Mish's Global Economic Trend Analysis

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• Ceasefire or Not? Will Kiev Honor Agreement? Poroshenko Says "Prepare for Martial Law"
• Discount and Department Stores Boost Manager Ranks by 46% in Two Years, Hours Up 88%
• Pessimism in Spain: 83% Say Economic Situation is Bad; Podemos Takes Huge Lead in Latest Poll

Ceasefire or Not? Will Kiev Honor Agreement? Poroshenko Says "Prepare for Martial Law" Posted: 14 Feb 2015 08:51 PM PST A ceasefire in Ukraine is supposedly underway. However there are many indications it won't last long. Let's take a look starting with a critical issue. Kiev Denies Amnesty and Constitution Agreements It seems highly unlikely that the separatists will honor the ceasefire given Kiev Denies Amnesty and Constitution Agreements. My translation follows. Kiev is not going to honor two important points of the new Minsk new agreements: Amnesty and commitment to constitutional reform. Speaking on Friday at a meeting of the Verkhovna Rada, Ukraine's Foreign Minister Pavlo Klimkin, said amnesty will not apply to the separatist leaders who are guilty of "crimes against humanity". Foreign Minister also noted that Ukraine did not incur any obligation on making specific changes to the Constitution of the country. The most difficult issue in resolving the situation in the Donbas continues to be the so-called debaltsevsky boiler in the Donetsk region, where, according to the separatists, several thousand Ukrainian military were surrounded. Kiev denies this information. Clashes Intensify Ahead of Ceasefire The Guardian reports Fears for Ukraine's ceasefire as clashes with Russia-backed rebels intensify Fighting between Ukrainian forces and Russia-backed rebel militias in the east of the country intensified on Saturday as fears grew for the durability of a ceasefire agreement that took effect at 12.01am on Sunday local time (10.01pm GMT on Saturday). In an inauspicious omen for the prospects of any cessation of hostilities, rebels have said they will not consider any battles for the town to be a violation of the ceasefire. In an inauspicious omen for the prospects of any cessation of hostilities, rebels have said they will not consider any battles for the town to be a violation of the ceasefire. Even before the peace plan was agreed, 50 Russian tanks, 40 missile systems and 40 armoured vehicles had crossed into Ukraine, Kiev claimed. The Ukrainians were moving up reinforcements on Saturday as well, in the hope that a ceasefire would allow them to reach Debaltseve, a national guard commander told the Observer. [Hmmmm can I see some images of those tanks please?] British equipment is now also reportedly in Ukraine after a private firm sold 20 decommissioned British army Saxon armoured vehicles to Kiev. Kiev also seemed to be bracing itself for continued clashes. Poroshenko warned on Saturday that, if the ceasefire did not work, he would declare a state of martial law across the country. Alexander Zakharchenko, the rebel leader in the city of Donetsk, was quoted by the RIA Novosti news agency as saying his fighters would not allow Ukrainian forces to escape Debaltseve. Separatists have said the Ukrainian troops there would be offered only the opportunity to surrender. Although rebels have been able to virtually surround Debaltseve and pound it with rockets and artillery, the road connecting the city with Ukrainian forces in Artemivsk is not fully under either side's control. Surrounded Regarding the Debaltseve Boiler I offer this translation from Colonel Cassad. The junta's attempts to break through the corridor to Debaltseve failed. Moreover, the WPC not only repeled the attacks of the enemy along the M-103, but they themselves went on the offensive on Debaltseve and there in the evening unfolded fierce battles with tanks and artillery. As expected, the remaining days before a possible truce, the parties will try to spend in the area Debaltseve "as productively as possible." Tonight's the night and all the next day seems to pass very hard and a lot of people will die. That report is now a day old, but with the trapped Ukrainian forces running out of ammunition, the situation for those trapped is bleak. Truce? The "truce" is now at hand. Translation of Colonel Cassad regarding the truce is even more difficult than usual. As best as I can tell, Ukraine has proclaimed victories just ahead of the truce. To which Cassad sarcastically replied "Experience shows that if Grishin writes about victories on Facebook, then with the troops of the junta there was something wrong.". DNR Says Ceasefire Does Not Apply to Debaltsevo For icing on the "truce" cake Colonel Cassad reports DNR Says Ceasefire Does Not Apply to Debaltsevo. This time I have a translation from Jacob Dreizin. Zakharchenko as well as DNR [separtist] defense ministry spokesman Basurin stated today that the ceasefire does not apply to the Debaltsevo cauldron. The reasoning seems to be that the cauldron is south of the agreed-upon line of contact between the DNR/LNR and Ukrainian forces, along which the ceasefire applies. Hence, if the encircled forces do not surrender, then they are violating the ceasefire (i.e. not being where they are supposed to be) and their liquidation would not be a violation of the Minsk agreement. Another consideration is that the Ukrainians in the cauldron would not be able to withdraw their artillery a sufficient distance (for obvious reasons), as required by Minsk, and thus, they would be violating the ceasefire and subject to liquidation. By the way, pro-DNR/LNR sources are claiming that the encircled Ukrainians are starting to run low on ammunition. Real Ceasefire Reason Jacob wondered if "President Poroshenko was unaware that there was a cauldron, with his army was keeping the truth from him, simply to support their own needed propaganda." I propose an alternative idea: Things were going so badly for Ukraine that Poroshenko felt he had no choice, especially with pressure from German Chancellor Angela Merkel. Regardless, the above commentary sets the tone. No matter how Kiev and Western media spins a breakage of the truce, Kiev never wanted to grant amnesty, nor institute constitutional reforms. Unless and until Kiev is willing to agree to a federation with real autonomy for the separatist regions, I suggest no truce can last. 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.

Discount and Department Stores Boost Manager Ranks by 46% in Two Years, Hours Up 88% Posted: 14 Feb 2015 12:38 PM PST In the last two years, hours worked by managers at discount and department stores are up 86% while hours worked by nonsupervisor employees is down. Why? Supervisors, don't get paid overtime. It's yet another artifact of Obamacare. Please consider The Obama Recovery's Illusory Manager Hiring Binge by Jed Graham. Retailers and other modest-wage employers increasingly are relying on managers, an unusual feature of the Obama economic recovery. Discount and department stores have boosted managers' ranks by 46% in less than two years, Bureau of Labor Statistics data show. And their hours worked have nearly doubled. In reality, this is a classification change more than a hiring binge, and a logical response to the Obamacare employer mandate to provide full-time workers with health insurance or pay a fine. As companies shift some workers below 30 hours per week to avoid the mandate, they also have an incentive to stretch the cost of insuring full-timers over as many hours of work as possible. Nowhere has the shift to managers been more visible than among general merchandise retailers. Since the start of 2013, when the earliest measurement period for the ObamaCare employer mandate got underway (only to be postponed in July of that year), managers at discount and department stores are working 6 million more hours each week, up a hard-to-believe 88% by November 2014. Meanwhile, the ranks of managers have increased by about 92,000, or 46%. Congratulations! Congratulations, you are now a manager, but don't expect any more money. Instead, expect to work 50 hours for the same or slightly more pay. Obama wants to put an end to that by revamping overtime rules for the first time since 2004. Current: Only salaried workers who make less than $455 a week, or $23,660 a year, are guaranteed overtime pay. Department of Labor Proposal: $42,000 a year ($808 a week). EPI Recommendation: The  Economic Policy Institute (EPI), wants to increase the limit to a minimum of  $51,168 ($984 a week). EPI Proposals The Department of Labor threshold would expand overtime to 3.5 million managers, while EPI Proposals would affect between 6.1 million and 10.4 million workers. In the past year, four significant proposals have been made. The lowest proposal, for a threshold of $807 per week or $42,000 a year, is rumored to be under consideration at the Department of Labor (DOL). Jared Bernstein and I recommended a simple inflation adjustment of the 1975 threshold: $984 per week or $51,168 a year. In a paper for EPI, Heidi Shierholz suggested that $1,122 per week, or $58,344 a year, was appropriate because it would guarantee that the same share of salaried workers receive overtime protection as were protected in 1975—after adjusting for the different educational composition of the workforce today. The highest figure, proposed by Nick Hanauer, is $1,327 per week, or $69,004 a year. It represents the salary level that would cover the same share of salaried workers as in 1975, but without adjustments for changed demographics. National Retail Federation President Matthew Shay last fall called on industry leaders to "work overtime on overtime. "The proposal is targeted largely at retailers: Overtime could become mandatory for assistant managers making as much as $50,000 if they spend too much time jumping in to work a cash register, stock shelves or help customers," Shay wrote. If Obama does what the EPI asks, expect the ranks of managers to thin dramatically with still more reliance on parttime work and still more double-counting of employees in the establishment job survey. 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.

Pessimism in Spain: 83% Say Economic Situation is Bad; Podemos Takes Huge Lead in Latest Poll Posted: 14 Feb 2015 02:03 AM PST Pessimism in the Streets In spite of the "recovery" in Spain, close to 24% are still unemployed. That statistic explains Pessimism in the Streets. The crisis is here to stay according to significant majority of Spaniards. The general perception is that the current situation in which the country is negative and far from getting better, can only stay stagnant or even worse. A Metroscopia poll published in El País makes it clear that the Spanish are unhappy with the current state of the country. Five out of six (83%) see the economic situation as "bad", while more than half of the remaining perceive "regular". More than half of respondents (52%) believe that in the coming months nothing will change, compounded with 15% who think things will get worse. Podemos Takes Huge Lead in Latest Poll Taking things one step further, overall pessimism explains the results of the latest election polls as Voters Punish PSOE and PP. Prime Minister Mariano Rajoy and his People's Party are in serious trouble in the upcoming elections later this year. Dissatisfaction In spite of the alleged recovery in Spain voters are dissatisfied. Why? Unemployment is still near 24% and youth unemployment is still over 50%. Recall that Podemos "Economic Manifesto" Calls for Debt Restructuring, Spain to Abandon the "Euro Trap". "Spaniards should be aware that it is physically impossible that they can pursue policies that meet the national interest, within the euro as it is designed. The euro was conceived as a real trap, but nowhere is it written that people have to accept it ." said Iglesias. 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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