Thursday, January 29, 2015

Greek Markets Tremble At New PM’s Confrontation With Europe - Fortune

http://time.com/3685601/greece-markets-tsipras/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

Geoffrey Smith/Fortune

Jan. 28, 2015

Greece’s new government came to power on a promise of a clean break with capitalist orthodoxy. Two days into the experiment, capital is making a pretty clean break with Greece instead.

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The Athens stock market has fallen 11% since Alexis Tsipras‘ left-wing Syriza party won Sunday’s elections, and the yield on Greece’s three-year bonds has rocketed to 16.9% from an already-elevated level of 14% as investors take fright at the openly confrontational stance Tsipras has taken.

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Bank stocks, in particular, have been routed, falling between 32%-40% since Sunday amid fears of widespread deposit runs even before Greece gets to a situation where it has to choose between staying in the Eurozone and leaving it.
Since Monday, Tsipras has stopped a landmark privatization and indicated he will raise the minimum wage to €751 a month ($853), reversing two key parts of the country’s bailout agreement with the International Monetary Fund and Eurozone.
And to make sure people get the point that Plan A is for confrontation rather than cooperation, Tsipras’ spokesman also raised the prospect of blocking further European Union sanctions on Russia over its role in the Ukraine conflict, saying that it hadn’t been consulted before the E.U. put out a statement in the name of its 28 heads of government promising to “consider further restrictive measures.”
At his first cabinet meeting Wednesday, Tsipras reportedly told colleagues he won’t default on the country’s €240 billion ($272 billion) in bailout loans but rather try to renegotiate the debts.
But it’s hard to see what other levers Tsipras can pull, other than by refusing to pay and exiting the Eurozone. It won’t get the remaining €7 billion ($7.95 billion) in bailout funds from the creditors while it’s busy reversing key parts of the bailout program, and it will lose access to those loans at the end of February. No bailout assurances would also force the European Central Bank to withdraw its support for the banking system, with dire consequences.
“Europe has time and money, a Greece mired in uncertainty has little of either,” says Holger Schmieding, chief economist for Berenberg Bank in London.
Analysts say Tsipras will find it much harder than he thinks to find allies among other Eurozone governments. Schmieding points out that even likely allies such as Italy and Spain will be reluctant to encourage their own left-wing populist parties by siding with Greece against a large bloc of northern and eastern European members led by Germany. Even France, which is openly sympathetic, has said that it expects the existing bailout agreements to be respected.
Italy and Spain, like almost all the rest of the Eurozone, are currently funding themselves at record low interest rates thanks to the European Central Bank’s decision to launch ‘quantitative easing’. The advantages of choosing Greece’s company over than France’s and Germany’s aren’t obvious, in such circumstances.
“Funding lunacies such as re-regulating the Greek labour market, creating a bad precedent and rewarding a populist who reneges on his country’s obligations and makes it less, rather than more, competitive is not part of the plan,” Berenberg’s Schmieding said in a note to clients.
But the outlook isn’t hopelesss. There is more to the bailout than budget cuts, and there is more to Syriza’s policy platform than unabashed Socialist redistribution. The creditors won’t quibble with anything Syriza does to abolish tax evasion by its super-rich, one of the top three priorities named by Yannis Varoufakis, the new finance minister. And the creditors still have room to cut the cost of the bailout loans, and to stretch out the repayment schedule still further, offering a face-saving compromise.
“Offering such deep reforms up front in areas where previous governments have failed is the best hope to secure a meaningful quid-pro-quo on the pace of fiscal consolidation and debt re-profiling,” says Christian Odendahl, chief economist at the Centre for European Reform.
By contrast, Odendahl says, the worst thing Tsipras could do is to try to blackmail Chancellor Angela Merkel, especially over the Russia issue. Merkel has already faced down her own powerful export lobby at home to counter what she sees as an existential threat to Europe’s democratic order, and is likely to react badly to any attempt to undermine the bloc’s efforts to make Russia pay for its destabilization of Ukraine.

Tuesday, January 27, 2015

What Obama and Davos Plutocrats Have in Common - TIME

http://time.com/3675596/obama-sotu-davos-taxes/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

Rana Foroohar @RanaForoohar

Jan. 21, 2015

A logo sits on a glass panel inside the venue of the World Economic Forum (WEF) in Davos, Switzerland on Jan. 19, 2015.Chris Ratcliffe/Bloomberg—Getty Images

Global wealth has changed dramatically. It's time our tax code should, too

If President Obama’s State of the Union speech Tuesday night and the chatter at the World Economic Forum in Davos, which opened Wednesday, are any indication, inequality will be the hot economic topic for another year running.

The president’s proposals for changes to parts of the US tax code that mainly benefit the wealthy revives the conversation Warren Buffett started a few years back with his op-ed about why his secretary pays a higher tax rate than he does. (Answer: She works for wages, whereas the Oracle of Omaha earns money on money itself, in the form of capital gains, interest income, etc.) At the WEF in Davos, where world leaders meet every year to hash out the big geopolitical and economic issues of the day, one of the most talked about reports is Oxfam’s new brief looking at how the 85 richest people on the planet have the same amount of wealth as the poorest 50%, a huge jump from last year when it took a full 388 plutocrats to equal that wealth. Some 20% of the billionaires come from the world of finance and insurance, a group whose wealth increased by 11 % in the last twelve months. And $550 million of it was spent lobbying policy makers in places like Washington, something Oxfam believes has been a major barrier to tax and intellectual property reform that creates a fairer economic system.

Plenty of those plutocrats are here on the Magic Mountain, and some are undoubtedly checking in with their tax planners. I expect that we’ll hear lots more in Davos this week about how to restructure tax codes for the 21st century, mainly because the nature of wealth and how it gets created has changed so dramatically. Today, more than ever since the Gilded Age, money begets money; income earned from wages has been stagnating for years, or decades even, depending on which type of workers you tally. Meanwhile, changes in the tax code and corporate compensation over the last 30 years or so has concentrated more financial resources at the very top of the socio-economic food chain. Indeed, financial assets (stocks, bonds, and such) are the dominant form of wealth for the top 0.1 %, which actually creates a snowball effect of inequality.

As French economist Thomas Piketty explained so thoroughly in his now famous 693 page tome on wealth inequality, Capital in the 21stCentury, the returns on financial assets greatly out-weigh those from income earned the old-fashioned way—by working for wages. Even when you consider the salaries of the modern economy’s super-managers—the CEOs, bankers, accountants, agents, consultants and lawyers that groups like Occupy Wall Street railed against—it’s important to remember that somewhere between 30% to 80 % of their incomes are awarded not in cash but in stock options and stock equity. This type of income is taxed at a much lower rate than what most of us pay on the money we receive in our regular checks. That means the composition of super-manager pay has the booster-rocket effect of lowering taxes (and thus governments’ ability to provide support for the poor and middle classes) while increasing inequality in the economy as a whole.

It’s a cycle that spins faster and faster as executives paid in stock make short-term business decisions that might undermine long-term growth in their companies even as they raise the value of their own options in the near. It’s no accident that corporate stock buybacks, which tend to bolster share prices but not underlying growth (you know, the kind that creates jobs for you and me), and corporate pay have gone up concurrently over the last four decades. There are any number of studies that illustrate the intersection between the markets, our tax system, and wealth gap; one of the most striking was done by economists James Galbraith and Travis Hale, who showed how during the late 1990s, changing income inequality tracked the go-go NASDAQ stock index to a remarkable degree.

As Piketty’s work shows, in the absence of some change-making event, like a war or a Great Depression that destroys financial asset value, the rich really do get richer–a lot richer–while the rest of us become relatively worse off. One of the few levers that governments have to combat this trend is the tax code. While Piketty argues for a global wealth tax, something that will likely never happen, President Obama’s stab at capital gains taxes and trust taxes is probably just the opening round in a tax debate that will go on throughout this year, and into the 2016 presidential race.

I say, bring it on—given that the nature of wealth has changed, it’s high time the tax system should too.

Monday, January 26, 2015

Here’s the Only Secret to Being Truly Successful - TIME

http://time.com/3674955/secret-true-success/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

Jeff Haden / Inc.

Jan. 21, 2015

Your significant other has a huge impact on your success. Science says so

Your customers are hugely important. And your key employees. As well as the industry you’ve chosen, politics, macroeconomics, and education.

And luck.

While all those are important factors in the success of your business (or career) and your earning power, here’s one factor you probably haven’t considered:

Your spouse.

Researchers at Washington University in St. Louis found that people with relatively prudent and reliable partners tend to perform better at work, earning more promotions, making more money, and feeling more satisfied with their jobs.

That’s true for men and women: “Partner conscientiousness” predicted future job satisfaction, income, and likelihood of promotion (even after factoring in the participants’ level of conscientiousness.)

According to the researchers, “conscientious” partners perform more household tasks, exhibit more pragmatic behaviors that their spouses are likely to emulate, and promote a more satisfying home life, all of which enables their spouse to focus more on work.

As one researcher said, “These results demonstrate that the dispositional characteristics of the person one marries influence important aspects of one’s professional life.” (In nonresearch terms, a good partner both sets a good example and makes it possible for you to be a better you.)

I know that’s true for me. My wife is the most organized person I know. She juggles family, multiple jobs, multiple interests—she’s a goal-achieving machine. Her “conscientiousness” used to get on my nerves, until I realized the only reason it bugged me was because her level of focus implicitly challenged my inherent laziness.

I finally realized the best way to get more done was to actually get more done, and she definitely helps me do that.

And I try to do the same for her. Since my daily commute is two flights of stairs, I take care of most of the house stuff: laundry, groceries, cleaning (I don’t do all the cleaning, but I make sure it gets done), etc., so when she comes home she can just behome.

So, while she’s still much more conscientious and organized than I am, she’s definitely rubbed off on me in a very positive way.

Which of course makes sense: As Jim Rohn says, we are the average of the five people we spend the most time with—and that’s particularly true where our significant others are concerned.

Bad habits rub off. Poor tendencies rub off. We all know that. But good habits and good tendencies rub off too.

Plus, if one person is extremely organized and keeps your household train running on time, that frees the other up to focus more on work. (Of course, in a perfect world, both people would more or less equally share train-engineer duties so that both can better focus on their careers, whether those careers are in the home or outside.)

Keep in mind, I’m not recommending you choose your significant other solely on the basis of criteria like conscientiousness and prudence. As the researchers say, “Marrying a conscientious partner could at first sound like a recipe for a rigid and lackluster lifestyle.”

Nor am I suggesting you end a relationship if you feel your partner is lacking in those areas.

But it does appear that having a conscientious and prudent partner is part of the recipe for a better and more rewarding career.

So instead of expecting your partner to change, think about what you can do to be more supportive of your significant other. Maybe you can take on managing your finances, or take care of more household chores, or repairs, maintenance, or schedules.

After all, the best way to lead is by example, and in time you may find that you and your significant other make an outstanding—and mutually supportive—team.

How awesome does that sound?

Sunday, January 25, 2015

Oil Prices Spike After Saudi King’s Death - TIME

http://time.com/3679641/oil-prices-king-abdullah-saudi-arabia/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

TIME Staff

Jan. 22, 2015

King Abdullah waves as he arrives to open a conference in Riyadh on Feb. 5, 2005 Zainal Abd Halim—Reuters

Last month, Saudi Arabia pumped 9.5 million oil barrels a day, but uncertainty clouds the future of oil prices

Oil prices spiked following the death on Friday of Saudi Arabia’s King Abdullah, whose country’s oil production is the largest of any state in the 12-member Organization of Petroleum Exporting Countries (OPEC), a cartel responsible for approximately 40% of the global oil supply.

The monarch’s passing also increased oil futures in New York by 3.1 and London by 2.6, according to Bloomberg. As the globe’s biggest exporter of crude oil, Saudi Arabia helped maintain an OPEC production quota last year that helped keep oil prices low by ensuring a high supply of crude in the worldwide market. Prices nearly halved last year when OPEC’s output did not drop to reflect oversupply, as the U.S., the globe’s largest consumer of oil, pumped more oil than it had in over three decades.

“The passing of King Abdullah is going to increase uncertainty and increase volatility in oil prices in the near term,” said financial analyst Neil Beveridge in a phone interview with Bloomberg.

U.S. crude stockpiles jumped by 10.1 million barrels, its largest volume increase since early 2001, according to the Energy Information Administration’s reports up to Jan. 16.

Crown Prince Salman bin Abdulaziz succeeds King Abdullah, who helmed the kingdom for nearly a decade and significantly enlarged Saudi Arabia’s economy, which is now the largest in the Arab world in terms of total GDP.

[Bloomberg]

Saturday, January 24, 2015

2015 has been named the International Year of Light (and light-based technologies) by the United Nations

Speaking Of Science

NASA releases breathtaking new space images in honor of the International Year of Light

By Rachel Feltman January 22

2015 has been named the International Year of Light (and light-based technologies) by the United Nations, and NASA's Chandra X-ray Observatory has some special treats to help kick it off.

As you can probably guess based on its name, the Chandra X-ray observatory (launched in 1999) captures the X-rays emitted by celestial objects. But X-rays are just one piece of the full spectrum of light.

These images all combine data from multiple telescopes -- ones that are tuned to capture different wavelengths of light -- to create one stunning picture. You can see the individual shots that made up the composite images at the Chandra Web site.

The observatory is also running a project called "Light: Beyond the Bulb" where scientists and artists can submit their own examples of the power of light. From bio-luminescent lakes to psychedelic shots of light-bulbs under X-rays, the collection will give you a new appreciation of just how beautiful -- and varied -- light is in our universe.

QVC hosts can’t decide if the moon is a planet or a star (it’s neither)

First batch of research on Rosetta’s comet now public

Friday, January 23, 2015

How Technology Is Making All of Us Less Trusting - Reuter

Denis Balibouse / Reuters

The world's major tech companies better pay attention to the growing backlash—before it's too late

Davos Man, take note: the technology that has enriched you is moving too fast for the average Joe.

That’s the takeaway from the 2015 Trust Barometer survey, released by public relations firm Edelman every year at the World Economic Forum in Davos. This year’s survey, which came out Wednesday, looks at thousands of consumers in 27 countries to get a sense of public trust in business, government, NGOs, and media. This year, it’s falling across the board, with two thirds of nations’ citizens being more distrustful than ever of all institutions, perhaps no surprise given that neither the private nor the public sector seems to have answers to the big questions of the day—geopolitical conflict, rising inequality, flat wages, market volatility, etc.

What’s interesting is how much people blame technology and the speed of technological change for the feeling of unease in the world today. Two to one, consumers in all of the countries surveyed felt that technology was moving too quickly for them to cope with, and that governments and business weren’t doing enough to assess the long term impact of shifts like GMO foods, fracking, disruptors like Uber or Apple Pay, or any of the the myriad other digital services that effect privacy and security of people and companies.

That belies the conventional wisdom amongst tech gurus like, say, Jeff Bezos, who once said that, “New inventions and things that customers like are usually good for society.” Maybe, but increasingly people aren’t feeling that way. And it could have an impact on the regulatory environment facing tech companies. Expect more push back on sharing economy companies that skirt local regulation, a greater focus on the monopoly power of mammoth tech companies, and closer scrutiny of the personal wealth of tech titans themselves.

Two of the most interesting pieces of journalism I have read in recent years look at how the speed of digital change is effecting culture and public sentiment. Kurt Andersen’s wonderful Vanity Fair story from January 2012, posited the idea that culture is stuck in retro mode—think fashion’s obsession with past decades, and the nostalgia that’s rife in TV and film—because technology and globalization are moving so fast that people simply can’t take any more change, cognitively at least. Likewise, Leon Wieseltier’s sharp essay on the cover of the New York Times book review this past Sunday lamented how the fetishization of all things Big Tech has led us to focus on the speed, brevity and monetization of everything, to the detriment of “deep thought” and a broader understanding of the human experience.

I agree on both counts. And I hope that some of the tech luminaries here at Davos, like Marissa Mayer, Eric Schmidt, and Sheryl Sandberg, are paying attention to this potential growing backlash, which I expect will heat up in the coming year.

Thursday, January 22, 2015

ECB unveils massive QE boost for eurozone - BBC MEWS

The European Central Bank (ECB) will inject at least €1.1 trillion (£834bn) into the ailing eurozone economy.

The ECB will buy €60bn bonds each month from banks until the end of September 2016, or even longer, in what is called quantitative easing (QE).

QE in theory increases the supply of money, something that keeps interest rates low and encourages borrowing and therefore spending.

The news sent the euro to an 11-year low against the against the US dollar.

In late afternoon US trading the euro was down 2% at $1.1367. It also fell 1.1% against the pound to be worth 75.82, or €1.3187. It has lost 6% of its value so far this year.

Stalling

Record low eurozone rates have failed to boost the 19-country euro area.

The ECB also said it would keep eurozone interest rates at 0.05%, a record low.

Rates have been at that level since September 2014.

ECB president Mario Draghi said the programme would begin in March.

Earlier this month, figures showed the eurozone was suffering deflation, creating the danger that growth would stall as businesses and consumers shut their wallets, as they waited for prices to fall.

Mr Draghi said the programme would be conducted "until we see a sustained adjustment in the path of inflation", which the ECB has pledged to maintain at close to 2%.

Shares rose in response to the news and bond yields, which are linked to the amount governments pay to borrow, fell, particularly those of the weakest countries including Italy, Spain and Portugal.

Lowering the cost of borrowing should encourage banks to lend and eurozone businesses and consumers to spend more.

It is a strategy that appears to have worked in the US, which undertook a huge programme of QE between 2008 and 2014.

The UK and Japan have also had sizeable bond-buying programmes.

But some economists question what impact, longer term, this move can have. "Economically it is irrelevant but at least markets have had fun selling the euro and buying bank equities and peripheral bonds," said Alastair Winter, chief economist at Daniel Stewart.

€1 buys	change	%
1.1320	- -0.00	- -0.37

'Sizeable' slack

Mr Draghi said the ECB's own programme had been taken because it was necessary to "address heightened risks of too prolonged a period of low inflation".

Mr Draghi said there had been a "large majority" on the ECB's governing council in favour of triggering the bond-buying programme now - "so large that we did not need to take a vote".

Up until now, the ECB has resisted QE, although Mr Draghi reassured markets in July 2012 by saying he would be prepared to do whatever it took to maintain financial stability in the eurozone, nicknamed his "big bazooka" speech.

Since then, the case for quantitative easing has been growing.

In advance of the ECB's announcement, there had been speculation that the central bank would not actually buy any bonds itself, but would invite the central banks of eurozone member governments to do so.

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Quantitative easing - explained in 70 seconds

Analysis: Nigel Cassidy, Europe business correspondent, Brussels

Arriving somewhat breathless for his news conference, thanks to broken lifts, Mr Draghi finally produced a QE package for Europe that received an initial thumbs-up from the financial markets. In cash terms, it was just slightly more than some were expecting - but not that much more.

On the question of sharing some of the risks of his bond-buying spree with the 19 national banks, Mr Draghi came out fighting, saying such arrangements were quite normal and starting to sound irritated when his questioners kept bringing it up. Yet for many, the eurozone is not a true monetary union if its liabilities are not shared equally.

It all showed that Germany's deep reservations about the dangers of printing money could not be overcome in Frankfurt. Yet once again, a European institution has reach an 11th hour compromise which will be considered and dissected by the markets over the next few days.

In the event, Mr Draghi said only 20% of the new asset purchases would require national central banks to shoulder risks outside their own borders.

But he added: "The modalities, the amounts, the rules, the limits that you just asked me about have been decided here in Frankfurt. So the governing council is the sole decision-maker and the decisions are meant to affect monetary and financial conditions across the whole euro area."

'Shock and awe'

The Italian Finance Minister, Pier Carlo Padoan, welcomed Mr Draghi's "ambitious strategy", which he said was "good for Europe".

Speaking in Davos to BBC economics editor Robert Peston, he said it would "push away any risk of deflation" and provide "an injection of confidence to markets".

But he added that it was "just one element" of efforts to restore the eurozone's economic fortunes. Structural reforms and further single market integration were also necessary, he said.

"Mario Draghi has been left with little choice than to begin a more robust than expected quantitative easing programme in a bid to awake the economies of the eurozone from their slumber," said Dennis de Jong, boss of trading site UFX.com.

"This play is seen by many as the last roll of the dice for the beleaguered euro. QE has had some success in the US and UK, but with such a patchwork of economies and banking systems in the eurozone, the jury is very much out."

Nancy Curtin, chief investment officer of Close Brothers Asset Management, said: "European QE is set to start with a bang rather than a whimper, a fact that will be well received by investors.

"However, the eurozone is far from out of the woods. Structural economic issues remain, and all eyes now turn to the Greek election, with concerns that the result may eventually lead to a default and exit from the monetary union - a move which could send shockwaves through investors in the eurozone."

Monday, January 19, 2015

AUSTRALIAN DOLLAR DEVELOPS AN IMAGE PROBLEM - ANZ Bank research

AUD DEVELOPS AN IMAGE PROBLEM

With the RBA ( Reserve Bank of Australia ) back in play, domestic factors will once again become a critical element in determining the direction of the AUD.
The impact of domestic factors on the AUD will be greater than the sum of their parts as Australia starts to suffer from an image problem.
We downgrade our AUD forecasts for the end of 2015 from USD0.82 to USD0.74, and for the end of 2016 from USD0.80 to USD0.72. We also reassess our view on AUD/NZD and expect it to remain range bound around these historic lows.

Overall, relative to last year, we think that the nuance around currency valuation dynamics will change and the question that will need to be raised is whether this is the year that the AUD undershoots fair value, and provides a net boost to the economy.

We also think that the domestic economy will become a more important swing factor in the level of the currency this year as the RBA comes back into play after more than 12 months on the sideline.

SHORT-TERM DYNAMICS SUGGEST THAT THE AUD IS FAIR, BUT FUNDAMENTAL SHIFTS CANNOT BE IGNORED

Over both very short and medium-term time frames the AUD looks like it is trading at a level that aligns with model estimates.

A more medium-term, static behavioural model suggests that the AUD has now declined sufficiently for the valuation gap that we highlighted last year to be largely closed.

This is another indication that we are trading at more fair levels, ie for the AUD to decline more rapidly than fundamentals in 2014 (and bring about the needed reversion) it had to disconnect from them. However, as we have now ‘caught up’, the future direction of the AUD has become far more contingent on the evolution of fundamentals.

As such, the AUD’s sensitivity to fundamentals is currently heightened, and this is likely to remain the case for much of the year.

This means that further moves in the AUD cannot be driven by valuation concerns. It will need to be driven by either a shift in fundamentals or because a case can be mounted that the AUD should be trading at a discount to what the fair value is suggesting.

SO, WHAT IS GOING TO DRIVE THE AUD FROM HERE?

All of this is not to say that the AUD is anywhere close to providing a positive competitiveness shock, or that a bullish case for the AUD can be mounted.

In fact, competitiveness concerns are a key reason why we remain in an environment in which downside overshoots to behavioural models remains a distinct possibility.

To remain short the AUD in the current environment one needs to identify something more compelling than international competitiveness.

CHANGING RATE DYNAMICS WILL CHANGE PERCEPTIONS...

Our new economic forecasts highlight that we expect the RBA to act more dovishly than the market is pricing, ie to cut rates in both March and May 2015. Current pricing suggests that the RBA will begin its easing cycle in the middle of the year, and likely cut twice. As such, the ANZ view has not been fully discounted into the market.

Further, our rates strategists are now forecasting that the bond spreads between rates for Australia and the US will compress to zero by the middle of this year (Figure 4), and for a short period actually turn negative, and this is certainly not a part of current consensus expectations.

These two factors together should be sufficient to drive the AUD to fresh lows. And while in a modelling sense this will only shave a couple of cents from fair value, we believe that for the AUD, this time, the impact of the shift will be greater than the sum of its parts.

...AND THE AUD WILL BE LEFT WITH AN IMAGE PROBLEM

We believe that the decline in term rates in particular will create an environment in which we can get an overshoot in the AUD relative to fair value.

To say that differently, we think that the market will begin to demand a higher risk premium to remain a buyer of Australian assets.

Over the past four years the risk premium on AUD assets has remained small (ie AUD assets have been viewed as safer investments than they were in the past) and has inadequately reflected the fact that the risks inherent in holding these assets have been rising.

Given this, it is increasingly likely that within our forecasts horizon we see a more rapid pricing of this risk premium.

Looking back, there were two key factors that investors used to justify the contraction in the risk premium. First, the Australian economy was growing more strongly than that of the US, and that its growth trajectory was tied to China, the core engine of global growth. And second, that the level of public debt was low, and that the yield that was on offer relative to that of other AAA credits was very attractive.

There is some potential that this is set to change. The Australian economy is now clearly underperforming, while the Chinese economy remains in the midst of a large and challenging structural adjustment.

Further, it needs to remember that the past four years have been the exception, not the rule. Prior to the crisis in Europe, the relationship between a country’s public debt situation and the level of its currency was of no concern.

What mattered were the levels of aggregate (private + household) debt and the size of the external liability that the country held (ie how much of the financing of the liability was at risk). On both of these count Australia scores far less flatteringly than on a simple measure of government indebtedness.

If, as ANZ Research expects, these broader issues come into focus, while at the same time the spread available on Australian government bonds (relative to the US) falls to zero, then we expect that the risk premium will widen once again, and the AUD will overshoot fundamentals.

This sort of deterioration in perception has occurred before. Around the year 2000, global investors were also dismissive of Australia’s fundamentals.

With a mining-based economy in a new technology driven world, Australia was seen as uncompetitive and ill-equipped to compete in the modern global economy.

Through that time the AUD traded consistently cheaply relative to fundamentals, and we think the episode demonstrates the importance of perception, and provides a reasonable blueprint for 2015.

By the end of 2015 we expect that the AUD will be trading at USD 0.74, and that in 2016, the prospects for a rebound look equally unlikely.

CONSEQUENCES FOR OUR VIEW ON AUD/NZD

While we continue to think that the relative economic divergence between the Australian and New Zealand economies is very well priced with the cross at 1.04, an overshoot for Australia that is driven by an image problem and more intangible factors means that the fundamentals are likely to be overlooked. This should keep the AUD/NZD around current levels for the foreseeable future.

Daniel Been

Daniel.Been@anz.com

Saturday, January 17, 2015

9 Ways Daily Mindfulness Will Help You Succeed - TIME

http://time.com/3670202/daily-mindfulness/?utm_source=feedburner&utm_medium=email&utm_campaign=Feed%3A+timeblogs%2Fcurious_capitalist+%28TIME%3A+Business%29

Prerna Gupta / StartupCollective

Jan. 16, 2015

Many of us are drawn to the peace and happiness promised by a life of mindfulness, but we often abandon it in our daily lives because practicing mindfulness can seem at odds with our desire to succeed.

But it doesn’t have to be.

Here are nine simple ways that incorporating mindfulness into your busy work life can actually help you succeed:

Forgive and forget. Workplace politics are draining, and a waste of time. Don’t let yourself get sucked into drama. Save your mental energy for your own success by forgiving those who slight you, forgetting who said what about whom, and moving on to more important things.
Breathe before you blast. Try not to shoot off emails when you’re angry. Take a deep breath first and reflect on what’s behind your anger. Anger-driven emails almost always do more harm than good, to sender and receiver alike.
Stop being ‘judgy.’ Mistakes are an opportunity to learn, not an excuse to look at yourself or others with negativity. Assessing mistakes from a neutral perspective allows you and your team to grow from them. Harping on them only serves to bring you (and those around you) down.
Do what you want. Mindfulness gurus often talk about the idea of “intention.” But what does intention really mean? It means to make sure you know why you’re doing what you’re doing. And to do what you want. If you feel like you are wasting time in your current occupation, stop doing it and start something new.
Salute the sun. Starting your morning with a quiet mind will help you be more effective throughout the day. Carve out time in the mornings — before the day’s madness ensues — to do a few sun salutations, eat a leisurely breakfast, go for a jog or engage in whichever activity helps you to still your mind.
Salute your enemies. The word “namaste” means “I bow to the divine in you.” Having respect for your enemies will help you learn from their strengths and be more objective about your own weaknesses. So salute your enemies. You may find yourself with fewer of them if you do.
Take victory in stride. It’s important to celebrate milestones. But don’t get addicted to them. If you let yourself become too attached to your victories, you will be less able to cope with defeat. And the ability to persevere through failure is essential to success.
Sleep more. According to the Dalai Lama, “Sleep is the best meditation.” Get more of it.
Enjoy the journey. Life is short, and you will spend most of it working. Work can either be depressing, or it can be an incredible ride. It’s up to you. The more you enjoy what you do, the better you will be at it.

JKHC FORUM