Thursday, January 22, 2015

Oil, Interest Rates, and the NHL

Global economies are in turmoil. Central banks around the world are printing currencies to try to jump start demand from consumers and spur economic activity. Those same central banks are trying to stimulate inflation while desperately fighting deflation that has been precipitated by falling oil prices. Surprisingly, some of those central banks, most recently the Bank of Canada, have cut interest rates to try to create more economic activity.

What do sluggish economies, falling oil prices and interest rates, and deflation have to do with our beloved hockey game?

A lot more than you would imagine.

And most of it is not good.

Let's start with some basics.

Deflation is simply a persistent decline in prices. Deflation can be caused by a decline in government, personal, or investment spending. A protracted period of deflation results in falling profits for businesses, which can lead to shrinking employment and income levels and business closures. Central banks can fight deflation by printing their currency (the Quantitative Easing programs are the current example) and lowering interest rates to stimulate economic activity and demand.

Printing currency and lowering interest rates dramatically (as most Central Banks have done) can devalue the local currency relative to other currencies.

When the Bank of Canada lowered their interest rate on overnight loans to Canadian banks, the effect was immediate and dramatic. The Canadian dollar fell against the U.S. dollar immediately. The Canadian dollar was worth .84 U.S. dollars the day before the rate cut. The day of the rate cut, the exchange rate fell to .80 to the U.S. dollar.

Part of the concern about deflation has been due to the precipitous fall in oil prices. On October 1, 2014, the price per barrel of crude oil was $90.73. It closed on January 22. 2015 at $46.31.

Now we all like paying less at the pump when we fill up, but the impact of these low oil prices is far reaching and negative.

The energy sector is an important component of most global economies. In Canada, it accounts for approximately 11% of Gross Domestic Product (GDP). The decline in oil prices is deflationary and will lead to lower capital investment and employment in that sector. The Canadian Association of Petroleum Producers estimates that capital spending in the energy sector will decline 33% in 2015. The effect of lower energy prices (and consequently lower income to the energy industry) will cause GDP in Canada to decline to 1.5% in the first half of 2015, according to the Bank of Canada, and will shave .4% off annual GDP to 2.1%.

That forecast presumes that oil will rise back to $60 per barrel.

According to the Bank of Canada, the effect of lower oil prices will be "unambiguously negative" on the economy of Canada.

To be sure, a weaker currency can have some positive effects.“When our dollar falls, the cost of our inputs increases,” said Trevor Welch, president and general manager of Textile Manufacturing Co. Ltd., a Toronto-based producer of braided goods such as skate laces and cords for clothing such as hoodies.

“The upside is that when it comes time to sell our goods internationally, we are more competitive—at least in the U.S. market,” Mr. Welch said. That market accounts for 10% to 25% of the company’s sales, depending on the year, he estimates.

In general, though, a weaker currency, is negative for a local (national) economy.

So what does this mean for the game of hockey?

The sluggish Canadian economy and policy decisions have significantly weakened the Canadian dollar. At the start of the season, the Canadian dollar was trading at .90 Canadian dollars to the U.S. dollar. As mentioned, it is now at .80.

We all know that contracts for the Canadian hockey teams are paid in U. S. dollars. So a falling Canadian dollar means that more of the revenue that Canadian hockey teams generate have to be allocated to paying the players currently under contract.

This is important to the economic landscape of hockey since the Canadian teams make significant contributions to the revenue pool for revenue sharing purposes.

The most profitable hockey franchise is the Toronto Maple Leafs, showing operating income of $70.6 million according to Forbes. Their current salaries total $75,109,000.

With the decline of the Canadian dollar from the start of the season to the present, the Leafs now pay out an additional $7,510,900 from their operating revenues to effectively make up for the decline in the Canadian dollar on an annual basis (yes, I know I am using annual numbers and the decline in the Canadian dollar was not in effect for the full year, but the example illuminates the point).

Not quantifiable but equally important is the general decline in economic activity not only in Canada but the U.S. It will probably not have a significant impact in this season, but the longer this sluggishness persists, the more it  will affect sponsors (especially the small and mid size companies that support local teams) and individual ticket buyers.

A lengthy period of Canadian dollar weakness will ultimately have a negative effect on league revenues, which in term will impact the salary cap and each team as more dollars of operating revenue are used to pay salaries.

For hockey fans, our world revolves around the sheet of ice and our favorite team.

Unfortunately, the outside world and its weak economies are intruding on our world like a Zac Rinaldo hit.

And it's not pretty.


Tuesday, January 20, 2015

Predators Start Strong, Can't Finish in OT Loss to the Canadiens

The Nashville Predators dominated the first 40 minutes of their game with the Montreal Canadiens at the Bell Center.

Unfortunately, it is a 60 minute game, and in this case, an overtime period as well, as the Canadiens defeated the Predators 2-1 in overtime.

Mike Ribeiro redirected a Seth Jones shot from the blue line over the shoulder of Carey Price to give the Predators a 2-1 lead in the second period.

Alex Galchenyuk tied the game on the power play in the third period as he redirected a P.K.Subban shot from the point past Carter Hutton.

Tied at the end of regulation, the game headed to overtime, and in the extra period, a weak tripping call on Craig Smith gave the Habs a power play.

On the 4 on 3 man advantage, P.K. Subban scored on a blast from the face off circle for the game winner.

Some observations:

  • The Predators out shot the Canadiens 14-4 in the first period and looked like the...well, Predators. After a lifeless game against Detroit, one wondered what Predators team would show up tonight. The first period saw the Preds get pucks to the net and aggressively forecheck, disrupting any offensive flow of the home team.
  • The Predators did a great job of blocking shots and passes, frustrating the Canadiens offense. When you have a goalie that has struggled and may be lacking a bit in confidence, playing outstanding defense in front of him and keeping pucks from getting to the net are essential. The Predators blocked 19 shots tonight.
  • Now that those first two positive points have been made, here is the negative. The Predators didn't finish some glorious scoring chances. Part of that was the play of Carey Price. Part of it is just not finishing. The forwards worked hard to create those chances and they have to bury when them have the opportunity.
  • I really liked the play of Gabriel Bourque. He played with lots of jump and was strong in all zones. Maybe playing in his home province brought out another level of play. Bourque and his line mates, Calle Jarnkrok and Matt Cullen, played with speed and created some chances tonight.
  • Carter Hutton made some huge saves tonight. He wasn't tested often in the first 40 minutes, but he had to come up with a big save late in the second period and was challenged in the third  when the Canadiens started their push. Hutton played with confidence and moved well in net. He was screened on the game winning shot and didn't have much of a chance.
  • Carey Price is an excellent goalie. The Predators threw a ton of shots at the net and Price was equal to the challenge. He is similar to Pekka Rinne- big and very athletic and turned away some very good scoring chances by the Predators. 
  • The Predators out shot the Habs 37-27.
  • Shea Weber led the Predators in TOI with 27:34.
  • Seth Jones had a solid game, logging 23:31 in ice time and recording an assist on the Ribeiro goal. Jones started slowly this season but is starting to hit his stride, and that has to continue after the All Star break.
  • This is the first time this season that the Predators have dropped back to back games.
This was a disappointing loss for the Predators, a game that got away after dominating play for two periods.

Now is the time for some rest and come back ready for the push to the playoffs.

My three stars:

1. Carey Price

2. P. K. Subban

3. Seth Jones

Monday, January 19, 2015

My View





Random ruminations from your resident curmudgeon...

It's stating the obvious when I say our nation has a lot of economic problems. A ballooning deficit; a large swath of working age Americans without a job; and a gargantuan amount of debt are but a few.

But perhaps our most serious economic problem has to do with birth and death.

No, not of individuals, but of businesses.

As of the end of the year, the U.S. economy ranked 12th globally in terms of business start up activity. Countries such as Finland, Hungary, Israel, New Zealand, and even Italy all rank ahead of the United States in new business start ups.

For the first time in 35 years, business "deaths"- companies that close for good- outnumber the business "births"- companies that are starting up.

According the Census Bureau, 400,000 new businesses started up while 470,000 businesses closed in 2012, the last year for which data has been released.

So why is this the biggest economic problem that our nation must confront?

I will answer by asking a question.

Where are jobs created?

85% of all jobs in this country are created by small business, defined as those that employ 50 people or less.When small and medium size businesses are dying faster than  new ones are being created, jobs disappear.

Now if you look at the census data, you will find that there are 26 million businesses listed in the U.S.

But dig deeper, and you find that just over 20 million of those businesses don't actually do business. They have no sales, workers, or profits. Their business is still listed as an active enterprise only because they have not officially shut down.

Of the remaining approximately 6 million companies, 3.8 million have under 4 employees. they are the "mom and pop" shops across the country. There are 1 million companies with 5 to 9 people employed. There are 500,000 companies with 20-99 employees; 90,000 companies with 100-499 employees;and 18,000 companies that employ more than 500 people.

These approximately 6 million businesses employ 100 million Americans, and those employed Americans and their employers, especially the small to medium sized ones, provide the tax base for all of our spending.

Without the growth of companies and the jobs they bring, our tax base starts to shrink. There is less tax revenue for defense spending, social programs, and running the country. When new businesses are not being born, jobs- and tax revenue- declines.

Without a growing entrepreneurial economy, good, well paying jobs are not being created, which puts further strain on economic growth and on families.

Until we recognize the growth of our economy does not come from stifling bureaucracy, layers of government, and an onerous tax code, our country is going to continue to struggle to produce jobs that pay well. We are going to struggle to have new companies "born" that provide those jobs.

We must understand that our national security as well as our standard of living are dependent upon an environment that fosters the birth of new companies that will employ more Americans.

If we do not reverse course, we will continue to travel the road to economic calamity.

And that, my friends, is my view.


Saturday, January 17, 2015

Predators Whipped by the Wings

The Nashville Predators were similar to a lot of fans of the Red Wings at the Joe.

They didn't show up.

The Nashville Predators, fresh off an emotional and hard fought victory the night before, traveled to Detroit to take on the Red Wings in a contest that featured former division rivals that were playing some good hockey.

On this night, only one team played some good hockey.

And it wasn't the Predators.

Carter Hutton allowed 3 goals on 4 shots before being pulled in favor of Marek Mazanec.

The Predators gave up a 2 on 1 goal to Gustav Nyquist; a strange bouncing deflection goal to Kyle Quincy; and a goal to Tomas Tatar to chase Hutton to the bench.

The Predators finally showed some life as Mattias Ekholm patiently waited for an opening and beat Mrazek from the slot to make it 3-1.

Whatever momentum the Predators got from that late first period goal was wiped out when Henrik Zetterberg scored from the goal line on the power play when Mazanec didn't seal off the post and the puck bounced off his shoulder and over the goal line.

Tatar scored on another power play with just under a minute to go in the second period to make it 5-1.

Mike Fisher tallied on the power play early in the third period to make it 5-2.

Some observations:

  • The Predators recalled Anthony Bitetto from Milwaukee. He saw his first NHL action and was paired with Mattias Ekholm.
  • I know that you are not going to win every game, but wow, the Predators were loose in the defensive zone and didn't look sharp in any zone.There were spurts of energy and good play but they were few and far between. The most disappointing aspect of this game was that the team just looked lifeless at times (most of the time) and had no push back. Not surprised there was an emotional letdown after the game last night and Barry Trotz returning to Nashville, but this team just had no spark tonight.
  • The first goal that Hutton gave up was a 2 on 1. The second was off a wild deflection and a bouncing puck. I will give him a pass on those two. He has to stop that Tatar shot. the goal that Mazanec gave up on the power play was just brutal. That shot should never go in.
  • Calle Jarnkrok faced the team that drafted him. Jarnkrok was acquired when David Legwand was traded to Detroit.
  • The penalty kill was atrocious, and tonight they continued the disturbing trend of giving up power play goals. The first goal from Zetterberg should never have happened but it did. The Predators PK entered the game killing just 80.6% of their opportunities, and this is an area that has to improve quickly.
  • Mattias Ekholm tallied his 5th goal of the season and his second in as many nights. Ekholm continues to impress with his play and has started to show some flashes of offensive punch. He is showing more confidence in all aspects of his game.
This game was an absolute stinker for the Predators. No excuses about an emotional game last night or being on the second half of a back to back.

It was just bad.

Sometimes that happens. None of us like it, but that is just the way it goes sometimes.

The team has an opportunity to get this bad taste out of their mouth on Tuesday in Montreal.

My three stars:

1. Tomas Tatar

2. Gustav Nyquist

3. Reilly Sheahan


Friday, January 16, 2015

Predators Come From Behind to Defeat the Capitals 4-3

The Nashville Predators faced the Washington Capitals at the Bridgestone Arena in a contest that featured two of the hottest teams in the NHL.

The Predators entered the tilt with an 8-0-2 record in their last 10 games, while the Capitals were 7-1-2. 

Two red hot teams going at it. Something- or some team- had to give.

It would be the Capitals.

This was the first of two meetings this season between the teams, and it marked the first visit to the Bridge by Barry Trotz as the Head Coach of an opponent of the Predators. Trotz was the Head Coach of the Predators since their inception through the end of last season.

The game was a back and forth physical affair that saw the Predators jump out to a 2-0 lead. Seth Jones beat Caps netminder Braden Holtby with a wrist shot to the glove side in the first period.

James Neal made it 2-0 early in the second period when Victor Bartley sent a shot toward the net from the boards. The puck deflected off Mike Fisher to James Neal, who was alone at the side of the net. Neal slammed home the puck into the open net for his 14th goal of the season.

The Capitals are a talented team, and they were not going away. Alex Ovechkin notched two goals in the second period to tie the game, and both goals came on incredible shots that were nearly identical. His first was a snipe from the right side that squeezed into the top corner short side. His second was from the same spot on the power play, and after 40 minutes, the game was tied at 2.

The Capitals took their first lead of the game in the third period when Marcus Johansson scored on the power play 2:38 into the third period. Johansson was able to muscle in close and no Predator moved him out of the crease, and he had three attempts before he was able to poke the puck past Carter Hutton to make it 3-2.

With the clock winding down and the Caps playing a physical style that was disrupting the flow of the Predators, things didn't look good.

This is a different Predator team, though, and they took over the last five minutes of the game.

With the Predators on the power play, Mattias Ekholm blasted a puck past Holtby to tie the game with 4:29 remaining.

James Neal stripped the puck from Matt Niskanen in the offensive zone and walked in on Holtby. His fake got Holtby to open up and Neal slid the puck between his pads for the game winner.

Some observations:

  • A very touching tribute to Barry Trotz by the team. Trotzy built the foundation for the success of the Predators, and he was instrumental in developing Nashville into a hockey market. The crowd responded with a 90 second standing ovation that was so loud it was difficult to hear the audio of the tribute. Barry Trotz is a good hockey coach and an even better person, and the sellout crowd showed their appreciation to a fine man.
  • With Ryan Ellis injured, Mattias Ekholm is seeing some time on the power play, and he is showing that he can perform very capably on that unit. He is calm handling the puck and has a heavy shot. That shot was on display with his goal on the powr play in the third. Holtby was unscreened but Matty Ek placed the shot perfectly and with tremendous velocity for the score. Ekholm is playing with confidence and taking on some bigger minutes with Ellis out of the line up and he is performing very capably.
  • Speaking of the power play, the Predators were 1 for 4 tonight, and I am certainly not a coach, but I don't understand the lack of a net front presence. The power play operates with five players moving (good) but usually  no one in front of the net (bad). Giving the opposing goalie a clean look at the shot doesn't seem like it is optimal. 
  • Carter Hutton played an outstanding game. I do not fault him for any of the three goals that he gave up. Two were absolutely perfect shots that were rockets from Ovechkin. the Johansson goal was certainly not his fault as Johansson had 4 whacks at the puck before he was able to get it past Huts. On that play, Anton Volchenkov failed to move Johansson out of the front of the net. When  your netminder makes 3 stops in close, you would hope he would get some help from the defenders in front of him. he did not and the result was a go ahead goal by the Caps forward. Hutton was solid, tracked the puck well, and made some very good saves. He faced 34 shots tonight, stopping 31.
  • Braden Holtby made some outstanding stops, including one in the third period on Colin Wilson who was wide open in the slot. Holtby's start tonight was his 21st consecutive start.
  • The Predators were excellent in the face off circle tonight, winning 45 of 68.
  • Winning games on your home ice is critical. The Predators are a league best 18-2-1 at the Bridge. Kudos to the fans for the energy they bring to the rink every game. It bolsters the Preds and is intimidating to the opponent.
  • The Predators are 30-9-4, and with the loss by Chicago tonight, have a 6 point lead (64 points vs. 58 points) over the Blackhawks. They have a 2 point lead over the Ducks with a game in hand.
The Predators have two road games remaining before the All Star break, tomorrow night in Detroit and Tuesday in Montreal.

The Capitals are talented, big, and physical. The Predators refused to relent when that talented team took the lead in the third and kept fighting for the win.

That effort will be necessary in these next two road games.

My three stars:

1. James Neal

2. Alexander Ovechkin

3. Carter Hutton

Thursday, January 15, 2015

Rinne to Miss 3-5 Weeks With Injury


The Nashville Predators announced that goaltender Pekka Rinne will miss three to five weeks, including the All Star game due to a sprained knee he suffered early in the third period of the Predators last game against the Vancouver Canucks.

Rinne was injured when Canucks forward Chris Higgins and Predators defenseman Anton Volchenkov slid into him and drove him into the end boards.

The Predators have three games remaining on their schedule before the team breaks for the all Star game. They are home Friday night against Washington, then travel to Detroit for a game on Saturday night and finish with a game at Montreal. After the All Star break, February is a busy month for the Predators with 15 games.

The Predators have recalled Marek Mazanec from their AHL affiliate in Milwaukee. Mazanec played 25 games for the Predators last season.

Carter Hutton will take over the starting netminder duties for the Predators in the absence of Rinne.

Hutton came in and stopped all 10 shots he faced in the third period of the game against the Canucks, a 5-1 Predators victory.

While you never want to see a player of Rinne's caliber out of the line up, this is a good time schedule wise. The Predators have the three games then the All Star break before a very busy February schedule. This gives Rinne time to rest and rehab while the Predators do not have a heavy workload. If the absence is on the short side (3 weeks), then Rinne will be back for most of the very busy February schedule. If it on the longer end (5 weeks), the Rinne will rejoin the team the third week in February with 7 games remaining in that month.

Here's hoping the injury isn't serious and Rinne can get back in the net quickly but fully healthy.

*photo from Chris Hanewinckel USA Today Sports

Tuesday, January 13, 2015

Predators Vanquish Vancouver, Lose Rinne to Injury

The Nashville Predators demolished the Vancouver Canucks 5-1 at Bridgestone Arena.

That was not the story of the game, though. Smashville and all its fans held their collective breath as All-Star goaltender Pekka Riine was injured early in the third period.

Rinne was driven into the end boards after he came out to block a shot and was caught in the tangle of Anton Volchenkov and Chris Higgins at 2:55 of the third period.

Rinne did not look to be seriously injured and stretched a bit on the ice before leaving the game for Carter Hutton. Hutton stopped all 10 shots he faced.


The Predators used a strong first period and an overwhelming third period to capture the win.

Craig Smith opened the scoring with the Predators on the power play. he took a pass from Colin Wilson in the low slot and beat Canucks netminder Eddie Lack top shelf to give the Predators a 1-0 lead.

Colin Wilson made it 2-0 with a snipe over the shoulder of lack on an absolutely well placed shot.

Vancouver owned the second period as the pushed the Predators back in their zone and were able to cut the lead to 2-1 at 2:47 of the second period as Alex Edler whipped a shot past Rinne. On the play, Rinne was under assault and made 4 saves on the Canucks attack before Edler got the puck past him.

After Rinne left the game, the Predators found another gear and swarmed the Canucks.

Filip Forsberg tallied his 15th goal of the season when his wrist shot hit Lack and trickled over the goal line.

Mike Fisher scored a sweet goal as James Neal fired a pass of the boards toward the net. Fisher was streaking down the slot and got his stick on the pass and shovled the puck past Lack.

Wilson recorded his second goal of the game on the power play at 17:39.

Some observations:

  • A big stick tap to Carter Hutton. He entered the game with the Predators clinging to a 2-1 lead and was tested early. He made some good saves and stopped all 10 shots he faced in the remainder of the period. Hutton looked confident in net and moved well, and hopefully this will be a big confidence builder for him.
  • James Neal returned to the line up after missing five games. He had a strong game playing on the second line and picked up 2 assists tonight.
  • Mike Ribeiro was outstanding tonight. He has such good vision on the ice and distributes the puck well. he picked up 3 assists in 19:11 of ice time.
  • Colin Wilson continues to play at an elite elite level. He had an assist and a goal tonight, and his goal was a thing of beauty. he placed a shot from the face off circle over the shoulder of Lack and inside the far post. Wilson is strong on the puck and has done a great job of driving puck possession for the team. He has taken the next step in his game by utilizing his ability to make plays in the offensive zone and his shot is excellent. Wilson has a 4 game point streak and has been integral to the Predators success this season. Consider this: Wilson had 5 points in his first 15 games this season. He has 25 points in his last 25 games. Don't underestimate the contribution of Wilson to this team's success and strong play of late.
  • Speaking of contributing to the success of the team, Mike Fisher has 14 points (8G-6A) in his last 15 games. having Fisher back in the line up has given the team a solid second line center that is strong in all zones and has contributed consistently to the offensive effort.
  • Rinne was the goalie of record, leaving the game with a 2-1 lead. His win tonight gives him a league leading 29 wins.
  • The Predators power play was 2-6 on the night. Craig Smith scored both power play goals. The man advantage unit showed much better movement without the puck and worked to open areas for good shots. This effort has to continue.
  • How about the home ice advantage? The Predators are 17-2-1 at Bridgestone Arena. 
A solid win by the Predators, one that saw them turn it on in the third period. When the game was in the balance, the Predators turned up the intensity and their level of play to capture the win.

Now we wait and see about the health of Pekka Rinne.

The collective fingers of Smashville are crossed.

My three stars:

1. Colin Wilson

2. Craig Smith

3. Mike Fisher