM PST

Australian newspaper "The Age" has an interesting interview with Gerard Minack, former Morgan Stanley strategist.

Minack is now out on his own, publisher of "Downunder Daily". Minack says "I deliberately decided when I left to keep it balanced, not to start writing like Zero Hedge."

Nonetheless, Minack is a bear who thinks Australia is in for some tough times, the price of iron ore still has plenty of room to fall, and the most important monetary policy act of the last four years was European Central Bank president Mario Draghi's "whatever it takes" speech, but the eurozone will break up anyway.

Finally Minack calls "central bank credibility" the biggest bubble. Let's take a look.

Cautionary Tale of Global Gloom

Please consider a few snips from The Bear is Back: A Cautionary Tale of Global Gloom.

Fairfax Media: How do you think 2014 panned out in investment markets?

Gerard Minack: People look at the S&P 500 and think it was a good year; it was a rubbish year for equities in US dollar terms. The S&P is the [2002 Olympics speed ice-skating gold medalist] Steve Bradbury of financial markets – the only one that has kept on skating while the others wobbled and fell over.

Aussie shares are in a full-blown bear market, in US dollar terms. Credit markets are starting to wobble, commodities have been smoked. After two years of broad-based gains in risky assets, we're down to the last man standing.

Fairfax: What has supported the strong gains in asset markets up to recently?

GM: A couple of things. I think QE has been overrated, but six years of zero rates in the US is going to have an impact.

But for me the most important monetary policy act of the last four years by a mile was [European Central Bank president Mario] Draghi's "whatever it takes" speech. In the two years before that, every time we hit a soft patch you reintroduced the tail risk of a systemic European banking crisis. And by taking that risk away all of a sudden the market became inured to macro weakness and started this two year re-rating. It was a pure valuation rally. From the late 2011 lows in global equities to early this year the MSCI All Country Index was up 65 per cent. Earnings over the same period were down, so we had a pure P/E-led rally.

Fairfax: What about China as a potential source of returns this year?

GM: There are structural problems there. You've had 30 years of great growth in China and lousy equity returns, and that's because they can't allocate their capital. If they improve their capital allocation they will be better over the medium term, but you want to see those reforms put in place first.

The rest of Asia is an uneven story. Ultimately still a slow-growth world. If the US is growing at 2.5 per cent, and it's the world's locomotive, then you know the train is not moving very fast.

Fairfax: What's your outlook for the iron ore price?

GM: From here, iron ore will halve in US dollar terms, in my view. In the boom all the other commodities went up six- or seven-fold, while iron ore went up 15 times. So, sure, it's halved already, but it has further to go.

Fairfax: How vulnerable is our housing market?

GM: I don't think there's anything exceptional about our housing market, except that we've gone 23 years without a downturn. When we get across-the-board unemployment then we'll get an across-the-board downturn in house prices; it's just a matter of time.

Fairfax: What are the big global risks you see out there in the coming few years?

GM: The biggest bubble out there is central bank credibility. If Draghi was a stock he'd be on a P/E of 200! Yellen's on 100. When that bubble pops, all hell will break loose again, and there you really just want to be in cash.

Fairfax: So the biggest risks are in Europe?

GM: Yep. The problem is the next crisis will not be in the periphery and it will not be in the banks; it will be economic and it will be in the core.

The big problem is the internal competitive imbalances in Europe. The problem's not [that] the euro is too high against the dollar, it's not that the euro is too high against the yen. The problem is that the French franc is too high against the deutschemark, and Mr Draghi can't fix that. From the resulting economic stress you're getting political blowback. You're getting fringe parties flourishing everywhere. There are whole landmines of elections coming up in the next 18 months, any one of which could throw up a result that could get the crisis back as front page news.

Fairfax: So you still don't believe the euro can survive?

GM: That's still the case. You can't restore your competitiveness in a fixed-exchange-rate regime.

The solution is simple, and it's what the periphery has done: it's called having a depression. It's 20 per cent unemployment and large nominal wage cuts. The trouble is that the small economies can be bossed around, but you can't see the French taking the same medicine.

In Agreement

With slight differences on theoretical possibilities, Minack and I are in near-complete agreement.

Eurozone: It's certainly possible to restore your competitiveness in a fixed-exchange-rate regime, but there's a snowball's chance in hell socialist France will do that. Otherwise, I have stated on numerous occasions the eurozone will break up or Europe will remain in a depression for over a decade.

Productivity: The euro has many structural defects, including monetary policy that is absolutely not suitable for every country in the eurozone. Minack says "the problem is that the French franc is too high against the deutschemark, and Mr Draghi can't fix that." Correct. The ECB can't fix that. France could in theory fix the problem, but won't.

Draghi: Without a doubt the most important monetary policy act of the last four years was Draghi's "whatever it takes" speech. That's something I have said that as well.

Fringe Political Parties: We are certainly in agreement here, except I believe two of the alleged fringe parties are going to win the next election.

Greece: Alexis Tsipras and the radical left in Greece (see Greek Polls Show Syriza on Cusp of Victory)
Spain: Pablo Iglesias and his radical left Podemos party (see Podemos "Economic Manifesto" Calls for Debt Restructuring, Spain to Abandon the "Euro Trap").
Italy: Beppe Grillo's 5-Star Movement (see Beppe Grillo Seeks Referendum to Abandon Euro, "At War with ECB Scum, Not ISIS or Russia!")
France: Marine Le Pen and her far right Front National party (see Rise of the Eurosceptics: Socialists Hammered in French Elections; Le Pen Surprises, Calls for "Alliance of Eurosceptics")

I expect wins by Podemos in Spain and Syriza in Greece. An outright win by the the 5 Star Movement in Italy is not out of the question.

If you win, are you a fringe party?

Central Banks: Minack says "the biggest bubble out there is central bank credibility."

On numerous occasions I have made similar statements.

Please consider this reference from Sisyphean Fed Struggle to Create Inflation.

Bubbles of Increasing Amplitude

Via the moral hazard of bailouts, the Fed sponsors bubbles and crashes of increasing amplitude over time.

But the biggest bubble of all is belief central banks will always be able to handle these busts.

It's pretty rare for me to agree with someone on so many issues, especially an analyst (former in this case) at a big brokerage house, but there you have it.

Further Reading

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

Illinois Governor Backs Away From No Tax Hike Pledge; Clueless Rauner Has Few Ideas

Posted: 11 Jan 2015 01:12 PM PST

It's par for the course for politicians to back away from campaign pledges. But one might have at least expected that Republicans would not consider tax hikes.

Unfortunately, even that modest assumption is suspect as Governor Rauner Set to Inherit Illinois' Sea of Red Ink.

Illinois faces a sea of red ink because shrinking income tax revenue will fail to keep pace with rising pension and health insurance costs, according to outgoing Gov. Pat Quinn's latest three-year budget forecast.

The projections from the Office of Management and Budget warn that the estimated $4.1 billion bill backlog expected at the close of fiscal 2015 could grow to $9.9 billion in fiscal 2016, $15.7 billion in fiscal 2017, and reach $21.3 billion at the close of fiscal 2018.

At the same time, a general funds deficit of $180 million this year will rise to more than $5 billion in the coming years.

Quinn, as he unsuccessfully pressed lawmakers last year to make permanent the 2011 tax hike, warned lawmakers that years of progress would be reversed if they expired.

Facing an election, lawmakers balked and adopted a fiscal 2015 budget that is now $750 million short of the actual funding needed to support costs.

The task of balancing the current budget that runs through June 30 and dealing with skyrocketing red ink falls to Gov.-elect Bruce Rauner, who has warned that state finances are in even more dire shape than he thought. He has, at least temporarily, backed away from his campaign pledge not to extend the higher rates.

Rauner, who defeated Quinn in November, takes office Monday and his budget is due Feb. 18 unless he asks for a delay. The Republican faces veto-proof Democratic majorities in the General Assembly.

Rauner has so far offered only general ideas for balancing the state's books. A 10-point fiscal blueprint released during the campaign called for trimming $1 billion in spending, cutting state purchasing and cracking down on Medicaid eligibility, among other ideas.

Clueless Rauner Has Few Ideas

Clearly Rauner has few solid proposals.

But instead of forcing Democrats to override his veto of a tax hike bill, Rauner appears ready to throw in the towel already.

Reflections on "Progress"

Former governor Pat Quinn "warned lawmakers that years of progress would be reversed if tax hikes expired."

Progress for Illinois democrats is tax hikes, followed by tax hikes, followed by more tax hikes simply to cover inane benefits of public unions while taxpayers and businesses flee the state.

And now Rauner appears ready to go along with tax hikes because "state finances are in even more dire shape than he thought."

Pathetic.

Our only hope is to shame Rauner into a position that displays a backbone rather than a wet noodle.

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

Seth's Blog : Planning on resilience

Planning on resilience

That thing you're launching: what if it fails to function?

The challenge of doing something for a crowd in real time is that if it doesn't work, you're busted. You have no way to alert people, to spread out demand, to reprocess inquiries.

Batch processes gives you a fallback. If the first printing is a little off, you can fix it in the second (if the first printing is small enough). When you know the email address of the people you're dealing with, for example, you can easily reroute people and change expectations. If you know how to contact the ticket holders, you can let them know in advance that the theater roof is under repair. You can fix things today and get them right for tomorrow without disappointing a mob of people in real time.

There's a huge difference between interacting with customers one at a time, one after another, and learning as you go, vs. interacting with everyone, all at once, in parallel.

The arrogance of most web launches (from hip new sites to healthcare signups) is that they assume that nothing will go wrong if they do it live. So they try to do it live for everyone, at once.

When someone you have no data on bounces, you have no way to ask them to come back.

The only part of a launch that should be live is the part that benefits from being live. Everything else ought to be in a batch, reserved, asynchronous and capable of recovery.

It's a journey, not an event, and working in asynchronous batches is a smart way to stay resilient.

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sâmbătă, 10 ianuarie 2015

Mish's Global Economic Trend Analysis

Huge Capital Raising Effort at Spanish Bank Passing Latest Stress Test; New Game in Town; Smell Test Failure

Posted: 10 Jan 2015 02:11 PM PST

Spanish bank Banco Santander was halted on Thursday, followed by an announcement it would raise capital. When the bank reopened its shares plummeted as much as 14%, with the Spanish stock market down about 4%.

Banco Santander passed the last "stress test" so allegedly it had no need to raise capital.

With that thought in mind, let's recap the ECB's love affair with stress tests that seldom find much need to raise capital.

On June 22, 2012, I commented Laugh of the Day: Stress Tests Show Spanish Banks Only Need Between €16bn and €62bn in New Capital; ECB to Accept BBB- Rated Debt (One Step Above Junk) as Collateral.

In October 2013, after two previous stress tests blew sky high, ECB president Mario Draghi announced that he would not hesitate to fail banks in the third test.

In Translating "Draghize", I commented "When it comes to stress tests, especially for European banks, the one thing history suggests is the tests will be essentially stress-free, by design. Why should this time be any different?"

Translating Draghize

For those of you who do not speak Draghize I offer these translations.

Draghize: "Banks do need to fail to prove the credibility of the exercise".
Mish: We are carefully scrutinizing several non-critical banks, looking for a couple of scapegoats, hoping to fool the public regarding the credibility of the exercise.

Draghize: "If they do have to fail, they have to fail. There's no question about that."
Mish: If any big banks are in trouble. They won't fail. There's no question about that.

Draghize: "The test is credible because the ultimate purpose of it is to restore or strengthen private sector confidence in the soundness of the banks, in the quality of their balance sheets"
Mish: The test is credible because we say it is.

Stress Tests Watered Down

On January 16, 2014 I commented ECB Waters Down 2014 Stress Tests Second Time; Yet Another Sham Stress Test.

One of the things the ECB watered down was in relation to sovereign bonds. They were assigned a "zero risk". Do Greek bonds look like zero risk here?

The second thing the ECB did was make a 25% reduction in the amount of capital banks had to hold.

Stress Tests Announced

On October 27, 2014 alleged stress tests were a glowing success. The ECB announced Most Banks Are Healthy, failing only 13. Another 12 would have failed but had already taken steps to raise sufficient capital.

The Wall Street Journal posted a table of Participating Banks With a Shortfall. The list includes all 25 banks.

click on chart for sharper image

Total Capital Shortfall

The total capital shortfall of all failing banks was €9.5 billion. The Journal reported "Overall, 25 banks technically failed the so-called stress tests, facing a cumulative shortfall of €24.6 billion. But most have already taken steps to solve their problems since the end of 2013, the cutoff date for the exercise."

Please note that the largest shortfall was a 2.11 billion euros. Only three banks had shortfalls over 1 billion euros.

Guess what bank was not on the list.

Banco Santander Announces Capital Increase of €7.5 Billion

Via translation from Libre Mercado, please consider Banco Santander Announces Capital Increase of €7.5 Billion.

Banco Santander announced on Thursday it would make a capital increase amounting to €7.5 Billion euros, equivalent to 10% of capital and apply a cut in dividends of 66%.

Minutes earlier, the CNMV decided to temporarily suspend trading to avoid unnecessary volatility before the bombshell. The CBMV lifted the suspension on Friday, accompanied with a sharp drop in the stock market.

1,213,592,234 new shares will be issued at a share price of €6.18. New shares will commence trading on the Stock Exchange on January 13.

The decision by Chair Ana Botín and CEO José Antonio Alvarez is preceded by a series of events that have taken place in recent months. Last September some discrepancies arose between the ECB and the bank entity with respect to capital levels. Banco Santander thought it was sufficiently capitalized but was pressured to improve its creditworthiness.

Following the announcement, rumors flew that Banco Santander would be interested in buying the Italian bank Monte dei Paschi di Siena.

Capital Shortfalls and Expansion Plans

Bloomberg comments Ana Botin Reveals Santander's Vision in Bank's Drive to Raise Capital

"The former management always maintained that they didn't want or need to raise capital," said Benjie Creelan-Sandford, a banking analyst at Macquarie Group Ltd. in London. "It reflects well on the new management that they have finally grasped the nettle and are taking steps to address the capital issue."

Santander will use the funds to expand its business and lending in markets where it already operates and economies are improving, Botin said, adding that Spain's crisis was at an end.

Botin said the bank had no plans to make significant acquisitions because it sees a "huge opportunity internally." Her emphasis on growing without purchases also marks a shift from her father who spent more than $70 billion on acquisitions after taking on the chairmanship in 1986.

Speculation

The BBC reports Santander Asks Shareholders for 7.5 Billion Euros.

Santander is asking shareholders for €7.5bn (£6bn), about 10% of its capital value. Santander comfortably passed a recent bank stress test, but there was speculation about its capital strength and whether it might float its UK arm.

There was also speculation on Thursday that the cash-call might herald a big acquisition. Shares in Italy's Monte Paschi bank jumped 8% on the news.

Monte Paschi, the world's oldest bank with roots dating back to 1472, is looking for a buyer after a poor showing in the stress tests.

Yohan Salleron, an equity manager at France's Mandarine Gestion, told Reuters: "We met Santander one month ago and they didn't say they needed a capital increase. We need to understand why they need (it)."

New Game in Town

The new game in town appears to be "let the banks pass stress tests in public, fail them in private". Only 13 banks failed the stress tests to a total tune of €9.5 billion.

Curiously the BBC headline reads "Santander Asks Shareholders ...". Is "ask" the right word? Did shareholders have a choice?

Santander maintains it was well capitalized yet raised €7.5 billion. Why? For acquisitions?

Speculation is that Santander would purchase the seriously troubled Italian bank Monte Paschi. Yet Botin said the bank had no plans to make significant acquisitions because it sees a "huge opportunity internally."

Smell Test Failure

Something here does not pass the smell test. It's difficult to say precisely what, yet one thing's for sure: Banks don't go raising huge amounts of capital for no reason. So what's the reason?

Santander was pressured by the ECB to raise capital because it really should not have passed the stress test
Santander raised money (or additional money) to make significant acquisitions but does not want that to be known for fear of bidding wars
Both of the above.

Let's return one more time to Botin's statement regarding "no plans to make significant acquisitions because it sees a huge opportunity internally."

Take out the word "opportunity" and replace it with the word "problem" and everything fits nicely.

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

Seth's Blog : Confused about the sample

Confused about the sample

If you survey 10,000 of your customers by email and 200 reply, what will you learn from the responses?

You will probably not get a statistically accurate presentation of how your customers feel. What you will get is an accurate understanding of how customers who answer email surveys feel. Two different things.

People who vote are not always the same as people who answer surveys. People who post Yelp reviews are not the same as people who buy from you. Customers who complain are not the same as all customers.

Sure, sometimes the groups are similar enough that it's okay to use one as a proxy for the other. But often, that's just not the case, and we mistake proximity and noisiness for accuracy.

• Email to a friend •

vineri, 9 ianuarie 2015

Mish's Global Economic Trend Analysis

Ding! Ding! Ding! Pimco Plans a Push Into Stocks With 7 New Equity Strategies; No Forecaster Predicts S&P Decline in 2015
Average Hourly Wages vs. CPI: Are You Ahead?
Nonfarm Payrolls +252K; Unemployment 5.6%; Employed +111,000 (Household Survey)
Another Run on Greek Banks Begins; Get Out While You Still Can; Buy Gold

Ding! Ding! Ding! Pimco Plans a Push Into Stocks With 7 New Equity Strategies; No Forecaster Predicts S&P Decline in 2015

Posted: 09 Jan 2015 02:04 PM PST

Ding! Ding! Ding!

Signs of a major market top keep piling on. Pimco provides the latest bell-ringer with launch of 7 new equity strategies.

Please consider Pimco Plans a Push Into Stocks.

Long known as a bond powerhouse, Pacific Investment Management Co. is once again attempting an expansion into stock mutual funds.

The Newport Beach, Calif.-based company, still reeling from the departure of its star manager Bill Gross late last year, said Thursday that it is launching seven new equity strategies in partnership with the asset manager Research Affiliates.

The strategies include investments in large and small companies, as well as international and emerging-market stocks.

The new Pimco strategies will be based on indexes created by Research Affiliates. The firms aim to boost returns and protect from volatility by rating companies based on their size and other economic factors, rather than the price of the security.

"We're responding to client needs," Pimco Chief Executive Douglas Hodge said in an interview.

Client Needs?

Pray tell what client needs are those?

Bill Gross, Pimco founder and former CIO (now with Janus), provides a more rational outlook.

Bill Gross says 2015 Is Going to Be Terrible.

Bill Gross, bond king, ousted executive, self-styled poet of the markets, has a bold, depressing prediction for 2015, and he's not couching it in any of his usual metaphor: "The good times are over," he wrote in his January investment outlook note. By the end of 2015, he goes on, "there will be minus signs in front of returns for many asset classes."

 Gross is putting himself way out on a limb: Not one of Wall Street's professional forecasters predict the S&P 500 will drop in 2015. Their average estimate calls for an 8.1 percent rise.

Gross has been wrong before, most famously in his predictions that bond yields would rise when the Federal Reserve ended quantitative easing. But maybe this time he sees something other market observers don't. As Gross writes, deploying the commentary's only off-color metaphor: "There comes a time when common sense must recognize that the king has no clothes, or at least that he is down to his Fruit of the Loom briefs."

No Forecaster Predicts a Decline

When not a single forecaster predicts a decline in equity prices in 2015, I like the odds something else will happen in a big way.

As for what Gross sees, I cannot say. However, I can say that I see one of the most overbought, overloved, equity and corporate bond markets in history, with valuations nearly as high as 1929 and the dot-com bubble in 2000.

In fact, this bubble is worse than 2000 because valuations in nearly every equity class are stretched as opposed to just technology.

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

Average Hourly Wages vs. CPI: Are You Ahead?

Posted: 09 Jan 2015 11:02 AM PST

Average hourly earnings for all employees unexpectedly declined 0.2%, $0.06 per hour in December vs. November. This was the largest month-to-month percentage drop since the data series began in 2006.

The following charts will help put wages in perspective, on an annual basis (percent change in wages vs. wages the same month a year ago).

Average Wages All Private Employees

click on any chart for sharper image

Average Wages Production and Nonsupervisory Workers

Average Wage Increase Minus CPI

No Benefit From Inflation

Economists tout the benefits of inflation. The idea is nonsensical.

Wages vs. the CPI are up 0.88% vs a year ago, but wages minus the CPI have spent more time in negative territory than positive territory since June 1973!

Moreover, please note the CPI does not take into consideration property taxes, income taxes, payroll taxes (social security, disability, unemployment), debt service, or various fees. The above numbers are even worse than they look.

I repeat my challenge to Keynesians: "Prove Rising Prices Provide an Overall Economic Benefit".

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

Nonfarm Payrolls +252K; Unemployment 5.6%; Employed +111,000 (Household Survey)

Posted: 09 Jan 2015 08:59 AM PST

Initial Reaction

The big surprise in this month's report was a decline in average hourly earnings. Details below.

For the second straight month there has been a huge discrepancy between the household survey employment and the establishment jobs survey. Swings in household survey employment and the labor force have been wild lately.

Last month household survey employment rose by 4,000 while the payroll survey had job gains of 321,000 (revised up this month to 353,000). This month the household survey shows a modest gain in employment of 111,000 vs. a payroll survey of 252,000 jobs.

The unemployment rate dropped this month primarily because 273,000 people dropped out of the labor force.

Once again we are in a situation where the establishment survey and the household survey are at odds. Over time these fluctuations tend to smooth out. The question, as always, is "in which direction".

BLS Jobs Statistics at a Glance

Nonfarm Payroll: +252,000 - Establishment Survey
Employment: +111,000 - Household Survey
Unemployment: -383,000 - Household Survey
Involuntary Part-Time Work: -61,000 - Household Survey
Voluntary Part-Time Work: -241,000 - Household Survey
Baseline Unemployment Rate: -0.2 at 5.6% - Household Survey
U-6 unemployment: -0.2 to 11.2% - Household Survey
Civilian Non-institutional Population: +183,000
Civilian Labor Force: -273,000 - Household Survey
Not in Labor Force: +456,000 - Household Survey
Participation Rate: -0.2 at 62.7 - Household Survey

December 2014 Employment Report

Please consider the Bureau of Labor Statistics (BLS) November 2014 Employment Report.

Total nonfarm payroll employment rose by 252,000 in December, and the unemployment rate declined to 5.6 percent, the U.S. Bureau of Labor Statistics reported today. Job gains occurred in professional and business services, construction, food services and drinking places, health care, and manufacturing.

Click on Any Chart in this Report to See a Sharper Image

Unemployment Rate - Seasonally Adjusted

Nonfarm Employment January 2011 - December 2014

Nonfarm Employment Change from Previous Month by Job Type

Hours and Wages

Average weekly hours of all private employees was stationary at 34.6 hours. Average weekly hours of all private service-providing employees was flat at 33.4 hours.

Average hourly earnings of production and non-supervisory private workers declined $0.06 to $20.68. Average hourly earnings of production and non-supervisory private service-providing employees also declined $0.06 to $20.47.

For discussion of income distribution, please see What's "Really" Behind Gross Inequalities In Income Distribution?

Birth Death Model

Starting January 2014, I dropped the Birth/Death Model charts from this report. For those who follow the numbers, I retain this caution: Do not subtract the reported Birth-Death number from the reported headline number. That approach is statistically invalid. Should anything interesting arise in the Birth/Death numbers, I will add the charts back.

Table 15 BLS Alternate Measures of Unemployment

click on chart for sharper image

Table A-15 is where one can find a better approximation of what the unemployment rate really is.

Notice I said "better" approximation not to be confused with "good" approximation.

The official unemployment rate is 5.6%. However, if you start counting all the people who want a job but gave up, all the people with part-time jobs that want a full-time job, all the people who dropped off the unemployment rolls because their unemployment benefits ran out, etc., you get a closer picture of what the unemployment rate is. That number is in the last row labeled U-6.

U-6 is much higher at 11.2%. Both numbers would be way higher still, were it not for millions dropping out of the labor force over the past few years.

Some of those dropping out of the labor force retired because they wanted to retire. The rest is disability fraud, forced retirement, discouraged workers, and kids moving back home because they cannot find a job.

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

Another Run on Greek Banks Begins; Get Out While You Still Can; Buy Gold

Posted: 08 Jan 2015 11:34 PM PST

In November, Greeks withdrew €220 million from banks. In December, the figure soared to €3 billion.

My advice to Greeks is simple: Get out while you still can. That means now!

Via translation from Libre Mercardo, please consider ECB Threatens to Unleash the 'Banking Yard'

The term "banking yard" is in reference to what happened to Cyprus depositors. What follows is my translation of the article.

According to initial estimates, Greeks withdrew €3 billion from their bank accounts in December. €600 million of that total came on December 29, when Greece failed to elect a new president, thereby forcing national elections on January 25.

In comparison, November when net outflows totaled about €220 million.

The risk of bank runs in Greece is reactivated. In this sense, just remember that since 2010, when the crisis hit the euro, the Greek bank deposits dropped 37% but even after the rescue by the troika, deposits never recovered. This data demonstrates strong distrust by Greek depositors of the monetary union.

The Greek financial system is artificially sustained by the ECB, the lender of last resort. It survives because the ECB accepts junk debt (including Greek state bonds) as collateral. If the ECB were to cut support, the Greek banking simply would close and the government would set strict limits on the withdrawal of deposits.

On Thursday, the ECB said that its funding to the Greek banking system depends on the success of the current bailout program and a subsequent agreement in Athens with the EU and the International Monetary Fund (IMF).

The rating agency Moody's also warned Thursday that the growing political uncertainty in Greece is damaging the liquidity of Greek banks, causing an outflow of deposits.

Investor Fear

Fear not only grows among depositors. Investors also show their misgivings by their rejection of the Greek public debt. The yield on Greek ten-year bonds has just surpassed the threshold of 10% for the first time in 15 months, while the risk of sovereign default is increasing, as reflected in the price of credit default swaps of Greek debt, now exceeding 1,500 points.

End Mish Translation

Soaring interest rates, soaring credit default swaps, and yield curve inversion are all signs of tremendous stress.

Inverted Yield Curve

Yield on the Greek 10-year bond is 10.24%
Yield on the Greek 3-year bond is 14.165%

The yield curve reflects the weight haircuts would have on shorter-term deposits.

Moody's Warns of Liquidity Crisis

Please consider Greek Banks Face Liquidity Crisis on Weak Deposit Base.

Greek banks' liquidity scenario is going to worsen thanks to the political uncertainty in the country as banks' deposit base is not adequately strong and borrowers are not willing to restructure bad loans until normalcy is back to the political system, Moody's said.

Greek banks' main focus has been to tackle high level of non-performing loans (NPLs) on their books, which were 34.1% of total banking system loans in June 2014.

This uncertainty is credit negative for Greek banks, including National Bank of Greece, Piraeus Bank, Eurobank Ergasias, Alpha Bank and Attica Bank, the rating agency said.

"We expect the alternative funding that Greek banks have recently obtained through interbank borrowing and loan securitisation to temporarily dry up and exacerbate the system liquidity, at least until the political situation normalises," Moody's said.

At the end of November, private-sector deposits were €164.3b and that ECB funding was €44.9b in the Greek banking system.

The ELA from the Bank of Greece is not unlimited and is subject to ECB governing council approval. The ELA from the Bank of Greece is not unlimited and is subject to ECB governing council approval.

Get Out While You Still Can

ELA stands for Emergency Liquidity Assistance. It's not unlimited. Given the political environment, if the run on Greek banks picks up steam, the ECB may be unwilling to step in.

The important message to Greeks is get out now, while you still can. If this panic escalates, Greece may very well respond with capital controls, even before the election.

Those who do not get out while they can may suffer devastating consequences.

Get Out Where?

As the chart of deposits shows, the smart money left long ago and did not return. I don't know where it went, but all European banks are suspect.

If I were a Greek citizen, I would personally worry that any euro-denominated bank (not just Greek banks) would confiscate my money.

Options

For short-term needs, consider US dollars or euros, in hand, not in bank safe deposit boxes. For mid- to long-term needs, US treasuries (or US treasury ETFs), and gold look attractive, especially gold.

In spite of all the attacks by mainstream writers on gold, it was still the second best performing currency in 2014.

Gold was up 13% vs. the euro, 15% vs. the Yen, and 6% vs. the British pound. Gold was down 1.3% vs. the dollar.

Get Out!

There is no reason to hold money in Greek banks, and every reason not to (even if there is talk of ECB guarantees). At this point, the "Juncker Rule" applies (they will lie when it's serious).

It's serious. Get out!

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

luni, 12 ianuarie 2015

Now the question is where do you start?

Things you need to know first

Focus on the right goals

Second, don't get tunnel vision

Third, some spam still works. Don't do it and rise above it.

Now let's get tactical and prepare for 2015

Practical tip 1: start with an audit

Do it yourself local SEO audit resources:

Do it yourself organic SEO audit resources:

Practical tip 2: consider behavioral signals and optimize accordingly

So how can you optimize for behavioral signals?

Local SEO: how to optimize for behavioral signals

Organic SEO: Optimize for Behavioral Signals

Practical tip 3: don't ignore barnacle SEO

Practical tip 4: earn some good links

Practical tip 5: have consistent citations and remove duplicates

Let's do good things in 2015

duminică, 11 ianuarie 2015

sâmbătă, 10 ianuarie 2015

vineri, 9 ianuarie 2015

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