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Investors will return from holiday with same fears
What's particularly troubling about oil's rise is that everyone knows it will affect the economy, but no one is sure exactly how. Experts are split over whether it will cause broad-based inflation, further economic weakness, or both at the same time.
I hope the experts are still makin' the big bucks.
Real Estate Newsletter Articles this Week: Existing-Home Sales Increased to
4.15 million SAAR in November
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At the Calculated Risk Real Estate Newsletter this week:
[image: Existing Home Sales]*Click on graph for larger image.*
• NAR: Existing-Home Sales Increase...
13 hours ago
6 comments:
Stag,
Just in case you haven't read this:
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+June+2008.htm
Bill Gross (an expert) has expertly hired Alan Greenspan (another expert).
There are no experts when it comes to economic forecasting. It's all a confidence game.
MAB,
There are no experts when it comes to economic forecasting. It's all a confidence game.
From your link...
On the other hand, commodity-based assets as well as foreign equities whose P/Es are better grounded with local CPI and nominal bond yield comparisons should be excellent candidates.
When the "Bond Kings" of the world tell you to get into commodities (after a nearly decade run) it really makes you wonder if you aren't near some sort of top (at least in the short-term if nothing else).
Oil, gold, and silver sure are down today anyway.
Check out wheat over the past few months.
http://futures.tradingcharts.com/chart/CW/W
Is the long-term trend breaking down? Is it a buying opportunity? Please throw some experts up here on the fence with me. I have NO idea.
http://futures.tradingcharts.com/chart/CW/M
The parabola is breaking down. Will there be another one though?
Stag,
When the "Bond Kings" of the world tell you to get into commodities (after a nearly decade run) it really makes you wonder if you aren't near some sort of top (at least in the short-term if nothing else).
Exactly. Expertly said.
The CPI changes that Gross is complaining about are between one & three decades old. Now, after commodities & foreign markets have outperformed U.S. stock & bond markets for over ten years, Gross notices and decides to make his move. Or more likely, throw an easy sales pitch.
I continue to live in awe of the keen foresight of financial experts. The patience is truly remarkable. Notice that experts can't time the markets until AFTER a decade long validation period. Also note that you can't wait for two decades of validation or you'd miss the easy money (aka easy sales trends).
If the likes of Gross are the best of alfa, I'll take beta over alfa any day. Good beta periods: 1920-1929, 1946-1960, 1982-1999. We also had some crazy low valuations that offered excellent entry points in the 1930s & 1970s.
IMO, we're in a period of bad beta. It's like bad karma - it's all around us. I have no intentions of gambling on alfa. Predicting/finding good alfa seems darn near impossible after factoring in fees & taxes.
MAB,
Or more likely, throw an easy sales pitch.
Back to that link you offered...
http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+June+2008.htm
I have been thinking about this for two days and now have a few questions.
Perhaps you can explain how they came up with the "24 representative foreign countries" in that 7% world inflation chart?
What great insight can we get comparing our inflation rate to Estonia? Why is Canada and its low inflation missing from the list?
As seen in the chart, world inflation was over 15% in 1998/1999. Was Bill Gross suggesting that the US inflation rate was similarly high back then? In other words, was the "Bond King" telling everyone that US interest rates were a full 10% too low and bonds were the biggest bubble in known history?
Somebody’s been foolin’, perhaps foolin’ themselves – I don’t know. This isn’t a conspiracy blog and there are too many statisticians and analysts at the Bureau of Labor Statistics (BLS) and Treasury with rapid turnover to even think of it. I’m just concerned that some of the people are being fooled all of the time and that as an investor, an accurate measure of inflation makes a huge difference.
Sure looks like fear mongering to me. It seems a bit like walking around asking leading/baiting questions about an ex-girlfriend.
You're thinking of dating her? Somebody's foolin' themselves. Has she been taking drugs and using dirty syringes? Does she have strange diseases she won't fully disclose? This isn't a conspiracy. She seemed fine when she was with me but I haven't seen her in months. I don't claim to know the answers. An accurate measure of her current health would make a huge difference to you though, don't you think?
Stag,
Somebody’s been foolin’, perhaps foolin’ themselves – I don’t know. This isn’t a conspiracy blog and there are too many statisticians and analysts at the Bureau of Labor Statistics (BLS) and Treasury with rapid turnover to even think of it.
Big lies are best hidden out in the open. Institutionalizing the false premise is the key. Once the bs is part of the "system" people become numb to it and just accept it. Questions and debate cease. History abounds with examples. Even a cursory study of the world's major political, religious and cultural beliefs is very enlightening.
Financial lies seem to have relatively short shelf lives. No more than a decade or two it seems.
Generally, as long as the herd believes that the system is fair and that things are improving there is little interest in questioning or debating the false premise.
BTW, I certainly don't believe we have 15% inflation. CPI + 2.5% is a closer fit with my cost of living.
MAB,
CPI + 2.5% is a closer fit with my cost of living.
I've been fairly inline with the CPI over the years personally, but it really depends a lot on the person.
For example, I don't drive much. I'm done with college. I don't chase inflating luxury goods. That helps a lot. I also live very close to a Safeway, Albertsons, and a QFC. I can therefore use the "substitution" (get you in the front door sales) part of the CPI better than some. Costco isn't all that far either and the pricing there has been relatively stable (until recently perhaps).
It is a bit hard for me to determine my personal inflation rate in 2008. I've had to put a hoarding asterisk next to my monthly expenses just so I wouldn't be alarmed by the increases. It is a mix of somewhat higher prices and much higher volumes. This is also seen in the same store sales at Costco. I'm clearly not alone.
I can say we just bought 5 more 12-packs of Coca-Cola products on sale at QFC for $11. A few years ago it could be done for $10. That's roughly inline with the government's reported food inflation rate.
The future doesn't look so good to me though. Meat prices in particular should go up next year. This brings me back to my point that the CPI looking back doesn't concern me nearly as much as what it might be in the future.
Rising corn feed costs prompt increase in meat prices
http://www.globegazette.com/articles/2008/05/24/news/latest/doc48389a8f1a71a324444394.txt
Largely due to the surge in prices for corn-based feed, the cost of everything from chicken to catfish will likely rise. Prices are expected to climb as much as 15 percent by early next year, economists said.
Baked-in.
“The livestock industry is adjusting,” Lawrence said. “Hog producers have been losing money. The poultry industry has seen its feed costs doubles. The cattle industry is losing money.”
Baked-in.
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