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Econintersect: The official PMI (Purchasing Managers' Index) reported a reading of 49.8 in January, just below the 50 mark which is the demarcation between expansion and contraction. This was the first monthly contraction in 2 1/2 years and was not unexpected: 10 of 11 economists in a Reuters' poll expected a reading above 50 with the consensus being 50.2. The December number was 50.1. Another PMI survey taken by HSBC and reported by Markit had a preliminary ("flash") value of 49.6 fo January, reported last week. The final reading for that survey is due 02 February 2015.Read more »
Even though Chinese officials have pledged to reduce the country's rolling clouds of smog, air pollution levels in many cities have soared to over twenty times the safe limit on several occasions over the past year.
Econintersect: Science holds an esteemed place in American society and it one of the areas that the public most strongly supports government involvement. But when it comes down to specific details the Pew Foundation has found some dramatic differences of opinion about science related issues. Some the areas of wide differences involve GM (genetically modified) foods, causes of climate change, uses of animals in research and desirable energy technologies.
News that the West End musical Made in Dagenham will close in April is disappointing on two fronts. Ignore for a moment what it says about the viability of new theatre productions in the capital, and consider that we will lose a valuable reminder of the fight for workplace gender equality in Britain. And it is a fight for which we need all the help we can get.
Sen. Charles Grassley said nonprofit hospitals could be breaking the law when they sue poor patients over unpaid bills and issued a stern warning to one Missouri hospital that he hopes reverberates nationwide.
The Gran Fondo New York bicycle race is the biggest mass-participation event of its kind in the state, a 100-mile run between Manhattan and Bear Mountain. In May 2012 the organisers introduced drug testing. With thousands of entrants, this expensive process was limited to a handful of riders. Of those, two came back positive for EPO (erythropoietin), a blood-boosting hormone largely associated with the most elite professional end of the sport. Both riders were banned for two years.
The last few months have not been a good time to be Russian Prime Minister Vladmir Putin.
Although turmoil in Ukraine may no longer be making front page headlines, the conflict situation there is still on tentative ground. Western sanctions on Russia continue to cause economic problems and now the country has to deal with yet another problem.
As Millennials begin to enter the home buying market in larger numbers, homes will get a little smaller, laundry rooms will be essential, and home technology will become increasingly prevalent, said panelists during an International Builders' Show press conference on home trends and Millennials' home preferences held last week
In modern world, educated people play a more significant role in a countries' economic growth. The competition for the educated around the world has become more and more intense. Consider that education flows from developed countries to developing ones.
The federal budget deficit, which has fallen sharply during the past few years, is projected to hold steady relative to the size of the economy through 2018. Beyond that point, however, the gap between spending and revenues is projected to grow, further increasing federal debt relative to the size of the economy—which is already historically high.
The Eurozone continues to live on borrowed time.
Last week in a scene reminiscent of the deck on the Titanic, whilst speculators were enabled by Mario Draghi and his expected QE operation to buy Eurozone equities, the Eurozone banks were busily stress testing the "Grexit" scenario - [i].
ECRI's WLI Growth Index improved but has remained in negative territory for 15 weeks. This index is forecasting a slight business cycle contraction in 1H2015. Obviously the markets do not share ECRI's view the business cycle is taking a downturn.
The final University of Michigan Consumer Sentiment for January came in at 98.1, virtually unchanged from the 98.2 preliminary reading and a strong surge from last month's 93.6. This is the highest final monthly sentiment in eleven years. Investing.com had forecast of 98.2 for the January Final.
Econintersect: Week 2 of 2015 shows same week total rail traffic (from same week one year ago) improved according to the Association of American Railroads (AAR) traffic data. Because the AAR reported the first week of 2015 as the last week of 2014, the data does not correlate properly when analyzing the four week averages - but still the data currently has a slight deceleration in the growth trend.
Fed's Balance Sheet week ending balance sheet was $4.461 trillion - down from the record $4.476 trillion for week ending 14 January 2015 and up from the $4.473 trillion for last week. Note that on the 29 October 2014, the Federal Reserves governing board (FOMC) stated that .....
The above graph shows the index value for the US Coincident Index. A comparison of US Coincident Index, Aruoba-Diebold-Scotti business conditions index, Conference Board's Coincident Index, ECRI's USCI (U.S. Coincident Index), and Chicago Fed National Activity Index (CFNAI) coincident indicators follows.
The National Association of Realtors (NAR) seasonally adjusted pending home sales index declined but remains in expansion for the fourth month in a row after a year in contraction. Our analysis of pending home sales however is much better - and we are projecting a relatively good month for existing home sales in January 2015.
The market was expecting the weekly initial unemployment claims at 280,000 to 310,000 (consensus 300,000) vs the 265,000 reported. The more important (because of the volatility in the weekly reported claims and seasonality errors in adjusting the data) 4 week moving average moved from 306,750 (reported last week as 306,500) to 298,500. The rolling averages have been equal to or under 300,000 for the 19 of the previous 20 weeks.
Econintersect: The Federal Open Market Committee (FOMC) - the board of directors of the Federal Reserve - continued to change its discussion and word engineering in their meeting statement relative to when to start raising the Federal Funds rate. And it appears that "financial and international developments" have been added to their list of concerns. Today's statement is remarkable in what they did NOT repeat in the current statement:
The Committee sees this guidance as consistent with its previous statement that it likely will be appropriate to maintain the 0 to 1/4 percent target range for the federal funds rate for a considerable time following the end of its asset purchase program in October, especially if projected inflation continues to run below the Committee's 2 percent longer-run goal, and provided that longer-term inflation expectations remain well anchored. ....
Our Economic Forecast continues to show a stable and growing economy - again with a modest decline in growth from last month. Most portions of the economy outside our economic model - except residential housing, business sales and industrial production - are showing reasonable expansion. Although the growth trend line for our model is decelerating, if we toss in a few more elements which we analyze (but do not include) in our economic forecast model (such as employment or consumer sentiment) - the trends are improving rather than slowing.
Of the four regional Federal Reserve surveys released to date, all show manufacturing expanding (although one barely expanding). A complete summary follows. The market expected this survey index at 4 to 8 (consensus 5.5) versus the 6 actual [note that values above zero represent expansion].
The headlines say new home sales surged from last month. Econintersect also sees the new home sales data improved - BUT even with this surge, the unadjusted 3 month rolling averages continued to decline. As the data is noisy, the 3 month rolling average is the way to look at this data.
The Chemical Activity Barometer (CAB), increased 0.2 percent this month, following a 0.1 percent slide in December, as measured on a three-month moving average (3MMA). Accounting for adjustments, the CAB remains up 3.6 percent over this time last year.
The non-seasonally adjusted Case-Shiller home price index (20 cities) for November 2014 (released today) year-over-year rate of home price growth slowed from 4.5% (reported as 4.5% last month) to 4.3%.
Readers of this blog will know that I am not generally very sympathetic to Austrian economics. There is one point on which the early Austrians did contribute an interesting idea to the world of economics: namely, their theory of capital. This does not mean that the Austrian theory of capital is valid — as I shall show in a moment it is deeply flawed — but there is an idea that can be salvaged from the wreckage that is Austrian capital theory.
In their first estimate of the US GDP for the fourth quarter of 2014, the Bureau of Economic Analysis (BEA) reported that the economy was growing at a +2.64% annualized rate, down -2.32% from the much celebrated +4.96% growth rate reported for the prior quarter.
The courtiers in the Hall of Mirrors that is Versailles on the Potomac are always lining up to give a new Secretary of Defense advice on how to manage the Pentagon during the coming era of budget “constraints.” Most of this wisdom takes the form of platitudes of how important it is to have a strategy and to make the hard choices needed to budget for that strategy.
The Charlie Hebdo attack and its aftermath in the streets and in the press tempt one to dust off Samuel Huntington's 1996 book, The Clash of Civilizations and the Remaking of World Order. Despite the criticisms he provoked with that book and his earlier 1993 article in Foreign Affairs, recent events would seem to be proving him prescient.
“Below the thunders of the upper deep, Far far beneath in the abysmal sea, His ancient, dreamless, uninvaded sleep The Kraken sleepeth: faintest sunlights flee….
“There hath he lain for ages, and will lie Battening upon huge sea-worms in his sleep, Until the latter fire shall heat the deep; Then once by man and angels to be seen, In roaring he shall rise and on the surface die.”
As the situation on the ground quiets down in the wake of the Jan. 24 barrage by Russian-allied forces near the Ukrainian city of Mariupol, Stratfor is continuing the watch initiated by our Red Alert. We believe, at the very least, that Russia is keeping its option to mount an offensive open, and at most, is preparing to launch an offensive to secure its hold on the Crimean Peninsula.
The European Central Bank (ECB) just announced a $70 billion per month bond buying plan. And Greece will probably elect an anti-austerity government on Sunday. Neither will do much to remedy the problems of the Eurozone.
This is a landslide week for economic data, and earnings season is in full swing. Last week's Q4 GDP report and overall market tone has revived deflation concerns. I expect market participants to be watching each economic release closely, asking: Are there signs of incipient economic weakness?
Below is a summary of the activity at Trefis during the past week that Trefis thought Econintersect readers would find interesting.
Trefis is a financial community structured around trends, forecasts and insights related to some of the most popular stocks in the US. It provides the unique feature of allowing the user to model future valuation based upon projected changes in components of each business. It also provides communication capabilities among members, including consensus of member analysis compared to Trefis staff analysis and blogging opportunities for members.
Every mutual fund ad says it in some form: past performance is no guarantee of future performance. Why then, are we constantly bombarded with investment market tendencies that have occurred since 1926? That's the year the esteemed Ibbotson Company (now owned by Morningstar) has used as the starting point for investment asset class tracking. It has become industry standard.
It has been a while since I wrote about option payoff diagrams. If you are not familiar with these, it is a good idea to learn about them. They allow us to make good estimates of how our option trades will do under varied conditions. Being able to do this will give us a big leg up on the option trading competition.
Below, technical overviews and analysis for key stock indices, commodities and currency pairs, based on market activity at what would have been the close (absent the holiday) of the 29 January 2015 U.S. session. This information is a comprehensive summary derived from simple and exponential moving averages along with key technical indicators shown for specific time intervals.
One of the ancillary effects of the collapse of oil prices is that companies that profit from solar energy have seen their share prices decline in recent months. The thinking is that Americans will have less interest in solar energy as they realize that they can provide power to their homes with fossil fuels more cheaply than they had anticipated.
No one-and I mean no one-wants anything to do with this base metal anymore. Stinks for anyone playing copper on the long side. But it also gives you a shot at fast, double-digit gains on another metals play... if you know where to look.
An adorable 3-year-old boy Lyonya Shilovsky casually being a boss on the drums while playing with Novosibirsk Symphony Orchestra. He enthusiastically beats along with a giant smile on his face.
Watch as the boy stays ecstatic and dedicated for the entire performance. Even when he loses a drum stick, he quickly retrieves it and keeps pounding along as if nothing happened. Watch near the end when the boy’s dad tells him to stop and the boy pouts but has the last word.
Today's New York Times has an editorial on Greece which mentions the major point of the whole debate (my highlighting):
Some of the creditors still seem to feel that a debt is a debt to be repaid in full, and that the Greeks "deserve" punishment for their history of profligate spending and habitual tax evasion. But shrinking an economy by a quarter and throwing more than half the young people out of work - policies Mr. Tsipras has likened to waterboarding - is not the way to enable a country to pay back its debts. Greece needs some breathing room, not only to give Mr. Tsipras a chance to turn the country around but also for the sake of the rest of Europe.
The “thirst for oil” is often put forward as a near self-evident explanation behind military interventions in Libya, for instance, or Sudan. Oil, or the lack of oil, is also said to be behind the absence of intervention in Syria now and in Rwanda in 1994.
Let me end with risks to the forecast; there are always risks. The most obvious one involves stagnation in either the eurozone, or in Japan, or in both. In both, using the "three arrows", to borrow from Abenomics, is clearly the way to go, to use monetary policy, fiscal policy and structural reforms. What is true for Japan is just as true for the eurozone as well.
The Wall Street Journal and the New York Time's eurozone reporters, who share the same unshakable devotion to TINA and austerity as the Murdochized WSJ news staff have been thrown into a panic by Syriza's electoral successes in Greece.
The 114th United States Congress is now in session. Is the new Congress better than the last one? Perhaps! Will America be better off because of the new Congress? No!
The new Congress may be better, because Republicans will control not only the House, as they did last term, but also the Senate, which was not the case last time. Admittedly, as an independent, I do have a Republican-leaning voting record.
As we approach the 70th anniversary of the liberation of Auschwitz on January 27, the victims of the Holocaust stand, with a good reason, at the centre of our attention. It is survivors' memoirs that shaped our understanding of this genocide. Yet this focus on the survivor sometimes goes hand in hand with an ahistorical, idealised reception of their memoirs.