Central Perk

luni, 30 noiembrie 2015

Mish's Global Economic Trend Analysis

Euribor Hits Record Low in First Ever Dip Below 0.10%; Negative Mortgage Rates Increasingly in Play
Chicago PMI Contracts Again, 6th Time in 10 Months; Service Economy Poised for a Big Slowdown?
Pending Home Sales Inch Up +0.2%, Economists Expected +1.0 to +1.5%

Euribor Hits Record Low in First Ever Dip Below 0.10%; Negative Mortgage Rates Increasingly in Play

Posted: 30 Nov 2015 09:01 PM PST

Via translation from La Vanguardia, Euribor at Historic Lows, Mortgage Interest Drops by €166 Per Year.

The 12-month Euribor, on which most Spanish mortgages are based, closed the month of November at 0.079%, setting a new record low and falling for the first time below 0.1%.

The monthly closing represents a decline of 0.256 percentage points since November last year.

A citizen with a mortgage of 120,000 euros will get a will save almost 14 euros per month, 166 euros per year.

XTB analyst Jaime Díez explained to Europa Press that the index has experienced a 50% drop since the beginning of the month based on "fruit of the proximity of the next meeting of the European Central Bank" to be held this Thursday by president Mario Draghi.

Negative Mortgage Rates Increasingly in Play

Hey, why not a negative Euribor so mortgage holders get money back?

Actually, negative interest rates on mortgages happened in April of this year, just not on 12-month Euribor.

.

The above table from on Euribor Rates.

Anyone with a mortgage rate tied to 6-month Euribor or less now gets paid to have a mortgage. In Spain, most mortgages are tied to 1-year Euribor.

Mike "Mish" Shedlock

Chicago PMI Contracts Again, 6th Time in 10 Months; Service Economy Poised for a Big Slowdown?

Posted: 30 Nov 2015 12:00 PM PST

Volatility in the Chicago PMI likely has economists scratching their heads. Following last month's surge comes this month's contraction. It's been off and on for 10 months. No swing in either direction has lasted more than two months.

Yet, the overall trend has been weakening for a year and economists missed this month's forecast by a mile. The Econoday Consensus estimate was for a reading of +54.0 in a range of 52.8 to 56.5. The actual reading was 48.7.

Volatility is what to expect from the Chicago PMI which, at 48.7, is back in contraction in November after surging into solid expansion at 56.2 in October. Up and down and up and down is the pattern with prior readings at 48.7 in September (the same as November) and 54.4 in August.

New orders are down sharply and are back in contraction while backlog orders are in a 10th month of contraction. Production soared nearly 20 points in October but reversed most of the gain in November. Despite November's weakness, employment is up slightly. Prices paid is in contraction for a fourth straight month.

Though this report points to November weakness for the whole of the Chicago economy, the volatility of the report should limit its impact on the month's outlook.

ISM Chicago vs. Manufacturing ISM

Something clearly changed in February, and it wasn't the weather.

Service Economy Poised for a Big Slowdown?

The Chicago PMI survey includes both manufacturing and non-manufacturing components so it is not directly comparable to pure manufacturing surveys. That makes matters worse actually, given economists generally consider the service economy to be in good shape.

Bloomberg proposes the volatility of the report should limit its impact on the month's outlook.
I suggest volatility is a sign of a trend change as well as underlying weakness. And the backlog of orders, one place where there has been consistent contraction for 10 months, does not bode well for future hiring needs.

All things considered, the Chicago PMI is a warning that the service economy may be on its last legs.

Mike "Mish" Shedlock

Pending Home Sales Inch Up +0.2%, Economists Expected +1.0 to +1.5%

Posted: 30 Nov 2015 09:57 AM PST

Pending home sales for the month of October were nearly flat vs. economists expectations of something much higher.

The Wall Street Journal reports Pending Home Sales Rise 0.2% in October, economists had predicted a 1.5% increase.

The Bloomberg Econoday consensus was for a +1.0% gain.

Sales of existing homes have been soft and are not likely to pick up in the next few months based on October's pending sales index which is up only 0.2 percent. Year-on-year, the index is up 3.9 percent which matches the rate of gain for final sales during October. Flatness, unfortunately, is the theme.

The Northeast did the best in October, up 4.5 percent for a year-on-year plus 6.8 percent. The West is next with pending sales up 1.7 percent for a year-on-year gain of 10.4 percent. Bringing up the rear are the Midwest, down 1.0 percent on the month for a year-on-year plus 3.3 percent, and the largest region which is the South, down 1.7 percent in October for the only negative year-on-year reading of minus 0.3 percent.

The National Association of Realtors cites low supply of available homes as a negative for sales and warns that prices in some markets are rising too fast, especially for first-time buyers. The association cites strength in the Northeast as an example, a region where price appreciation is lower and supply greater.

The new home market isn't doing that much better than existing homes, with sales up 4.9 percent year-on-year in the latest available data. Watch for construction spending on tomorrow's calendar, one aspect of the housing market that has been showing solid strength.

Housing has undeniably cooled and so has retail spending. Manufacturing is in an outright recession. Jobs and autos have been the two main drivers of the economy. Jobs are a hugely lagging indicator.

Mike "Mish" Shedlock

Seth's Blog : What does branded look like?

What does branded look like?

The vast majority of products that are sold are treated as generic by just about everyone except the naive producer, who believes he has a brand of value.

A branded object or service has two components, one required, one desired:

1. Someone who isn't even using it can tell, from a distance, who made it. It appears that it could only be made by that producer (or it's an illegal knock off).

Ralph Lauren certainly got our attention when he started making his logo bigger and bigger, but we also see this in the shape of a Paloma Picasso pin, or the label on a pair of Tom's shoes, or the red soles of Louboutin or the sound of a Harley or the cadence of Sarah Kay or ...

If we (the user or the observer) can't tell who made it, then there's no brand. That's the distinction between generic and specific...

2. In the long haul, successfully branded items succeed because the user likes that the brand is noticed in daily use, either by others or even by themselves.

That's subtle but crucial. Does the very existence of the logo or the identifier or the distinction make the user happier?

Can you imagine how crestfallen the debutante would be if her date didn't even know what a Birkin bag was?

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duminică, 29 noiembrie 2015

Mish's Global Economic Trend Analysis

Amazon Unveils New Drone Prototype for 30-Minute Deliveries; Google Seeks Drone Deliveries by 2017
Warmonger Senators McCain and Graham Want 20,000 More US Troops in Syria and Iraq
German Economist Concludes Refugees Will Ultimately Cost Germany €900 Billion

Amazon Unveils New Drone Prototype for 30-Minute Deliveries; Google Seeks Drone Deliveries by 2017

Posted: 29 Nov 2015 10:21 PM PST

Drone delivery is coming, and faster than most think.

Time Magazine disagrees. Time proclaims Here's Why Drone Delivery Won't Be Reality Any Time Soon

Time notes the FAA will not have anything to do with autonomous deliveries other than line-of-sight, but I expect regulations will be worked out soon enough.

Countries like Canada and the UK are ahead of the US in addressing regulations, and history suggests that such pressure and demand from consumers is all it will take to get the US to catch up.

New Drone Prototype

Video of New Drone

Link if video does not play: Amazon Prime Air

30-Minute Deliveries

Please consider Amazon Unveils New Hybrid Drone Prototype to Make Deliveries Within 30 Minutes.

Amazon has unveiled a new hybrid delivery drone that can fly both vertically, as a helicopter capable of landing in customers' backyards, and horizontally like a conventional plane. The drone can travel up to 15 miles at high speed.

The hybrid is conceived as the prototype workhorse for Amazon Prime, the futuristic delivery service that aspires to carry purchases to customers within 30 minutes of an order.

The retail giant hopes that safety features built into the vehicle, including "detect and avoid" sensors that Amazon says allow the drone to fly around obstacles, will overcome concerns from government regulators – some of whom have proven resistant to the idea of delivery drones – and customers.

Earlier this year, at an unidentified location in Canada, the Guardian witnessed versions of the hybrid being tested. As a result of reluctance at the US regulator the Federal Aviation Administration (FAA) to allow commercial drones to fly beyond line of sight, the drone delivery team, led by Gur Kimchi, had been forced to decamp across the border.

Other governments have been notably more receptive to the idea of semi-autonomous drones. The UK's equivalent of the FAA, the Civil Aviation Authority, has indicated it is open to the idea of delivery drones flying beyond line of sight.

Amazon's new hybrid bird has eight rotors, assembled in pairs, that provide the helicopter-style vertical thrust. In addition there is a larger blade situated at the back of the plane, giving forward horizontal movement.

The helicopter function would be used to take the vehicle up to elevation, and then down to a customer's doorstep or yard. Once the horizontal motor is engaged, the drone would fly at up to 60mph, allowing rapid delivery.

The hybrid aeroplane has long been an aspiration of flight engineers and it already exists in various large-scale vehicles, including the military Osprey. Amazon's prototype is believed to be the first effective hybrid achieved in a small unmanned drone of under 55lb.

Google Seeks Drone Deliveries by 2017

Also consider Google Aims for Drone Deliveries by 2017.

David Vos, the leader for Google's Project Wing, said his company was in talks with the Federal Aviation Administration and other stakeholders about setting up an air traffic control system for drones that would use cellular and internet technology to co-ordinate unmanned aerial vehicle flights at altitudes under 500ft (152m).

"Our goal is to have commercial business up and running in 2017," he told an audience at an air traffic control convention near Washington.

Google and Amazon are among companies that have said they want to use drones for deliveries. The FAA is expected to publish final rules for commercial drone operations early next year.

Vos said a drone registry, which the Obama administration hopes to set in place by 20 December, would be a first step towards a system that could use wireless telecommunications and other technology including cellphone apps to identify drones and keep them clear of other aircraft and controlled airspace.

He said Google would like to see low altitude "Class G" airspace carved out for drones, saying it would keep UAV away from most manned aircraft aside from low-flying helicopters, while enabling drones to fly over highly populated areas.

"There's a lot that can be done in this market space," Vos said.

I side with Vos. Technology marches on. Demand from customers and country-to-country competition ensures the nay-sayers like Time are simply wrong.

Mike "Mish" Shedlock

Warmonger Senators McCain and Graham Want 20,000 More US Troops in Syria and Iraq

Posted: 29 Nov 2015 06:40 PM PST

Presidential candidate Lindsey Graham and warmonger-in-chief John McCain both seek more US ground troops in Syria and Iraq. They want 20,000 more to be precise. Half of them would be advisers.

The Guardian reports, John McCain and Lindsey Graham call for 20,000 troops in Syria and Iraq.

Two senior senators called on Sunday for Washington to nearly triple military force levels in Iraq to 10,000 and send an equal number of troops to Syria as part of a multinational ground force to counter Islamic State in both countries.

McCain, chairman of the Senate armed services committee, recently proposed intervention in Syria by a European and Arab ground force backed by 10,000 US military advisers and trainers.

On Sunday, he and Graham told reporters during a visit to Baghdad that US personnel could provide logistical and intelligence support to a proposed 100,000-strong force from Sunni Arab countries like Egypt, Turkey and Saudi Arabia. Graham said special forces would also be included.

US counter-terrorism experts have warned that deploying ground troops risks backfiring by feeding Isis's apocalyptic narrative that it is defending Islam against an assault by the west and its authoritarian Arab allies.

McCain said it would be possible but not easy to rally Arab allies to contribute to the proposed ground force in Syria.

The senators said removing Assad, who is backed by Russia and Iran, was key to getting Arab Sunni states to back the proposed ground force.

Out of Their Minds

Both Senators are clearly out of their minds.

10,000 advisers out of 20,000 US troops? In a proposed 100,000 multinational force? Do we really need 1 adviser for every US soldier? Do we need 1 adviser for every 10 troops overall? Is it remotely possible for a coalition of the willing to agree to send 100,000 troops to Iraq and Syria?

And by what right does the US get to decide who or should not rule Syria? Didn't the US make a complete mess in Iraq and Libya with nation building?

And wouldn't taking out Assad risk a major confrontation with Russia? Or is that precisely what they hope?

These guys are among the worst the Republican party has to offer.

Mike "Mish" Shedlock

German Economist Concludes Refugees Will Ultimately Cost Germany €900 Billion

Posted: 29 Nov 2015 08:36 AM PST

In contrast to the absurd Keynesian position that refugees will pay for themselves via higher growth rates, German economist Bernd Raffelhüschen estimates that over the long haul Refugees Will Cost Germany €900 billion.

Via translation ... Bernd Raffelhüschen, director of the Research Center for Generational Contracts totals the cost of all government spending on refugees, including social insurance, over the life of a refugee.

At his Market Economy Foundation presentation, Raffelhüschen stated that "even with an integration of migrants into the labor market within six years, administrative fees in the long term will cost 900 billion euros."

The article did not say the number of migrants on which the number was based, or whether the influx would continue and at what pace.

If one assumes 4 million total refugees, then each refugee would cost €225,000. Spread out over 30 years, the cost would be €7,500 per year.

I am not sure I buy the notion the cost will be that much "even with an integration of migrants into the labor market within six years". Then again, I am quite confident a big percentage of the migrants will not be in the labor force within six years.

If Angela Merkel does not like Raffelhüschen's numbers, then she should publish her own. Of course politicians never want to put a realistic price tag on their pet projects.

Mike "Mish" Shedlock

Seth's Blog : About to be

About to be

The only way to become the writer who has written a book is to write one.

The only way to become the runner who has just finished a run it to go running.

You might dread the writing or the running or the leading, but it's the key step on the road to becoming.

If it's easier, remind yourself what you're about to be.

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sâmbătă, 28 noiembrie 2015

Mish's Global Economic Trend Analysis

National Front Leading Polls for French Regional Elections Dec 6, Dec 13; Center-Right Squeezed

Posted: 28 Nov 2015 03:19 PM PST

French Regional Elections are coming up on December 6 and December 13.

At stake are the presidencies of the 18 Regions of France. 12 Regions are on continental France, plus Corsica and 5 more overseas.

The regions do not have legislative autonomy, but they do manage sizable budgets. And the regional elections are often taken as a mid-term opinion poll.

National Front Ahead in Polls

European polls are frequently inaccurate, but as it stands, the center is being squeezed by Marine Le Pen's Eurosceptic and anti-immigration National Front party (FN) on the right, and on the other side by the radical left.

Via translation, 20 Minutes reports National Front Ahead in Regional Election Polls.

According to an exclusive survey by Harris Interactive for 20 Minutes, less than one in two French (43%) claiming to vote in the 1st round believes that the attacks will play their choice. And only one in four surveyed believes this will play "a lot" (26%). "There is not today, when questioned French, immediate relationship between this situation of tension and electoral behavior," said Jean-Daniel Levy, director of the department "Politics and Opinion" Harris Interactive.

According to the survey, the National Front collects 27% of voting intentions ahead of the radical socialist Left Party-Party with (26%),and Republicans-UDI-MoDem (25%). Then come the lists of Europe-Ecology-The Greens (7%) left the Communist Party-Front (5%) tied with sovereignist party France Arise.

"At present, the situation appears favorable to the National Front and the left. The FN obtained the highest percentage of the vote in a poll for regional. As for the left, it is admittedly scattered, but it has a certain mobilization, "said Jean-Daniel Levy. For the united right in the center, the situation seems more complicated inversely. "It now seems squeezed between FN and formations of the left," says pollster.

Finally, the assumption that a regional council is directed by a majority FN is considered "least desirable" by the French. The situation seems paradoxical while the FN has the highest rate of voting intention.

Center-Right Squeezed

The center appears to be squeezed between the far left and the Eurosceptic National Front. But I don't understand the wording "only one in four surveyed believes terrorism will play a lot". 26% seems like a lot, especially in countries with a multitude of small parties.

Moreover, that French Unemployment Rises Most in Three Years to Record Level should also play into the National Front's hands.

We will find out soon enough, but the Nannycrats in Brussels are likely quite worried.

Mike "Mish" Shedlock

French Unemployment Rises Most in Three Years to Record Level

Posted: 28 Nov 2015 09:22 AM PST

The recovery in France appears to have stalled already, and this is from employment data before the terrorist attacks. Via translation from Les Echos ...

The number of Class A unemployed rose by 42,000 last month. This is the largest increase in nearly three years. Overseas included, France now has 3,810,000 unemployed, a new record.

The major disappointment is for the Government, which hoped that the sharp decline in September finally marked the beginning of the reversal "credible" and "sustainable" in the curve of unemployment to which Hollande has conditioned his candidacy for re-election in 2017.

"These figures are not satisfactory," euphemized Myriam El Khomri, the labor minister, while adding they "must still be interpreted with caution because the results of recent months experiencing strong variations."

Economists point out that the attacks in Paris strengthen the uncertainties about the pace of recovery in France. They fear a decline in activity in tourism and catering that would inevitably damage employment.

compare the above assessment with an amazing statement by economist Nouriel Roubini: "Positive Impacts of Paris Attacks Modest Unless More Attacks Follow"

Mike "Mish" Shedlock

Damn Cool Pics

Around the World in 15 Exotic Snacks [Infographic]

Posted: 27 Nov 2015 07:31 PM PST

Nothing for experiencing a culture like getting a mouthful of their favorite snack food, so the next time you decide to go wandering around the world, be sure to check out the local cuisine with help from Expedia.

Click on Image to Enlarge.

via expedia

Seth's Blog : Past performance is not indicative of future results

Past performance is not indicative of future results

This is clearly and demonstrably true of mutual funds. It's easy to confirm.

And yet...

We are very uncomfortable with randomness. So the newspaper does a 12 page section of mutual funds, filled with articles and ads and charts, all touting past performance.

Superstition is what we call the belief in causation due to a mistaken correlation of unrelated data. A broken mirror doesn't actually cause seven years of bad luck, and cheering in a certain way isn't going to help the Yankees, sorry.

Of course, we don't live in a completely random world. The scientific method and statistics make it more likely than ever that you can find trends that actually matter.

The hard part is accepting that the random things actually are unpredictable, and refusing to spend time or money guessing on what can't be reliably guessed. It frees up a lot of time and resources to focus on the things that are actually worth measuring.

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luni, 30 noiembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : What does branded look like?

What does branded look like?

More Recent Articles

duminică, 29 noiembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Seth's Blog : About to be

About to be

More Recent Articles

sâmbătă, 28 noiembrie 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis

Damn Cool Pics

Damn Cool Pics

Seth's Blog : Past performance is not indicative of future results

Past performance is not indicative of future results

More Recent Articles

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