Wednesday, December 30, 2015

Mish's Global Economic Trend Analysis

Mish's Global Economic Trend Analysis


NSA Spied on Israeli Prime Minister During US-Iran Nuclear Negotiations

Posted: 30 Dec 2015 01:28 PM PST

In an unexpected confirmation of what every thinking person realized upfront, the Guardian reports US 'spied on Binyamin Netanyahu during Iran nuclear deal talks'
Despite Barack Obama's promise to curtail eavesdropping on allies in the wake of the Edward Snowden revelations about the scale and scope of US activities, the National Security Agency's (NSA) surveillance included phone conversations between top Israeli officials, US congressmen and American-Jewish groups, according to the Wall Street Journal.

The White House did not confirm or deny the report. Ned Price, spokesman for the National Security Council, said on Wednesday: "We are not going to comment on any specific alleged intelligence activities. As a general matter, and as we have said previously, we do not conduct any foreign intelligence surveillance activities unless there is a specific and validated national security purpose. This applies to ordinary citizens and world leaders alike."

Relations between Obama and Netanyahu have often been described as strained. The NSA reports allowed Obama administration officials to peer inside Israeli efforts to turn Congress against the Iran deal, the Wall Street Journal said.

The surveillance allegedly revealed how Netanyahu and his advisers had leaked details of the US-Iran negotiations, which they learned through Israeli spying operations. Last March, Israel denied reports that its security forces spied on the negotiations between Tehran and major powers over Iran's nuclear capacities.
Security Threats

Who constitutes a validated national security threat? The answer is anyone and everyone still breathing.

Mike "Mish" Shedlock

A "Mish Together" January 5, 2016

Posted: 30 Dec 2015 12:22 PM PST

Chris Temple, a friend of mine, and author of the National Investor newsletter is passing my way (Crystal Lake, Illinois) on his annual snowbird trip from Wisconsin to Florida.

I know Chris as a fellow panelist at several Chicago Area Natural Resources conferences.

I invited him over for dinner, but after some discussion, we elected to open the invite to anyone who is in the area and wants to come for dinner, or just drinks and appetizers for those who prefer something light.

Date: Tuesday, January 5, 2016
Time: 7:00 PM
City: Crystal Lake, Illinois
Place: Village Squire Restaurant - 4818 Northwest Highway - Crystal Lake, Illinois

For those who want to come a bit earlier, Chris and I will be at the bar at 6:30 PM.

There are several Village Squire locations. Pick the one in Crystal Lake. Here's a Google Map.

If you can make it, please: Send an Email Confirmation.

After dinner, there is a nearby karaoke bar for those who want to sing or have further discussion over drinks.

It should be a fun evening. You can ask questions about anything that is on your mind.

Mike "Mish" Shedlock

Pending Home Sales Decline 0.9%, Well Below Lowest Estimate; About that "Know Before You Owe" Theory

Posted: 30 Dec 2015 11:06 AM PST

Today the NAR released the Pending Home Sales Index, a measure of expected sales on existing homes. The Econoday Consensus Estimate was for a 0.5% rise in a range of 0.0 to 2.4%.

No economist got the sign correct. The index unexpectedly declined 0.9% month-over-month, well below even the lowest economist's estimate.
Pending home sales in November declined for the third time in four months as buyers continue to battle both rising home prices and limited homes available for sale. The pending home sales index was down 0.9 percent but up 2.7 percent from a year ago. Modest gains in the Midwest and South were offset by larger declines in the Northeast and West.

November's dip continued the modestly slowing trend seen ever since pending sales peaked to an over nine year high back in May. NAR said that home prices rose too sharply in several markets, there were mixed signs of an economy losing momentum and waning supply levels all contributed to headwinds in recent months despite low mortgage rates and solid job gains.

The Northeast decreased 3.0 percent but is still 4.3 percent above a year ago. In the Midwest the index rose 1.0 percent and and is now 4.1 percent above November 2014. Pending home sales in the South increased 1.3 percent and are 0.5 percent higher than last November. The index in the West declined 5.5 percent but remains 4.5 percent above a year ago.

Recent History Of This Indicator

Pending home sales are expected to rise a solid 0.5 percent in November vs. a softer 0.2 percent rise in October. The expected gain would point to a badly [needed?] increase for final sales of existing homes which were depressed in November by new disclosure rules and related time delays.
About that "Know Before You Owe" Theory

Ahead of the release, Bloomberg parroted the NAR line that disclosure rules affected November existing home sales.

I wrote about the rule changes on December 22, in Existing Home Sales Plunge 10.5%, NAR Blames "Know Before You Owe"; What's the Excuse for Last Month?

The rule change, dubbed "Know Before You Owe", was a simplification of disclosure rules. It became effective on October 3. I failed to see how a decline in November was related to simplification of rules that actually took effect the previous month.

Bear in mind, that the NAR called a dip in October "disturbing" but in November placed the entire blame on the "Know Before You Owe" rules.

If the rule change theory was correct, delays in November would have pushed into expected closings in December. The Econoday economist guessing a rise of 2.4% probably believed that theory. Instead, we see a plunge.

Of course the index itself could be wrong, so we have to wait for the actual December numbers. But as it sits, the most likely thing is blaming "Know Before You Owe" was simply a bad call.

Today, the NAR blames "home prices that rose too sharply in several markets".  I find that a much better theory, especially if we replace the word "several" with the word "most".

What about the NAR's perpetual "never a better time to buy" thesis? Is the NAR willing to toss that theory on the ash heap of history?

Don't hold your breath.

Mike "Mish" Shedlock

Drastic Action

Posted: 30 Dec 2015 12:28 AM PST

In Misguided Plans to Fix the Fed Part 1: Bernie Sanders I proposed abolishing the Fed. That's something I have stated many times over the past decade.

Nonetheless, reader Harold wonders is that action would be a bit drastic. Harold writes ...
Hello Mish:

Don't you think totally abolishing the Fed is a bit drastic.  Theoretically if they could be stripped of any political influence and let the free market set interest rates their endless bubble production would be muted. I think their function of providing liquidity as a lender of last resort serves a useful function. Wasn't this the original purpose for creating the fed in 1913? I think their function has been bastardized by politicians and they have evolved into a tool of the government and the financiers. Free market capitalism can run the economy otherwise. 

I hope you have a healthy happy New Year.  Thanks for the great commentary.

Harold
Hello Harold. No I don't believe my solution to end the Fed is drastic.

Look at things this way: How can anyone determine the precise amount of steel, of oranges, of oil that the economy should produce?

If you do not think that is possible, then please tell me how a set of jackasses (or geniuses if you prefer) can possibly know where interest rates or the money supply should be?

In practice, the Fed has never once spotted a bubble or bust in advance. Nor does the Fed have any foresight in predicting economic growth. The Fed is perpetually overoptimistic as are economists in general.

Setting the price of orange juice would be far simpler than setting interest rates.

The Fed may have an alleged "function" but the result has been boom-bust cycles of increasing amplitude over time.

Mike "Mish" Shedlock

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