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Albert Sung is the author of Correlation Economics, monitoring breaking economic news on a day to day basis. He started investing in 2008 because of the economic crisis and holds a masters degree in chemical engineering. Previously, he worked several years as a process engineer at Ashland, a... More
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Correlation Economics
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  • This Is Why Interest Rates Can't Be Raised

    Janet Yellen may be telling us that she will increase interest rates next year (and the market believes that). But here is why it can't happen.

    Because when we arrive at 2015, the long term bond yields (red and blue chart) will have almost intersected with the short term treasury bills (purple chart). We call this flattening of the yield curve.

    If Janet Yellen even increases its interest rates half a percent, the 2 year treasury yields will skyrocket. The yield curves will flatten out and a recession will start, just like in 2008 where the yield curves were flat.

    Note: A flattened yield curve means that all maturities (3 month, 2 year, 5 year, 10 year, 30 year bonds) have the same yield. This is typically a recessionary indicator.

    Look how the 2 year bond yields go up because of Janet Yellen's talk about increasing interest rates.

    (click to enlarge)
    2 year U.S. bond yields
    Sep 24 4:56 PM | Link | Comment!
  • Commodities To Be Hit By China Slowdown

    I have bad news for commodity fans. China is indeed slowing down as power consumption has reached sub-zero year over year growth in August 2014. This means that China GDP growth will be sub 6% as the correlation suggests on chart 2.

    Chart 1: China power consumption growth

    Chart 2: Power output growth Vs. GDP growth

    Sep 24 3:03 PM | Link | Comment!
  • Peter Schiff Was Right Bitcoin Version

    Bitcoin was a bubble in December 2013 as I called here. Peter Schiff explained clearly why Bitcoin was bound to decline.

    (click to enlarge)

    I wanted to look back on the funniest moment on the Peter Schiff Show in November 2013 where he discussed the Bitcoin bubble with a certain "Ye".

    Sep 24 2:49 PM | Link | Comment!
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