15/7/2014: Construction Sector PMI: Q2 2014

June PMI for Construction industry were out this week. Good discussion of some monthly data on this topic here.

Here are quarterly averages through Q2 2014:

  • Total Activity index is up 3.6 points to 61.2 in Q2 2014 compared to Q1 2014. The index is up significantly – by +18.8 points – on Q2 2013.
  • On average we have fourth consecutive quarter of growth in the sector activity and in three of these quarters, the index was statistically significantly above 50.0 expansion mark.
  • Based on these figures we are in a confirmed recovery in the sector and in Q2 2014 this accelerated substantially. Which is good news.
  • Housing Activity sub-index rose to 61.9 – marking rapid growth – and is now up 2.8 points on Q1 2014 and 17.1 points on Q2 2014. Again, we are into fourth consecutive quarter of above 50 readings and, as above, this is the third consecutive quarter of statistically significant readings above 50.0.
  • Commercial Activity sub-index rose to 61.5, up 2.8 points on Q1 2014 and 20 points on Q2 2013. Same dynamics over the last four quarters as in the case of the Total Activity index and Housing Activity sub-index.
  • Civil Engineering index is a drag on overall growth picture, averaging 44.9 over the Q2 2014, up 4.2 points on Q1 2014 and up 12.1 points on Q2 2013, but still below the 50.0 line. This is expected, as the Government continues to destroy public investment at an alarming rate.

Chart to illustrate:

11/11/15: The Gig Economy: A Challenge

“It is not true that people stop pursuing dreams because they grow old, they grow old because they stop pursuing dreams.” Gabriel Garcí­a Márquez

Nassim Nicholas Taleb was asked whether public protests in Athens is a Black Swan Event. He replied: “No. The real Black Swan Event is that people are not rioting against the banks in London and New York.”

“Getting worse more slowly is not the same as getting better”, Prof. Brad DeLong

13/6/17: Four Months of the Invisible Fiscal Discipline

U.S Treasury latest figures (through May 2017) for Federal Government’s fiscal (I’m)balance are an interesting read this year for a number of reasons. One of these is the promise of fiscal responsibility and cutting of public spending and deficits made by President Trump and the Republicans during last year’s campaigns. The promise that remains, unfortunately, unfulfilled.

In May 2017, cumulative fiscal year-to-date Federal Government receipts amounted to $2.169 trillion, which is $30 billion higher than over the same period of 2016. However, Federal Government’s gross outlays in the first 8 months of this fiscal year stood at $2.602 trillion, of $57.345 billion above the same period of last year.As a result, Federal deficit in the first 8 months of FY 2017 rose to $432.853 billion, up 6.77% y/y or $27.44 billion.

Given that 4 out of the 8 months of FY 2017 were under the Obama Presidency tenure, the above comparatives are incomplete. So consider the four months starting February and ending May. Over that period of 2017, Federal deficit stood at $274.274 billion, up 11.17% or $27.569 billion on February-May for FY 2016. In this period, in 2017, Trump Administration managed to spend $51.9 billion more than his predecessor’s presidency.

You can see more detailed breakdown of expenditures and receipts here: https://www.fiscal.treasury.gov/fsreports/rpt/mthTreasStmt/mts0517.pdf but the bottom line is simple: so far, four months into his presidency, Mr. Trump is yet to start showing any signs of fiscal discipline. Which raises the question about his cheerleaders in Congress: having spent Obama White House years banging on about the need for responsible financial management in Washington, the Republicans are hardly in a rush to start balancing the books now that their party is in control of both legislative and, with some hefty caveats, the executive branches.

19/10/2013: WLASze Part 1: Weekend Links on Arts, Sciences and zero economics

This is the first post of my WLASze: Weekend Links on Arts, Sciences, and zero economics for this week.


Today is the birthday of one of my favourite Italian futurists: Umberto Boccioni, born this day in 1882. Here’s his brilliant painting from the States of Mind series: The Farewells, 1911

Boccioni’s page on ArtStack: http://theartstack.com/artists/umberto-boccioni

Great slideshow giving an insight into the world of trespassers’ photography:

This is not quite art, but there is some sense of raw force driving us, as people, to pushing the limits of ‘normality’. And that force is well-represented in these photographs… almost voyeuristic, half creative and half inquisitive – the borderline of learning self and expressing self…

Via http://www.saatchionline.com/koenlybaert works of a Belgian painter Koen Lybaert:

Evocative of (if not outright ‘borrowing from) Gerhard Richter‘s works.

An interesting report about the research into behavioural, emotional and mental activity of dogs, suggesting that the caudate region activity in dogs’ brains is proximate to human and indicates that dogs: http://www.nytimes.com/2013/10/06/opinion/sunday/dogs-are-people-too.html?pagewanted=1&_r=1

Some select quotes: “Although we are just beginning to answer basic questions about the canine brain, we cannot ignore the striking similarity between dogs and humans in both the structure and function of a key brain region: the caudate nucleus.”

“Do these findings prove that dogs love us? Not quite. But many of the same things that activate the human caudate, which are associated with positive emotions, also activate the dog caudate. Neuroscientists call this a functional homology, and it may be an indication of canine emotions. The ability to experience positive emotions, like love and attachment, would mean that dogs have a level of sentience comparable to that of a human child. And this ability suggests a rethinking of how we treat dogs.”

Not only an amazing set of studies, but also a promise of serious ethical and even legal implications, were the findings to continue expanding our insight into the emotional, cognitive and psychological existence of our extended family members…

A brief note: http://classic.slashdot.org/story/13/10/07/2352217 with huge implications. This marks the first time that a fusion reactor was able to generate more energy than it consumed. Full report here: http://www.bbc.co.uk/news/science-environment-24429621

An absolutely stunning breakthrough in mapping out the future of mathematical theory:
The implications of this thinking are so far reaching out only to the issue of how we write proofs (the topic of the article), but far beyond that, the removal of the heavy burden of proof formulation and verification will enable mathematics to move onto the core purpose of the field of any inquiry – derivation of questions and formulation of propositions. Here’s a direct link to Voyevodsky‘s work on Univaliant Foundations: http://www.math.ias.edu/~vladimir/Site3/Univalent_Foundations.html and his lecture introducing the topic: http://video.ias.edu/univalent
Marvellously put…

For those of you who took my course in Investment Theory this week at Trinity College, I referenced this work in the last lecture, talking about the advancements in computing and data analytics / strategy formation nexus.

And from the future of mathematics to the past of the power that drives all inquiry: humanity. The origins of our beginnings must be rethought now… thanks to the latest fossil discovery…

Enjoy and stay tuned for more WLASze…

06/06/2011: Putting IMF’s comment against data

According to the report by RTE: “The acting Managing Director of the International Monetary Fund has said Ireland’s economic recovery programme ‘appears to be on track’… However it still requires what he described as ‘forthright action by the Irish authorities to re-establish the basis for sustained growth.’ Mr Lipsky said there were positive signs in the Irish economy, such as a return to export growth. However Mr Lipsky described Ireland’s economic recovery as ‘a difficult challenge’.” [emphasis is mine]

One cannot expect RTE news to critically challenge Mr Lipsky on his pronouncements, but… can someone ask Mr Lipsky what did he mean by the ‘positive signs in the Irish economy, such as a return to export growth’?

Here are two charts showing that export growth did not return to Ireland any time recently, but in fact was here for some months before IMF showed up in Dublin and certainly well before this year.
So let’s give Mr Lipsjy a quick briefing:

  • Irish exports reached their recession bottom at the annual value of €82.238 in 2009. Hence the growth in Irish exports returned in 2010 when annual exports value rose to €89.427bn.
  • In terms of annual trade balance, local minimum occurred in 2007 when Irish trade balance stood at €25.740bn. Since then, every year throughout the crisis our trade balance grew, reaching €43.785bn in 2010.
  • In monthly time series, our exports reached the bottom of the cycle in December 2009.
  • Relative to 2003-present trend, March 2010 was the month when Irish exports have fully recovered from the recession. That is full 8 months before IMF waltzed into Dublin and full 14 months before Mr Lipsky discovered our return to export growth.
  • In terms of Trade Surplus, Irish external trade has ‘returned to growth’ back in January 2009, when our monthly exports exceeded long-term trend.
  • Lastly, if we are to take Mr Lipsky’s phrase on its face value, the return to growth in our exports dates back to January 2010 (17 months before Mr Lipsky’s statement recognizing the phenomenon) and our trade balance (monthly series) returned to growth in January 2008.

Economics 28/11/2009: Net investment position, 2008

CSO released Ireland’s net investment positions for 2008 yesterday. Full release is available here. My analysis of this data follows:&13;

Table shows outflows of Irish-owned investment from Ireland to foreign destinations (negative values) and the share of each destination in total outflows. Note the significant jump in outflows to the offshore centres, which has risen between 2006 and 2007. It will be interesting to see if this trend – moderated in 2008 – resumes in 2009 in the wake of significant increase in taxation burden in Ireland. Per more detailed breakdown in CSO data, the offshore centres received only a modest share of Irish capital in the form of reinvested earnings, and virtually none in equity purchases, suggesting that most of the outflow to these destinations was in form of business investment and cash.

Another interesting feature of this data is that significant outflows continued to the UK in 2008. Margin calls? These related to equity purchases and reinvested dividends and a significant uptick in ‘other capital’ outflows (margin calls covers on buy-to-let and other risky investments covers?).&13;

Over the same period of time, outflow of investments to the US has fallen off the cliff in 2008. Equity purchases in the US peaked in 2007 at almost 5 times the levels of 2006 and then collapsed to a quarter of 2007 levels in 2008. Someone was buying into the top of the bubble in the US stock markets… Meanwhile, reinvested dividends remained relatively stable. Other types of capital have fallen off the cliff from almost €3 billion in 2006 to €746mln in 2007 to €77mln in 2008. Given that the US property prices peaked in 2006, this also suggests that we were buying at the top of the market there.

&13;Table above shows inward investment inflows to Ireland. Negative values imply that foreign investors took out net amount of capital from Ireland. Offshore centres sent in about as much as 40% of the inflows from entire European area. Any alarms ringing at the Financial Regulator’s office? Notice dramatic swing from net inflows to net outflow vis-à-vis Lux and the Netherlands in 2007-2008? Equity and other capital outflows dominated here. Tax optimization in action, especially on capital taxes side. &13;

Amazing figures from the US. Between 2007-2008, a surplus of inward inflows of €15.2bn swings into a deficit of net outflows of €14.6bn – a spread of €29.8bn or 17.4% of 2009 GDP! Interestingly, equity and reinvested earnings were still in net positive in 2008, and going strong, so the massive net outflows were the result of something else. Capital flight? Deposits crunch? Losses taking?


Net deterioration in our inward investment position between 2007 and 2008 was over €31.7bn or -18.54% of our 2009 GDP. Net improvement in our inward investment position between 2006 and 2007 was €13.63bn or +7.97% of our 2009 GDP. Massive volatility even for a small open economy, but what does it tell us about Government’s idea that Ireland Inc will be rescued not by our own actions, but by foreign investors coming back to our shores?

&13;The totals suggest that Ireland has bled a massive €36.8bn worth of investments (equivalent to 21.5% of our 2009 GDP) out of the country in 2006-2008 alone. This hardly accounts for the full extent of deterioration in the capital values of the remaining investments by foreigners in Ireland and Irish own investments abroad. But even without taking into account our current crisis, at the peak of our markets valuations in 2006-2007, we were hardly generating much real growth out of our own and foreign investments into the country. Wonder why? Me too.

12/12/19: Ireland’s Jobs Creation Track Record: Raising Some Questions

Doing some research on the state of precariat in modern labor markets, I came across some interesting data from the ‘poster country’ of the post-GFC recovery: Ireland.

Ireland’s economy and its recovery from the crisis are both characterised by the huge role played by the internationally-trading multinational corporations. In recent years, these companies have been gearing up for the upcoming OECD-led BEPS reforms (more on this coming up next month in my usual contribution to the Manning Financial publication, but you can read academic-level analysis o the BEPS here: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3406260). The strategic shift this entails involves MNCs domiciling into Ireland intangible property and new business functions to create a larger ‘footprint’ in the economy. With this, employment in MNCs operations in Dublin and elsewhere boomed.

Why is this important? Because the main story of the Celtic Tiger revival has been about the aforementioned jobs creation and accompanying dramatic drop in official unemployment. Less covered in the media and politicians’ statements, over the same period of time as ‘jobs creation’ was allegedly booming, Irish labour force participation remained well below pre-crisis levels (meaning there were more discouraged unemployed who stopped being counted as unemployed). Even less attention has been paid to the quality of jobs creation.

The above chart partially reflects the latter concern. It shows that full-time employment as a a share of total working age population has improved from the bottom of the series at the peak of the recession, but the rebound has been largely incomplete. Similarly (not shown in the chart) the percentage of those in part-time employment as a share of total number of those in employment has remained above pre-crisis levels. Over 1998 through the first half of 2008 (the pre-crisis period), that share averaged 17.5 percent. This rose to above 23 percent in the years of the crisis (2H 2008 – 2013). It remained at around 23 percent through 4Q 2016, and has declined to around 20.3-20.5 percent since then. This too signals that the quality of jobs being added even in the mature stage of the recovery is still lagging the quality of jobs in the pre-crisis period.

Now, imagine what these figures would have been were it not for the MNCs latest tax shenanigans…

5/3/15: Russian Economy: External Trade, Inflation and Wages

Quick digest of top news relating to Russian economy:

Customs receipts for Russian Federation in February 2015 reached RUB393.7 billion down 30% y/y. January-February receipts were RUB840 billion or 19.6% down y/y. Full year 2014, customs receipts amounted to RUB7.1 trillion – up 8.5% y/y.

Much of the decline is down to imports collapse: imports were down over 2014 by USD29 billion or 9.5% y/y to USD286 billion in 2014 from USD315 billion in 2013. Only three countries saw increased exports into Russia: U.S., Kazakhstan and Brazil. Largest declines in export to Russia were in Ukraine (31.9%), Japan (19.5%) and Belarus (15.6%). By category of imports: largest declines in Russian imports were in passenger vehicles (21.9%), heavy transport equipment and agricultural equipment and machinery (22.3%), engines and power trains (13.2%), household appliances (20%), milk and dairy products (17.5%), pharmaceuticals (13.1%), and alcoholic beverages (12.3%). Imports categories that posted y/y increases in 2014 were: computer equipment (8.6%), telecommunications equipment (6.9%), household chemicals (4.4%) and heating equipment (3.8%).

Given decline in external trade, largest adverse impact of the Russian crisis is being felt in Armenia and Ukraine.

  • Armenia received remittances from Russia to the tune of 10% of its GDP in 2012, which fell to around 6% by the end of 2014. Armenia’s net exports into Russia accounted for roughly 3% of GDP, while Russian investors account for roughly 50% of total foreign investment stocks.
  • Ukraine received remittances from Russia amounting to 2.1% of GDP in 2012 and Russia accounted for roughly 25% of Ukrainian exports. Russian investors account for around 5% of the stocks of foreign direct investment in Ukraine.

Inflation: January inflation printed at 3.9% m/m, or 15% y/y. February 2015 inflation reached 16.7% y/y. Food prices rose 23.3% y/y in February, against 6.9% y/y inflation in food prices in February 2014. M/m February inflation was 2.2% m/m, suggesting potentially a slowdown in the rate of inflation. Some shorter term data suggest that over the first week of March, weekly CPI stood at 0.2% – the lowest weekly reading since October 2014. Good news, for many, bad news for many more: vodka prices fell 0.4% in February.

Wages: A recent survey by a large recruitment company, the Hay Group, showed that 75% of businesses are planning to raise wages in 2015. RBC has details (in Russian): http://top.rbc.ru/economics/04/03/2015/54f706b39a7947103b521853 E-commerce enterprises are planning largest wage hikes (+11.3% on average), followed by Industry sector (+10%), media (9.7%), chemical sector (+9.4%). None of the wage hikes planned are matching expected inflation: Central Bank of Russia forecasts 2015 year-end inflation at 12-12.4% and average inflation during 2015 at 15.8%.

An interesting report in RBC on the proposals for economic reforms from the Russian Union of Industrialists and Entrepreneurs (sort-of Russian IBEC), РСПП (see here: http://top.rbc.ru/economics/04/03/2015/54f724ea9a79472c640c6f5e). According to RSPP, Government response to the crisis should focus on achieving further liberalisation in the economy. First pillar of the proposals focuses on early stage reforms, especially those aiming to stabilise the financial situation in the corporate sector. Second pillar contains 73 specific Government and regulatory decisions that should be suspended to reduce their adverse impact on corporate sector.

Note: those who are interested to learn more about the above topics or the business and economic environment in Russia can contact me to arrange a more in-depth one-on-one briefing.

15/3/2013: Irish banks – still the second sickest of the sick euro area banking sector

In anticipation of the today’s release (16:00 GMT) by the IMF of the 2013 Financial System Stability Assessment Report for European Union, Euromoney Country Risk analysts have published an interesting article Country Risk: Five years on, banks still inflict chronic pain on eurozone. Here are some of the very insightful charts – including an update on the previously covered banks stability scores (see here for January 2013 post and here for Q3 2012 data).

Let’s start with the aforementioned chart on banks stability scores:

Pretty poor showing here for Ireland. Unlike the rest of the economy, we clearly have not ‘decoupled’ from the peripherals in terms of banking sector health and that is given:

  1. Unprecedented and incomparable by the rest of the EZ standards levels of support for banks in Ireland;
  2. Lack of any progress on mortgages crisis; and
  3. Longer duration of the banking crisis in Ireland than in any other peripheral state.

We had the second weakest banking sector in the EZ throughout 2011-2012 and we still do. So much for the theory that Irish banks are ‘lending into the economy’ or ‘have been repaired’ and so much real support for the body of economic knowledge that says the deeper the debt overhang crisis, the longer and the deeper the required deleveraging crisis…

Now, something that shows that despite the consensus in Ireland and in the bonds markets, we are not quite due an upgrade as risks are still favouring continuation of the banking crisis (note, my view is that we are due an upgrade, but a single notch one, to reflect economic decoupling from the peripherals):

And the sovereign-banks links? Well, they are still there and still nasty for Ireland:

And here are few sobering words from the ECR:

“While some observers might still be convinced the worst of the banking crisis is over, the [Euromoney’s Country Risk] survey provides compelling evidence that bank stability risks are as concerning, if not worse now, for many European countries than at the beginning of last year, according to its contributing experts. More than five years on from the catastrophic events of 2007/08, the resolution of the region’s banking sector problems is still firmly at the top of policymakers’ to-do list, but with plans seemingly stalling, the implications of failing to act could prove critical.”

Just in case you are in the ‘green jersey’ ‘we’ve-turned-the-corner’ camp, here’s ECR quote putting Irish gains in the above scores into perspective:

“Across the eurozone, bank stability risks were unchanged last year in four countries – Austria, Belgium, Cyprus and Slovakia; with Cyprus the lowest of the group – and improved in four more: Malta, Italy, Ireland and Portugal. However, for the latter three, the rebounds were small and their scores remained at low levels of 5.5, 4.3 and 3.3 out of 10 respectively, illustrating heightened levels of risk.”

So how bad are things in the euro periphery and in Ireland? Well:  And the banks are just as problematic across the periphery. Taken as a whole, the seven riskiest eurozone countries (Greece, Portugal, Spain, Ireland, Italy, Cyprus and Slovenia) had an average bank stability score below that of most other regions, worse even than Mena or Latin America – see chart (below).” Keep in mind, that is for the average and Ireland is way worse than the average.

So next time you see Irish ‘banks’ adds claiming they are ‘open for business’ and ‘doing our bit to help the economy’ etc, just check these charts once again. They are, by all international comparatives, graveyard zombies, still holding this island at ransom.

Retirement plan limits for 2019-2020

 401(k) contributions

The annual contribution limit for employees who participate in 401(k), 403(b), most 457 plans and the Thrift Savings Plan
used by federal government employees increased in 2019 to $19,000 (and
those limits will be going up another $500 in 2020). If you’re 50 or
older, you also can take advantage of a catch-up provision of $6,000 (a
figure that is also rising by $500 in 2020). That means all together you
could put away $25,000 in your employer-sponsored plan in 2019 — and
that total rises to $26,000 in 2020. And in case you were wondering,
your employer’s matching contribution, if there is one, doesn’t count
toward your limit

The contribution limits for traditional and Roth IRAs went up in 2019 — to $6,000, or $7,000 for those who are 50 and
older. So if you’re a 50-plus individual focused on growing your savings
account, you could put away as much as $32,000 between your 401(k) and
your Roth in 2019.

Contribution limits for Roth IRAs and traditional IRAs will remain the same in 2020.

Thanks to:  Dina Siracusa, Investment Adviser Representative |
Provident Wealth Advisors
Source: https://www.kiplinger.com/article/retirement/T047-C032-S014-401-k-and-ira-advice-especially-for-women.html