Retail sales took a modest dive last month, but the prevailing explanation places the blame on Hurricane Sandy. That’s a plausible excuse for October’s consumption retreat, although it’ll take time to confirm, which means that it’s not immediately obvious that we can dismiss today’s news as a one-off event.
Strategic Briefing | 11.14.12 | The Revival Of US Energy Production
North America leads shift in global energy balance, IEA says in latest World Energy Outlook
Int’l Energy Agency | Nov 12
The World Energy Outlook finds that the extraordinary growth in oil and natural gas output in the United States will mean a sea-change in global energy flows. In the New Policies Scenario, the WEO’s central scenario, the United States becomes a net exporter of natural gas by 2020 and is almost self-sufficient in energy, in net terms, by 2035. North America emerges as a net oil exporter, accelerating the switch in direction of international oil trade, with almost 90% of Middle Eastern oil exports being drawn to Asia by 2035.
History Lessons & Financial Crises
Professor Gary Gorton’s new book is mandatory reading for anyone who wants to understand why financial crises are a recurring feature across time and distance for capitalism. There are no secret solutions on the pages of Misunderstanding Financial Crises: Why We Don’t See Them Coming
Another Civics Lesson… The Hard Way
There’s always another recession out there somewhere, although the catalysts keep changing. Here’s a new one: feckless politicians who provide the raw material for the next downswing in the business cycle by driving us over the fiscal cliff. Your tax dollars at work…Not! If this diaster hits (and there’s no reason it should), it would be the first time that Washington knowingly, willingly, without any illusions, delivers the macro equivalent of suicide. Political dysfunction at its worst.
Tactical Macro And So Much More…
Today marks the start of a new gig for The Capital Spectator. In addition to the usual commentary here, I’ll be publishing my two cents regularly on Saxo Bank’s 3 Numbers To Watch blog on its TradingFloor.com site. The focus is on the trading day ahead as seen through the prism of what’s on the docket for economic news. As you’ll see, I’m in good company over there. I recommend taking some time to explore the analytical flavors that range from forex to technical analysis to macro. On that note, a shameless plug: you can start with my debut post on 3 Numbers To Watch for the fiscal cliff risk: the 10-year Treasury yield, gold prices, and the US$/euro exchange rate.
A New Fed Flick
The Federal Reserve is the 800-pound gorilla when it comes to factors affecting the economy and the capital markets. That’s generally understood, if not routinely respected. Yet this goliath remains a mysterious entity for most Americans. A new film attempts to peel away some of the inscrutability with what is ultimately a fascinating story of the power, glory, and failures of the Fed. Money For Nothing: Inside the Federal Reserve is a self-proclaimed “independent, non-partisan documentary film that examines America’s central bank from the inside out–in a critical yet balanced way,” according to the movie’s website.
Book Bits | 11.10.12
● Market Sense and Nonsense: How the Markets Really Work (and How They Don’t)
By Jack Schwager
Excerpt via publisher, Wiley
Many investors seek guidance from the advice of financial experts available through both broadcast and print media. Is this advice beneficial? In this chapter, we have examined three cases of financial expert advice, ranging from the recommendation-based record of a popular financial program host to an index based on the directional calls of 10 market experts and finally to the financial newsletter industry. Although this limited sample does not rise to the level of a persuasive proof, the results are entirely consistent with the available academic research on the subject. The general conclusion appears to be that the advice of the financial experts may sometimes trigger an immediate price move as the public responds to their recommendations (a price move that is impossible to capture), but no longer-term net benefit. My advice to equity investors is either buy an index fund (but not after a period of extreme gains—see Chapter 3) or, if you have sufficient interest and motivation, devote the time and energy to develop your own investment or trading methodology. Neither of these approaches involves listening to the recommendations of the experts.
Has Krugman Gone Too Far This Time?
If you’re looking for fresh insight into the dysfunctional thinking that impairs policy debates in the U.S., which in turns gums up the machine for doing the right thing on the federal budget in a timely manner, read Paul Krugman’s column today. The title says it all: Let’s Not Make a Deal.
Another Jobless Claims Report, Another Reason To Wonder
Did Hurricane Sandy distort last week’s jobless claims data? Possibly. One argument is that the storm kept people away from the unemployment offices and so last week’s decline in new filings for unemployment benefits dispensed an artificially low number. “Extreme weather can hold down filings initially, with people initially preoccupied,” says Jim O’Sullivan, chief U.S. economist at High Frequency Economics. “Claims are likely to be boosted in the next few weeks by hurricane-related job losses.”
New Filings For Jobless Benefits Continue To Decline
Jobless claims dropped again last week, offering more evidence for thinking that the October pop in new filings for unemployment benefits wasn’t a statistical harbinger of cyclical doom after all. Once again the lesson is clear for poking through this data set: remain wary of the latest update and instead focus on the longer-term trend. By that standard, the numbers suggest that modest healing in the labor market continues, a trend that’s been in force for most of the past 18 months.