Simple Man's Macro View of the World

I received an interesting email the Wednesday before Thanksgiving from Steen Jakobsen, chief economist for Saxo bank, regarding his macro picture of the world.I purposely delayed posting it until now so more would see it than during a holiday-truncated week.From Steen ... Simple Man's View One Trading View: Fixed income will outperform all assets. US 10-Year treasury yield will drop under 1.5% by 2015 Q3One Economic View: Disinflation/deflation will be catalyst for asset sell-offOne Timing View: Q2/Q3-2015 low this cycle for all indicatorsOne Guaranteed View: Volatility will go up significantlyCore Trading Views10Y Bond yields(US) will continue...

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Podemos "Economic Manifesto" Calls for Debt Restructuring, Spain to Abandon the "Euro Trap"

The Podemos party, a far-left populist party in Spain led by Pablo Iglesias, has come from out of nowhere to lead the polls.Podemos' economic manifesto includes debt restructuring, exiting the European Monetary Union, and a jobs program to end unemployment.The plan was drawn up by Vincenç Navarro and Juan Torres, two Spanish economists.Pablo Iglesias (party leader), Carolina Bescansa (party member) and economists Vincenç Navarro and Juan Torres, present Podemos' economic program.Via translation from Libre Mercado, Podemos Admits Its Economic program Unfeasible Under Current Euro. Globalization and National Sovereignty Incompatible The document...

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Sanctions on Russia Bite Europe, China the Beneficiary

European sanctions on Russia have hurt the EU far more than Russia. Moreover, Europe has lost key machinery contracts to China, and those contracts will likely stay with China even after sanctions are lifted.Please consider Europe Feels Sting in the Tail of Russia Sanctions. At a technology fair in Moscow last month, European executives faced the new reality of doing business in Russia since the West imposed sanctions: the number of companies at the international showcase had shrunk by half from a year ago."The impact on business couldn't be clearer. Fewer stands, fewer companies," said Mark Bultinck, a sales executive for Belgian digital screen maker Barco, which had a booth at the annual expo for the audiovisual industry.The impact of the sanctions was already clear to Barco.The company...

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Italy's Unemployment Rate Unexpectedly Hits Record High 13.2%

The string of unexpectedly bad news in the eurozone continues unabated as Italian Unemployment Rate Rises to Record, Above Forecasts. The unemployment rate rose to 13.2 percent from a revised 12.9 percent the previous month, the Rome-based national statistics office Istat said in a preliminary report today. That’s the highest since the quarterly series began in 1977. The median estimate of seven economists surveyed by Bloomberg called for an unemployment rate of 12.6 percent in October. The youth unemployment rate for those aged 15 to 24 rose to 43.3 percent last month from 42.7 percent in September, today’s report showed. Expectations vs. RealityEconomists expected a drop in unemployment of 0.3%. Instead unemployment rose 0.3%.Italian Prime Minister Matteo Renzi blamed the rise on an...

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Conflicting Shopping Headlines: NY Times "Brisk Sales", Yahoo "Black Friday Shopping Crowds Thin"

Here's a pair of conflicting stories regarding Black Friday shopping.Crowds Thin Yahoo!Finance reports Black Friday Shopping Crowds Thin After Thanksgiving Rush. Mall crowds were relatively thin early on Black Friday in a sign of what has become the new normal in U.S. holiday shopping: the mad rush is happening the night of Thanksgiving and more consumers are picking up deals online."It just looks like any other weekend," said Angela Olivera, a 32-year old housewife shopping for children's clothing at the Westfarms Mall near Hartford, Connecticut. "The kind of crowds we usually see are missing and this is one of the biggest malls here. I think people are just not spending a lot."Brisk SalesThe New York Times reports Black Friday Sales Are Brisk, Retailers Say, Bolstered by Online Deals. Parking...

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Japan Household Spending Down 4%, CPI Drops to 0.9%; Bankruptcies Soar in Yen Collapse

In spite of the Yen falling 35% since 2011, Japan once again borders on deflation. Please consider Japan’s CPI falls to 0.9%. Japanese core inflation last month fell below 1 per cent to a 13 month low, just weeks before prime minister Shinzo Abe heads to the polls to garner fresh support to push back a scheduled rise in sales tax.Core consumer prices, all prices excluding fresh food, slowed to an annual pace of 2.9 per cent growth year-on-year in October, in line with forecasts. Stripped of any impact of the sales tax rise in April, core prices are up 0.9 per cent.Highlighting the scale of the challenges facing the Abe administration, data released...

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Crude Plunges Following OPEC Decision to Not Cut Production

For five consecutive months OPEC produced over its alleged quota. Nonetheless, and in spite of falling prices and pleas from Venezuela to restrict production, OPEC decided to take no action. In the wake of the news, West Texas Intermediate plunged nearly 7% and Brent fell over 8%. WTI Crude FuturesBrent Crude FuturesPlease consider OPEC Fails to Take Action to Ease Glut as Crude Plunges. OPEC took no action to ease a global oil-supply glut, resisting calls from Venezuela that the group needs to stem the rout in prices. Futures slumped the most in more than three years.The group maintained its collective production ceiling of 30 million barrels...

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"Neutrality" Gone Mad: Should GM Have to Promote Toyota?

The EU's attempt to breakup Google gets more absurd by the day. I wrote about this just yesterday in Google vs. Sun vs. France: Too Big, Too Powerful, Too Free.I have a few more EU proposals regarding Google worth discussing, but first I have a few questions: In the name of neutrality...Should GM have to promote Toyota? Should Target have to promote WalMart?Should Pepsi have to promote Coke? The idea sounds blatantly absurd, because it is.Yet EU nannycrats Demand Neutrality From Google. Google was under fire on two fronts in Europe on Wednesday as privacy watchdogs told it to apply the “right to be forgotten” globally and German ministers pushed for laws to make its search engine a “neutral platform”.The developments crown a difficult week for the US technology group, which has already seen...

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Thanksgiving Travel Nightmare: Over 700 Flights Canceled, Major Storms; Black Friday Ice; Please Drive Safely

If you are traveling tonight or tomorrow, please take extra time.If you are traveling by plane, please check your flight schedule. Hundreds of flights have been cancelled, thousands of other flights delayed.Thanksgiving Travel NightmareAccuweather reports Snowstorm Creates Thanksgiving Travel Nightmare in EastA snowstorm pummeling the East has produced lengthy flight delays and treacherous travel on roadways Wednesday. As snow rapidly exits the Northeast into Thanksgiving Day, there will still be some travel trouble spots in the wake of the storm.Aircraft displaced and delayed by the storm in the East may lead to additional flight delays and...

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Google vs. Sun vs. France: Too Big, Too Powerful, Too Free

I happen to like the sun. By definition, the earth would not even be a planet without the sun. No one on earth would be alive without free sunshine.I happen to like Google. I could survive without Google, but like the sun, much of what Google provides is free. Free Google ThingsFree internet services including the best search engine in the worldFree GmailFree research on self-driving cars Free research on other roboticsFree blog softwareFree hosting and storage for blogsFree ads on my blog (and those ads make me money)For a discussion of the implications of a self-driving car, please see Google Unveils Self-Driving Car, No Steering Wheel, No Accelerator, No Brake Pedal; Self-Driving Taxi Has Arrived. Who, other than city bureaucrats with their taxi licensing scheme will not want lower taxi...

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Merkel Will Blink First, Not Putin

The cold war took another twist last week when a Senior German Politician Endorsed Russian Takeover of Crimea. Former state premier Matthias Platzeck, chairman of the German-Russian Forum business lobby and erstwhile Social Democrat (SPD) chief, is the first high-ranking German to say the West should endorse the annexation as a way to help resolve the Ukraine crisis. Platzeck, 60, told the Passauer Neue Presse newspaper: "A wise man changes his mind - a fool never will... The annexation of Crimea must be retroactively arranged under international law so that it's acceptable for everyone."Platzeck, Brandenburg's popular state premier from 2002 to 2013, struck a nerve in eastern Germany where there is far less support for sanctions against Russia than in the West."We have to find a resolution...

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Rents Heading Up? Will the CPI Follow?

Rents are up 6.5% in San Francisco, and 4.5% in numerous other cities. Is this a leading indicator for a stronger inflation as measured by the CPI?Please consider the Variant Perception article Higher Rents in the US are a Strong Support for CPI. Despite the subdued nature of US CPI, some large components are turning up.  Owners’ equivalent rent and rent of primary residence, which together account almost of a third of the CPI basket, are turning up strongly. A low vacancy rate and a relatively resilient US economy is helping to drive rents higher, with San Francisco seeing the greatest rent increases, at 6.4% over the last year, and with...

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War on Terror: Drones Target 41 but Kill 1,147 Mostly Innocent men, Women, and Children

The US calls it a war on terror. In reality it's a war of terror. And for every innocent person killed, hundreds of friends and family members hold it against the US. The Guardian reports 41 Men Targeted but 1,147 People Killed in US Drone Strikes. New analysis of data conducted by human rights group Reprieve shared with the Guardian, raises questions about accuracy of intelligence guiding ‘precise’ strikes. The drones came for Ayman Zawahiri on 13 January 2006, hovering over a village in Pakistan called Damadola. Ten months later, they came again for the man who would become al-Qaida’s leader, this time in Bajaur.Eight years later, Zawahiri...

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Fed "Mystified" Why Millennials Still Live at Home; My Answer May Surprise You (It Isn't Jobs, Student Debt, or Housing)

A New York Fed research paper wonders What’s Keeping Millennials at Home? Is it Debt, Jobs, or Housing? The paper says "it's a mystery" why the housing recovery did not have a bigger impact on millennials living at home.The research paper, written by Zachary Bleemer, Meta Brown, Donghoon Lee, and Wilbert van der Klaauw notes correlations to debt, jobs and housing.Yet, "student debt only explains about 10% of the increase in parental coresidence since 2004, with another 10% being explained by house prices during the mid-2000s".I have the answer below, but first a few charts and notes on the charts.Notes:CCP is the Federal Reserve Bank of New...

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Juncker's €315bn EU Slush Fund is €299bn Sleight of Hand Magic

Last week France asked for a "New Deal" with "Real Money" not fake EU promises.France was a bit wary (and rightly so) over sleight of hand math from Jean-Claude Juncker, the new head of the European Commission.Today we have the facts.Juncker's €315bn EU Slush Fund looks like this.95% Leveraged Magic, 5% Fund €16bn from the EU budget€5bn in guarantees from the European Investment Bank (EIB)€299bn is magic.Supposedly, private money will come up with €299bn based on €5bn in guarantees.Of course someone has to administer this action plan. So Juncker unveiled a new “investment advisory hub” run by "financial professionals" with direction from the European Commission and EIB. After padding their own pockets, the group will decide which projects to undertake, no doubt based on kickbacks, bribes,...

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"Regin" World's Most Advanced Cyber Snoop Hits Russia, 4 Other Countries; Western Intelligence Agency Likely Responsible

Telecom companies in Russia and Saudi Arabia have been hit by the world's most sophisticated hacking software to date.Symantec believes a Western intelligence agency is responsible.Please consider World’s Most Advanced Hacking Spyware Let LooseA cyber snooping operation reminiscent of the Stuxnet worm and billed as the world’s most sophisticated computer malware is targeting Russian and Saudi Arabian telecoms companies.Cyber security company Symantec said the malware, called “Regin”, is probably run by a western intelligence agency and in some respects is more advanced in engineering terms than Stuxnet, which was developed by US and Israel government hackers in 2010 to target the Iranian nuclear programme.The discovery of the latest hacking software comes as the head of Kaspersky Labs, the...

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Wrong Three Ways: Europe Not at Risk of Full-Blown Deflation Says ECB Vice President

Statements from various high-ranking central bank officials prove they are totally clueless.For example, please consider an announcement today by European Central Bank (ECB) Vice President Vitor Constancio: Europe not at risk of full-blown deflation. During a debate in central Italy, Constancio said he did not think "that in Europe there is the risk of falling into full deflation" because nominal salaries would have to fall in all member countries "and this cannot happen".Cannot Happen?!One really has to wonder about what is in these central bankers' heads. Constancio is wrong at least three ways. Wrong Three WaysEven if nominal wages and salaries...

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"Eagle Cam": Aerial View of London via Video Camera Attached to an Eagle

An eagle got an impressive birds-eye-view of London this week, flying over the city's most iconic landmarks using a Sony HDR-AZ1VR Action Cam attached to its back.Link if video does not play: Action Cam Footage Shows Eagle Flying Over City of London The BBC reports Eagle With Camera Flies Over LondonAn eagle with a camera attached has flown across London and offered a new perspective on some of the capital's best-known landmarks.The footage was recorded over a week by an Imperial Eagle called Darchan.The animal has been brought to London from the French Alps by The Freedom Project to mark the 50th anniversary of the International Union for Conservation of Nature (IUCN) Red List.The Red List compiles the world's most threatened species. Mike "Mish" Shedlockhttp://globaleconomicanalysis.blogspot.com...

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UKIP Picks Up Second Seat Following Tory Defection, Two More Coming Up?

The first one or two people doing something can hardly be called a trend. Yet, all trends start with a movement of One. UKIP gained a second seat in British parliament as a result of a special election following a Tory defection to UKIP. The first UKIP seat also came from a special election following a Tory defection. Two other Tories are allegedly considering switching parties to UKIP.Prime minister David Cameron's Tories are clearly under pressure. Please consider UKIP Gains Second Commons Seat With Victory in Rochester. The U.K. Independence Party dealt a new blow to Prime Minister David Cameron as it won a second seat in Parliament from his Conservatives in six weeks.Mark Reckless, who defected to UKIP from the Tories in September and then forced a special election in his seat of Rochester...

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Bloomberg Sensationalism and Inaccuracies Regarding "Forced Nationalization of Crimea"

A few days ago a friend emailed the Bloomberg article Russia Delivers a New Shock to Crimean Business: Forced Nationalization.I replied something along the lines of "interesting, but I am going to bounce this off Jacob Dreizin", a US citizen who provides frequent updates to me regarding Ukraine.I also bounced the article off Pater Tenebrarum at the Acting Man blog. Pater commented ... Russian oligarchs stealing stuff back from Ukrainian oligarchs would be my guess. I should add, the arbitrariness of this process is of course quite disturbing (regardless of the fact that Ukraine's oligarchs are a bunch of corrupt thieves). But this strikes me mainly as a case of politically motivated payback. The oligarchs all aligned themselves with Kiev as soon as it was clear that Yanukovich had lost power...

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Reply From Pettis on Spain; Prisoner's Dilemma in Reverse; EMU End Game

In response to Spain Needs to Debate Leaving the Euro; Tooth Fairy Economics I received a nice email from Michael Pettis confirming my translation was correct. He also attached the original article in English.Michael Writes ...Thank's Mish. I am attaching the original, but the translations you got were basically right and covered the main points, which you understand anyway. Excessive debt impedes growth, and very few sovereign debt crises in history have been resolved by growthThe only other way to "resolve" a debt crisis is to assign the losses to one group or anotherIt is usually workers through unemployment and middle class savers through hidden or explicit taxes who end up payingIt may or may not be worthwhile to save the banks at the expense of the middle and working classes, but at...

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