Mish's Global Economic Trend Analysis

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Yield Curve Casts Doubt on "Robust Recovery" Theory Posted: 03 Dec 2014 04:33 PM PST A week ago Fed Governor Dudley announced "U.S. Economic Outlook Looks Brighter". My response was Ring! Ring! Goes the Bell. Today, Curve Watcher's Anonymous offers a few charts that show the bond market ringing a bell in disbelief of Dudley. Yield Curve as of November 28, 2014 Curve Analysis The yield curve flattened, then inverted prior to the last recession. The yield curve steepened well ahead of the end of the recession. Since then, the yield curve has steepened twice and flattened twice. What's Next? Starting at the beginning of 2014, short-term yields (2-year and 5-year) have risen while long-term (30-year and 10-year) have declined. In a strengthening economy, yields on the long end of the curve typically rise faster than yields on the short end. Those waiting for the typical recession indicator (an inverted yield curve where short-term bonds yield more than long-term bonds) may as well be waiting for Godot with the Fed holding 3-month rates near zero percent. Nonetheless, expectations of a major Fed tightening cycle are pretty much the norm. If the Fed hikes (which I doubt), then I fully expect to see action similar to the first yield-curve flattening box in the above chart. If the Fed continues to hike, expect a quick inversion. Regardless, the bond market does not believe this happy talk from the economic cheerleaders, and neither do I. 30-Year Yield Minus 5-Year Yield 10-Year Yield Minus 5-Year Yield 10-Year Yield Minus 2-Year Yield The first chart shows two incidents since 2010, where declines in yield reversed. However, both occasions ended when the Fed stepped on the gas.  If the Fed does so again, will the stock market respond the same way? Feelin' lucky? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

Enter the Carpetbaggers: Ukraine's New Finance Minister a US Citizen, New Economy Minister from Lithuania Posted: 03 Dec 2014 09:29 AM PST Carpetbaggers Take Over Ukraine Now that Ukraine's gold has been sold off, the only thing left to complete the plundering is to send in the carpetbaggers. That process is now underway. Ukraine's just-named "Finance Minister" is a US citizen, and Ukraine's new "Economy Minister" is from Lithuania. To get around legal issues associated with having foreigners in top level government positions, Ukraine made the appointees Ukrainian citizens. Reuters explains Foreign Technocrats Given Ukrainian Citizenship Before Cabinet Vote. Ukrainian President Petro Poroshenko on Tuesday granted citizenship to three foreign technocrats nominated for cabinet positions in a new government hoping to tackle severe economic and defense threats. Parliament is expected to vote on nominees for cabinet positions on Tuesday with Kiev under pressure to form a new government quickly. Ukraine has been offered billions of dollars in aid by international lenders if it implements a program of economic reform and Poroshenko said the administration would benefit from international specialist input. Meet Your New Carpetbagger Technocrats Natalie Jaresko, a U.S. citizen and chief executive of private equity group Horizon Capital, will take over as "Finance Minister". She has worked in Ukraine for more than 20 years after holding various economic positions in the U.S. State Department.   Aivaras Abromavicius, a Lithuanian citizen and a partner in investment firm East Capital, will take over as "Economy Minister".   Aleksander Kvitashvili, a Georgian citizen who has served as health minister and labor minister in Tbilisi will take over as "Health Minister" Jacob Dreizin Comments Reader Jacob Dreizin a US citizen who speaks Russian and reads Ukrainian offered these select comments. Ukraine has a new finance minister, Natalie Jaresko. She is a former U.S. State Department official. After leaving State Department, she ran a Ukraine-based private equity firm. Her company site (Horizon Capital) is down now. I guess everyone was trying to look at her bio. She was only granted Ukrainian citizenship today, so she could legally hold the position. The post of "Economy Minister" was just given to an asset management firm partner from Lithuania, and the "Health Minister" is from Georgia. The choice of nationality is not surprising. It's an attempt to give the EU direct access to Ukrainian economic policy, specifically "reforms" or lack thereof, as well as to poke a stick in Putin's eye. These moves show that Ukraine is willing to be turned into a Western colony in exchange for whatever financial scraps can be tossed its way. While it's true that Ukraine is in desperate need of a total overhaul, any country that turns its economy over to foreigners wholesale is going to be pillaged wholesale. Greece is a perfect example.  Finally, I should also mention that a number of Ukrainian power plants are down to their last few days of coal. And the winter is just starting. Jacob With Ukraine's gold long gone (see ZeroHedge report With Its Gold "Vaporized", A Furious Ukraine Turns On Its Central Bankers), the carpetbaggers will soon take control of anything worthwhile that is left remaining. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific.

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