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vineri, 6 noiembrie 2015

AdSense Insider Quarterly - November 2015

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Seth's Blog : Idiosyncratic

Idiosyncratic

So, which is more interesting: A vintage 1964 Porsche or a new Honda Civic?

Which is a better car?

If we think hard about the definition of 'better', it's pretty clear that on almost every measurable performance metric, the Honda is a far better car. More reliable. A better value. Able to drive faster, longer, in more conditions. Better mileage. Safer. And on and on.

So why do people pay more, talk more, gawk more at the other car?

Scarcity isn't the only reason. It turns out that perfection is sort of boring.

Airbnb isn't as 'perfect' as staying at the Hyatt (more variability, more ups and some downs) but it's certainly more interesting...

When a product or service benchmarks quality and can honestly say, "we're reliably boring," it might grow in sales, but it will eventually fade in interest, because the people at the edges, the people who care, are drawn to idiosyncrasy, to the unpredictable, the tweakable, the things that might not work.

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joi, 5 noiembrie 2015

Mish's Global Economic Trend Analysis

Merkel Reaffirms "Refugees Welcome" Policy Over Her Own Party's Objections

Posted: 05 Nov 2015 08:32 PM PST

German chancellor Angela Merkel seems bound and determined to go out in flames due to her open arms welcoming of refugees. Earlier today Merkel Rejected German Plan for Refugee Transit Zones.

Chancellor Merkel has rejected controversial plans for special transit zones for processing refugees on Germany's frontiers, defeating members of her own party who had called for tougher controls on asylum seekers.

After weeks of tense negotiations within the ruling coalition, in which rightwing MPs even raised the possibility of building barriers on Germany's borders, Ms Merkel's government has opted instead for more modest proposals for locating the new facilities inside Germany.

The deal is a victory for Ms Merkel's SPD social democratic coalition partners who opposed transit zones, condemning them as "uncontrollable detention zones".

Ms Merkel emerges from the tussle with her "refugees welcome" policy broadly intact and her grip on the CDU-CSU alliance maintained, despite the strains between its left and right wings.

The campaign for a tougher response to Europe's refugee crisis was led by Horst Seehofer, the CSU leader and Bavarian premier, who has hit out at Austria in recent weeks over a "lack of co-ordination" on the border with Germany.

Refugees arriving in Germany will be filtered at the border under the new agreement. Those with strong claims to asylum, notably Syrians fleeing civil war, will be permitted, as now, to travel to a wide range of reception centres across the country.

The agreement came as the latest figures showed 758,000 refugees had been registered in Germany so far this year, fuelling renewed concern for the country's capacity to cope.

With 181,000 arriving last month alone, the government's 800,000 estimate for 2015 looks increasingly out-of-date, but ministers are refusing to raise the figure for fear of sending a signal to would-be migrants than Germany is opening its doors wider.

"Refugees Welcome"

Bear in mind the "transit zone" proposal was doomed to failure because it was far too weak to accomplish much good. But at least it was better that hanging out a "Refugees Welcome" sign complete with vouchers for free food and shelter.

And note the ridiculous hope of not raising refugee estimates for fear that telling the truth would "send a signal".

Refugees got all the "signal" they need from Merkel's inept policy.

Mike "Mish" Shedlock

Seth's Blog : Should we pander?

Should we pander?

In a race to go faster, cheaper and wider, it's tempting to strip away elegance, ornamentation or subtlety. If you want to reach more people, aim for average.

The market, given a choice, often picks something that's short-term, shoddy, inane, obvious, cheap, a quick thrill. Given the choice, the market almost never votes for the building, the monument or the civic development it ends up being so proud of a generation later. Think about it: the best way to write an instant bestseller is to aim low.

The race to popular belies the fact that our beloved classics were yesterday's elitist/obscure follies.

Bob Dylan, Star Trek and the Twilight Zone vs. The Monkees, The Beverly Hillbillies and Gilligan's Island.

Zaha Hadid and Maya Lin vs. Robert Moses.

A Confederacy of Dunces vs. Valley of the Dolls.

No one watches Ed Sullivan reruns (except for one, the exception that proves that rule).

It's our choice. The ones who create, the ones who instigate, the ones who respond to what's been built. It's up to us to raise the bar—pandering is a waste of what's possible.

Sometimes it seems like winner-take-all capitalism is pushing us ever harder to play it dumb. That makes it even more important that we resist.

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miercuri, 4 noiembrie 2015

Mish's Global Economic Trend Analysis

Shippers Warn of Overcapacity, Cancel Scheduled Voyages, Announce Profit Warnings; Don't Sleep in the Subway
Greek Banks' Non-Performing Loans Hit 43%; Only €14 Billion Recapitalization Needed?
EU Running "People-Smugglers’ Promotion Programme" Warns Austria’s Foreign Minister; Crazy Response From Sweden
GDP at Stall Speed Once Again

Shippers Warn of Overcapacity, Cancel Scheduled Voyages, Announce Profit Warnings; Don't Sleep in the Subway

Posted: 04 Nov 2015 10:09 PM PST

Shipping is a strong indication on the health or weakness of the global economy. So let's take a look at what's happening.

World's Largest Shipper Cancels 39 Voyages

The Wall Street Journal reports Maersk Line to Cut 4,000 Jobs as Market Deteriorates

The world's biggest container-ship operator is altering course, slashing jobs and canceling or delaying orders for new vessels after years weathering a sharp downturn in the container-shipping market.

Danish conglomerate A.P. Møller-Maersk A/S said Wednesday its Maersk Line container-shipping unit would cut 4,000 jobs from its land-based staff of 23,000. It is also canceling options to buy six Triple-E vessels, the world's largest container ships, to cope with the deepest market slump in the industry since the 2009 global financial crisis. Maersk said it would also push back plans to purchase eight slightly smaller vessels.

After issuing a surprise profit warning last month, Maersk signaled it, too, was no longer immune to a combination of slowing global growth and massive container ship overcapacity on many routes.

The conglomerate said it would cut its annual administration costs by $250 million over the next two years and would cancel 35 scheduled voyages in the fourth quarter. That is on top of four regularly scheduled sailings it canceled earlier in the year.

Shipping Rates Plunge

Over-Capacity Crisis, Next Year Will be Worse

Ship & Bunker reports Box Markets are in an Over-Capacity Crisis, Next Year Will be Worse

Credit managers may well be keeping an even closer eye on box carriers next year, following a warning from Drewry that the sector is set to face even tougher times in 2016 as the in-balance of supply and demand slides to its worst since financial crisis hit 2009.

And the research agency says the slump could last for several years.

"The container shipping industry is in the midst of an over-capacity crisis which will worsen next year," Neil Dekker, director of container shipping research at Drewry said in an emailed note accompanying the release of its 2015 edition of the Container Market Annual Review and Forecast 2015/16.

Drewry says it has now slashed its container shipping growth forecast for 2015 to just 2.2 percent, while the 1.6 million TEU of extra capacity that has been added this year is the equivalent of a growth rate of 7.7 percent.

As a result, the firm says its Global Supply/Demand Index indicating the relative balance of vessel capacity and cargo demand in the market (where 100 equals equilibrium) has fallen to a reading of 91 in 2015, its lowest level since 2009.

Last week Ship & Bunker reported that Maersk Line was forced to idle one of its 18,000-TEU Triple-E containerships, and has cooled on an option to order another eight 14,000-TEU containerships.

Harper Petersen Shipping Index

Additional time frames available at Harper Petersen.

Peak Season Cutbacks

Do the above articles represent overbuilding of shipping capacity or a slowing global economy?

The answer is likely both. Cancellation of new ship orders is likely overcapacity. However, cutbacks of scheduled routes in the peak season of shipping likely represents falling demand.

Don't Sleep in the Subway

On the personal side, my wife Liz and I are in Zion National Park right now.

We have some beautiful images this trip. On Thursday we have a back country permit to hike the "subway". This is an all day hike to a spectacular slot canyon.

Interested parties may wish to consider this description of The Subway From the Bottom.

Top down requires rappelling straight into a huge pool of water, then swimming to a hiking spot. Not exactly what we want to do in November, not to mention well beyond our technical capabilities.

I may not post again today until this evening. On Saturday, we plan to hike the "Zion Narrows".

Mike "Mish" Shedlock

Greek Banks' Non-Performing Loans Hit 43%; Only €14 Billion Recapitalization Needed?

Posted: 04 Nov 2015 10:12 AM PST

Only €14 Billion Recapitalization Needed?

On November 1, I noted Greek Banks Need €14 Billion Recapitalization Following Latest Stress-Free Tests.

My comment was "Greek banks did much better than expected in the latest ECB stress test (undoubtedly stress-free). The ECB's adverse scenario shows Greek banks only underfunded to the tune of €14 billion."

Greek Banks' Non-Performing Loans Hit 43%

Reader Lars from Norway just emailed regarding recent interview in Germany with former Greek finance minister Yanis Varoufakis that strongly suggests that €14 billion recapitalization number is pure fantasy.

Lars writes ...

Hello Mish.

In a October 28th event in Munchen, Yanis Varoufakis and Hans-Werner Sinn, Professor of Economics and Public Finance at the University of Munich, discuss the Greek tragedy.

It is interesting because Varoufakis gives a very frank description of what went on behind the scenes. In short the Troika wanted Greece on its knees.

Varoufakis stated that Greek banks are suffering with is 43% nonperforming loans.

Alpha Bank alone has assets of €70 billion of which loans are €47 billion. Alpha Bank only has €7 billion in capital. So if 43% of the €47 billion is nonperforming, then nonperforming loans would be about €20 billion.

And that's just one bank. How can a €14 billion capital injection be enough?

I recommend you to listen to the video (2 hours) because it gives a chilling description of what happens when the Troika rules Europe.

I don't agree with everything Varoufakis proposes. I find Sinn more level headed. But you get frank speaking from both. There are also some tough questions from the audience in Munich.

Lars

Here is a link to the video: The Situation in Greece and the Future of Europe

Mike "Mish" Shedlock

EU Running "People-Smugglers’ Promotion Programme" Warns Austria’s Foreign Minister; Crazy Response From Sweden

Posted: 04 Nov 2015 09:07 AM PST

In what should be perfectly obvious (but isn't to Germany and Sweden), EU's Refugee Policy Helps People Smugglers.

Europe is running a "people-smugglers' promotion programme" that is "massively overburdening" several countries, Austria's foreign minister has warned.

Urgent action should be taken to control the EU's external borders, Sebastian Kurz told the Financial Times, and an "honest" message should be sent to make clear the migrant rush is too great.

"There is a massive overburdening, not only in Austria but in other countries such as Germany and Sweden," he said. "It cannot continue as it is."

The minister's comments highlight rising alarm in Vienna, which has found itself on the front lines of Europe's migrant crisis, and could presage fresh clashes with Berlin over its response.

Responding to public anger, Vienna this week announced tougher rules on asylum seekers wanting their families to join them in Austria.

Rather than encouraging unhindered inflows, as some accuse Berlin of having done, Mr Kurz said asylum applications should be assessed at the EU border or further afield. Those likely to be successful could then be distributed fairly among member states. "What we're doing at the moment is indirectly running a people-smugglers' promotion programme," he said.

Mr Kurz also took aim at efforts by EU leaders, including Angela Merkel, the German chancellor, to appeal to Turkey to curb the numbers crossing into Greece. It was "hypocritical", he argued, for EU countries to imply they were welcoming refugees while behind the scenes relying on Turkey to block their entry.

Last week Johanna Mikl-Leitner, the ÖVP interior minister, revealed plans to build a fence on the border with Slovenia. Her comments raised concerns because they appeared to threaten the reimposition of EU internal border checks. Mr Faymann had previously criticised Hungary for building a fence on its borders.

Parade of Fools

At the head of the "not getting it at all" parade are German Chancellor Angela Merkel, EU head Jean-Claude Juncker, and especially Stefan Löfven, Sweden's prime minister.

Please consider Stefan Löfven Rebukes Eastern Europe Over Refugee Crisis.

Stefan Löfven, Sweden's prime minister, rebuked some central and eastern European governments for what he termed a selfish approach to the EU's refugee and migrant crisis, saying their attitude was incompatible with humane European values.

In an interview with the Financial Times, Mr Löfven said: "I can understand it if you say this crisis is a worry. But to say: 'This isn't my problem, we can't accept Muslims' — no, I don't think this is part of our European values, and I can't understand this kind of attitude."

Sweden, a country of 9.6m people, is anticipating the arrival this year of up to 190,000 asylum-seekers, the largest per capita inflow for any EU country and more than twice as many as forecast only five months ago. More than 86,000 people have already sought asylum in Sweden this year, the greatest number of refugees since 1992, when the country provided refuge for 84,000 fleeing the Balkan wars.

Unusually large numbers of the refugees — about 30,000 to 40,000 — are expected to be children or youths travelling alone, adding to the pressure on Sweden's comprehensive social welfare system.

"This is putting pressure on Swedish society," Mr Löfven said.

Crazy Response From Sweden

Kurz is correct about the hypocrisy, but his plan, although somewhat better than the current free-for-all, still misses the mark.

Löfven, on the other hand is from Mars. The pressure on Sweden is due to Sweden's inane policy. This is not about Muslim discrimination. This is about policies in Germany and Sweden that actively encourage people smuggling. It is also about economic refugees shopping around for the most benefits.

The countries offering the most free benefits are Sweden and Germany. Every country between Turkey and Germany or Sweden has to suffer the consequences of overly generous benefits in those two countries.

There are millions of refugees in Turkey. If Germany and Sweden want those refugees, then Merkel and Löfven should airlift them in. I bet several million would apply for asylum in the first week of an airlift announcement.

Correct Response

I outlined a strategy for dealing with the refugees in Austria Announces Fence With Slovenia; Irony of German Whine; Cascading Fences; Mish Proposed Strategy.

In my post Former Australia Prime Minister Chastises EU on Securing Borders, Economic Migration; Mish for President Review I made a few changes.

Here is my proposal to date.

Mish Proposed Strategy

Block the border between Greece and Turkey
Stabilize Syria, even under Assad, but also seek promises of free Syrian elections
Eliminate the free handouts
Return economic refugees to point of entry
Give Turkey some aid for US/UK role in this mess
Halt all US support for alleged "moderate" Al Qaeda rebels. Instead, arm the Kurds now fighting ISIS.

The key point is that once the refugees fled Syria to any other country but especially Turkey, the refugees had already escaped persecution as well as the Syrian civil war. Thus, any travel beyond Turkey was for economic purposes only. On those grounds it is reasonable to deny every refugee's application.

So, instead of building fences all over the place, creating a multitude of bottlenecks while still encouraging people smuggling, the EU should build a fence in Greece and shut off the flow entirely.

Mike "Mish" Shedlock

GDP at Stall Speed Once Again

Posted: 03 Nov 2015 11:47 PM PST

Inquiring minds may be interested in the initial Atlanta Fed GDPNow Estimate for 4th quarter 2015. Here is the chart.

The ISM release on November 2 had a big impact.

The GDPNow model forecast for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2015 is 1.9 percent on November 2, down from 2.5 percent on October 30. Following this morning's Manufacturing ISM Report On Business, the forecast for fourth-quarter real consumer spending growth declined from 2.9 percent to 2.4 percent while the forecast for real equipment investment growth declined from 3.9 percent to 1.3 percent.

I wrote about the ISM report on November 2 in Manufacturing ISM Flirts With Contraction Third Month, Employment Shifts to Contraction

Although the ISM index was the lowest reading since May of 2013, the reading was still positive (presumably showing growth).

I sometimes have difficulty predicting large moves in GDPNow estimates following economic news releases. This was one of those times.

The GDPNow model sees things this way.

I would have guessed a decline of 0.2% or so. Instead, the model says the ISM numbers led to a 0.6% decline.

Regardless, here we go again. The initial GDPNow estimate is already contracting, and is below the stall speed of 2.0% growth.

And the Fed, for the first time ever, now seeks to hike interest rates in December with GDP averaging a mere 2%+- growth for an entire year.

Mike "Mish" Shedlock

Mike "Mish" Shedlock

vineri, 6 noiembrie 2015

AdSense Insider Quarterly - November 2015

Seth's Blog : Idiosyncratic

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