Robert Loftus

Robert Loftus
Contributor since: 2010
That's largely dependent on consumer spending and gas prices. If gasoline prices don't go any higher than the $3.85 - $4.05 per gallon peak that we're used to seeing at the end of the summer, then there's a good chance that consumers won't retrench and consumer spending will spur additional inventory building; that combination of factors will prevent a significant deflationary event.
Commodity prices are pretty disconnected from what consumers pay for goods. The only category of items where commodities valuations have a significant and direct impact on consumer spending are energy commodities, and declines in spending for gasoline tend to be offset almost immediately by increased spending in restaurants, clothing stores and home appliance purchases.
You're talking about a specialized market. When I made that comment I was referring to national averages. The retirement cottages in a more typical market like Sarasota, that went from $350,000, all the way down to $185,000 during the real estate bust won't be seeing the $350,000 mark again for many years.
As I've said in the article, expect the Fed to set a home value appreciation target and adjust tapering accordingly.
There's a great deal of hyperbole coming out of the Austrian economics/right-wing media camp. I have no interest in Doomsday predictions from Newsmax and the crowd over at Mises.org.
Actually the spike in 2008 had more to do with money looking for somewhere to go after the REIT bond firesale associated with the real estate crash. That price spike was a pump and dump also which had absolutely nothing to do with actual demand.
Oil and gasoline futures always rise between Monday overnight trading on into Wednesday morning. It's the typical weekly bump before the EIA report comes out.
There's a collection of media outlets that do everything they can to encourage movements in the markets that have the potential to damage the economy, and by extension public approval of our current President.
Here's an example:
http://bit.ly/172m5Aa
The above comment regarding a commenter with a disrespectful tone was in reply to another comment which has since been deleted. Those remarks are not in reference to Abegaz's comment.
The issue here is how oil markets are affected, and as Egypt is a net importer of oil, and even if their entire oil production apparatus were to be idled and they had to replace all of that production with imports the total level of imports would be less than the rate of increase seen in the past year in US production alone, your claims of $125/barrel oil are unfounded.
Also, your tone is rather disrespectful and not quite appropriate for this forum. If you want to peddle right wing conspiracy theories and paranoia then head over to Breitbart or The Daily Caller where your kind of attitude is welcome.
Agreed. Actually, I think the election of Baradei in Egypt and Rouhani in Iran bodes well for the region. Baradei is a respected intellectual leader who has strong secular support. As the President of Iran Rouhani is basically a figurehead and subject to the dictates of the clerics but at least he appears to be far less likely to deliver a continous stream of half-witted and inflammatory foot in mouth moments like Ahmedinejad was known for.
The refiners make those decisions.
Demand for oil is falling, and that decline in demand is structural in nature.
Exports of finished gasoline and diesel fuel were greatest when the spread was greatest. If you look at EIA reports from a few months ago you'll see that at one point exports peaked at over 1 Million barrels per day.
At it's peak the Brent Premium was around $21 per barrel. That's about twice what it costs to ship a barrel of oil by rail from Cushing to Houston. The Seaway Pipeline reversal increased the profit margin of exporting finished gasoline and diesel. The Seaway reversal was completed a little over a year ago, and the 1+ Million per day peak in exports happened earlier this year.
As Cushing is debottlenecked export of unrefined light sweet crude from the Gulf would put immediate downward pressure on Brent prices. Oil refiners are more likely to refine stocks of heavily discounted Midwestern crude, then sell the refined products. That way they still have the cost advantage from using heavily discounted Dakota and Wyoming crudes, and can continue to export finished gasoline at some profit.
There are a lot of small oil exploration firms who have popped up and who will lobby Congress for a change in the law, but those firms don't have the clout of large refiners like Exxon or Valero who will benefit more by using Midwestern fuel stocks as an alternative to importing North Sea and Saudi Arabian crude.
You're correct - I forgot about the Treasury Direct accounts. I'll retract my last comment and say "The overwhelming majority of bonds are purchased by bond houses."
Private individuals do not purchase those bonds. Government bonds are purchased by investment houses, who roll the bonds into bond fund portfolios, then sell shares in that bond portfolio to retail investors.
The price of bonds is determined at the time they are auctioned. In a Federal Bond auction the buyer offers a discount bid against the face value of the bond. Future increases in interest rates won't affect the interest paid on bonds which have already been sold.
Tesla's been talking about a battery service where consumers will pay a monthly battery maintenance fee for swappable batteries. The company will test and refurbish battery packs at their own service stations. It's just like having companies that service the battery packs and scanners for the pricing guns used in retail stores.
There's being political, and there's calling out foolish behavior. This article does the latter.
Insurance has always functioned by pooling risk and spreading it over a larger group of people. That's why a larger insurance pool brings lower premiums. Your complaint is essentially a complaint about the fundamental operating basis of all insurance policies.
We may also be in for a massive jump in employment as a reduction in commodities leads to falling PPI figures for businesses, and the FED also decides to stop paying 0.25% interest on TBTF Federal Reserve deposits which leads to downward pressure on Treasury Notes - so that interest rates don't exceed historic norms. Of course, that's not even beginning to factor in the financial benefits of a reduction in bankruptcies and improved public health as a result of the Affordable Care Act.
I disagree with your characterization. It's not only gold bug trolling, it definitely has a gold bug trolling element but there's also a very straight-forward description of why gold was driven so high, who was involved in creating that phenomenon, and the inevitable "run on the cash-4-gold shops" that we'll see as gold starts to fall.
Ask any far-right Libertarian about their gold stash, based on the responses to this article it appears there are several in the comment stream you could send a message to.
Tuition has more to do with the construction of multi-million dollar athletic complexes and coaches making $2+ Million per year at big ten schools than it does inflation. The increase in gas prices is a result of consolidation and loss of market competition in the oil and gas refining industry - something the Bush administration did nothing to prevent. Health insurance -like education- should never be in the hands of the private sector. It's a public good that will see declining costs once the ACA is fully implemented.
"The only logical conclusion is that paying interest on reserves is a result of post-FED employment prospects in the banking industry being considered by members of the open market committee."
I disagree. See my comment above about reducing the rate on Fed deposits becoming a policy tool for controlling interest rates.
Also, if you aren't real savvy regarding how the Fed operates, and you want to spout anti-government conspiracy theories, there are plenty of other places for that on the web. The right-wing crazies have already infected 99+% of the internet with their mindless regurgitation of right-wing propaganda. Let's keep SA reasonably sane shall we?
ShadowStats is not a credible source. John Williams' doesn't announce any of his methodology to explain why he comes up with the figures he does. He just makes up numbers that he thinks will please his base of right-wing paranoids, then -instead of actually explaining the logic behind his claims- makes wild conspiracy theory claims to divert and distract his audience. Anyone who would claim that Shadow Stats is a reliable source of information is a lunatic.
I agree with you mostly, but the "bone-headedness" of paying interest on Fed deposits depends on how you look at it. One advantage of Bernanke having been slandered by the media relentlessly since Obama took office is that people frequently underestimate him. Paying interest on Fed reserves also creates a policy tool that allows him to counter rising interest rates.
Think of the outcomes after the June meeting if Bernanke announces a 50% draw-down in MBS purchases along with a reduction in Fed interest payments to TBTF depositors of 0.10%.
2% is the Fed's target rate for inflation. Inflation during the Bush administration was actually much higher.
http://bit.ly/Z8swl1
It didn't help that health care costs grew at an annualized rate of 9% for every year of the Bush Administration. Thankfully even with just the earliest components of the Affordable Care Act kicking in we've seen that fall to 4% per year.
Agreed. I'm anxious to see how far RBOB gasoline futures fall once the Fed does finally announce tapering of QE.
Agreed - Dollar Tree has outstanding potential, but to realize that potential they need to optimize their supply chain management; a process that would ideally involve identifying a wider selection of core items that should always be in stock at every one of their locations.
I'm also a Dollar Tree shopper and I like the half-loaves of light rye that they sell, but it's a product that sells out the day it comes in, then who knows how long it will be before it's in stock again.
Sometimes I misinterpret web comments. That's my bad. Your capitalization of the word "legitimate" is what led me to that conclusion. Otherwise we're on the same page regarding capital flows, although I believe a lot of excess capital is also flowing into commodities and hopefully an increase in MBS yields will contribute to a normalization of energy commodity valuations.
We're mostly on the same page but you seem to be taking a bit more of an Austrian view while I'm looking at it from more of a Post-Keynesian perspective. Gross negligence in lending practices by companies like Countrywide and some 200+ Florida and Texas banks which have since been dissolved or bought-out led to retail investors being skittish about MBS products. The Fed's actions were an effort to prime the pump and get the banks lending again.
Rising interest rates = increase in the yield curve