Mish's Global Economic Trend Analysis

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• Consumers Report Stable Inflation Expectations, Lower Spending Growth Expectations
• Hryvnia Volatile, Near 25 Per US Dollar; Three Days of Wild Swings
• Will He or Won't He?

Consumers Report Stable Inflation Expectations, Lower Spending Growth Expectations Posted: 09 Feb 2015 01:09 PM PST Results from the January 2015 Survey of Consumer Expectations (SCE) indicate median consumer inflation expectations were largely unchanged at both the one-year and three-year ahead horizons at 2.9 percent and 3 percent, respectively. Median household spending growth expectations retreated significantly from the last month. The mean perceived probability of finding a job in the next three months (if one were to lose one's current job) continued to increase. Inflation Expectation Projection Earnings Growth Expectations Income Growth Expectation I could not locate the chart of spending expectations and that was the chart I was most interested in. The Fed does allow a data download so here is the chart I created in Excel. Spending I do not place a lot of faith in such projections actually, especially inflation expectations that I find totally useless. In regards to spending, if consumers really do slow spending, it will be yet another knock on the 1st quarter 2015 GDP report. GDP Trends For more on 1st quarter GDP, please see ... Diving Into the GDP Report - Some Ominous Trends - Yellen Yap - Decoupling or Not?   Unexpected Collapse in Chinese Trade; Expect More Currency Manipulation Claims; Impact on US GDP 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.

Hryvnia Volatile, Near 25 Per US Dollar; Three Days of Wild Swings Posted: 09 Feb 2015 11:25 AM PST On February 5, I posted Ukraine Floats the Hryvnia: It Sinks, As Expected, Down 45% Today; Carpetbaggers Take Over. Since then, action has been volatile. Three Days of Wild Swings click on chart for sharper image Each of the last three days has seen wild gyrations, all stopping at an upper limit of 25 Hryvnia per one US dollar. It almost seems as if there is a cap on how low Ukraine is willing to let the Hryvnia sink. If there is another peg, it will likely fail soon. Today Reuters reports Ukraine cuts official hryvnia rate, closes gap with market rate. Ukraine cut the hryvnia's official rate on Monday to an all-time low of 24.96 to the dollar, the central bank said, bringing it broadly into line with the market rate following a steep slump in the currency's value last week. The rate stood at 23.13 on Friday. On Thursday the hryvnia lost 30 percent against the dollar after the bank moved towards a free float, stopping currency auctions that had served as a peg for the exchange rate and ramping up base interest rates. The move all but paralysed the country's foreign exchange market, with buyers of hard currency putting off purchases and sellers holding out for higher levels. According to Reuters data, the bid/ask spread for the hryvnia was in a range of 24.50-25.50 to the dollar on Monday. The head of FX and money markets at a large Ukrainian bank said sufficient dollar buyers had emerged at around 25.00. "Trading has been active. If everything goes well in Minsk and if the IMF also gives us money, then we could strengthen to 22-23, but if everything breaks down on Wednesday in Minsk, then I cannot vouch for the rate," he said by telephone. There is little reason to expect things to go well on the war front. Nor is there a reason for the hryvnia to stabilize here even if talks in Minsk do go well. Ukraine is bankrupt and on dwindling foreign exchange reserves. 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.

Will He or Won't He? Posted: 09 Feb 2015 03:35 AM PST The question on everyone's mind is "Will He or Won't He?" The word "he" can mean either the ECB or Greece. Take your choice. Is the ECB really prepared for a Grexit? Is Greece really prepared for a Grexit? In this corner, I am not quite sure either side is prepared for anything. Yet, if one side is more prepared than the other, then I suggest Greece has the upper hand. Greek Bonds Decline as Tsipras Holds Firm to Bailout Rejection Bloomberg reports Greek Bonds Decline as Tsipras Holds Firm to Bailout Rejection Greek government bonds declined, with the three-year yield climbing to the highest since 2012, as Prime Minister Alexis Tsipras reaffirmed his government's rejection of the country's international-bailout program. Tsipras' comments are "underlining that Greece is still an unresolved issue and that a solution is not going to be easy," said Arne Lohmann Rasmussen, head of fixed-income research at Danske Bank in Copenhagen. "It is always harder to absorb this uncertainty if you at the same time have a lot of supply in the market." Compromise? On February 8, the Financial Times reported Washington Urges Eurozone Leaders to Compromise with Athens. The Obama administration is pushing eurozone leaders to compromise more with Athens as fears grow that a protracted stand-off could damage the global economy, say senior EU and US officials. The US lobbying comes amid mounting concern in Brussels and Washington about the hardline stand taken by some eurozone governments, particularly Germany, that Greece must press on with budget-cutting commitments made under its existing €172bn bailout regardless of last month's election, which brought anti-austerity party Syriza to power. Greece Says "No Extension" Today the Financial Times reports No extension to Greek bailout, says Tsipras. Alexis Tsipras, the new Greek prime minister, has insisted he will not seek an extension to the country's current bailout, putting his leftwing government on a collision course with its creditors in the run-up to this week's EU summit. In his first speech to parliament since taking office last month, Mr Tsipras said on Sunday: "This government isn't justified in seeking an extension . . . The bailout has failed. "The Greek people gave a strong and clear mandate to immediately end austerity and change policies," he said. "Therefore the bailout was first cancelled by its very own failure and its destructive results." Jeroen Dijsselbloem, head of the eurozone group of EU finance ministers, who clashed publicly with Mr Varoufakis over the debt issue during a recent visit to Athens, said bluntly on Friday: "We don't do bridge loans." Collision Course In a way, it does not matter who blinks first. What cannot be paid back won't. Yet, only Greece is willing to state that. The rest of the eurozone still has not figured out Germany will suffer more than Greece should Greece default. For further discussion, please see ... Playground Bully Theory vs. Eurozone Gang Rules; The Only (and Ironic) Solution   ECB Revokes Greek Bonds as Collateral; ECB vs. Novices; Brass Knuckles 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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