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Ivan Kitov  

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  • 10 Reasons This Is Not a Sustainable Rally [View article]
    I agree with the conclusion. This is a temporary and transient increase.
    See the S&P 500 level around 1000 by the end of September.
    Sep 3, 2010. 01:25 PM | 10 Likes Like |Link to Comment
  • Gold Doesn’t Care If It’s IN-flation or DE-flation [View article]
    I would expect gold to decline at a five-year horizon
    Jun 24, 2009. 10:11 AM | 6 Likes Like |Link to Comment
  • U.S. Economy Facing Japan-Like Deflation: What Investors Need To Know [View article]
    Deflation is really a long term threat to the stock market -

    and it indeed repeats the path of Japan -

    as we described six years ago
    Jan 22, 2012. 09:28 AM | 4 Likes Like |Link to Comment
  • Why Peabody Energy Is Highly Undervalued [View article]
    Thank you for this comment. Did both disruptive impacts start in April 2011? The SA editor has removed the question mark from my original title of thsi article. Actually, I wonder what was the reason behind the deviation?
    Apr 4, 2012. 06:06 AM | 3 Likes Like |Link to Comment
  • Unemployment: Historical Chart Sends Scary Message [View article]
    Unemployment rate is defined as a share of some changing portion of total working population. People in this portion are called labor force and the portion itself is referred in economics as to labor force participation rate. Unemployed are those people who are currently ready (for example, students are not ready during scholar terms) to occupy any job position but have no opportinity to do that because of the absence of vacancies.
    This tricky definition of unemployment confuse many researchers and broader audience. For example, labor force participation rate in developed countries varies in a wide range and thus the same portion of the total working age population announcing itself as " unemployed" may define quite different "unemployment rates" .

    When applied to one country, the definition misses actual long-term variations in labor force participation rate. However, variation in participation rate are tramendous. As it has been actually observed in the USA since the 1960s. In 1963, the participation rate was below 58.7% , and between 1997 and 2000 it was 67.1%. the latter was the peak and since then the rate has been falling. As a result, people are likely to move first into unemployment and then out of the labor force at all. This is a long-term process with some fluctuations.
    Again, this is an observed (actual) process with some fundamental economic, social, demographic, and etc. forces behind it. In 2006, the rate was 66.2%, i.e. 1 percenatge point less than in 2000. 1% of the participation rate or 1% of the working population is ~2,300,000 people leaving labor force through unemployment.
    As one can see, this effect can not be neglected:
    Aug 12, 2009. 01:48 PM | 3 Likes Like |Link to Comment
  • Why Crude Will Reach $100 / Barrel [View article]
    As a matter of fact, I will not be disappointed if this prediction is wrong. This is just about links between measured variables. I can do nothing about forces behind such bounds, and do not take this personally. On the other hand, the reported behavior looks very natural for a physicist.
    Jul 15, 2009. 10:39 AM | 3 Likes Like |Link to Comment
  • Crude Will Reach $100 by December 2009 [View article]
    Thanks, I appreciate your comment and deep analysis.
    My guess about the future of the CPI DIFFERENCE is based on the past observations. I am a naive person, and expect that the future will repeat the past somehow. In the case of the CPI difference, I guess that the next 5 to 10 years it will be a mirror refelection of the years between 2001 and 2008. In other words, the difference wil be growing at the same ( or close) rate as it was declining between 2001 and 2008. Is it naive? Yes. But it does not contradict my understanding of the nature. As a thought experiment, imagine yourself in 2001, in the beginning of a new trend (actually observed between 2001 and 2008). Somebody told you that the next 7 years would be charaterized by quick oil rise to $150. Would you believe that?

    As a naive person with background in physics, I prefer to discuss only quantitative links, not word explanation. I believe that you are right with your analysis of the forces behind the trends, but I can say nothing about that. It is really beyond my undestanding.

    P.S. For your convenience, there are more commodities analyzed in my articles and paper.
    at seeking alpha -
    or in my blog -

    On Jun 27 05:20 AM tradingdayz wrote:

    > Very Impressive Ivan, I was thinking that what you've done is very
    > important in understanding trading strategies for the next three
    > months at least but beyond that I'm less sure. The physicist's comments
    > are appropriate but his notion of pendulum is modified perhaps by
    > the fibonacci retracement as reducing rebound to a damped range that
    > ends in late August. This damping would be due to momentum getting
    > cut by half by mid-July--something to watch for. Fibonacci would
    > apply since the difference between headline and crude index represents
    > the amount the economy is overheated so it seems applicable as a
    > growth oriented paramenter. Your long term notion of crude at 22$,
    > now this is fascinating. I am assuming you are using world figures
    > to create CPI? Aren't such figures hard to estimate since currencies
    > fluctuate? I guess i am saying does the model breakdown if the headline
    > rate is off? Can it account for 6.5% chinese growth and continuing
    > demand for all things crude? Local industry in the US would completely
    > collapse below 40$ wouldn't it? And production bottlenecks would
    > arise long before that price and push up development costs and the
    > price for crude. I think what might be interesting to consider is
    > what if your work represents a philosophically broader concept than
    > just crude. Till 2016 the price of 'personal energy' needs to be
    > more inline with headline and so your model then predicts the change
    > to alternatives will be driven by the comparative VALUE of crude.
    > In a way 22 means the downward pressure on crude, despite whatever
    > real price it has, since for whatever reason, it will probably be
    > more like 150 by then. We all know it since it is the political nature
    > of this commodity since it so central to the world economy.
    Jun 27, 2009. 06:05 AM | 3 Likes Like |Link to Comment
  • The Rate Of Unemployment May Fall Below 6% In A Year [View article]
    We had predicted the fall to 64% in the rate of participation in labor force two years before it actually realized:

    Kitov, I., Kitov, O., (2008). The Driving Force of Labor Force Participation in Developed Countries, Journal of Applied Economic Sciences, Spiru Haret University, Faculty of Financial Management and Accounting Craiova, vol. III(3(5)_Fall), pp. 203-222.
    Dec 10, 2012. 12:58 PM | 2 Likes Like |Link to Comment
  • Economists Ignore 33,000,000 Americans When Calculating Income Inequality [View article]
    This is a list of income sources as defined by the Census Bureau :

    For each person in the sample 15 years old and over, the CPS asks questions on the amount of money income received in the preceding calendar year from each of the following sources:

    2.Unemployment compensation
    3.Workers’ compensation
    4.Social security
    5.Supplemental security income
    6.Public assistance
    7.Veterans’ payments
    8.Survivor benefits
    9.Disability benefits
    10.Pension or retirement income
    13.Rents, royalties, and estates and trusts
    14.Educational assistance
    16.Child support
    17.Financial assistance from outside of the household
    18.Other income

    It should be noted that although the income statistics refer to receipts during the preceding calendar year, the demographic characteristics, such as age, labor force status, and family or household composition, are as of the survey date. The income of the family/household does not include amounts received by people who were members during all or part of the income year if these people no longer resided in the family/household at the time of interview. However, the CPS collects income data for people who are current residents but did not reside in the household during the income year.

    Data on consumer income collected in the CPS by the Census Bureau cover money income received (exclusive of certain money receipts such as capital gains) before payments for personal income taxes, social security, union dues, medicare deductions, etc. Therefore, money income does not reflect the fact that some families receive part of their income in the form of noncash benefits, such as food stamps, health benefits, rent-free housing, and goods produced and consumed on the farm. In addition, money income does not reflect the fact that noncash benefits are also received by some nonfarm residents which often take the form of the use of business transportation and facilities, full or partial payments by business for retirement programs, medical and educational expenses, etc. Data users should consider these elements when comparing income levels. Moreover, readers should be aware that for many different reasons there is a tendency in household surveys for respondents to underreport their income. Based on an analysis of independently derived income estimates, the Census Bureau determined that respondents report income earned from wages or salaries much better than other sources of income and that the reported wage and salary income is nearly equal to independent estimates of aggregate income.
    Oct 29, 2012. 03:11 AM | 2 Likes Like |Link to Comment
  • Why Peabody Energy Is Highly Undervalued [View article]
    Right. This is my first investment - should be defensive and a part of a big portfolio. GOing to enter stocks (likely BTU and NFX) directly when S&P 500 is at 1350 - expect this level by May.
    Apr 3, 2012. 04:00 PM | 2 Likes Like |Link to Comment
  • Why The Employment Situation Isn't Improving [View article]
    Only real economic growth can improve employment/unemployment situation. The US needs the rate of real GDP per capita growth at least 1.9% per year for the employment/population ratio to grow and the rate of unemployment to fall - .
    Sep 7, 2011. 01:45 PM | 2 Likes Like |Link to Comment
  • V-Shaped Revenue Recovery + L-Shaped CapEx Growth = Unstable Economy [View article]
    In the very short-run, the revenue is V-shaped - the growth in 2009 is measured against the fall in 2008. This will stretch into 2010 (likely till April). Then the rate of teh current growth will be decelerating and referred to the fast growth in 2009. It will give an impression and formal realization of fall. So, I would guess that the revenue curve is likely a W-shaped one, if to look at a three year horizon since 2008:
    Aug 13, 2009. 05:55 AM | 2 Likes Like |Link to Comment
  • Economist Consensus: The Recession Is Over [View article]
    Recession as an economic term has a lot of problems with definition. Common sense says that "recession" should be defined as a contraction of real GDP. This straightforward definition results in many problems arising before the NBER recession dating committee. The committee made a mistake in 2001 - the current estimate of real GDP growth rate in 2001 is +1.1% revised from -1.3% announced in 2002. In order to avoid any further criticism, the committee (i.e. most distinguished economists!) has sophisticated the definition to the extent that nobody understands what is called recession. Actually, any random configuration of downward economics curves can be called recession if the NBER saying so.
    Considering the vagueness of the current definition of economic recession any opinion on the current state of the US economy is void. When the rule of thumb definition is implied (two subsequent quarters of negative growth or annual negative figure) one should bear in mind that the BEA regularly revises its estimates. In practice, these revisions are bigger for bigger estimates. Therefore, I would wait until the 2015 comprehensive revision before announcing any end of recession. It might happen that the recession ended in Q2 if relevant growth rate estimate revised to a positive figure. It happened in 2001, why not in 2009?
    There is an alternative proof of a positive economic growth in 2009Q2. The S&5 500 returns are tightly linked to real economic growth. This link says that the GDP in the USA increased in Q2:
    Aug 13, 2009. 04:28 AM | 2 Likes Like |Link to Comment
  • Crude Will Reach $100 by December 2009 [View article]
    It is my intention not to carry out any statistical tests. You can see in Figure 1 I removed Rsq. from the graphs and left only the slope.There are two reasons. First, I am sure that everybody can estimate Rsq. just by visual fit. the interval between 1988 and 1999 has Rsq.=0.48 and between 2001 and 2008 Rsq.=0.8.
    The former interval contains a spike near 1991 which spoils OLS estimates, as you know. More elaborated techniques are also applicable but hardly give more insight. The most important would be heteroscedasticity of the residual. At first glance the time series looks good with the deviation amplitude distributed evenly over the intervals.

    Second reason is practical - any deviation from the trend finally ends up in an opposite deviation of the same amplitude in order to balance the overall deviation to zero, i.e. the trend line. So, any deviation provides opportunity to get profit for those who know the model. The larger is deviation the larger is the profit.

    Because all time series are easy to retrieve you can conduct any analysis yourself and all results will be welcome.

    On Jun 27 11:24 PM Henry Buttal wrote:

    > Ivan,
    > An interesting analysis; does your approach allow you to include
    > statistical methods such as confidence intervals?
    > If so it would be interesting to know how accurate the correlation
    > has been in the past at different measurement intervals.
    Jun 28, 2009. 03:24 AM | 2 Likes Like |Link to Comment
  • Crude Will Reach $100 by December 2009 [View article]
    It looks like you have developed a very good research plan. I would appreciate to learn your results when ready.
    The linear trends are visible in the data reported by the BLS. Using the trends one can predict the future at several year horizon, not vice versa. The paper is not theoretical but 100% empirical one.

    On Jun 26 09:07 PM pdub271 wrote:

    > A predictable piecewise-linear relationship? Sounds too good to be
    > true. Any function can be well approximated by piece-wise linear.
    > The question is whether the model has any predictive power. Show
    > me a retrospective analysis which uses a standard "hold out" strategy,
    > holding out the data on later years, and training on the earlier
    > years. Show me that you can predict the held out data using the training
    > data alone. Then show the predictive ability is significant, by repeatedly
    > permuting the time points and repeating the entire analysis.
    Jun 27, 2009. 02:56 AM | 2 Likes Like |Link to Comment