Guest Post by Paul Kasriel, The Econtrarian As quantitative easing comes to an end (apparently) by the Fed and is taken up by the European Central Bank (ECB), let’s compare the behavior of nominal domestic demand in each central bank’s economy and venture a reason for any differences. Plotted in Chart 1 are index values of the nominal Gross Domestic Purchases in the U.S. and the eurozone, respectively. Each index is set at a value of 100 for Q4:2008. Since Q4:2008, Gross Domestic Purchases in the U.S. increased a net 18% through Q2:2014 (that is what the index value of 118 indicates). For the eurozone, Gross Domestic Purchases increased a...
For the last 4 years, the national average retail price of gasoline in the United States stayed within a range of $3.25-$4.00 a gallon. But that all changed this fall, with U.S. consumers now paying an average price of $2.82. Source: New Jersey Historical Gas Price Charts Provided by GasBuddy.com This usually is the time of year when gasoline prices tend to be at their lowest. But the current U.S. price of gasoline is exactly what we’d predict given the long-run relation between the price of gasoline and crude oil. There’s essentially no seasonal component in the price of crude. In other words, if crude stays at its current value (n...
The number of employees quitting their jobs is the highest it has been since early 2008, when the recession was just getting started. The number of vacant jobs is the highest it has been since 2001. The unemployment rate continues to fall. Only one thing has not changed: wage inflation. Is it time for companies to raise wage rates? A year ago I noted the upswing in quits and wrote about the 7 Employee Retention Strategies Your Company Must Have. That article talked about ways to keep good employees that did not involve higher wages. Before considering higher pay, every manager should review those retention strategies. If you are missing sever...
If admitting you have a problem is the first step toward recovery, then China is making progress. The question is progress to what, because the generic answer, “another debt-fueled boom” is no longer applicable. Recall that as we noted here initially in the summer of 2013, the very reason why China finds itself in a reformist quandary is that the traditional method of Chinese “growth” – issuing a little under $4 trillion in aggregate system debt per year – no longer works as the bad debt portion of the Ponzi scheme is rising at a faster pace than the total notional of debt itself. Which means the PBOC, wh...
The latest Reuters poll is showing 24 out of 43 economists projecting the first rate hike in the U.S. by June of next year. The futures market is pricing lift-off by September. Citi’s latest analysis puts it in December. And all of these forecasts are running way behind the so-called Taylor Rule, which suggests that the Fed Funds rate should already be at 1.5%. Source: @Schuldensuehner, Citi In fact the U.S. economy can easily handle non-zero short-term rates at this point. The banking system is quite healthy and can easily manage funding costs of 1.5%. Corporate borrowers can deal with slightly higher rates as well. And as far as m...
Written by Gail Tverberg, Our Finite World The world is in a dangerous place now. A large share of oil sellers need the revenue from oil sales. They have to continue producing regardless of how low oil prices go unless they are stopped by bankruptcy, revolution, or something else that gives them a very clear signal to stop. Producers of oil from U.S. shale are in this category, as are most oil exporters, including many of the OPEC countries and Russia. Some large oil companies, such as Shell (RDS-A), and ExxonMobil (XOM), decided even before the recent drop in prices that they couldn’t make money by developing available producible res...
The Cleantech Open held its 2014 Global Forum on San Francisco’s Treasure Island and I had a first-hand view of the action. My direct involvement this year culminated with the previous day’s final pitches and investor connect speed rounds at a Financial District hotel. I stayed for the Global Forum because thought leaders invariably have insights that make my day. I won’t disclose anything proprietary from the pitches and speed connections on day one, but I do have some random thoughts to share. My general impressions of this year’s startups were very positive. Most of the startups I directly observed presen...
We had expected the level at 1.2557 might act as resistance as it had acted previously as both resistance and support. Note how these “flipping” levels can work really well. The H4 chart below shows how the price printed a bearish pin bar with a bounce off this level just before Monday’s London session, shown at (1). The price moved down to the 1.2450 area and then began to print some bullish price action, shown at the bullish pin bar, marked at (2). This would have been a logical point at which to exit the trade. Note how the 1.2557 area was resistant enough to be the origin of the large move down at the end of the week. Click on p...
Photo Credit: Shutterstock, Flags of China and Commonwealth of Australia As a part of its global expansion, Alibaba (BABA) announced today that both its payment affiliate Alipay and Taobao marketplace are committed to bringing Australian products, brands and businesses closer to Chinese customers. This move is expected to boost Chinese consumption of Australian products by connecting Australian consumers with Chinese manufacturers. Alipay has established a Sydney-based venture, Alipay Australia, which will work closely with Paybang, a joint venture by Alipay, in facilitating cross-border trade between the two countries. In addition, Alipay...
by Sam Seiden, Online Trading Academy As the old saying goes, “risk and reward go hand in hand.” I can’t tell you how many times I have heard that in the trading and investing world. Most people think the more reward you try to attain, the more risk you need to take on. Many years ago, I heard this so often that I believed it. However, after many years of trading experience I could not disagree more. It is very possible to attain plenty of reward taking on minimal risk if you know what to look for when analyzing price charts. Whether you are trading for short term income which means creating a daily, weekly, or monthly inco...