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What We Read Today 16 March 2015

Econintersect: Every day our editors collect the most interesting things they find from around the internet and present a summary "reading list" which will include very brief summaries (and sometimes longer ones) of why each item has gotten our attention. Suggestions from readers for "reading list" items are gratefully reviewed, although sometimes space limits the number included.

This feature is published every day late afternoon New York time. For early morning review of headlines see "The Early Bird" published every day in the early am at GEI News (membership not required for access to "The Early Bird".).

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Here's What Economists Think About the ECB's Historic Stimulus Plan (Andre Tartar, Bloomberg BusinessBloomberg's survey of economists reveals that most expect ECB President Mario Draghi to follow through on the QE (quantitative easing) plan largely as laid out in the announcement 22 January 2015.  That is €60 a month for 19 months.  That is about $1.2 trillion as of today (was $1.3 trillion on 22 Jan).  The opinions where divided into thirds:  Draghi will hit the €1.14 trillion total program target; he will fall short; or he will overshoot.  The target will be hit exactly in the first month according to 86% of respondents.  The ECB balance sheet will not reach the level above $4.2 trillion achieved by the Fed but an ECB record €3.2 trillion ($3.4 trillion at today's exchange rate) is the consensus prediction. As far as extent in time 96% believe the timeline will extend at least to the 16 September 2016 target, and 16% think it will extend into 2017.

As opposed to the Fed QE program which had over $1 trillion in mortgage backed bonds in the purchased portfolio, economists think the ECB will have only about 4% asset backed securities.  But the ECB is expected to have about 12% covered bonds, which are relatives of asset backed securities.

ecb.qe.timeline.expectation


Articles about events, conflicts and disease around the world

U.S.

Greece

Germany

Israel

Russia

China

Brazil

Venezuela



trade and the dollar/euro- supply and demand doing their thing (Warren Mosler)  Hat tip to Roger Erickson.  Warren Mosler has contributed to GEI.

Note how the portfolio shifting that caused the dollar to appreciate has also caused the US trade deficit, excluding petroleum, to likewise increase. That is, it’s not wrong to say that the global portfolios shifting to dollars are getting more and more of those dollars from US resident’s growing net purchases of imports.

And likewise the EU is experiencing a rising trade surplus as the weak euro/strong dollar has increased EU ‘competitiveness’ by lowering their costs of labor and other domestic inputs vs their trading partners. From the EU point of view they are net selling to US residents and the selling those dollars/buying euro in the market place to get the euro they need to meet their domestic costs of production. This ‘removes’ the euro that are being sold to buy dollars.

In other words, trade balances and sovereign fiscal accounts are doing just what they are supposed to do.

us.euro.trade.balance


This Fed economic indicator looks pretty awful (Jeff Cox, CNBC)  The Producer Price Index (PPI) is falling year-over-year, which is a deflationary indicator.  But Steve Liesman says his assessment is that the environment is currently disinflationary rather than deflationary when all aspects are taken into account.  For the latest GEI review see February 2015 Overall Producer Prices Are Now in Deflation Year-over-Year.


New Orders Look Recessionary (Charles Hugh Smith, Of Two Minds)   Chales Hugh Smith contributes to GEI.  Smith finds the decline in new orders for consumer goods and capital goods in the U.S. to  be a potential warning of depressed future demand.

new.orders.recession.chsmith.2015.mar.09 


Guess What Happened The Last Two Times The S&P 500 Was Up More Than 200% In Six Years? (Michael Snyder, The Economic Collapse)  We have a stock market condition that has only occurred twice in the last 115 years, in 1929 and 2000.  What does thi observation portend?  We'll answer in a few years. :-)

six.year.stock.perf.since.1900


U.S. Producers Ready New Oil Wave (The Wall Street Journal)  Yes, it's true.  The U.S. is drilling less and pumping more.  And analysts say that is the way things will keep moving for at least most of 2015.

oil.strategic.drilling


Other Economics and Business Items of Note and Miscellanea

Experimental cholesterol drugs cut heart risk, but questions remain (Reuters)  New drug cuts LDL cholesterol (the "bad" kind) by 60% and incidence of heart attack and stroke by 50% compared to "standard" treatments.

Thoughts about monetary and fiscal policy in a post-inflation world (Alice Rivlin, Brookings)  The New Normal suffers from a cultural lag in thinking about economic policy, according to Rivlin.

Should we take Bitcoin more seriously? (MSNBC)  Josfh Barro video.

Gurley: Facebook's mobile ad sales vulnerable to startup bubble's bursting (Seeking Alpha)  Facebook will be hurt by fallout from bursting bubble in private tech funding and valuations.

Look, your eyes are wired backwards: here’s why (The Conversation)

Hedge fund Everest Capital falls off a Swiss cliff (CNBC)  A single bad currency bet has caused one of the largest and longest-standing private investors in emerging markets to collapse.

Facebook, Google, and the Economics of Time (The Atlantic)  Two opposing philosophies on making money from your time: Google saves time while Facebook soaks it up.

Gold futures settle higher despite dollar rally (Reuters, CNBC)


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