Why was Kohn talking about the Phillips curve today? That term--that whole idea--has been discredited. The only place it seems to have any standing is at the Fed. The Phillips Curve started as a very casual empirical observation with no theory behind it. Economists then formed theories to explain it, the scientific method in reverse! It was then discredited both by Milton's Friedman's famous paper circa 1968 and by the experience of the 1970s. So why are we still talking about it in 2008?
crispy&cole, I wonder if this will impact expectations of a rate increase? This report suggests conditions are worse now than in April - both with economic weakness and rising prices - not exactly what the Fed wants.
Could someone explain the divergence of SKF (banking) and SRS (Commercial RE). I have been trading them for a year (read relative novice) and they seem to have tracked pretty closely. I keep hearing CRE trails residential by 6-9 months, but SRS has stalled while SKF has taken off again.
Coming up with theories to explain observed phenomena is a large part of the scientific method. Its reverse would be coming up with phenomena to justify theories, i.e., the Bush administration.
I think if you had a poll here of rate increase chances - I would 90% of no rate cut this year.
One of the businesses I operate in is hurting in May and early June. My competitors in Ca are also down in these two months. We had a good Mar and Apr, then we went back to the weakness we saw in Nov - Feb.
OT- but not by much. It is understood that the largest holder of Oil futures is none other than Morgan Stanley. Hey, are all of these IB's killin' by sucking us dry, especially all of us in the proletariat cast.
"Business contacts in most Districts reported increases in input prices since the last report, especially prices for energy, petroleum derivatives, metals, plastics, chemicals, and food."
The U.S. government turned in a $165.93 billion budget deficit for May, a record for that month, as tax revenue fell and federal spending was pushed higher by a tax rebate program meant to stimulate the economy, the U.S. Treasury said on Tuesday.
He said central banks should probably take some of the blame for the crisis because of "a monetary policy that has favoured excessive money and credit growth globally, and exceptionally low interest rates".
Although significant risks remain we realize that we screwed up and now we have to try to kick the commodities down before nothing we do or say will bring down prices and we are rendered insignificant. Oops too late!
Charlie Poole,
I hope everyone knows that the Phillips curve is a joke. To talk about it is to show how intellectually challanged some Fed heads truely are.
Why was Kohn talking about the Phillips curve today?
The Fed still plays with an old pre-globalization playbook that says that believes that workers have bargaining power, that resources are immobile, and that inflation can't be exported. nuff said.
St. Louis Federal Reserve President James Bullard said on Wednesday there had been a deterioration in U.S. inflation expectations, but he did not think this reflected an increase in wage demands.
The U.S. seems to differ from the rest of the world in how it computes its inflation rate in three primary ways: 1) hedonic quality adjustments, 2) calculations of housing costs via owners equivalent rent, and 3) geometric weighting/product substitution. The changes in all three areas have favored lower U.S. inflation and have taken place over the past 25 years, the first occurring in 1983 with the BLS decision to modify the cost of housing. It was claimed that a measure based on what an owner might get for renting his house would more accurately reflect the real world a dubious assumption belied by the experience of the past 10 years during which the average cost of homes has appreciated at 3x the annual pace of the substituted owners equivalent rent (OER), and which would have raised the total CPI by approximately 1% annually if the switch had not been made.
Given the Fed-speak this weak, perhaps it's not a coincidence that cpi will be released on Friday the 13th? The last two releases appeared to have transient factors that artifically held the rate down. Add a reversal of these factors to some really nasty price increases over the past few weeks and it could make for a seriously ugly day.
Fiiiirst!
"generally weak"
Code word for oh S!@#
Ciao
MS
I wonder if this is already "priced into the market"?
Hey pretty soon we might even have a......dare I say it?.....recession!!!
Why was Kohn talking about the Phillips curve today? That term--that whole idea--has been discredited. The only place it seems to have any standing is at the Fed. The Phillips Curve started as a very casual empirical observation with no theory behind it. Economists then formed theories to explain it, the scientific method in reverse! It was then discredited both by Milton's Friedman's famous paper circa 1968 and by the experience of the 1970s. So why are we still talking about it in 2008?
crispy&cole, I wonder if this will impact expectations of a rate increase? This report suggests conditions are worse now than in April - both with economic weakness and rising prices - not exactly what the Fed wants.
Best Wishes.
Ca foreclosures break another record:
Mr. Mortgage’s Guide to the TRUTH! » Mr Mortgage – RECORD-BREAKING MAY CA FORECLOSURE REPORT
Could someone explain the divergence of SKF (banking) and SRS (Commercial RE). I have been trading them for a year (read relative novice) and they seem to have tracked pretty closely. I keep hearing CRE trails residential by 6-9 months, but SRS has stalled while SKF has taken off again.
If that's what the Biege Book says, I shudder to think what the Flourescent Orange-Red Book will say.
Coming up with theories to explain observed phenomena is a large part of the scientific method. Its reverse would be coming up with phenomena to justify theories, i.e., the Bush administration.
I think if you had a poll here of rate increase chances - I would 90% of no rate cut this year.
One of the businesses I operate in is hurting in May and early June. My competitors in Ca are also down in these two months. We had a good Mar and Apr, then we went back to the weakness we saw in Nov - Feb.
OT- but not by much. It is understood that the largest holder of Oil futures is none other than Morgan Stanley. Hey, are all of these IB's killin' by sucking us dry, especially all of us in the proletariat cast.
JS: Agreed. I went too far. But I hope you agree that the main point I made has some credibility.
I think all thinking people will discount any account of a rate increase.
It is obvious that all this Verbal Intervention is only that Verbal.
"Business contacts in most Districts reported increases in input prices since the last report, especially prices for energy, petroleum derivatives, metals, plastics, chemicals, and food."
As known as "just about everything."
Put on your rally caps. Here it comes....
The U.S. government turned in a $165.93 billion budget deficit for May, a record for that month, as tax revenue fell and federal spending was pushed higher by a tax rebate program meant to stimulate the economy, the U.S. Treasury said on Tuesday.
U.S. posts $165.9 bln May budget deficit
| Reuters
The US government is the economy, unfortunately that is all on borrowed money.
This is horrible news, time for a triple digit rally.
Bad, but nothing apocalyptic in here, to be sure. Probably the reason for a little lift. That, plus the margin clerk finishing up.
Other than that, Ms. Lincoln, how was the play?
Gotta remember, last time it was 9 down/3 flat. Easy comps is the name of the game.
Also, getting pretty well into oversold. Don't be shocked by an inexplicable rally.
OT (sorta, kinda, maybe not)
Guardian: ECB's Draghi-low rates partly to blame for crisis
He said central banks should probably take some of the blame for the crisis because of "a monetary policy that has favoured excessive money and credit growth globally, and exceptionally low interest rates".
Fed:
Although significant risks remain we realize that we screwed up and now we have to try to kick the commodities down before nothing we do or say will bring down prices and we are rendered insignificant. Oops too late!
Your charima
So many info here..nice to read it..
Can someone Call the close... i have no clue.
1338 was a good trade around number last time we were in the zone.
(2nd attempt, current thread)
1329 support so i say 1335
Charlie Poole,
I hope everyone knows that the Phillips curve is a joke. To talk about it is to show how intellectually challanged some Fed heads truely are.
Oil to $150 and housing falling at least 30%, mkt will drop 2K
Why was Kohn talking about the Phillips curve today?
The Fed still plays with an old pre-globalization playbook that says that believes that workers have bargaining power, that resources are immobile, and that inflation can't be exported. nuff said.
St. Louis Federal Reserve President James Bullard said on Wednesday there had been a deterioration in U.S. inflation expectations, but he did not think this reflected an increase in wage demands.
Fed's Bullard: inflation expectations have grown
| Reuters
Wage demands are there but that doesn't mean they will be forth coming. The inflation monster is the same source as always.
"The U.S. government turned in a $165.93 billion budget deficit for May"
That is the weak dollar, high oil price source, and the fuel for the bubbles- government spending.
Re: Phillips curve
Investment Outlook
Bill Gross | June 2008
Hmmmmm?
PIMCO - IO June 2008
The U.S. seems to differ from the rest of the world in how it computes its inflation rate in three primary ways: 1) hedonic quality adjustments, 2) calculations of housing costs via owners equivalent rent, and 3) geometric weighting/product substitution. The changes in all three areas have favored lower U.S. inflation and have taken place over the past 25 years, the first occurring in 1983 with the BLS decision to modify the cost of housing. It was claimed that a measure based on what an owner might get for renting his house would more accurately reflect the real world a dubious assumption belied by the experience of the past 10 years during which the average cost of homes has appreciated at 3x the annual pace of the substituted owners equivalent rent (OER), and which would have raised the total CPI by approximately 1% annually if the switch had not been made.
Given the Fed-speak this weak, perhaps it's not a coincidence that cpi will be released on Friday the 13th? The last two releases appeared to have transient factors that artifically held the rate down. Add a reversal of these factors to some really nasty price increases over the past few weeks and it could make for a seriously ugly day.
More good news:
Economy.com's Mark Zandi predicts $4.75 gasoline by July 4.
Zandi Predicts $4.75 Gas by July 4, as Households Feel Recession - Real Time Economics - WSJ
We'll have it by early next week in SD
A tad over $4.50 now....
Ciao
MS
Mark is The Man and CR and Tanta are also The Man:
Sorry ma
Call the close... dunno. Pretty good chance of a 3:30 smackdown.
Maybe S&P 1330?
So what the hell is Bernanke spewing. The beige largely contradicts his "don't worry be happy" speeches over the past few days.
Another 30 points and you're looking at the January lows.
Bingo, a selloff into the close. 1336.
gold star to warp9
on the nose...
Even if you round it via the "fed model"
Ciao
MS