by ilene - March 30th, 2015 11:39 pm
Courtesy of Mish.
Yet another central bank has announced a warning about the perils of deflation. Please consider China Central Bank Calls for Vigilance on Deflation.
China's central bank governor Zhou Xiaochuan warned on Sunday that the country needs to be vigilant for signs of deflation and said policymakers were closely watching slowing global economic growth and declining commodity prices.
Zhou's comments are likely to add to concerns that China is in danger of slipping into deflation and underline increasing nervousness among policymakers as the economy continues to lose momentum despite a raft of stimulus measures.
"Inflation in China is also declining. We need to have vigilance if this can go further to reach some sort of deflation or not," Zhou said at a high-level forum in Boao, on the southern Chinese island of Hainan.
Zhou added that the speed with which inflation was slowing was a "little too quick", though this was part of China's ongoing market readjustment and reforms.
Historical Perspective On CPI Deflations
In its March report, the BIS took a look at the Costs of Deflations: A Historical Perspective. Here are the key findings.
Concerns about deflation – falling prices of goods and services – are rooted in the view that it is very costly. We test the historical link bet ween output growth and deflation in a sample covering 140 years for up to 38 economies. The evidence suggests that this link is weak and derives largely from the Great Depression. But we find a stronger link between output growth and asset price deflations, particularly during postwar property price deflations. We fail to uncover evidence that high debt has so far raised the cost of goods and services price deflations, in so-called debt deflations. The most damaging interaction appears to be between property price deflations and private debt.
Deflation may actually boost output. Lower prices increase real incomes and wealth. And they may also make export goods more competitive.
Once we control for persistent asset price deflations and country-specific average changes in growth rates over the sample periods, persistent goods and services (CPI ) deflations do not appear to be linked in a statistically significant way with slower growth even in the interwar period. They are uniformly statistically insignificant
by ilene - March 30th, 2015 11:27 pm
With Apple Inc. and fellow Silicon Valley companies edging further into health care, the U.S. agency in charge of oversight says it will give the technology industry leeway to develop new products without aggressive regulation.
Bakul Patel, who oversees the new wave of consumer-focused health products at the Food and Drug Administration, said most wearable gadgets such as the soon-to-be-released Apple Watch and health-focused applications for smartphones have a way to go before warranting close scrutiny from the agency. (Read here)
This week’s heavy load of economic data releases from the U.S. (and, to a lesser extent, China and the euro area) comes at a particularly opportune moment. Views about the prospects for the U.S. economy are all over the map. There also is significant divergence in the assessments of the effects of a probable increase in interest rates this year by the Federal Reserve. And there is an even greater diversity of opinion about whether the U.S. will help pull the rest of the world out of the doldrums or, instead, be dragged down. (More)
In November 2013, Austin Holland, Oklahoma’s state seismologist, got a request that made him nervous. It was from David Boren, president of the University of Oklahoma, which houses the Oklahoma Geological Survey where Holland works. Boren, a former U.S. senator, asked Holland to his office for coffee with Harold Hamm, the billionaire founder of Continental Resources, one of Oklahoma’s
by ilene - March 30th, 2015 8:36 pm
Courtesy of Mish.
Can you refuse service to gays and lesbians? You can in Indiana thanks to the "Religious Freedom" Bill.
Indiana Governor Mike Pence has signed a bill that would allow businesses to refuse service to gay and lesbian patrons on the grounds of “religious freedom”, even as some of the state’s largest business interests oppose the measure.
Mr Pence, a potential 2016 presidential contender, said he signed the bill because “many people of faith feel their religious liberty is under attack by government action”.
Proving that he cannot think, Pence quipped "If I thought it legalised discrimination in any way in Indiana, I would have vetoed it."
And what about religious freedom for atheists, Muslims, ISIS? Can they do whatever they want too, or is this just religious freedom for Christians and Jews?
Where does one draw the line? Can I post a sign Catholics not welcome? Jews go home?
Greg Ballard, the Republican mayor of Indianapolis, has said that the Indiana law sends the “wrong signal”. “Indianapolis strives to be a welcoming place that attracts businesses, conventions, visitors and residents,” he said in a statement Wednesday.
In recent days, three major conventions have threatened to pull out of the state because of the bill. The organisers of Gen Con, the city’s largest convention, said the law “will have a direct negative impact on the state’s economy, and will factor into our decision-making on hosting the convention in the state of Indiana in future years”.
History Lesson for Pence
The opening of the United States Declaration of Independence states as follows:
We hold these truths to be self-evident, that all men are created equal, that they are endowed by their Creator with certain unalienable Rights, that among these are Life, Liberty and the Pursuit of Happiness. That to secure these rights, Governments are instituted among Men, deriving their just powers from the consent of the governed;
"Many people of faith feel their religious liberty is under attack by government action," said Pence. Actually, people of all races, creeds, and religions are under attack by this ludicrous bill.
To Pence, you are equal unless your religion says otherwise. He is exactly the kind of fake-conservative jackass the Republican party needs to get rid of.
by ilene - March 30th, 2015 4:09 pm
Courtesy of Mish.
Ben Bernanke just started his own blog at the Brookings Institute. His first post, from today, Inaugurating a New Blog is the announcement.
Let's dive into Bernanke's second post of the day: Why are Interest Rates So Low?
Bernanke: Low interest rates are not a short-term aberration, but part of a long-term trend. As the figure below shows, ten-year government bond yields in the United States were relatively low in the 1960s, rose to a peak above 15 percent in 1981, and have been declining ever since. That pattern is partly explained by the rise and fall of inflation, also shown in the figure.
Mish: Inflation is only low if one ignores asset bubbles. The CPI does not factor in bubbles induced by monetary policy. The Bernanake and Greenspan Fed ignored the biggest bubble ever in housing for which the Fed has never apologized nor admitted any wrong doing. The effects of inflation are visible everywhere, except of course where the Fed looks.
Bernanke: If you asked the person in the street, “Why are interest rates so low?”, he or she would likely answer that the Fed is keeping them low. That’s true only in a very narrow sense. But what matters most for the economy is the real, or inflation-adjusted, interest rate (the market, or nominal, interest rate minus the inflation rate). The real interest rate is most relevant for capital investment decisions, for example. The Fed’s ability to affect real rates of return, especially longer-term real rates, is transitory and limited. Except in the short run, real interest rates are determined by a wide range of economic factors, including prospects for economic growth—not by the Fed.
Mish: It is difficult to say precisely where interest rates would be in the absence of the Fed, but the answer is likely, surprisingly low. The reason is the Fed (central banks in general) coupled with government deficit spending and fractional reserve lending are the very source of inflation. Amusingly, the Fed bills itself as an "inflation fighting force" but it is a key determinant of inflation. Worse yet,
by ilene - March 30th, 2015 3:06 pm
Courtesy of Mish.
CoreLogic chief economist Dr. Frank Nothaft says Strong Economic Growth To Propel US Housing Market in 2015.
The U.S. economy is poised to grow by close to 3 percent in 2015, generating a 3- to 3.5-million-person gain in employment. This job growth, coupled with very low mortgage interest rates and some easing in credit access, is expected to propel both owner-occupant and rental housing activity this year. This heightened level of housing demand should translate to the best home sales market in eight years, a projected rise of about 5-6 percent in the national CoreLogic Home Price Index (HPI) and mortgage originations that will likely rise in 2015 compared to last year.
Economic growth near 3 percent
U.S. economic growth will be buoyed by three forces in 2015. One is the halving of energy prices since last summer, with prices unlikely to jump back up this year. This price drop has the similar beneficial effect on aggregate economic performance that a tax cut would have: Both consumers and business owners have more cash left each month to spend on other goods or invest in new equipment and financial assets. Lower energy prices could boost growth by as much as 0.5 percent, even though regions of the U.S. with jobs tied to energy production will face a slowdown.
A second force at work is the rise in consumer and business manager confidence in the economic recovery. This rise has been pronounced over the past year, coinciding with the pickup in economic growth (better than 4 percent annualized growth over the last three quarters of 2014) and the drop in energy costs. The Conference Board Consumer Confidence Index and the National Federation of Independent Business’ Small Business Optimism Index have both risen to the highest levels since before the Great Recession. Consumers who feel more financially secure are more likely to form new households and more likely to transition from rental to ownership; and businesses that are more optimistic that demand will be there for their products are more likely to hire staff.
The third factor at work is a significant improvement in the budget outlook for state and local governments. With tax receipts stronger than expected, state and local governments will likely spend more, providing further stimulus to aggregate demand. With
by ilene - March 30th, 2015 3:01 pm
By Dana Lyons, Tumblr
Investment in the riskiest assets has been on a relative decline, a development which has preceded previous major tops.
"For the moment all discipline seems painful rather than pleasant, but later it yields the peaceful fruit of righteousness to those who have been trained by it.” - Hebrews 12:11
About 4000 years ago, the world experienced its most significant “risk-off” event of all time. Angered by the peoples’ wicked behavior, God flooded the earth, wiping out the entire human race, save for Noah and his family. One might consider Noah the original risk manager. Rather than dismiss the risk of rain — an event that supposedly had never occurred up to that point — he built an ark that would provide protection in the event of a flood.
It certainly helped having an advisor with inside information like God who not only warned Noah of the flood, but was also in charge of its implementation. Even so, it must have taken some serious faith and fortitude on Noah’s part to continue executing his risk strategy considering how lengthy the effort was before it finally revealed any benefit. From start to finish, it took Noah 100 years to build the ark. Can you imagine the taunting he must have endured (e.g., the “perma-bear” accusations in the social media circles)? To his credit, none of that interfered with the implementation of his risk management process. And in the end, the man lived for another 300 years while everyone else ended up under water, literally.
We have been implementing our risk management process to manage investments for over 40 years. Over the course of that time, we have seen all kinds of markets. However, never have we seen anything like the recent environment. While storm clouds in the market have been accumulating for the past few years, there has hardly been any rain, save for an occasional drizzle (June 2013, October 2014). So while we have not been shy in pointing out the growing potential risk in the market (we are active risk managers after all), this risk has not
by ilene - March 30th, 2015 2:46 pm
By Brian Nelson, Tumblr
In its biggest potential acquisition in history, newsletter portfolio holding Intel is reportedly in talks to acquire Altera, though deal terms have yet to be disclosed. We think Intel could pay up to ~$40 per share for the company on the basis of the high end of our fair value estimate range for Altera and still generate value for shareholders, though we wouldn’t expect Altera’s $2 billion revenue stream to be much of a needle-mover against Intel’s $50+ billion revenue base, at least initially. However, there are a few reasons why this would be a strategic win for Intel.
Altera is one of the top standard cell ASIC (application-specific integrated circuit) suppliers in terms of revenue. Due to the rising cost of transistors, however, the ASIC and ASPP (application-specific standard product) models have come under pressure as of late. Altera’s response has been to position itself as one of the two largest manufacturers of field-programmable gate arrays, FPGAs, a sub-segment of programmable logic devices (PLDs) that have much better economics than either ASICs or ASPPs and are poised to displace legacy technologies, almost across the board (ASSP, ASIC, DSP, MCU, CPU, and GPU).
Image Source: Altera
Full article: Brian Nelson's Tumblr — Why Intel Wants Altera.
by ilene - March 30th, 2015 1:52 pm
This caught my eye this morning. While the author confirms that the diet book, the Blood Type Diet (telling people what to eat based on their blood types), was junk science, she also explains that blood type is likely correlated to certain diseases and causes of death — the major ones. Essentially, type O blood doesn't clot as well as blood with the A and/or B antigens, making it better for heart disease, strokes (presumably not the bleeding variety), certain infections and certain cancers.
If lower clottability is indeed the mechanism for protection against heart disease, strokes and some cancers, that would support the practice of taking low dose aspirin on a daily basis.
By Cassie Shortsleeve at Yahoo Health
A trendy diet left blood type with a hard-to-shake reputation, but respectable research suggests that being A, B, AB, or O may matter — far beyond what you’re eating. (Photo: Getty Images/Kevin Curtis)
A few years back, the Blood Type Diet — a controversial nutritional plan that suggests eating a certain way based on blood type — was all the buzz. The gist, according to the book that popularized the idea, was that doing so could maximize your performance, boost health, protect from disease, build stronger emotions, and even help you live longer. Problem is, last year, the diet was debunked by a study in the journal PLoS ONE, leaving blood type with a bad rep and most people thinking it didn’t matter much beyond the need for a transfusion or donation some day.
But emerging research suggests that while your diet needn’t be so closely linked with your blood, your overall health may be. In fact, one blood type continues to emerge above the rest: blood type O.
Research suggests that people with type O blood are at alower risk for cardiovascular health issues like stroke and heart attack. A new study from the Karolinska Institute shows that people with type O blood are less likely to die from malaria. Science suggests that people with AB blood are at an increased risk…
by ilene - March 30th, 2015 12:06 pm
Courtesy of Charles Hugh-Smith via OfTwoMinds
by ilene - March 30th, 2015 11:00 am
Courtesy of Pam Martens.
It’s tough to keep up with the conspiracy theories that run rampant from day to day in the hallowed halls of Congress. But one that is gaining traction is that the U.S. Treasury Department’s Financial Stability Oversight Council (whose acronym is pronounced F-SOC) is the handmaiden of an international finance cabal and is obediently marching to its beat instead of the mandates of Congress.
These suspicions were on display at the Senate Banking Committee hearing last Wednesday and the House Financial Services Committee hearing the week before where U.S. Treasury Secretary Jack Lew, who Chairs F-SOC, was pummeled with thinly veiled, and not so thinly veiled, accusations.
F-SOC was created under the Dodd-Frank Wall Street Reform and Consumer Protection Act in 2010. It is charged with the early identification of emerging risks to the financial system. Every major regulator of Wall Street banks has a seat.
The conspiracy theory that foreign hot shots are really controlling decisions at F-SOC is not without roots. The international equivalent of F-SOC is the Financial Stability Board, which is run by a Plenary of central bankers and finance ministers from around the globe, along with organizations like the International Monetary Fund (IMF), World Bank and Basel Committee on Banking Supervision. The United States has three members on the Plenary: Nathan Sheets, the Undersecretary for International Affairs at the U.S. Treasury; Daniel Tarullo, a member of the Board of Governors of the Federal Reserve; and Mary Jo White, Chair of the SEC. Mark Carney, the Governor of the Bank of England is the current Chair of the Financial Stability Board.
The simmering conspiracy took wings on February 5 of this year when Mark Carney issued what appeared to be marching orders from the Financial Stability Board to G20 members, which includes the United States. One portion of the document reads as follows:…