Bits Bucket for July 14, 2015
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trade deficits and tariffs
here’s a paper titled “why trade deficits don’t matter”. the author (Robert McGee) has written out several examples with simple math that explain why this is so. if you want to be ahead of the game you have to increase your understanding, and let go of the myths.
oh, and along the way he explains why nations that impose tariffs are hurt more than the nations that they are imposed on.
those of you who have interest in these things might want to save the article as it may not stay up much longer.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2138
——–
here’s a different article written by the great walter williams. mr. williams is also a great economist, and gives his take on trade deficits.
http://www.creators.com/opinion/walter-williams/worry-over-trade-deficits.html
i have feeling that jim rickards reads this blog once in a while. perhaps even peter schiff does. neither of them understands trade deficits. unfortunately, neither does jim rogers whom i have the utmost respect for and agree with about 98% of the time.
these two articles make it very easy to understand. all you have to do is take the time to read them.
We will file that right next to “Budget deficits don’t matter”.
budget deficits do matter.
LOL, Blue.
But it’s true, trade deficits _don’t_ matter—as long as you are one of the oligarchs in a position to benefit from them. If you are one of the working class, you are so screwed.
nobody gets ’screwed’ by trade deficits. why don’t you try to prove the guys articles above wrong?
Because you’ll just answer with some slimy propaganda that mixes truthiness with lies. And you and I have different goals anyway so you’ll never agree.
And you and I have different goals anyway so you’ll never agree.
what are your goals?
Now you’ve done it, oxide — you’ve sent tj off into bold plain mode.
nobody gets ’screwed’ by trade deficits.
Tell that to everyone who’s had their job offshored.
Tell that to everyone who’s had their job offshored.
high taxes and burdensome regulations are what drives jobs offshore, not free trade.
Free trade makes it easier for the high taxes and burdensome regulations to chase those jobs offshore. It’s not an either/or type of situation.
Meanwhile China has thrown up every favorable trade barrier that it can. Want to sell cars in China, pilgrim? You’re gonna have to build a factory there. The only stuff they import is stuff they can’t produce, especially raw materials.
Funny how we are pretty much the only country that practices “free trade” and we have had our clocks cleaned.
it would actually be ‘freedom’ that is more applicable there.
Meanwhile China has thrown up every favorable trade barrier that it can.
they hurt themselves more than anyone else. they just don’t understand that.
The only stuff they import is stuff they can’t produce, especially raw materials.
again, any restrictions they put on trade hurts themselves the most. McGee covers that, but you don’t want to read it. fair enough.
Funny how we are pretty much the only country that practices “free trade” and we have had our clocks cleaned.
we had our ‘clocks cleaned’ because we made it harder and harder for businesses to operate here.
high taxes and burdensome regulations are what drives jobs offshore, not free trade.
Pay your bills! that $60 Trillion war (by 2053) wont get paid off with lower taxes.
During his eight years in office, President Bush oversaw a large increase in government spending. In fact, President Bush increased government spending more than any of the six presidents preceding him, including LBJ. In his last term in office, President Bush increased discretionary outlays by an estimated 48.6 percent.
We want less gov, not more!
presidents bush (both of them were rinos). neither held to conservative principles.
neither does the Republican party since Reagan grew the gov and tripled the deficit. Yet people are fooled into voting for them as the “conservative” party.
The problem is, we don’t have free trade, we have predatory trade.
Amazing how blind you have to be to ignore the blatant abuses of workers in manufacturing outsource countries. Then the “fruits” of their pseudo-slave labor are brought back onto the US market where of course products made by US workers can’t compete on price.
But of course it’s eebil gubment regulations and taxes that’s the cause. It couldn’t possibly be that a small group of greedy assholes want to enrich themselves exploiting the delta between minimal pseudo-slave labor costs and what the free market will bear in the US.
Nope, that’s un-possible in my world view. It all works just the way Hannity and Limbaugh told me it does and it’s all the gubmints fault, and the liberal boogey man (I know he’s around here SOMEwhere).
Couldn’t possibly be blatant corruption. Nope, nohow.
/The stupid - it hurts
reagan wasn’t perfect but he wasn’t a rino either. dems lied to him about their amnesty promises. plus the house was controlled by the democrats throughout his entire presidency and they controlled the spending.
again, not saying he was perfect but he was hamstrung by a democratic house the whole way.
The problem is, we don’t have free trade, we have predatory trade.
define ‘predatory trade’..
Amazing how blind you have to be to ignore the blatant abuses of workers in manufacturing outsource countries.
amazing how holier-than-thou one has to be in order to make such a statement.
Then the “fruits” of their pseudo-slave labor are brought back onto the US market where of course products made by US workers can’t compete on price.
that’s because our labor has become highly inefficient because of many socialist policies.
Couldn’t possibly be blatant corruption. Nope, nohow.
we’ve got corruption because government has become too powerful. too much power up for sale to the highest bidder. it’s called government or regulatory capture. and it’s responsible for corruption down to it’s tiniest levels.
“it’s called government or regulatory capture.”
Social Security
Medicare
Unemployment tax
Fannie
Freddie
HUD
medical insurance laws
auto insurance laws
The list goes on. Rigged, distorted, corrupted, inefficient dying market. And the solution from MT Pockets? More of it and raise the minimum wage.
“…we have predatory trade.”
On eBay I recently purchased 10 USB cables, roughly 18-inches long with dual USB connectors at one end, mini and micro, to attach two Garmin GPS devices at the same time. They cost $0.80-ea shipped from China.
Well, 4-days later and $8.00 lighter, I have them in-hand. We (the U.S.) can’t compete. Here, one UBS cable blister packed would cost me $9.95 plus sales tax.
Here, one UBS cable blister packed would cost me $9.95 plus sales tax.
And that one is also made in China. It’s just all the middle men and the retailer mark it up.
The list goes on. Rigged, distorted, corrupted, inefficient dying market.
that’s right. btw, who is ‘empty pockets’?? obama?
“reagan wasn’t perfect but he wasn’t a rino either. dems lied to him about their amnesty promises. plus the house was controlled by the democrats throughout his entire presidency and they controlled the spending.”
So the golden Reagan yrs are really the result of a DEM congress you are saying!? Pick one, you cant have it both ways. Who was in charge Dems or Reagan?
He’d be MT Skull.
I once swam from CA to England. PROVE I didn’t.
tj: high taxes and burdensome regulations are what drives jobs offshore, not free trade.
Lower costs, however they are reached, encourages businesses to offshore their production.
Lack of regulations does lower costs. “If we can’t have the Triangle Shirtwaist factory here, we’ll just move it abroad.”
Also, in the emerging world, when the choices are starvation or a laborious job with long hours for a pittance, the job is accepted with open arms due to the alternatives. So naturally wages are going to be lower, further reducing costs.
The perspective of an business owners are different from the perspective of a worker who is not willing or able to start a business. Reality is, most people want to be salarymen, not devote their lives to the volatile, all-consuming world of building and maintaining businesses. For most folks, that would be being a small business vendor, as one sees in the developing world. Fruit vendors, sandwich vendors, bric-a-brac vendors. That would be business for most.
Hopefully, policy makers (i.e. politicians - seems a bit surreal to realize they are policy makers when their primary ability is raising money and politicking) would see the big picture and try to balance the competing interests for the overall benefit of the society.
So the golden Reagan yrs are really the result of a DEM congress you are saying!?
no, i am not! i’m saying the reagan years would have been much better without a democrat house. that’s not having it both ways.
He’d be MT Skull.
that’s true.
Lower costs, however they are reached, encourages businesses to offshore their production.
it encourages businesses to go with lower cost production, which could be achieved domestically by higher efficiency.
Also, in the emerging world, when the choices are starvation or a laborious job with long hours for a pittance, the job is accepted with open arms due to the alternatives.
true
So naturally wages are going to be lower, further reducing costs.
wages aren’t the only way to lower costs of production. efficiency also lowers costs and it’s getting to be more important than ever.
The perspective of an business owners are different from the perspective of a worker who is not willing or able to start a business.
you might even say they are diametrically opposed. each wants the best for himself.
Reality is, most people want to be salarymen, not devote their lives to the volatile, all-consuming world of building and maintaining businesses.
true again
Hopefully, policy makers (i.e. politicians - seems a bit surreal to realize they are policy makers when their primary ability is raising money and politicking) would see the big picture and try to balance the competing interests for the overall benefit of the society.
i think you have way too much faith in them, Neuromance.
if you believe in relatively pure capitalism, trade deficits absolutely don’t matter.
this is because you don’t believe governments should be picking winners/losers or doing anything that holds back the “winners”. moreover, you’re agnostic about whether US based companies keep their money in the US or in tax havens. you’re agnostic about whether the top 1% of your population even tries to earn income from working a real job. hint: most income for the top 1% in the US is absolutely __not__ generated by working a “loser job” like a 1099 or w-2.
^^ note: i don’t really agree with “pure capitalism” because I do think governments should care about their citizens, impose reasonable rules on trade/safety/sourcing/pollution/labor laws/immigration. i’m simply restating how the world works and explaining that, obviously, much of the income for the top tier of the US economy is exactly the type of income that creates the “trade deficit”.
this is because you don’t believe governments should be picking winners/losers
there are no losers is free trade.
Let me guess… you work in IT at Disneyworld?
LOL.
budget deficits and trade deficits have very different consequences. the formula (and procedures) for measuring trade deficits are probably quite a bit different than you’re thinking.
trade deficits can matter, but there are many situations where they do not. in the abstract, if you have a country with an extremely well-off top 10%, it doesn’t “matter” (in macro terms) if you eliminate jobs typically held by your lower middle classes.
this isn’t to say a nation’s economic stability couldn’t be undermined by outsourcing or income inequality. but in pure economic terms, those types of “values” questions aren’t on the table.
Downlow Joe has entered the building
** is a millenial who secretly idolizes caitlin jenner **
** prances his way onto HBB **
caitlin jenner
The sad reality for most transexuals is that they are not rich and will never afford to look as female as Caitlin Jenner, and will forever inhabit gender purgatory
I had friends with weird parents growing up, and learned the difference between a drag queen and a skag queen at a very young age
“…will never afford to look as female as Caitlin Jenner…”
That’s saying a lot!
if you read the top article by McGee, he makes the comparison of constantly going to your neighborhood grocery store and buying. you keep giving him your dollars and he keeps selling you food. the people that don’t understand this stuff would say that grocer has a big trade deficit with you because you keep getting all the goods while all he gets is ‘worthless’ paper. does this so-called trade deficit matter? should you or the grocer be concerned about it?
if you look at the examples in the article, it will become clear.
Liberace!
+1
McGee measures the effect of international trade in terms of the amount of net profit that is gained/lost. The American worker isn’t even a party to the transaction.
the amount of profit or loss is the point of calling it a trade surplus or deficit, isn’t it?
The American worker isn’t even a party to the transaction.
Let them eat cake.
let them eat cake is just your erroneous interpretation of what he said.
oxide’s “the american worker isn’t even party to the transaction” makes no sense since the trade examples work at every level including the individual level. the simple example of the grocer or any other type of store works.
Actually, you misunderstood me. My remark meant that Americans, much like Marie Antoinette’s subjects, have absolutely no say whatsoever in trade policy, and are taken for granted.
if you mean that the middle class is taken for granted, i agree. but our collective low understanding of economics makes us easy pickin’s.
Now listen up
We export to Canada, Caribbean Islands, and all over the US from NYS. Now we are expanding into the European markets. Personally I don’t care about trade deficits. I will outsource parts of our production locally or overseas if it eliminates regulatory headaches, employee headaches and cost WAY less than I can produce in house. I will pay a little bit more money than our employees can get from a competitor.
Our business in not about the employees even thou we pay them very well and provide benefits that other companies cannot afford. Hence we have low turnover. This game is all about money in my pocket. We also keep our customers in velvet gloves. By this I mean we would rather turn over a quick nickel rather than make a slow dime.
Nothing personal it’s just business.
My father always told me that all businessmen were sons of bitches, but I never believed it till now. — (Comment made 10 April 1962 in reaction to news that U.S. Steel was raising prices by $6 per ton, right after the unions negotiated a modest new contract under pressure from JFK to keep inflation down.)
John F. Kennedy, “
Now listen up
yes, you are being honest about it. you are doing it for yourself, not out of the goodness of your heart, but everyone benefits from you doing business.
you do what you have to do to survive because many are nipping at your heels. and again, we all benefit from it.
good luck in your business.
The first sentence of Professor McGee’s is this:
This paper takes the position that trade deficits are irrelevant from a policy perspective and that any attempt to reduce them is counterproductive and violative of individual rights.
He should have stuck with the individual rights part. If he could have convinces people that tariffs and other impediments to absolute free trade violated rights, then he might have been able to convince people that unemployment caused by Japanese imports didn’t matter.
then he might have been able to convince people that unemployment caused by Japanese imports didn’t matter.
he’s trying to expose the myth that people like you believe. he’s not saying that unemployment doesn’t matter. not anywhere. that;s just your red herring.
you either didn’t fully read his article or you’re just not getting it.
This is all I know about trade deficits it makes your GDP go down weather this cuts into government programs like social security I guess we will find out
Net Exports - This is calculated by subtracting a nations imports (M)from exports (X). Imports are goods and services produced outside the country and consumed within, and exports are goods and services produced domestically and sold to foreigners. Note that this number may be negative, which has occurred in the U.S. for the last several years. Net exports for the U.S. were minus $606 billion during calendar year 2004 (as per Bureau of Economic Analysis, U.S. Department of Commerce June 29, 2005 press release).
Formula 4.1
GDP = C + I + G + (X - M)
first, trade deficits are proven by McGee, Williams and others to be a false phenomenon. they are either measuring only one side of the equation or dissimilar sets. they are fooling themselves and many others.
second, GDP is a poor measurement of the economy anyway. for instance, GDP rose sharply after hurricane katrina. do you believe our economy was better because of katrina? that’s the broken window fallacy and anyone that believes in it should do their part and start junking some valuable things in their lives, you know, to help the economy. you could bring your well working fridge to the junk yard. (you can’t give it away because that might prevent someone from buying a new one).
take some of your other appliance to the junk yard too. whatever you can afford. because when you buy new appliances you’re helping the economy (according to the keynesians like krugman).
that’s how nuts this whole thing is.
After reading this I still think trade deficits matter but I would agree governments can’t do much passing laws to protect poor domestic industry from trade deficits that are helpful to consumers.
i think it will get clearer and clearer to you over time, cactus.
I don’t know what it is that you think that I believe. I didn’t have time to read what he wrote. Regarding imports from Japan in the 1970s and ’80s, some Americans benefited from being able to buy goods manufactured in Japan. Other Americans suffered unemployment. That’s when the Rust Belt became the Rust Belt. Someone who wants to argue that those events were good for America would have to make the case that the benefits outweigh the drawbacks.
sure you had time read it. you just didn’t want to. that’s fine. remain in the dark.
I spent so much time reading it that now I don’t have time to explain why it’s all a crock, at least for Americans. Not that you would accept any of my reply anyway.
I took a look at that abstract while I was having breakfast. If I would have read the whole thing I would have been late for work. But you know for a fact that I had the time to read it.
I took a look at that abstract while I was having breakfast. If I would have read the whole thing I would have been late for work. But you know for a fact that I had the time to read it.
ok, sorry mike. i’ll accept that you didn’t have time. get back to me after you’ve read it and i’ll discuss it with you.
I spent so much time reading it that now I don’t have time to explain why it’s all a crock, at least for Americans.
i’ll wait for when you have time to explain why it’s all a crock.
Not that you would accept any of my reply anyway.
i accept all replies that makes sense and reject those that don’t. yes, probably we won’t agree. i don’t expect you to see what walter williams does.
Another exhaustive and abusive exchange with tj…phew!
“phew!”
tj = ABQDan as a teenager.
i don’t mind you comparing me to Dan at all.
you should know, however, that he also thinks that trade deficits matter. but maybe, after he reads McGee and Williams and settles back to think on it more, he might come to see that trade deficits really don’t matter. or he may not.
“i don’t mind you comparing me to Dan at all.”
Hey, we all need a role model. Personally, I wouldn’t choose a narcissist troll as mine, but I could see that working for you.
nah, roll models are for conformist followers like you.
Ouch! You’re too good, tj! Although I like my rolls mottled with butter.
and i like my models rollin’ in dough.
To feel flattered by a comparison to a prolific communist propagandist strikes me as peculiar.
http://www.shanghaidaily.com/business/Chinese-shares-close-mixed-Tuesday/shdaily.shtml
China’s market looks like the Dow in 1929: Top technician
Amanda Diaz
18 Hours Ago
CNBC dot com
China’s stock market has been nothing short of a roller-coaster ride this year.
The Shanghai composite rallied more than 60 percent from January to its mid-June high, then took a sharp turn lower, losing more than 23 percent of its value in the past 30 trading sessions. Since hitting a low of 3,507 last week, the index has bounced 13 percent. And while that volatility has some investors drawing parallels to the Nasdaq collapse in 2000, one top technician says the better analogy might be the Dow in 1929.
“We are seeing some similarities to what we had seen in the Dow where you had a very parabolic advance and then a sharp correction, followed by a relief rally and then ultimately there was a parabolic decline even further,” technical analyst Craig Johnson said Friday on CNBC’s “Trading Nation.”
The Shanghai composite has shown some signs of life in the past week, rebounding nearly 8 percent for the five trading sessions. But according to Johnson, senior technical research analyst at Piper Jaffray, this kind of chart behavior is dangerous. “Traders are watching this relief rally here to see how far this is going to follow through. But those who have studied charts and looked at charts for a long time know that parabolic advances typically end poorly,” he said. “Typically you get a 110 percent retracement of the entire advance up.”
…
theGuardian
China
China accuses brokers of manipulating share prices during stock market crisis
- Beijing’s police ministry said it has launched a criminal investigation into unlicensed companies that financed speculative trading
- An investor looks at the price of shares in Nanjing, China. Photograph: Imaginechina/Corbis
Staff and agencies
Monday 13 July 2015 09.36 EDT Last modified on Monday 13 July 2015 19.01 EDT
Beijing has accused brokers of manipulating share prices during China’s recent stock market plunge and launched a crackdown against unlicensed companies that financed speculative trading.
The police ministry said investigators had found “evidence to suspect that individual trading companies are illegally manipulating securities and futures exchanges”. It said in a statement that a criminal investigation was under way but gave no details of which firms were being looked into.
The move appears to be aimed at deflecting blame away from the ruling Communist party for the trillions of dollars lost by investors after China’s market benchmark plummeted 30% since peaking in mid-June.
Drastic official efforts over the past two weeks, including a ban on sales by executives and big shareholders, appear to have at least temporarily halted the decline that wiped out $3.8tn (£2.45tn) in investor wealth.
…
“the decline that wiped…investor wealth.”
Ironically, investor debt remains.
china is an awful sh*thole of a country.
it’s going to be demographically old before the avg chinese person has anything approaching a US standard of living.
they’ve also trashed their environment. which has been good for US, much less pollution in the US than there would otherwise be.
It is a country filled with people making one dollar a day thirty five years ago, now it is a country with hundreds of millions of people with what we would consider middle class lifestyles. Will the majority of Chinese have our present living standards in the foreseeable future? Not likely but we are very unlikely to have anywhere near our present living standards within ten years without drastic changes to our trade and immigration policies.
Albuquerquedan for President!
From China Daily this would have been unthinkable five years ago:
China now has the world’s highest penetration rate for smartphones, according to a report released by the Global System for Mobile Communications Alliance.
The new study, which serves as a prelude for the Mobile World Congress Shanghai which begins on Wednesday, shows that smartphone adoption in China reached 62 percent during the first three months of this year, against Europe’s 55 percent on average.
The alliance said the number of unique mobile subscribers, which can account for multiple mobile connections, reached 632 million by the end of March, accounting for 48 percent of the population.
Smartphone penetration is predicted to reach 68 percent by the end of this year, it said.
The proliferation of smartphones across urban areas of China has been fueled by increasing popularity of both international brands such as Apple’s iPhone and domestic devices, it said.
4G models are now the primary drivers of sales but the study predicts there will not be any new non-4G models released by Chinese smartphone vendors after 2016.
It forecasts 4G connections in China will reach one billion by 2020, representing about two-thirds of the market by that point, up from the 8 percent at the end of 2014.
Local mobile operators are helping to drive the overall shift to 4G by subsidizing the cost of an increasingly wide range of 4G devices via their retail channels. Chinese vendors are also producing a greater proportion of 4G smartphones than their international rivals.
During the first quarter, 70 percent of the new handset models released by Chinese vendors supported 4G, against a global average of 40 percent. A China-manufactured 4G smartphone costs around 375 yuan ($60) more than its 3G equivalent.
“Chinese smartphone vendors such as Xiaomi Corp, Huawei Technologies Co Ltd and Lenovo Group Ltd are benefiting from a rich local smartphone manufacturing and design ecosystem, which is allowing them to compete with foreign smartphone brands such as Apple and Samsung,” said Hyunmi Yang, chief strategy officer at the GSMA.
smartphones
We have the total summary of thousands of years of human knowledge in the palm of our hands, and we use it to “like” cat videos
You say that like it’s a BAD thing.
So, by the metric of “even poor people have Smartphones” we are Third World compared to the Chinese.
Too bad other countries dont but into this Free Market Utopia.
Free Markets = candy crapping flying unicorns. Nice to believe they actually exist. Ask a five year old.
Ask us out here in Kansas how no taxes and minimal regulation (behavior of the wretched refuse excepting) have worked out.
Ask us out here in Kansas how no taxes and minimal regulation (behavior of the wretched refuse excepting) have worked out.
why would i assume that any of you know why things have worked out so poorly? people still carry rabbits feet and throw salt over their shoulder and all kinds of other superstitious stuff. and we should consider their analysis? not hardly.
most people in kansas and elsewhere have no clue why times are so bad. most think that they need bigger government to fix it. they jump to really bad conclusions because it ’seems to fit’ or ’seems right’ or something. they aren’t coming from knowledge or wisdom. they are grasping at straws. i would think that the vast majority of them don’t know what they’re talking about in economic matters.
Any economist who states that cross-nation economic activity is the equivalent of buying things at your local grocery store isn’t worth the time spent trying to understand anything. So government policy, law, legal, regulatory, language, and cultural differences are all worthless (meaning $$, not feels).
Also, anyone that wants to make a strawman argument like “New Jersey may have a trade deficit with Montana, yet nobody complains”, besides the fact that it is incorrect and Montana has a trade deficit with New Jersey, is why this guy is at Fayetteville U instead of somewhere legitimate.
People complain about capital movement between states all the time, from union jobs moving southward, to Federal welfare, to the banking sectors being in the north, to the free movement of people (Colorado is full, don’t move here) on this blog.
Finally, anyone who is realistically making a point about capital moving freely between nations would honestly believe that people (just vessels for capital in a situation where government policy, law, legal, regulatory, language, and cultural differences are all meaningless ) should also be able to move freely between nations. Otherwise, this person would say that free trade is constrained by governmental regulation of people movement.
In short, he’s an idiot.
Moorpark has a trade deficit
Moorpark’s economy has suffered from the departure of four major retailers over the past year, including Albertsons, Do It Center, Staples and Big Lots.
KMA’s analysis will update a retail study done in 2004 by Allan D. Kotin and Associates and CB Richard Ellis Consulting that looked at how the city could create attractive new shopping opportunities to keep residents from driving outside the city to do their buying.
Halting the city’s “significant retail leakage”
Any economist who states that cross-nation economic activity is the equivalent of buying things at your local grocery store isn’t worth the time spent trying to understand anything.
so of course you can tell us what the fundamental difference is between the big and the small, right? tell me, what is the fundamental difference when it comes to trade?
trade happens where ever it can happen no matter the laws. it’s just that sometimes the laws and regs allow for it and other times it doesn’t.
and it’s very convenient for you that you can just dismiss McGee out of hand, isn’t it?
you are with those that think the grocer is harmed by taking ‘worthless’ paper while the customer takes actual goods. i admit you’re in good company with schiff and rogers. but they are wrong. i like to look at what makes sense. i see no harm whatever to the grocer or to his customers even though they constantly take the goods and the grocer constantly takes the worthless paper. huge trade deficits constantly without end, and it seems like no one is being harmed. and there’s never any balance there at all. no ‘balance of trade’, it’s all one sided. forever. and yet people keep going into business all the time to do precisely that. strange they aren’t afraid of the never ending trade deficits.
there’s no difference in principle between the large and the small in free trade. the only difference is how some choose to tally up the numbers differently in certain nations to make bogus claims about something that only exists because of their wrong headed dumbass calculations.
i’ll go with my eyes and common sense, and you can tap dance in your fearful fairy land of bogus concerns that you can’t prove mathematically.
did you find any errors in McGee’s math? if so, why not offer them up?
“i see no harm whatever to the grocer or to his customers even though they constantly take the goods and the grocer constantly takes the worthless paper.”
I saw no harm to the auto dealers when we traded worthless paprr for the last two cars we purchased, except perhaps that we gave them relatively less worthless paper than if we hadn’t bought during the Great Recession and then again in the tailwind of its aftermath.
From China Daily:
China’s property market is warming up again in first-tier cities.
The Beijing market is not as steamy as in Shenzhen, where prices jumped overnight after a rise in panic purchases.
But sales in both have been rising for a fourth straight month, and prices too have been edging higher.
The latest monthly gain might seem mild at first sight－but given the gigantic absolute numbers involved, a 1 percent month-on-month price rise translates into an extra 20,000 yuan ($3,222) to 30,000 yuan onto the total cost of even a modest property.
As a real-estate reporter, what really intrigues me, though, is the purchase power still driving China’s residential market, one which has increased nearly tenfold in price terms over the past decade, but still appears to have the momentum to keep growing.
Prices in Beijing and Shanghai, now at around 30,000 yuan to 50,000 yuan per square meter, mean an 80 sq m apartment costs between 2.4 million yuan and 4 million yuan, and would take a typical earner between 24 and 40 years to pay off.
But even these stark figures are deterring few of those I know in Beijing from taking the property plunge.
People borrow to buy in most cases, and of course newly married couples can share the expense. A typical mortgage rate means hefty monthly repayments, costing around 6,000 yuan per month.
On a monthly salary of 8,000 yuan, a borrower might be faced with having to spend the lion’s share of his or her pay on a mortgage payment.
Taking on such a mortgage, buyers can forget about considering other life options, such as quitting their job for a break, or for further education, or even starting out on their own as an entrepreneur.
Neither can they afford to get ill, or financially support aging parents who might get ill. And what if they lose their job? Or if the dream home they buy starts falling in price in a downturn?
Take all these issues into consideration, and you might be left wondering whether it makes sense for an ordinary-income person to buy a home in Beijing.
I asked some people around me for their opinions, and the answers were revealing.
One typical response was that renting will never give anyone the kind of security and fulfillment associated with owning his own home, particularly in a huge city.
Renters routinely complain about the short and volatile contracts they have to sign with landlords, an experience that can intensify their feeling of insecurity and alienation.
Another was if they don’t buy, they deny themselves certain perks.
For example, many Chinese parents have saved up large sums of money for their sons’ wedding and their “wedding house”.
If a young couple decides to buy a home, they can get a huge subsidy from the husband’s parents, or both sets of parents, which can greatly ease their payment pressures.
The nation also has the Housing Provident Fund scheme that offers low-interest loans to first-time buyers. If you find yourself paying 1,000 yuan a month to the fund, it would seem a shame not to use it. And by the way, it is a real hassle to withdraw from the fund for rent.
The third most common answer was that despite occasional volatility, most Chinese still believe the value of their home is going to rise, especially in first-tier cities.
Any investment that combines self-living and asset appreciation is not a bad choice.
With the channels widening for personal investment in housing, the days of double-digit price rises largely gone, and speculative demand also fading, the prospect of modest appreciation is still tempting for many.
All that said, others were becoming less enthusiastic about owning their own home.
One 33-year-old office worker told me her monthly mortgage payment (6,000 yuan) was considerably higher than her rent (3,000 to 4,000 yuan). The annual returns on a home were also now much lower than yields offered on other investment products. And the only prospective homes she could afford in downtown Beijing near her workplace were dilapidated, while the nicer new ones she liked and could afford, were too far away. “Buying a home has become high-interest-rate consumption,” she said.
Both camps have their rationalities. The long-term prospects of China’s property market will depend on which way of thinking becomes dominant.
South China Morning Post
More Chinese investors consider foreign property after stock market crash
More mainland Chinese seek to diversify assets outside the country, including in US real estate
Langi Chiang langi.chiang@scmp.com
PUBLISHED : Monday, 13 July, 2015, 10:31pm
UPDATED : Tuesday, 14 July, 2015, 5:15pm
Chinese, including those from Hong Kong and Taiwan, bought US homes worth US$28.6 billion from April 2014 through March 2015. Photo: MCT
More and more mainlanders are looking to diversify their wealth into foreign real estate assets after the recent stock market rout and government intervention, finds a survey.
East-West Property Advisors, a consultancy that helps Asians buy US properties, polled 170 mainland clients and partners through WeChat and found more than half of them are considering buying overseas properties.
“It’s basically an increase compared with what we have seen in the media and our conversations [with clients] before,” Sam Van Horebeek, the Hong Kong-based firm’s founder, told the South China Morning Post.
…
The wealthy Chinese (i.e. the ones endowed with high IQs) seem more interested in taking their wealth out of the country than in buying empty apartment units back home.
I know this first hand because these recent Chinese immigrants’ children are among the best students at my kids’ high school. They graduate and head straight to the Ivy League, or either Cal or Stanford if they stay in state.
“panic purchases”, always a good sign for an economy.
“Any investment that combines self-living and asset appreciation is not a bad choice.”
That house should also pay for the family car.
Too bad so many of those Chinese housing investments stand vacant.
Is oil set to plunge on the Iran accord? $80/bbl by Dec 2015 or bust!
Marketwatch dot com
Futures Movers
Crude oil slides to three-month low after Iran deal
By Sara Sjolin
Published: July 14, 2015 4:06 a.m. ET
- August crude contract set for lowest close since April
Reuters
- A nuclear deal is an important step in restoring Tehran’s oil exports to previous levels
Crude oil prices plunged early on Tuesday after reports that six world powers have reached a nuclear deal with Iran in exchange for removing economic sanctions on the country, allowing it to resume oil exports.
August West Texas Intermediate crude (CLQ5, -1.95%) dropped $1.03, or 2%, to $51.17 a barrel, setting it on track for the lowest settlement price since mid-April. Brent crude for the same month (LCOQ5, -1.80%) slid 90 cents, or 1.5%, to $56.95 a barrel.
…
Crude drops after Iran deal hit, hit oil stocks
By Nigel Stephenson
LONDON | Tue Jul 14, 2015 5:05am EDT
By Nigel Stephenson
LONDON (Reuters) - Oil prices dropped, pushing commodity-linked shares and currencies lower on Tuesday, after Iran and six world powers reached a historic nuclear deal expected to increase the supply of Iranian crude on world markets.
European shares edged lower in early deals, pulled lower by commodity stocks and as investors turned cautious on the prospects of the Greek government winning parliamentary support for reforms demanded by its creditors in exchange for talks on an 86 billion euro rescue package.
But oil was the big mover, down nearly 2 percent, after Tuesday’s deal, clinched in Vienna after more than a decade of on-off negotiations, granting Iran sanctions relief in exchange for curbs in its nuclear programme.
Brent crude was last down $1.35 a barrel, or 2.3 percent, at $56.50 a barrel.
“Sanctions have crippled Iran’s oil production, halving oil exports and severely limiting new development projects. The prospect of them being lifted is creating great excitement … as foreign trade and investment will allow Iran to make huge efficiencies and drive down the cost of production,” said Sarosh Zaiwalla, a London-based sanctions lawyer.
The fall in crude prices hit oil producers’ currencies. The Norwegian crown fell 0.3 percent to 8.11 per dollar, having earlier fallen to 8.14, while the Canadian dollar fell 0.4 percent against the greenback to a four-month low of C$1.2796.
…
Yesterday morning, a-Dan assured me that Obama had already telegraphed the Iran deal last week, and the drop in oil had already been priced in. And now 24 hours later, it’s dropping more?
Why would oil prices not fall? It’s no different than housing.
The Washington Post website has “Historic Iran nuclear deal reached” as the top headline now, but I’d rather look at the photo gallery of Taylor Swift performing at Nationals Park last night
Well d’oh…
This is an article from William Kristol’s Weekly Standard with video of Senator Tom Cotton advocating the United States to launch another trillion dollar war in the Middle East:
https://m.weeklystandard.com/blogs/cotton-iran-deal-terrible-dangerous-mistake_990706.html
The Washington Post website has “Historic Iran nuclear deal reached” as the top headline now, but I’d rather look at the photo gallery of Taylor Swift performing at Nationals Park last night
It’s fun to compare the content of American “news websites” with those in other countries. The American websites are 90%+ fluff, stuffed with stories about entertainment, celebrity scandals, etc.
Is this a-dan Obama’s Deep Throat?
If you think that around a $1 is a big deal, yes they are falling further. However, oil moves that much one way or another virtually everyday.
Hey day trader, not long ago you were on here gleefully announcing every $1 move up. With Glee.
Yesterday morning, a-Dan assured me that Obama had already telegraphed the Iran deal last week, and the drop in oil had already been priced in. And now 24 hours later, it’s dropping more?
BTW, oil prices are now up, of course day to day movements mean nothing, the EIA report released today predicts a sharp drop in U.S. production in August almost 100,000 barrels a day, it will be interesting to see what tomorrows EIA reports estimates for last week’s production, I am noticing a drop of oil rigs working in North Dakota, just from last week, it probably will not be caught in Friday’s data but will be caught the following week. With oil production dropping 100,000 per month and world wide demand growing by 100,000 per month, any surplus in oil production will soon disappear. Iran is a side show since its fields which date from the 1930s may have plenty of oil in the ground but will take extensive EOR methods to raise production significantly by the time they come on line shale oil production will be long past peak:
http://futures.tradingcharts.com/marketquotes/index.php3?market=CL
“BTW, oil prices are now up,…”
Hanging on by a thread just above the 52-week low…
Seems like the market is shrugging off Iran in favor of the 91k BPD reduction expected from July to August…I thought oil would be down on the Iran news.
PB- take a look at this report from the EIA:
http://www.eia.gov/petroleum/drilling/pdf/dpr-full.pdf
Interesting that the shale producers had their peak production in March/April, and for the most part are now in decline.
Greeks are turning on Tsipras & Co. after the latter’s abject surrender to the Troika.
http://wolfstreet.com/2015/07/13/its-starts-greeks-rebel-against-bailout-risk-collapse/
61% ‘no vote’ + Tsipras acquiescence = tire burning and rock throwing. I’d be pissed too.
So what sort of “referendum” was this? Was it a real vote or just an opinion poll?
They might as well asked whether the population was in favor of mandatory celibacy. The Greek leadership made it a counter productive referendum when they went on television and said it was not about leaving the Euro. Only a vote that explicitly stated that Greece would leave the Euro if it did not get an end to austerity would have given the Greeks any bargaining leverage. I still do not think the Germans were prepared to give them a good deal or that Greece can survive outside the Euro but when you want a deal more than the people on the other side of the table whether it is a nuclear arms deal or a financial deal you get a bad deal.
So the Greek people voted to leave the EZ, and Tsipras & Co. overruled them?
It’s a sad day in the birthplace of democracy.
“I still do not think… that Greece can survive outside the Euro”
They somehow have survived for a couple thousand years already.
Greece spent $150 million on a pointless referendum. Should’ve funded soup lines instead.
Has the Greece bailout deal laid the eurozone crisis to rest?
Marketwatch dot com
Opinion: Greece’s new deal simply won’t work for these two reasons
By Tim Mullaney
Published: July 14, 2015 5:15 a.m. ET
Get ready for a replay — the can just got kicked down the road
Bloomberg News/Landov
How fitting that a tourism-driven nation like Greece signs a debt-restructuring deal whose one certainty is that everyone involved will once more book tickets.
The bad news is that the trip sure to be taken isn’t to the Parthenon or the Greek Islands. It will be back to Brussels in a few years, when this deal fails and has to be renegotiated yet again.
Greece has two big problems, and this deal fixes neither — in fact, it makes them both worse. One is that it owes too much money, about 350 billion euros ($385 billion), to be repaid from a shrinking economy. The other is that its economy is indeed shrinking, led, unfortunately, by a tourism sector that is Greece’s only material export and provides about 18% of gross domestic product.
Naturally, then, the solution to Greece’s inability to pay its debt or to halt the decline in its 25.6% unemployment rate is last weekend’s deal to borrow another 86 billion euros and raise taxes on island tourism, all the while insisting that this bankrupt country push its budget surplus to a level higher than Germany’s, adjusted for the two economies’ size, after already cutting spending 30% since 2010 and staying in the red.
Really? Europe has apparently kidnapped John Maynard Keynes and replaced him with Col. Wilhelm Klink. As Klink’s aide-de-camp Sgt. Schultz used to say: “I know nothing.”
…
Germans lament diplomatic ‘disaster’ in Greece talks
AFP By Deborah Cole
Berlin (AFP) - Chancellor Angela Merkel may appear to be the victor in the Greek bailout standoff but many Germans looked on in dismay at the heavy cost to the country’s image.
But while Merkel, often called Europe’s de facto leader, has grown used to Nazi caricatures on the streets of Athens, a backlash appeared to be mounting this time at home too.
Commentators of all political stripes said they feared that Berlin’s “bad cop” stance in Brussels had brought back “ugly German” stereotypes of rigid, brutal rule enforcers.
“The German government destroyed seven decades of post-war diplomacy on a single weekend,” news website Spiegel Online said.
http://news.yahoo.com/germans-lament-diplomatic-disaster-greece-talks-062206874.html
Here’s the video referenced in the article:
https://www.youtube.com/watch?v=ktqKNu4N9Ds
The European left is coming unhinged, they thought they were going to ride to power on the Greek wave, now everyone is seeing the leftist Greek government as filled with liars and incompetents.
“coming unhinged”
Well, it’s comedy, which you might not understand. And they’re quoting German newspaper headlines. Well, except for the part about tartare for the dog, maybe.
“Greece has two big problems, and this deal fixes neither — in fact, it makes them both worse. One is that it owes too much money, about 350 billion euros ($385 billion)”
No kidding. Also their projected budget surplus is supposed to be $2 to $5 billion a year after austerity cuts. That will not even pay the interest on a 2% interest rate on the $358 billion debt.
This is an article from some random website titled “Social Justice Bullies: The Authoritarianism of Millennial Social Justice”
https://medium.com/@aristoNYC/social-justice-bullies-the-authoritarianism-of-millennial-social-justice-6bdb5ad3c9d3
When did conservatives become such a bunch of crybabies? It’s pathetic to see.
What’s even more pathetic is the inability to distinguish between PUA, MRA, Red Pill, and MGTOW ideologies, but Social Justice Warriors™ have never been known for their critical thinking skills
Feels before reals is all they got
What’s even more pathetic is the inability to distinguish between PUA, MRA, Red Pill, and MGTOW ideologies, but Social Justice Warriors™ have never been known for their critical thinking skills
Most Americans have no idea what those terms refer to and don’t care.
Considering that 70% of American males under age 35 are single, and that the number who will never marry is increasing, that will directly impact the demand for types of housing in this country
I rent about 1/3 of the space I could afford
P.S. Bill just south of Irvine = WIN
Ben: Here’s one for your next column.
http://www.dallasnews.com/news/metro/20150713-recession-era-federal-mortgage-scams-still-echo-in-dallas-area.ece
The bubble here in DFW has inflated far beyond any I can remember. A flipper in my neighborhood bought a 1940s ranch house in 2013 for about 280K, threw the usual paint and granite countertops in it, and sold it it in less than a week for 640K. Nothing in this neighborhood has ever sold for more than 400K except the teardown/McMansion rebuilds. The tax value on that place was about 240K and what’s the FHA limit? It ain’t 600K. Incredible. How did someone who has enough money to afford that ever accumulate it with that level of stupidity?
Dallas, TX Housing Inventory Up 57%; Prices Fall
http://www.movoto.com/dallas-tx/market-trends/
Clearly some kind of one off fraud. Probably a straw purchaser.
Feels like 2006 again - the blow off top, the increase in fraudulent purchases. The hyper-increase in both prices and supply.
Wait a minute. txchick is back?? For reals?
I hope she sticks around.
definitely a sign of a market top when she comes back in
Hah!
Slim is around a bit, and even Polly put in a cameo the other day. And here we were wondering what happened to all the wimmins.
shifting gears
Hee-haw!
Well, shoot, lady, good to see ya!
How did someone who has enough money to afford that ever accumulate it with that level of stupidity?’
Lots of stupid people have money were I live but a good question , how did they got it in the first place ?
Good thing oil doesn’t matter
I think youre right. With or without it, housing prices are falling.
Well, with oil prices soaring, Texas will be awash in newly-generated wealth.
Oh, wait….
“That means they committed 22% to 37% of all murders in the U.S., while being only 3.52% to 8.25% of the population.”
10 Horribly Violent Crimes That Were Committed By Illegal Immigrants
Yes, illegal immigrants are responsible for lots of crime in this country
by Michael Snyder | End Of The American Dream | July 14, 2015
Yes, illegal immigrants are responsible for lots of crime in this country.
#1 An illegal immigrant that had been deported five times recently gunned down a young woman that was taking a walk with her father on a pier in San Francisco…
Kate Steinle was walking on a busy pier in San Francisco with her father when there was a single popping sound in the air.
She fell to the ground, struck by a bullet, the victim of what police say appears to be a random killing.
The man accused of firing the deadly shot — 45-year-old Juan Francisco Lopez-Sanchez — is an undocumented immigrant, a repeat felon who has been deported five times to Mexico, according to immigration officials.
Conclusion: criminal and illegal aliens commit murder at much higher rates than all inhabitants of the U.S. – at least 3 to 10 times higher.
If employers faced huge fines and they were enforced, illegal immigration would be solved overnight. Make it illegal to rent to illegals, no bus pass, no DL, no bank accounts, no check cashing, no library use, no food stamps….. get it. Be like Northern Europe where an American has a hard time getting a job.
But we like our house cleaners and gardeners at $12 an hr and they cant sue us.
Make it illegal to rent to illegals,
Some red states tried that and were promptly sued by Obama’s Justice Department.
cherry picking again?
ps. ALL my conservative friends in the OC have Mexican house cleaners and gardeners. Do you think the dishwashers have papers? Yet you eat out and give them your cash, then complain.
Most restaurant kitchen help is Mexican, with documents that might not stand up to scrutiny. Most Americans - and I know this from direct experience during my college days - simply don’t last in those jobs. They can’t handle the long hours, hard work, and low pay. You’d have to double menu prices to have a pay scale that would attract and keep the kind of native-born Americans you’d have to pay pretty well to stay in a job like that.
Most restaurant kitchen help is Mexican
That sounds unlikely. There are a still parts of the country without a lot of Mexicans, yet they have restaurants.
Most Americans - and I know this from direct experience during my college days - simply don’t last in those jobs. They can’t handle the long hours, hard work, and low pay.
——–
I was in Singapore and this is also very similar. Singapore issues temporary work visas for foreign workers.
“If employers faced huge fines and they were enforced, illegal immigration would be solved overnight.”
That is not part of the the Cloward–Piven strategy.
“But we like our house cleaners and gardeners at $12 an hr and they cant sue us.”
Maybe the people who have not been hit and run by illegal immigrants fuqing twice like I have.
PS
My wife who still has neck problems from the second illegal hit and run does most of our house cleaning and I cut the lawn.
If they were hit and runs, how do you know the drivers were illegals?
I found one (the one who hit my wife) and called the Jupiter police after they had come to the scene and made a report. They told me none of it was going to get my wife’s car fixed or help her with medical because he was illegal, bad tag and no insurance.
The other one in Lake Worth was a bad tag and and a visual on the driver by witnesses and the best guess of the guy who had my truck and the PBC Sheriff.
I talked about this on this blog throughout the day when the incident with my wife was going on. That was the second one.
How did you find the first one?
They never did.
On a related note, I highly advise reading up on the life of escaped Mexican drug lord and US wanted man Joaquin “El Chapo” Guzman. There’s a lot out there on the web, and it’s very interesting, from his abusive childhood to his rise as the most powerful drug lord/organized crime boss in the history of the world. He is a multi-billionaire who has paid off every public official needed to do whatever he pleases within Mexico, including recently buying off the heads of the prison so they’d turn a blind eye to his escape.
El Chapo is a ruthless sociopath who would routinely execute his own underlings himself for late deliveries, etc., but he wasn’t actually the one who started with the beheadings and mass executions in the struggle for control of the drug trade in Mexico. Ramon Arellano Felix of a rival cartel targeted the wife of El Chapo’s partner Hector “El Guero” Palma by sending an associate to seduce her, steal $7 Million, then chop her head off and send it to her husband back in 1989, then shortly thereafter killing both of their children. This is what set off the ruthlessness which continues today. The bodies have since piled up in unbelievable quantities and fashion, and the gun battles, kidnapping, etc. make some of our organized crime look like child’s play. Scary is the fact that a lot of these drug traffickers are in our country.
Here’s what’s headed our way.
http://www.borderlandbeat.com
Warmist Warming Tuesday
This is an article written by real journalists at the Washington Post that says news about an imminent mini ice age is trending — but it’s not true
https://m.washingtonpost.com/news/morning-mix/wp/2015/07/14/news-about-an-imminent-mini-ice-age-is-trending-but-its-not-true/
And now back to your regularly scheduled Drudge Report links
The article says:
“As for that image of Londoners frolicking at “frost fairs” on the frozen-over Thames? Those had less to do with the activity of the sun than the activities of humans. Historical climatologist George Adamson told the BBC last year that the river used to freeze because of the architecture of the old London Bridge, whose arches prevented salty sea water from passing upriver and lowering its freezing point. The construction of a new bridge in the 19th century, and other landscape changes that made the river flow faster, brought an end to those festivals — less so than the end of the Maunder minimum.”
But Wikipedia says:
“London Bridge refers to several historical bridges that have spanned the River Thames between the City of London and Southwark, in central London. The current crossing, which opened to traffic in 1973, is a box girder bridge built from concrete and steel. This replaced a 19th-century stone-arched bridge, which in turn superseded a 600-year-old medieval structure. This was preceded by a succession of timber bridges, the first built by the Roman founders of London.”
But the Thames did not freeze every year for the 600 years that the “600-year-old medieval structure” was in existence, it only froze during the years of the Little Ice Age.
Bloomberg reporting “sales at U.S. retailers unexpectedly dropped in June, curbing optimism about the strength of the rebound in consumer spending during the second quarter”
The simple truth is China is one of the few economies in the world that is doing well although it is difficult to increase exports when the EU and the U.S. are flat on their backs. Of course, they do have their respective media spinning that it is China that is doing badly. Yes, China, the country where people are getting 8% raises, 5.6% after inflation is doing badly and the countries with no or negative income growth in the U.S. and EU are doing well.
that is doing well
Ignoring the “externality” of ecological suicide, they’re doing just peachy Dannyboy
BTW I was kayaking on the Cuyahoga River two weeks ago and got dunked three times and drank some of it, still haven’t broken out in a rash yet
You can keep China, no thanks
“…I was kayaking on the Cuyahoga River two weeks ago…”
For those who missed the historical significance of this reference:
Cuyahoga River Fire
However, let me warn all Americans who read here that if China buys up enough U.S. real estate, they may eventually decide to relocate some of their dirty manufacturing operations over here…
Luckily the Chinese buyers still appear to be operating independently, and they prefer sinking their money into few high-priced condo floaters. I guess they don’t understand the appeal of huge tracts of land.
” I guess they don’t understand the appeal of huge tracts of land”
Condos are a lot easier to absentee own.
Until they burn down, fall over, and sink into the swamp.
Feh, you ignore the bright side of China’s horrific pollution!
Moar rain.
http://qz.com/451554/chinas-terrible-air-pollution-may-be-causing-deadly-floods-too/
“…China is one of the few economies in the world that is doing well…”
A 30% drop in the stock market is always a sign that all things economic are just peachy.
What is the distinction between “technical recession”, “revenue recession”, and “recession”?
Market Extra
U.S. is at risk of a ‘revenue recession’
Published: July 14, 2015 10:45 a.m. ET
By Anora Mahmudova
Reporter
The bigger problem with the second-quarter earnings season is not the impact of strong dollar, or fall oil prices, but companies’ inability to generate sales in a low-growth environment, according to analysts.
The current consensus forecast for earnings per share on the S&P 500 is a decline of 4.4%, according to FactSet. Over the past four years, companies beat estimates by an average of 2.9 percentage points, and if that number is applied this quarter, the final number will be a decrease of 1.6%, according to John Butters, earnings analysts at FactSet.
Top-line growth is projected to be rather weak, primarily driven by a nearly 40% decline in the energy sector. The consensus estimate for S&P 500 revenue is a decline of about 4.2%. If this turns out to be the final number, it will be the second quarterly decline in a row, which analysts refer to as a revenue recession. Revenue fell nearly 3% during the first quarter.
…
CFOs lose confidence in their companies’ outlooks
Published: July 13, 2015 1:19 p.m. ET
- Finance chiefs lower expectations for revenue and profit
- The prospect of interest-rate hikes is a key concern for CFOs.
By Ciara Linnane
Corporate news editor
Finance chiefs from large North American companies remain upbeat on the outlook for the economy but have far less confidence in prospects for their own companies, according to Deloitte’s second-quarter CFO survey.
The survey, which measures the views of more than 100 CFOs in the U.S., Canada and Mexico, most of whom head companies with more than $1 billion in annual revenue, found expectations for key performance metrics had deteriorated significantly in the second quarter from the first. Revenue and profit expectations tumbled to their lowest levels in the survey’s five-year history.
“The prospect of a pullback in the U.S. economy, possible interest-rate increases and high equity valuations are among the most worrisome risks for CFOs this quarter,” said Sanfor Cockrell III, Deloitte national managing partner, in a statement.
Revenue-growth expectations fell to 3.1% from 5.4% last quarter, led by the energy and resources sector, although all industries saw a decline. Earnings expectations slid to 6.5% from 10.6% last quarter.
…
IMHO, these rate hike fears are overblown, as apparently interest rates are not going up any time soon.
Yellen the Felon knows any rate rise would implode the Fed’s asset bubbles and Ponzi market. All the Fed mouthpieces will keep jaw-boning about a rate increase, but they’ll keep finding convenient pretexts to keep deferring it for a few months…then a few more…and more….
It’s been happening for years already in case some have failed to notice. And brain dead U.S. investors have become completely oblivious to the repeated deception.
The implication is that the Fed has created a massive “boy who cried ‘wolf’” conundrum for itself, as it seems unlikely they will suppress rates to current historic low levels indefinitely. Unless the Fed has a clever means to sterilize liftoff, an unexpected reversal of the bull market underpinnings of a falling long-term T-bond yield could prove jarring. Consequently liftoff is likely to generate investor surprise and a selloff to initiate long-term mean reversion in interest sensitive investments like stocks and long-term bonds.
Which all gets to the reasons I don’t buy saber rattling over near-term liftoff. Repeatedly kicking the can down the road and sparking a stock market rslly on each repetition is far more pleasant.
They hate us because of our freedoms:
http://www.cnn.com/2015/07/06/opinions/nigeria-america-gay-marriage
So you’re the Rainbow Rockstar now
What animal will you be at Rocky Mountain Fur Con?
Paleolibertarianism is a form of libertarianism that was developed by anarcho-capitalist theorists Murray Rothbard and Llewellyn Rockwell that combines cultural conservatism in social thought and behavior with a radical libertarian opposition to government intervention. (wikepedia)
So you’re the Rainbow Rockstar now
Not really, just pointing out how with our collective self righteousness we are pizzing off a lot of people in the world, and not just Muslims.
What was especially interesting was that Cameron is a member of Britain’s “conservative” party. That should give pause to Fundies who still harbor the delusion that “conservative” parties in most western nations are in sync with their values, and maybe make them wake up to the reality that, especially in the USA, both parties cater to Corporate America and that Corporate America is very “rainbow” these days. Which means that as time passes the GOP will eventually not even bother pandering to them as it will contradict their true master’s wishes.
Read the Social Justice Warrior™ article above
BTW, the first person I ever met who self-identified as libertarian was in college, studying computer science, and very into the furry scene
Just so you know, not all liberals and Dems are Social Justice Warriors. Just like not all conservatives are Trumps.
I was a page in the Democrat Party caucus in the state legislature when I was an undergrad at Football Factory State University, working with alot of representatives who came up through the Cuyahoga County Democrat Party machine
All this Social Justice Warrior™ rubbish hadn’t infected the party yet then
Some of the SJW stuff goes too far. Have a younger relative in college that complains the professors espouse these highly revisionist historical views that the entire U.S. culture for the last 200 years is an expression of white male patriarchal hegemony and is inherently evil because of it.
How ZIRP and free money helps people…
——————
Struggling to live in a $1M city: Photographer captures lives of ordinary San Francisco residents
dailymail | 13 July 2015 | By Dailymail.com Reporter
Photographer Wenxin Zhang moved to San Francisco in 2011 Discovered a group of people online that had been forced to find alternative means of accommodation ‘I visited them alone with mutual trust,’ she said The subsequent photo essay is called Goodnight Stories
A recent report said that a family needs about $200,000 a year to live comfortably in San Francisco, so long as their children go to public school.
And in June the median home price hit $1 million.
Wenxin Zhang understands this better than most.
The Chinese-born, California-based photographer moved to the city in 2011 and started reaching out on internet forums to meet new people.
What she found was a community that had been displaced by a city that has been hit with skyrocketing prices following the tech boom and expansion of nearby Silicon Valley.
Zhang decided to start documenting these people and the alternative means of accommodation they had been forced to find.
San Francisco
The Bohemian Club was founded in San Francisco
I read the book “Them” by British author Jon Ronson in which he infiltrates the annual Bohemian Grove event and sees the “cremation of care” ceremony with the giant stone owl statue and lots of rich Republican men having gay sex
Does anyone know what the return assumption used to compute Calpers’ retirement liability is?
Is it 7.5%?
CalPERS likely to fall short of annual investment goals
The California Public Employees’ Retirement System earned only 3% in the 10 months that ended April 30. Above, Ted Eliopoulos, CalPERS’ chief investment officer.
(Carl Costas / For The Times)
By Dean Starkman contact the reporter
The nation’s biggest public pension fund is falling far short of its annual investment goals, a setback for a system already straining to keep up with looming obligations.
The California Public Employees’ Retirement System earned only 3% in the 10 months that ended April 30 and is likely to fall short of its 7.5% annual target when the fiscal year ends Tuesday, the pension giant’s investment chief said.
Absent a “remarkable rally in the global stock market,” said Ted Eliopoulos, CalPERS’ chief investment officer, the ground to make up in two months is too great to avoid a likely shortfall.
“We don’t like to get too excited about any one-year return,” he said. “As the board is well aware, we would like to look at longer time periods as they are much more meaningful in measuring our performance.”
…
I see a tax hike in the future made to sound like it will help with global warming
Correct. Only down 45%.
Looks to be a miss of over 2/3 for this year, at least. Given the size of the fund, we are talking about a lot of money!
5% of $301 bn = $15 bn miss…
Yawn.
Yes. 7.5% is the target.
To be clear, I think pension math is garbage. The expected returns are too high for a long-term investment of hundreds of billions of dollars.
However, the article I read noted that they expect up and down years.
2014 was 18%+
The three years before were 10%+.
They can’t have too many years at 2%+, but one won’t kill them.
Is 7.5% the “target” or the “actuarial investment return” assumption used to compute the expected discounted present value of accrued pension liability?
The distinction matters!
It’s the actuarial investment return. Fairly recently they moved it down from 7.75%.
Markets
Calpers Struggles as Its Return Falls Short
Largest U.S. pension fund earned 2.4% in fiscal 2015, shy of 2.5% goal
Calpers, based in Sacramento, Calif., saw its worst year since 2012, when it earned 1%.
Photo: Max Whittaker/Reuters
By Timothy W. Martin
Updated July 13, 2015 6:43 p.m. ET
The California Public Employees’ Retirement System fell short of its annual return target in fiscal 2015, as public pensions around the U.S. struggle through one of their worst years since the financial crisis.
The $301 billion pension fund, the largest in the U.S. by assets and known as Calpers, said it earned 2.4% on its investments for the fiscal year ended June 30 because of a slump in the markets and weak private-equity returns. The performance was just shy of its internal goal of 2.5%. It was Calpers’ poorest year since 2012, when it earned 1%, and down from 18.4% in 2014.
Calpers is closely watched as a bellwether for how other large pensions across the U.S. will perform, and many of them will report annual results in coming weeks. Pension investments have been challenged this year by low interest rates, uneven market performance and the recovery of the U.S. dollar, which has weakened gains in global stocks.
Many U.S. pensions, including Calpers, don’t have enough assets to cover future retirement costs, so investments are critical to close that gap. In some cases, subpar investment results can dial up the pressure on states and cities to force employees to contribute more to retirement plans or cut the benefits retirees are due to receive.
The returns for 2015 have been “below what we need long term,” though not unexpected, said Gary Bruebaker, chief investment officer at the $88 billion Washington State Investment Board, which earned 4% through the first nine months of its fiscal year ended March 31, the latest figures available.
“Public equities have had a good run, so a period of time with lower equity returns was inevitable,” Mr. Bruebaker said.
Large U.S. pensions as a group are expected to finish fiscal 2015 with one of their worst showings since the financial crisis. Four of the previous five years since 2010 have produced returns of at least 12.2%, according to the Wilshire Trust Universe Comparison Service, but through nine months ended March 31 the median total return for pensions tracked by Wilshire was just 3.2%.
…
Funny how the MSM jumps all over CalPERS when they have an off year but not much is heard when they outperform.
“Calpers …[noted] that the pension fund had topped three- and five-year internal targets with returns of 10.9% and 10.7%. ” <<< this is more important than a one-year pause.
I was just feeling smug because my personal investment performance beat Calpers’ last year, likely due to a combination of luck with freedom to take seat-of-the-pants gambles, like occasionally going to cash, that corporate fund managers are not free to take.
A Wiley Coyote moment for CalPers?
Chinese fraudsters and SEC caves like a cheap suit - it ain’t just RE there folks - take a look at this little ditty and see how the sheep are being fleeced AGAIN!!!
http://wallstreetonparade.com/2015/07/china-stocks-and-the-new-york-stock-exchange-shutdown-the-untold-story/
OK - now what is plan D?
—————
Greeks Can’t Tap Cash, Gold, Silver In Bank Safety Deposit Boxes
ETF Daily News | 7/14/15 |
Capital controls have been in place in Greece since the start of the month to protect the banks from mass withdrawals by nervous Greeks. They have rightly been concerned about their savings, the collapse of the banking system and the loss of their savings in deposit confiscations or bail-ins.
Many Greeks were also withdrawing their cash because they fear the country might be forced back onto the drachma. However a little known fact is that, Greeks who had prepared for bank runs by withdrawing cash and buying gold and silver bullion and then lodging that bullion and indeed cash into safety deposit boxes have also been caught up in the draconian capital controls.
We have warned about this for many years and warned as recently as April this year that people should avoid using safety deposit boxes in banks.
“Greeks cannot withdraw cash left in safe deposit boxes at Greek banks as long as capital restrictions remain in place”, Nadia Valavani, a Deputy Finance Minister in Greece told local television station according to a Reuters report.
The report (Greeks cannot tap cash in safe deposit boxes under capital controls) was little noticed at it was published on the less trafficked ‘Bonds’ section of Reuters.com on Sunday July 5th at 1:58 pm EDT or 6:58 pm GMT. Sunday afternoon and evening is a time when traders, investors and even eagle eyed news junkies are likely to be taking a well earned break.
“Comment by MacBeth
2015-07-12 08:00:26
Thanks for this.
Trouble is brewing. A line has been crossed. Liberals now actively seek to stomp out their opponents’ belief systems and way of life.
They no longer seek to fight on behalf of the oppressed, but seek to oppress others instead.
Comment by measton
2015-07-12 20:25:40
Yes if you’re belief system is to persecute gays, minorities, other religions, atheists, agnostics, and well anyone else that doesn’t share your narrow beliefs than yes.”
I’m surprised this little exchange went unnoticed yesterday. It was pretty much a tacit admission from a respected board leftist that yes, they do seek to oppress people who think differently from them. Sure, he climbs on his high horse to justify his admission, but it was an admission just the same. And in a political environment where the definitions of terms such as tolerance, persecution and racism are largely fluid, this is a disturbing notion to say the least. Not to mention, with the arguable exception of his first two listed items, the other items are no different than what he is straight up admitting are his own targets for persecution. So non leftists be warned, the left IS looking to oppress you, destroy your way of life and delegate you to the dustbin of history, and they now feel their position is advantageous enough that they can admit it openly.
Coexisting is not part of the agenda folks, no matter what their bumper stickers say.
Please read the Social Justice Warrior™ article I posted
Uh huh. And how ’bout them evangelical conservatives who scream “Christian persecution” at every perceived slight and then try to shove creationism down your throat and won’t bake a cake for the rainbow couple. Want to be a racist? Go ahead. It’s a free country. However, freedom of speech does not come with immunity from criticism.
How about them? When I see posts like the one I quoted, I start to feel they are a little less paranoid.
“Yes if you’re belief system is to persecute gays, minorities, other religions, atheists, agnostics, and well anyone else that doesn’t share your narrow beliefs than yes.”
I agree with the quote: it’s OK to persecute the persecutors. A pure libertarian would say that all people should have the right to hold any internal belief system they want *however* it is anti-liberty to impose those beliefs on others. There’s a line that’s crossed when your internal beliefs become actions that harm the liberties of others.
Noted…you’re one of the oppressors now, or at least you fully and with eyes wide open intend to be. That you’ve convinced yourself that yours is a righteous brand of oppression is as unsurprising as it is unoriginal.
Liberal Fascism: The Secret History of the American Left, From Mussolini to the Politics of Change Paperback – June 2, 2009
by Jonah Goldberg (Author)
735 customer reviews
If you believe in oppressing people, f**ck your belief system. You’re right up there with anti-vaxxers.
Liberals now actively seek to stomp out their opponents’ belief systems and way of life.
I doubt that many liberals are trying to stomp out anyone’s belief system. If they try, they should fail if the beliefs are strongly held. The biography of Dietrich Bonhoeffer shows how that works.
Coexisting is not part of the agenda folks, no matter what their bumper stickers say.
Yup, that’s why it’s called the culture war.
GOP voters should know their team’s game plan:
Tax cuts alone do not equal free-market economics, nor do they equal fiscal reform. Cutting taxes allows policymakers to give voters something they want, while appearing to rein in the size of government. But this is a temporary illusion unless the tax cuts are combined with necessary reductions in spending—a far more difficult but also the more important task.
Lesson 1: Tax cuts without spending cuts are not tax cuts; they are tax deferrals.
The Bush tax cuts were fundamentally flawed in that they were undertaken without any effort to reduce unsustainable government spending. In fact, spending exploded in the decade following their implementation:
Tax revenues fell from 19.5 percent of GDP in 2001 to 15.1 percent of GDP in 2009.
Spending rose from 18.2 percent of GDP in 2001 to 25.2 percent of GDP in 2009.
Note: Spending increased steadily throughout the Bush administration and increased dramatically at the end of 2008 and through 2009 with the stimulus bill and other “one-time spending.” Since that time, however, spending has only fallen slightly, to 24.3 percent of GDP.
Yup. As I’ve written here before, tax cuts during a period of decifits = financing today’s government operations with treasury bonds. When you give the rich tax cuts during a period of deficits, it is a transfer of tax liability from the rich to the public at large, who hold the public debt.
From ZH - As I read this it occured to me that this whole clown show led by mashed potato face Kerry is not so much about nukes - (Thanks Obama for making the world less safe you f….piece of s..t) - rather it is about suppressing oil price and oil market and pissing off Netenyahu. “Iran offers exceptional investment opportunities, but the near term impact will be to continue oil’s decline back to its lows, potentially taking energy stocks with it.”
We all know bummer hates oil - hates it with a passion and so is on a course to not only arm his buddies in Iran much to the chagrin of Israel (he also hates them) but to take out oil.
He gets a three fer in this deal - piss off Israel more, make the world less safe but looking mighty fine in the eyes of his muslim buddies there in Iran and take out oil - It is the trifecta of the day there folks. This guy bummer is a snake if there ever was one. Lying piece of sociopathic s…t that he is!! Thanks Obama. Thanks.
Iran Deal Done - “Stunning, Historic Mistake” Or “Profoundly Positive Change”
Submitted by Tyler Durden on 07/14/2015 - 11:30
While slightly later than expected, a comprehensive deal on Iran’s nuclear weapons program has now been reached. As Reuters reports, the agreement will be greeted with alarm in several quarters, both in Washington and Tehran and internationally too, and could yet unravel. Internationally, the deal will accelerate unease in some Arab states, including Saudi Arabia, but it is Israeli Prime Minister Benjamin Netanyahu who remains the fiercest public critic and has issued a warning that the accord will “inevitably lead to a nuclear war.” The deal profoundly changes the balance of power in the region, but averts the conflict that was likely otherwise, but as ECStrat notes, Iran offers exceptional investment opportunities, but the near term impact will be to continue oil’s decline back to its lows, potentially taking energy stocks with it.
MikeyMite no likey the ZeroHedge
NewYorkTimesWashingtonPostCNN RealJournalists DoublePlusGood
From what RJ posted, it appears that they’re lining up with the Weekly Standard. Obama and Kerry should just take their order from Bibi, apparently.
Is it possible that a clueless group of starry-eyed zombies elected an administration bent on the ultimate destruction of the United States of America?
Why yes…yes it is.
The rest of us, who may actually like and care about the future of this great Nation, “unknowingly” paid for the facilitation of this destruction. How? Our money goes to public schools and universities that convert 60 to 70 percent of the students into unrecognizable Orwellian drones.
God help us…no wait…Allah help us.
Proof.
https://www.youtube.com/watch?v=SpHOaW99ST4
Mark Dice is awesome.
the ultimate destruction of the United States of America
Iran is no direct threat to the sovereign territory of this country and you know it
But then again, your primary loyalty is not to the United States of America
http://thehill.com/homenews/senate/247789-graham-iran-deal-akin-to-declaring-war-on-israel
“Iran is no direct threat to the sovereign territory of this country”
So why the hurry to get a deal? Why go down on and bend over for the Mullahs?
Valerie knows, Ben Rhodes knows, Obama knows and so do you.
“your primary loyalty is not to the United States of America”
Speak for yourself hippie.
The United States has no business in the Middle East, in Israel, in “friendly” muslim countries, or in hostile muslim countries
The national debt is almost Twenty Trillion Dollars, it’s time to pull the plug on this sh*t
And BTW, there are hundreds of millions of guns in the hands of United States citizens, do you think anyone, any country, any ragtag band of loosers like ISIS are gonna physically seize one square inch of American sovereign territory?
P.S. Ben Jones thanks for everything and providing a platform to school these warmonger fools
“it’s time to pull the plug on this sh*t”
Took the words right out of my skull.
“…thanks for everything and providing a platform to school these warmonger fools”
Hope you dropped some dead presidents on the HBB last week.
I like it as I am no fan of Israel getting $8 billion a year in aid, i drive a car, the Bush Wars suck, maybe Iran will destroy ISIL. Reagan loved Iran, why cant O?
It wont effect my tennis game.
…you keep interrupting my golf swing…
Reagan loved Iran, why cant O?
Reagan hardly loved Iran, he sold them weapons so that two of our enemies would keep killing each other. He played the Middle East game just like the mullahs play the game.
more moochers who wont pay their bills:
Trump International Golf Club Puerto Rico filed for bankruptcy today.
From what RJ posted, it appears that they’re lining up with the Weekly Standard. Obama and Kerry should just take their order form Bibi, apparently.
Coming to a city near you?????
http://panamaadvisoryinternationalgroup.com/blog/news-from-panama/multinationals-pack-their-bags-as-violence-surges-in-guerrero-mexico/
Guerrero state is one of the most violent parts of Mexico. From what I hear, it isn’t safe to venture away from your hotel at night in Acapulco.
We invite you to visit our country and learn if Panama Real Estate is right for you. -
just BS. Mexico has some very safe cities.
santa clarita CA, / Inglewood CA - very different places to live less then 30 miles apart. Why would Mex be any different?
Port St. Lucie or Miami?
And who says Panama is safe?
Cray, cray - tur.
Mex - the other story: https://www.youtube.com/watch?v=WKyMG_jaR84
Say hello to our new allies, courtesy of John McCain and the neo-cons.
http://www.independent.co.uk/voices/iran-nuclear-deal-however-the-great-and-good-represent-it-america-has-now-taken-the-shia-side-in-the-middle-easts-sectarian-war-10388940.html
‘Twas the night before Jade Helm, when all through the South
not a creature was stirring, not even a mouse.
Jade Helm 15, heavily scrutinized military exercise, to open without media access
By Dan Lamothe July 8
Jade Helm 15, the controversial Special Operations exercise that spawned a wave of conspiracy theories about a government takeover, will open next week without any media allowed to observe it, a military spokesman said.
Embedded reporters won’t be permitted at any point during the exercise, in which military officials say that secretive Special Operations troops will maneuver through private and publicly owned land in several southern states. Lt. Col. Mark Lastoria, a spokesman for Army Special Operations Command, said his organization is considering allowing a small number of journalists to view selected portions of the exercise later this summer, but nothing is finalized.
“All requests from the media for interviews and coverage of U.S. Army Special Operations Command personnel, organizations and events are assessed for feasibility and granted when and where possible,” Lastoria said in a statement released Wednesday to The Washington Post. “We are dedicated to communicating with the public, while balancing that against the application of operations security and other factors.”
The exercise is scheduled for July 15 through September 15 and is expected to include more than 1,200 troops. Army Special Operations Command announced the exercise in March, saying its size and scope would set it apart from most training exercises. For months, some protesters have said Jade Helm is setting the stage for future martial law. Those fears have been mocked by comedians such as Jon Stewart and others, and the U.S. military has tried to reassure people about the exercise.
http://www.washingtonpost.com/…/ -
The paranoia about this is ludicrous. It’s just a military exercise. No patriots will be rounded up and hauled off to Wal-Marts converted to FEMA camps. No blue-helmeted UN storm troopers in Russian tanks and APCs will conduct gun raids. So untwist panties and carry on. The exercise participants will do their exercise thing and then pack it up and go back to their garrisons. Pretty boring stuff, except for people who see conspiracies everywhere.
Nobody will get rounded up, they will however continue to get used to this kinda cr@p.
“Pretty boring stuff,”?
This same stuff has and continues to happen all over the country.
Blackhawk Helicopter Over Miami Drops ‘Bomb-Like … - YouTube
http://www.youtube.com/watch?v=dfrwLg0XiQQ - 233k - Cached - Similar pages
Feb 6, 2015
Military black hawks fly over Miami Florida firing blanks - YouTube
http://www.youtube.com/watch?v=JYf2xpVuX6g - 233k - Cached - Similar pages
Jan 29, 2013 .
Whoa, how can this be? Despite China’s (faked) “Everything is Awesome!” official data released tonight, despite the blatant market-rigging and interventions and suspending trades of all and sundry stocks that might drop, China’s stock market is STILL down more than 2% at the moment. What will it be when the controls are eventually lifted, as they must be? Will the Chinese Ponzi markets be first to implode?
http://www.marketwatch.com/investing/index/shcomp?countrycode=cn&mod=MW_story_quote
Rainy year ahead for California? Already Tioga Pass road was closed last week (July) from 4 inches of snow.
Californians must be careful what they wish for. Lots of rains means floods. Floods unfortunately lead to accidents, injuries, and deaths.
For me, (South of Irvine) I will be able to use my fireplace more often (if this is true). I only use my fireplace when it’s raining outside and it’s below 55.
http://www.zerohedge.com/news/2015-07-14/california-get-relief-drought-el-ni%C3%B1o-rescue
I’m just looking for reduced fire risk plus a reason for drought fear mongers to shut up.
Does anyone besides me find it odd that the Shanghai Index would drop by over 3% on the good news regarding China’s GDP growth rate?
Market Extra
Wall Street is in for a rollercoaster ride of a session Wednesday
Published: July 15, 2015 2:46 a.m. ET
By Joseph Adinolfi
Markets reporter
Wednesday promises to be a busy session for investors.
Wall Street traders are in for a wild ride over the next 24 hours.
A report on China’s second-quarter economic growth has triggered selling in the country’s fragile stock market. The Shanghai Composite (SHCOMP, -3.19%) slumped about 4% as better-than-expected data dampened some hopes for future stimulus.
Federal Reserve Chairwoman Janet Yellen is scheduled to speak Wednesday morning about the central bank’s economic outlook to the House Financial Services committee, one day after a disappointing retail-sales report. That report, combined with a weak reading on employment gains from July 3, have caused investors to second-guess whether the pace of U.S. economic expansion has been strong enough to coax the central bank to raise interest rates in September.
And by the end of the day in Athens, the Greek Parliament must decide whether or not to adopt a raft of unpopular and stringent reform measures demanded by the country’s international creditors.
The measures call for more severe spending cuts, market reforms and tax increases than those rejected by Greek voters in a referendum on July 5. Accepting the measures is necessary to begin negotiations on a desperately needed bailout. Rejecting them could possibly lead to a Greek exit from the eurozone — and more intense economic pain in the short term.
Also on tap for Wednesday is a meeting of the Bank of Canada. Economists are divided on whether the central bank will cut its benchmark interest rate, as falling oil prices continue to stymie economic growth in Canada. An economists with Capital Economics said there’s “a very strong chance” the central bank will cut its rate benchmark to 0.5% from 0.75%. While another at PNC said it’s more likely the central bank will leave rates unchanged.
“The next 24 hours are going to be pretty interesting and possibly very volatile for currencies and it’s not going to be about the U.S. dollar (DXY, +0.11%) but about external event risk as well,” said Kathy Lien, managing director of FX strategy at BK Asset Management.
Tom di Galoma, head of rates and credit trading at ED & F Man Capital Markets, said Yellen will be the main event on Wednesday.
“There’s a lot of hope in the market place that [Yellen] will raise rates in September,” di Galoma said. But disappointing readings on national employment and consumer spending in July would make a rate hike difficult to justify, given that the central bank has repeatedly promised that the course of impending interest rate increases will be data-dependent.
Yellen will address the Senate Banking Committee on Thursday.
Di Galoma said Yellen might sound like the central bank is on track for a September interest-rate hike because that’s what Congress wants to hear.
…
Could the problem be that nobody save AlbuquerqueDan believes the 7% GDP growth figure?
Asia Markets
China stocks fall despite rosy growth data
Published: July 15, 2015 12:48 a.m. ET
By Chao Deng
Stocks in China fell as surprisingly strong growth data diminishes hopes for more stimulus, while concerns grow that broader economic risks, and triggers of the recent selloff, remain largely the same.
The Shanghai Composite (SHCOMP, -3.02%) is down 1.4% at 3,868.67, shedding gains from a three-day rally that lifted the benchmark roughly 13%. The index remains down nearly a quarter from its peak on June 12. The smaller Shenzhen Composite (-4.09%) is down 1% and the small-cap ChiNext board (-4.63%) is down 2.6%, down about a third since its June high.
“The GDP figure has lost impact on the market because the market consensus of a slowing economy is strong,” said Jacky Zhang, an analyst at BOC International. “The regulator’s crackdown on gray-market margin financing also creates liquidity pressure,” he added.
Chinese officials have increased scrutiny on using borrowed money to buy stocks, steering investors from gray-market financing options, like peer-to-peer lending, that offer credit for leveraged share purchases.
In Hong Kong, the Hang Seng Index (HSI, -0.47%) is down 0.5%, as China’s positive growth data lessens the likelihood of more stimulus, said Chris Weston, chief market strategist at IG. Shares of Macau casinos — often a proxy for stimulus expectations — pulled the index lower, while a gauge of Chinese firms listed in the city fell 0.8%.
The continued slide among Chinese stocks reflects deepening doubts that Beijing can turn things around, despite heavy intervention in recent days. Some 696 mainland firms remain suspended, representing about a quarter of the number of firms listed on Shanghai and Shenzhen, according to FactSet. The halts have frustrated investors and increased market volatility by limiting the stocks that traders needing could sell.
Another sign of waning confidence: Foreign investors have pulled capital out of Shanghai stocks for seven straight days, via a trading link with Hong Kong, the longest stretch of net outflows since the program began last November.
China’s growth held at 7% in the second quarter, a level economists had deemed unlikely given signs that Beijing’s policies to jump-start the world’s second-largest economy hadn’t yet taken hold. The median forecast by 14 economists surveyed by The Wall Street Journal was for 6.8% growth in the quarter.
“The longer term outlook remains one of structural slowdown as the economy works through a painful process of adjustment and deleveraging,” said Andrew Colquhoun, head of Asia-Pacific sovereigns at Fitch Ratings. The ratings firm nevertheless expects a pickup in growth during the second half of the year, after recent monetary and credit-policy easing.
That growth even managed to hit 7% also refreshes debate about the reliability of Chinese statistics.
“The chances that that data is real is very low,” said Alicia Garcia Herrero, Natixis’s chief economist for the Asia-Pacific region.
…
phony scandals