Mish's Global Economic Trend Analysis

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• Portugal Negotiates $116 Billion Bailout Loan, Bond Market Yawns
• Images of Copenhagen Take II; Key to Quality Images; Photo Equipment Review and Camera Bag Suggestions
• Gallup: U.S. Job Creation At Post-Recession High; What's Next? How Congress Can Spur Job Creation

Portugal Negotiates $116 Billion Bailout Loan, Bond Market Yawns Posted: 03 May 2011 05:10 PM PDT Portuguese Prime Minister Jose Socrates is singing the praises of a $116 bailout on good terms, even though two weeks ago he denied the need for Portugal to take a loan at all. The bond market responded with a big yawn. Please consider Portugal Says It Has Negotiated a Bailout Loan of $116 Billion Portugal has reached agreement with the European Union and International Monetary Fund on a three-year bailout loan of 78 billion euros or about $116 billion, the caretaker Prime Minister Jose Socrates said on Tuesday. Mr. Socrates, who now faces a snap parliamentary election on June 5, hailed the package as a victory, saying it included more lenient terms than those imposed on Greece and Ireland. "The government has obtained a good deal. This is a deal that defends Portugal," Mr. Socrates said. "Some of the parameters look a little softer than expectations such as the higher deficit target and longer time line," said Vitaly Serebryakov, currency strategist at Wells Fargo in New York. The deal is expected to be approved at a meeting of euro zone finance ministers in mid-May, in time for the European rescue fund to raise money for Portugal by June 15, when the country needs to meet a bond redemption of 4.9 billion euros. Good Deal or Impossible Deal? Portugal gets a 3-year loan Portugal needs to cut this year's budget deficit to 5.9% Portugal deficit will shrink to 4.6% in 2012 Portugal deficit will shrink to 3% in 2013 I have three questions: Does anyone possibly think Portugal can pay back $116 billion in three years? Does anyone in their right mind think Portugal's budget deficit will be 3% in 2013? Given that Portugal is crowing about getting better terms than Ireland or Greece, how long will it take for Ireland and Greece to start bitching? Portuguese 2-Year Government Bond Yield I have a final bonus question. If the bond market does not believe the deal, why should I? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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.

Images of Copenhagen Take II; Key to Quality Images; Photo Equipment Review and Camera Bag Suggestions Posted: 03 May 2011 12:19 PM PDT The images I posted in Meeting with Saxo Bank Chief Economist; My Speech in Copenhagen; Images of Stockholm and Copenhagen were raw unedited images. Burning and dodging a few select areas in Photoshop can help. Reader "CH" took one of my images and sent it back with a message "I hope this doesn't offend you". In a second email "CH" replied I 'dodged' the boat. I also used a Photoshop plug-in called Topaz Labs Adjust. Here is a before and after of a kayaker in Copenhagen. Copenhagen Kayaker and Ships - Raw Image Copenhagen Kayaker and Ships - Edited Image The contrast is now a bit too high, but the extra details on the kayaker and water are excellent. Click on either image to enlarge. I did not have time to alter any of the images in my original post. Many could have been improved. Key to Quality Images Start with an excellent composition and an exposure in the ballpark, +- 1/2 stop. I prefer a slightly under-exposed image to an over-exposed one. Once detail is washed out, it cannot be recovered. Shoot in the last two hours of the day or first two hours of the day for landscapes People and flower closeups generally photograph best on bright overcast days. I used to carry a boatload of Canon lenses and equipment, all professional. 100mm macro 70-200mm F2.8 L 17-35 mm F2.8 L 28-70 mm F2.8L 24 mm Tilt-Shift 2 Canon Camera Bodies Tripod I would guess that 75-85% of images I have ever taken were in the range 24-100mm range. In Europe my equipment list looked like this: EOS 5D full frame digital camera 24-105 L lens Camera Bags The above two items fit nicely in a Lowepro Passport Swing Bag but one does have to remove the lens hood. I used to carry a huge backpack that weighed a ton. Does it make sense to carry all that extra gear for 15-25% of the images? The above bag will also hold a few filters, extra battery and battery charger, and other small items but it will not hold two lenses as the description of the bag says, unless the second lens is a small one or you do not have many extra items. The length of the 24-105 lens is about 4.5 inches. Attached to the body, it takes up the entire removable padded center pocket. For my current needs the above bag is nearly perfect but I wish it had a bit more padding in the side pockets. To carry an extra lens, I would advise putting some padding in the side pocket. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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.

Gallup: U.S. Job Creation At Post-Recession High; What's Next? How Congress Can Spur Job Creation Posted: 03 May 2011 09:14 AM PDT The U.S. job picture continues to inch up and a Gallup poll shows Job Creation Hits Post-Recession High in April, primarily on the strength in manufacturing. The red and deep blue anecdotes in the charts below are mine. Gallup's Job Creation Index reached a new high of +13 in April. This does not differ much from the +12 of the prior two months, but well exceeds the +5 of April 2010. Percent of Companies Hiring Minus Percent of Companies Firing Survey Question Based on what you know or have seen, would you say that in general, your company or employer is -- 1) hiring new people and expanding the size of the workforce 2) not changing the size of its workforce 3) letting people go and reducing the size of its workforce The long-suffering job markets in the Midwest appear to be benefiting from continuing improvements in the manufacturing sector, and one of the benefits of the weak U.S. dollar has been to make U.S. exports more attractive globally. As a result, this region has the lowest firing in the nation and, along with the East, shows the most year-over-year improvement. Still, increased manufacturing activity has been enough to stimulate only a modest improvement in job growth nationwide. Although technically hitting a new high in April, Gallup's Job Creation Index suggests there has been a virtual stagnation of job market conditions over the past three months. This stagnation most likely reflects the slower economic growth of the first quarter that seems to have continued in April. Current Conditions Analysis Although the trend is improving (Gallup calls it a "virtual stagnation of job market conditions over the past three months"), the index is still only half it was in January of 2008 and likely must worse compared to pre-recession in October of 2007. I need a few extra months on Gallup's chart to see if I am correct. An additional chart in the link depicts regional variations that show the Midwest and South performing the best at +15 each, followed by the East at +13 with the West lagging at +9. Tax Hikes Cannot Create Jobs Will the massive tax hikes that California's Governor Brown wants help? How can they? For further discussion of the mess in California please see Governor Brown Tells Cheering California Unions "You've Got a Friend" If you thought California was bad please consider Governor Quinn Holds Illinois Cities Hostage Over Budget Proposal; Cities Face Massive Cash Crunch Yet somehow the Administration thinks, and the fools running Illinois and California think "higher taxes are the solution". Survey Flaws and Corporate Profits One flaw in a survey like this is a lack of scale. A company firing just one worker counts as much as a company hiring 200. The reverse is true as well where companies firing 200 workers have as much weight in the survey as those hiring one person. Nonetheless, the survey shows just how drawn out the "recovery" has been compared to the decline. Corporate profits are up, and one of the reasons is that hiring has been anemic as compared to normal recoveries in prior years. Now what? U.S. Questions and Answers Is there any pent-up demand for autos? No Will auto manufacturing increase, decrease, or level off? Level off at best Will retail hiring increase, decrease, or level off? Weak hiring at best Is housing poised for a rebound? No What about cutbacks at the state level? Expect more layoffs If the recovery falters is Congress going to start massive jobs programs? No Is government spending going to lead the way forward? Let's hope not. We have too much spending already and need to reduce the deficit. Global Questions and Answers Is China going to slow? Yes, like it or not China must slow because it is overheating. This will reduce China's demand for commodities as well as demand for US goods and services Is Europe going to slow? Yes, because of tax hikes by the ECB, the strengthening Euro, and the renewed pickup in the sovereign debt crisis. What about property bubbles in Australia and Canada? The bubble has popped in Australia and will pop in Canada. Both will impact global growth. Those expecting a smooth continued expansion in jobs better have different answers to the questions I asked above. Want a sure-fire way to increase job expansion? I have two. How Congress Can Spur Job Creation Pass National Right-to-Work Laws Scrap Davis-Bacon and all Prevailing Wage Laws Unions and socialists will howl at those suggestions but government does not exist to provide high-paying jobs with preposterous benefits to pubic union workers when everyone else has to be taxed to death to pay for it. Nor is it the role of government, or the right of government to tell corporations where they can do business. For further discussion President Obama's Slave Trade; Senator DeMint Says Team Obama Acts Like Thugs; Death of Right-to-Work? Instead of taxing everyone to death for the sole benefit of public unions and the politicians who take bribes from public unions, why not put more money in everyone's pocket where it can be put to far better use? Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List 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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