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SA Editor Stephen Alpher

SA Editor Stephen Alpher
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  • Chart of the day: core inflation over the past 40 years. Does this really look like a big problem?  [View news story]
    Not surprising to see one of the Fed's favorite mouthpieces put this up.

    First, the nature of the chart is deceptive - yes CPI sucked in the 70s which makes today look good, but a rate of even 2% can be quite corrosive to purchasing power over time.

    Second, I'm guessing a part of today's pleasant rate is just that the government has gotten better at artificially lowering it through things like the Boskin Commission (whose role was to lower the CPI) and hedonic adjustments.

    Third, inflation is excess money - in the 70s this excess showed up in CPI, in the 90s it showed up in internets and telcos, in the 00s it showed up in RE ... Just because CPI (as defined by the government) doesn't capture it should be of little comfort to anyone who is worried the Fed has somehow engineered yet another boom/bust cycle in asset prices.
    Feb 10 09:47 AM | 5 Likes Like |Link to Comment
  • An optimistic Floyd Norris sees much in common between the current employment picture and 1983, when the unemployment rate tumbled from record highs. But Norris overlooks a huge difference: housing. In 1983, housing starts zoomed from 1M to 1.7M - "Not. Gonna. Happen. Not with the overhang of existing vacant housing units."  [View news story]
    Don't forget, in 1983 there was a lot of room left for interest rates to come down. The 30 year was still in double digits at the time, short rates were probably pretty close as well.
    Feb 4 09:46 AM | 2 Likes Like |Link to Comment
  • March sugar futures rise 5.1% to a 30 year high as Tropical cyclone Yasi threatens Australian production, which accounts for 7% of world exports. Earlier flooding has already reduced Australia's sugar crop to the lowest level in nearly 20 years. Sugar ETF: SGG +4.2%.  [View news story]
    Covered it earlier ...

    seekingalpha.com/curre...

    Been looking all day, but still can't find a place to buy banana futures!
    Feb 2 03:37 PM | 1 Like Like |Link to Comment
  • Iceland's decision not to guarantee the debt of its banks stands in stark contrast to Ireland's path. Both countries suffered brutal recessions, but Iceland has quickly resumed organic growth, while Ireland faces years of staggering debt payments and austerity (though today's numbers look good).  [View news story]
    I'm missing something here. What has you upset?
    Feb 1 03:39 PM | Likes Like |Link to Comment
  • Iceland's decision not to guarantee the debt of its banks stands in stark contrast to Ireland's path. Both countries suffered brutal recessions, but Iceland has quickly resumed organic growth, while Ireland faces years of staggering debt payments and austerity (though today's numbers look good).  [View news story]
    I'd hardly call it "editorializing.' That Ireland will face difficult times is fairly common wisdom. I fail to see the harm in pointing out good news when it does hit. Would you prefer not to know that information?
    Feb 1 01:49 PM | Likes Like |Link to Comment
  • A shortage of workers becomes the issue as German unemployment falls to about the lowest level since reunification. The lack of skilled labor “can already be felt today and threatens to become a serious problem," says a spokesperson for an engineering firm group.  [View news story]
    I think "skilled" is the operative word here!
    Feb 1 09:11 AM | Likes Like |Link to Comment
  • An investor buys 108,000 Citigroup (C +1.3%) January $7.50 calls expiring in 2012, Steven Sears reports - noteworthy because it's the first time "in recent memory" that a major investor has created a significant position that envisions Citigroup trading above $7. Up until now, most of the betting has centered on the stock trading above $5.  [View news story]
    Maybe he's short C up the yazoo and is just hedging.
    Jan 31 03:30 PM | 1 Like Like |Link to Comment
  • Among the stocks hit by unrest in Egypt and the suspension of cell phone activity is its largest mobile phone operator, Vodaphone (VOD -2.1%), who says "under Egyptian legislation, the authorities have the right to issue such an order and we are obliged to comply with it." EGPT -4.4%.  [View news story]
    Thanks for the suggestion. We did cover a possible "bell ringing" in shipping rates yesterday ...

    seekingalpha.com/curre...
    Jan 28 03:18 PM | 1 Like Like |Link to Comment
  • Interest rates in Australia could rise a lot faster than markets expect if a research report warning of accelerating inflation is correct. Strong demand, rising import prices, and widespread shortages of labor all point an economy operating at or beyond capacity.  [View news story]
    Yes, there will be slowing. Far more important IMHO to the Aussie economy and interest rates is the voracious Chinese and emerging market demand for the commodities.

    The X factor will be the raging housing bubble (much of it tied to the China-led boom). If it cracks, expect the RBA to ease early and often!

    Don't forget the (small) possibility of a TARP like bond issuance by the Aussie gov't to pay for the necessary rebuilding. In this case, you could see the Aussie economy speed up as a result of the flooding. Conversely, the gov't could jack taxes and exacerbate the slowdown.

    It's a giant 9 dimensional puzzle. When you figure it out let me know!
    Jan 28 12:31 PM | Likes Like |Link to Comment
  • Interest rates in Australia could rise a lot faster than markets expect if a research report warning of accelerating inflation is correct. Strong demand, rising import prices, and widespread shortages of labor all point an economy operating at or beyond capacity.  [View news story]
    Whatever happens to interest rates in Oz over the coming year (and I have no idea; the article posted is one group's opinion), I wouldn't think the floods would affect very much. People and entire economies have a way of getting right back on their feet. The Aussie $ remains near all-time highs. Stocks have been going up.

    Are the floods going to end the commodity boom? Are they going to slow down Chinese demand for Aussie goods? Are they going to reverse the labor shortage?
    Jan 26 08:50 PM | Likes Like |Link to Comment
  • Barclays looks set to cut 1,000 jobs as it gets out of the business of financial planning for retail customers. That number accounts for about 3% of its retail banking operation. Premarket: BCS +0.05%.  [View news story]
    Check out Taylor Cottam's outstanding essay from yesterday ...

    seekingalpha.com/curre...

    No need to have all those pesky employees when one guy with a computer can ride the yield curve all day long!
    Jan 26 09:12 AM | 1 Like Like |Link to Comment
  • “Does it make sense that you can buy considerable stocks of commodities without running any risk, without blocking any sum, without committing to any cargo delivery," says French President Sarkozy, apparently not briefed on the way futures markets operate.  [View news story]
    I'm aware of that change. Much of that has to do w/the rise of financial futures.

    I'm still not getting your original point. Somebody going long cotton in 1860 (another balls to wall bull market) was no more obligated to take delivery than someone going long today. Ease of offset has always existed. There would be no market otherwise.

    Before we get too far afield, let's look at Sarkozy's comment ...

    "without running any risk" - wrong, there's always risk
    "blocking any sum" - wrong, margin requirements still exist
    "committing to any cargo delivery" - right, but this has always been the case

    I'm not specifically picking on Sarkozy. I'd expect nothing less ignorant from pretty much any politician. :)

    All the best!
    Jan 25 04:20 PM | 2 Likes Like |Link to Comment
  • “Does it make sense that you can buy considerable stocks of commodities without running any risk, without blocking any sum, without committing to any cargo delivery," says French President Sarkozy, apparently not briefed on the way futures markets operate.  [View news story]
    Please elaborate on your point, because I don't get it.

    "If you bought a contract for ten boxcars of soy beans and didn't liquidate it before expiration, you wound up with ten boxcars worth on your front lawn"

    The same goes today - if you don't liquidate a long contract, you must take delivery.

    There's been no removal of any delivery requirement.
    Jan 25 03:20 PM | 3 Likes Like |Link to Comment
  • Deflation continues to be a worry as McDonald's (MCD +0.5%) plans to raise prices just 2-2.5% in the U.S. and 3.5-4.5% in Europe.  [View news story]
    "Deflation" was meant to be a sarcastic comment ... :)
    Jan 24 06:35 PM | 1 Like Like |Link to Comment
  • Those expecting the RBA to hold off on rate hikes because of the Queensland flooding may be disappointed. Far more influential will be the track of consumer prices and employment, both of which look strong as the commodity boom spurring Oz remains in force.  [View news story]
    I think the Australian Times article was referring to the commodity volume boom that is causing surging growth and wage inflation in Oz, not the price of commodities.
    Jan 24 03:37 PM | Likes Like |Link to Comment
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