Con-tango

Fortune telling I

In an attempt to complete the weather map with the salient storms which will most likely assail investments next year, I did the rounds visiting some of the better respected and informed minds to hear what they had to say…

Of course, I’ll shine the cristal ball, and give it a try too.

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Will you still love me when I’m 64?

Paul McCulley and Saumil Parikh make the case for the Fed’s transparency, arguing that both the US and the world economies have benefited as a consequence of this openness. Although I intuitively agree with them, I don’t think their low interest rate charts help to prove their point, viewed against the backdrop of the Chinese exported deflation of the last 20 years or so…

I think the article’s utter importance rests elsewhere: according to recent Fed estimates, based on population growth, participation and productivity growth, aging will trim 1 % from potential US GDP growth during the following 10 years… Since populations from Europe, Japan and China are also rapidly heading in the same direction, this contraction could easily be extrapolated to world growth forecasts.

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A 2007 recession?

Paul Krugman

To start, I
urge you to visit Mark Thoma’s blog to take note of the comments sparked by
Paul Krugman’s… 2007 recession prediction in his New York Times
article of 1 December 2006. As a matter of fact, I
strongly recommend reading
all his early December posts, they all touch quite unsettling themes:
the USD
demise ,
the folly
of the war in Iraq and
the wall
to Latin American relations.

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…A huge haircut

Natural Gas  NG0611 Source: Prophet
(click to enlarge)

According to Bloomberg’s September 21 piece,
by Katherine Burton and Justin Baer, Amaranth Advisors LLC hedge fund
lost $6 billion or 65% this month on a natural gas long bet.

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Greenspan’s conundrum II

Alan Greenspan
Source: US Treasury

…I think we all owe a lot to the old Fed chairman.

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Greenpan’s conundrum I

I thought I had enough of Greenspan’s conundrum with all the litter
I spilled the other day at JD Hamilton’s excellent yield curve presentation.

But, I was drawn in once again by reading knzn’s CB bank bond and US
interest rates purchases presentation, at his well argued
blog: Economics and.

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New Home Sales, not

I stole this chart and comment from JD Hamilton’s post on the new home sales data – it’s that good!

" Another way to summarize the deviation from the usual seasonal pattern
is with a graph like the following. In an average year prior to this
one, June sales would be 36% above the December trough, whereas this
year they are up only 17% since December.

Only 4 years out of the last
41 years (which includes 6 recessions) saw as weak a December-to-June
gain." [my italics]

I’ve got nothing to add; a picture is worth a thousand words…