Tesla Investor's General Macroeconomic / Market Discussion

[FluxCap]

Retail sales unexpectedly dropped in December but some good news did come out of the economic front, the Feds reported that "faster growth remains the expectation as payrolls and credit demand increases."
-cnbc

Well, as I predicted though, large-scale US labor market layoffs due to cheap oil undercutting US producers has begun. How much of a drag on the US economy vs. whatever gains come from cheap oil at the pump are to be determined.

"Now according to Tom Runiewicz, a US industry economist at IHS Global Insight, if oil stays around $56 a barrel till the middle of the next year, companies providing services to oil and gas industry could lose 40,000 jobs by the end of 2015, while oil and gas equipment manufacturers could slash up to 6,000 jobs."

If you ask most people, I bet they would rather have a job than save a buck a gallon on gas.

I'll be looking very closely at tomorrow morning's weekly jobless claims numbers, and the PPI.

 

[Auzie]

Well, as I predicted though, large-scale US labor market layoffs due to cheap oil undercutting US producers has begun. How much of a drag on the US economy vs. whatever gains come from cheap oil at the pump are to be determined.

"Now according to Tom Runiewicz, a US industry economist at IHS Global Insight, if oil stays around $56 a barrel till the middle of the next year, companies providing services to oil and gas industry could lose 40,000 jobs by the end of 2015, while oil and gas equipment manufacturers could slash up to 6,000 jobs."

If you ask most people, I bet they would rather have a job than save a buck a gallon on gas.

I'll be looking very closely at tomorrow morning's weekly jobless claims numbers, and the PPI.

Agree, for most people having a job trumps most other concerns.

I would expect some reasonable lag between oil price drop and subsequent rise in jobless claims numbers, but it will certainly be interesting to see the trend.

 

[sundaymorning]

Well, as I predicted though, large-scale US labor market layoffs due to cheap oil undercutting US producers has begun. How much of a drag on the US economy vs. whatever gains come from cheap oil at the pump are to be determined.

"Now according to Tom Runiewicz, a US industry economist at IHS Global Insight, if oil stays around $56 a barrel till the middle of the next year, companies providing services to oil and gas industry could lose 40,000 jobs by the end of 2015, while oil and gas equipment manufacturers could slash up to 6,000 jobs."

If you ask most people, I bet they would rather have a job than save a buck a gallon on gas.

I'll be looking very closely at tomorrow morning's weekly jobless claims numbers, and the PPI.

I agree that there will be some layoffs, hopefully those individuals will have a solid retirement plan in place or are young enough to change/switch careers as the average American changes careers anywhere between 3-6 times in a lifetime. Even if the 40,000 jobs were to be lost, it will only represent a microcosm of the global job market that may benefit from this oil drop. In America alone, a penny deducted from the gas station brings in $1billion extra in consumer spending, a drop of $1.60 is equivalent to $160 billion in consumer spending annually.. capitalism will garner competition, bankruptcies and new IPOs that will add jobs to the economy every year.

I believe what is worrisome to the overall market in terms of oil is instability. If oil stabilizes at a certain range it'll be easier to conduct business as there is predictability. There will always be global events that will trigger some worries in the market, data often times come in mixed, Europe doesn't do well, but the ECB will talk up QE, Oil is down, others will benefit like China is benefiting, November was up but December was down. I just don't think oil being down is bad, because oil up is also very bad.

 

[Auzie]

Super Mario in Action

Devil may be in the details on European Central Bank bonds buying

Mr.Mario Draghi, Super Mario, the president of the European Central Bank, famously said back in 2012, that he would do 'whatever it takes' to preserve Euro and thus created a key turning point in the eurozone crisis. His current politics of devaluing the Euro will result in a loss of savings of Eurozone citizens.

Mr. Draghi proposed bond buying back in 2012, but was prevented by a lawsuit by German citizens seeking to block Mr.Draghi's program. Highest European Appeals Court opinion issued last week paved the way for this stimulus measure.

If it is not big or broad enough, the program might not work to revive the region. And many of the economists who have been saying for a year or more that the European Central Bank needs to take this stimulus step contend that when the move finally comes, it could be too little, too late.

Should the European Central Bank buy bonds from all 19 eurozone countries, and in what proportions? If from all eurozone members, then how should it handle Greece? The country is poised to elect a new government that could repudiate some of the billions of euros of loans the country owes as part of its international bailout. And how to keep the Germans on board?

But the bank will have to figure out how to deal with the lack of Pan-European assets comparable to the United States Treasury bonds that the Fed purchased in its quantitative easing program.

The simplest and most likely option would be to buy bonds in proportion to each eurozone country’s share of the central bank’s capital, which is calculated according to each member state’s population and gross domestic product. The drawback to this method is that it would mean buying large quantities of German government bonds, which are already in heavy demand — so much so that on Wednesday the yield on the 10-year German bond reached a new low.

A second option would be to buy only highly rated government bonds — those of France, Finland and Germany, say, while avoiding the bonds of governments with riskier finances, like Portugal or Greece. That approach would answer German concerns that taxpayers could be stuck with the bill if some eurozone governments were to default on their debt.

A third option would be to buy bonds in proportion to the outstanding debt of each eurozone country — the higher the debt level, the more bonds the central bank would buy. This alternative would favor countries that are the most deeply in debt and need the most help, like Italy. But conservative critics in Germany would probably complain that these countries were being rewarded for irresponsibly running up huge debts.

Among economists, there is widespread skepticism about whether any amount of bond-buying will solve the eurozone’s growth and inflation problem. There is already plenty of money in the system, they say. The problems, many economists argue, lie in economic drags that are beyond the control of Mr. Draghi and the central bank — that it takes too long to get a building permit in Italy, for example, or that there are too many restrictions on hiring and firing in France.

 

[Gerasimental]

"Now according to Tom Runiewicz, a US industry economist at IHS Global Insight, if oil stays around $56 a barrel till the middle of the next year, companies providing services to oil and gas industry could lose 40,000 jobs by the end of 2015, while oil and gas equipment manufacturers could slash up to 6,000 jobs."

Do you think this could be made up for by hiring in other sectors that have seen their costs fall due to lower oil costs? 46000 jobs is a monthly average of 4000 jobs lost. I don't know the US labor market well but NFP numbers have been consistently strong suggesting many firms are hiring and that seems likely to me to continue in 2015. Anyway, near full employment, losing a few 10k jobs isn't a huge tragedy (of course on a personal level it still is, just speaking economics).

 

[FluxCap]

Jobless claims 316K, haven't been higher since June.

 

[sundaymorning]

Some more mixed data to digest, CPI down was offset by positive news on cost of living decreased by 6 years.

 

[jhm]

Meanwhile, jobs in the US solar industry are up 22%, and the industry will add another 36,000 jobs this year. SolarCity filled 4000 new jobs last year, and is building a large panel maufacturing plant in New York state.

I also hear Tesla is creating a few new jobs.

So while it's tough that oil jobs are being lost, new energy jobs--technical, manufacturing, installation, sales, service and logistics--are being created at a tremendous rate. Most of these jobs are securely domestic and cannot be offshored. And these jobs are not so dependent on the highly volatile oil market. When solar panel goes up, its going to generate power for two or three decades, regardless what goes on with the price of oil. That labor today is going to pay off energy dividends for a long time.

US Solar Jobs Climb 22 Percent as Clean Power Aids Economic Recovery

Well, as I predicted though, large-scale US labor market layoffs due to cheap oil undercutting US producers has begun. How much of a drag on the US economy vs. whatever gains come from cheap oil at the pump are to be determined.

"Now according to Tom Runiewicz, a US industry economist at IHS Global Insight, if oil stays around $56 a barrel till the middle of the next year, companies providing services to oil and gas industry could lose 40,000 jobs by the end of 2015, while oil and gas equipment manufacturers could slash up to 6,000 jobs."

If you ask most people, I bet they would rather have a job than save a buck a gallon on gas.

I'll be looking very closely at tomorrow morning's weekly jobless claims numbers, and the PPI.

 

[sundaymorning]

Meanwhile, jobs in the US solar industry are up 22%, and the industry will add another 36,000 jobs this year. SolarCity filled 4000 new jobs last year, and is building a large panel maufacturing plant in New York state.

I also hear Tesla is creating a few new jobs.

So while it's tough that oil jobs are being lost, new energy jobs--technical, manufacturing, installation, sales, service and logistics--are being created at a tremendous rate. Most of these jobs are securely domestic and cannot be offshored. And these jobs are not so dependent on the highly volatile oil market. When solar panel goes up, its going to generate power for two or three decades, regardless what goes on with the price of oil. That labor today is going to pay off energy dividends for a long time.

US Solar Jobs Climb 22 Percent as Clean Power Aids Economic Recovery

Consumer Sentiment index at 11 year high this month, citing more savings and higher job prospects.

 

[FluxCap]

Meanwhile, jobs in the US solar industry are up 22%, and the industry will add another 36,000 jobs this year. SolarCity filled 4000 new jobs last year, and is building a large panel maufacturing plant in New York state.

I also hear Tesla is creating a few new jobs.

So while it's tough that oil jobs are being lost, new energy jobs--technical, manufacturing, installation, sales, service and logistics--are being created at a tremendous rate. Most of these jobs are securely domestic and cannot be offshored. And these jobs are not so dependent on the highly volatile oil market. When solar panel goes up, its going to generate power for two or three decades, regardless what goes on with the price of oil. That labor today is going to pay off energy dividends for a long time.

US Solar Jobs Climb 22 Percent as Clean Power Aids Economic Recovery

That's fantastic for all kinds of reasons. Thanks, jhm.

 

[Krugerrand]

Rather than look at this as simply a set of jobs ending, we need to look at it more accurately as a reshuffling and even evolving process. What we teach in our schools now, is not what we taught 10 years ago, or 20 years, or 30, etc... because the jobs we need to fill are ever changing. Fortunately humans are highly adaptable. Those who are being forced out of oil/gas jobs can take what they know into other jobs and/or learn new skill sets. Yes, it can be tough to do, being laid off is never fun and personal trials can exasperate the situation. But we need to move forward.

 

[Robert.Boston]

Rather than look at this as simply a set of jobs ending, we need to look at it more accurately as a reshuffling and even evolving process. What we teach in our schools now, is not what we taught 10 years ago, or 20 years, or 30, etc... because the jobs we need to fill are ever changing. Fortunately humans are highly adaptable. Those who are being forced out of oil/gas jobs can take what they know into other jobs and/or learn new skill sets. Yes, it can be tough to do, being laid off is never fun and personal trials can exasperate the situation. But we need to move forward.

While that's true, we can't overlook the real costs of change. A 55-yo coal miner living in WV loses his job, while a job for a solar installer in Arizona is created. It may be a wash for the economy, but the coal miner isn't going to move and retrain.

I'm not arguing against change, but I do think something is owed workers displaced by the coming revolution in energy.

 

[Auzie]

Swiss National Bank lets the franc float against Euro, sudden policy turnaround

On Jan 2015, SNB announced turnaround of their monetary policy and abandoned 1.2 peg to Euro. SNB explanation:

The minimum exchange rate was introduced during a period of exceptional overvaluation of the Swiss franc and an extremely high level of uncertainty on the financial markets. This exceptional and temporary measure protected the Swiss economy from serious harm. While the Swiss franc is still high, the overvaluation has decreased as a whole since the introduction of the minimum exchange rate. The economy was able to take advantage of this phase to adjust to the new situation. Recently, divergences between the monetary policies of the major currency areas have increased significantly – a trend that is likely to become even more pronounced. The euro has depreciated considerably against the US dollar and this, in turn, has caused the Swiss franc to weaken against the US dollar. In these circumstances, the SNB concluded that enforcing and maintaining the minimum exchange rate for the Swiss franc against the euro is no longer justified.

The Economist explains the sudden move:

First, many Swiss are angry that the SNB has built up such large foreign-exchange reserves. Printing all those francs, they say, will eventually lead to hyperinflation. Those fears are probably unfounded: Swiss inflation is too low, not too high. But it is a hot political issue. In November there was a referendum which, had it passed, would have made it difficult for the SNB to increase its reserves.

Second, the SNB risked irritating its critics even more, thanks to something that is happening this Thursday: many expect the European Central Bank to introduce “quantitative easing”. This entails the creation of money to buy the government debt of euro-zone countries. That will push down the value of the euro, which might have required the SNB to print lots more francs to maintain the cap.

But there is also a third reason behind the SNB’s decision. During 2014 the euro depreciated against other major currencies. As a result, the franc (being pegged to the euro) has depreciated too: in 2014 it lost about 12% of its value against the dollar and 10% against the rupee (though it appreciated against both currencies following the SNB's decision). A cheaper franc boosts exports to America and India, which together make up about 20% of Swiss exports. If the Swiss franc is not so overvalued, the SNB argues, then it has no reason to continue trying to weaken it.

SNB also dropped its interest rates from -0.25% to -0.75% to further discourage investing in the Swiss franc.

 

[Krugerrand]

While that's true, we can't overlook the real costs of change. A 55-yo coal miner living in WV loses his job, while a job for a solar installer in Arizona is created. It may be a wash for the economy, but the coal miner isn't going to move and retrain.

I'm not arguing against change, but I do think something is owed workers displaced by the coming revolution in energy.

You make it sound like 55 is the end of useful life. I'd move, retrain, and learn new skills. But okay I understand a lot of world looks at it the way you do. So, what do you suggest they be paid?

 

[Auzie]

You make it sound like 55 is the end of useful life. I'd move, retrain, and learn new skills. But okay I understand a lot of world looks at it the way you do. So, what do you suggest they be paid?

55+ may be more than willing to move, retrain, learn new skills, however it is not their call to make. Employers are highly unlikely to tap into this work pool if there is an alternative, younger and cheaper pool.

 

[Krugerrand]

55+ may be more than willing to move, retrain, learn new skills, however it is not their call to make. Employers are highly unlikely to tap into this work pool if there is an alternative, younger and cheaper pool.

It depends. Video game programming might not be in that mature person's future, but there are a number of industries where those of mature age with life experience are highly prized. Our population is aging and it's becoming quite apparent that we'll have to work later in life as a function of living longer and increases in cost of living.

 

[Robert.Boston]

It depends. Video game programming might not be in that mature person's future, but there are a number of industries where those of mature age with life experience are highly prized. Our population is aging and it's becoming quite apparent that we'll have to work later in life as a function of living longer and increases in cost of living.

My choice of 55 was precisely because such a person likely has many productive years ahead of them, but age discrimination will be a serious challenge. Also, will someone of this age be willing to uproot from a community and move across the country in search of a new job? Will they have skills essential to shift from mining to something else and, if not, how will they acquire those skills?

My point is that change in the economy creates dislocations. Growth is one form of change; it creates more opportunities than dislocations, but we shouldn't lose sight of the fact that a job lost and a job created isn't the same as a job preserved.

 

[Auzie]

Growth forecast, Europe, 2015

Interactive overview of European forecast

It seems that the average GDP growth forecast is less than 2%. There are concerns about triple dip recession. Inflation fell to 0.4% in October. ECB seem to be doing poor job, acting too late and perhaps not doing enough.

Youth unemployment exceeds 20% in 17 out of 28 countries.

Very difficult task ahead for Eu leaders, I am just not sure who the leaders are.

 

[ev-enthusiast]

New information out today on german ZEW index: ZEW economic sentiment rose in January surprisingly (google translate)

The barometer of the ZEW economic sentiment rose in January to a surprising degree plus 48.4 points from 34.9 points in the previous month, as the Centre for European Economic Research (ZEW) announced on Tuesday his survey of 233 investors and analysts.

This is the highest level since February 2014 and the third consecutive increase. Economists had expected only 40 points.

Same is valid for Europe, the economic outlook for Europe rose 13.4 points in January to 45.2.

Some of this positive sentiment of ZEW index is attributed to cheap oil and anticipation of some strong statement on QE this Thursday by Mario Draghi.

Economy outlook index "Zentrum für Europäische Wirtschaftsforschung (ZEW)" as well as "ifo-Geschäftsklimaindex" are amoung the most important indices in Germany to provide an outlook on future economy.

 

[Gerasimental]

http://www.reuters.com/article/2015/01/20/us-china-economy-idUSKBN0KT04920150120

Mixed bag of news today, I daren't make any predictions how the market will react to the sum of it.