For Your Pi Weekend Ruminations – March 14, 2015

thJPAU8I4AHere is what I read on Friday and early Saturday around the net. As usual some are related to the market, some to geo-politics and some are for fun. Hope you will find these useful and interesting.

  1. Why Germany Shouldn’t Take Its Economic Success for Granted – Indeed, Germany’s policymakers seem to be stumbling from decision to decision. Instead of steering the economy, they are being driven by it, reacting with no clear sense of direction to the demands of the moment. The country’s celebrated de-carbonization is putting its industry at risk. Collective bargaining, once left to economic actors, is becoming increasingly politicized. Changes in pension policy are boosting public spending and contributing to rising levels of debt.
  2. Why Deflation is Good News for Europe – The fall in (consumer) prices that the eurozone currently is experiencing should thus be seen as a positive development for all energy importers. The eurozone periphery, in particular, can look forward to an ideal combination of low interest rates, a favorable euro exchange rate, and a boost in real incomes as a result of cheap oil. In a deflationary environment, lower oil prices appear to make it more difficult for the European Central Bank to achieve its target of an inflation rate close to 2%. In reality, lower oil prices represent a boon for Europe – especially for its most beleaguered nations.
  3. Language of Greek Crisis Shifts From Financial Jargon to Humiliation – Now, with Greece and its European creditors locked in bitter negotiations this week over the terms of the country’s bailout, the politesse of the talks has disintegrated into starkly personal terms. Now the language of the Greek crisis is about humiliation, national pride, moral hazard and hypocrisy.
  4. Watch Four Years of Oil Drilling Collapse in Seconds – The crash in oil prices kicked off intense debate over when, and how, American producers would react. So far they’re still cranking out oil, but there are signs that a slowdown is looming. Chief among them: the record drop-off in drilling for new oil.
  5. One of the Hottest Get-Rich-Quick Trades Is Banned in the U.S. – Familiar, yes — and illegal if this were the U.S. Because what these people are selling are neither stocks nor bonds nor futures nor funds. They are offering contracts for difference, financial derivatives that are off-limits to retail investors in the U.S. and highly regulated elsewhere.
  6. What You Tweet Might Tell Janet Yellen It’s Time to Raise Rates – Your Google search or a tweet about your job is part of a vast trove of private economic information that might help Federal Reserve Chair Janet Yellen and her colleagues get a more complete picture of where the economy is headed.
  7. Surprise: U.S. Economic Data Have Been the World’s Most Disappointing – The Bloomberg ECO U.S. Surprise Index, which measures whether data beat or miss forecasts, fell to the lowest since 2009, when the nation was in the deepest recession since the Great Depression.
  8. Economies of the Red and Blue State – In total, the blue states have a GDP of $11,1 trillion while the red states have a GDP of $5.6 trillion. However, in addition to having more population, blue states also have higher GDP per person. The average GDP per person for a blue state is $55,194 and the average GDP per person for a red state is $48,725. The blue states also have a much deeper lineup in terms of GDP. Seven blue states have GDP’s over $500 billion- California, New York, Florida, Illinois, Pennsylvania, Ohio and New Jersey. Only one red state has a GDP over $500 billion- Texas. In fact, Texas produces 27% of the entire GDP of the red states. Among the blue states, although California produces $670 billion more GDP per year than Texas, it still only constitutes 20% of the GDP of blue states.
  9. An Island Reversal for S&P MidCap SPDR – The S&P MidCap SPDR (MDY) fell to broken resistance with a gap down on Tuesday, firmed on Wednesday and gapped up on Thursday morning. The two gaps created a price “island” on Tuesday-Wednesday and an island reversal over the last four days.
  10. Chinese Stocks: Year of the Bull? – This is the Year of the Goat in China. This could be the year of the bull for stock investors given the big 32.8% gain in the Shanghai A-Share Index (in yuan) since November 14 of last year. However, the China MSCI stock index (also in yuan) is up only 3.2% over this period. Nevertheless, both are impressive gains given the concerns discussed above.
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