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Strategies & Market Trends : John Pitera's Market Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: Jon Koplik who wrote (10480)	11/6/2008 11:22:25 PM
From: John Pitera	Read Replies (1) \| Respond to of 33421

Hi Jon, these are the height of days of concern regarding global deflation..... look at crude under $60 as an undisputable axe..... or benchmark regarding the huge systemic deflation that has been coming out of the global capital markets. Does this then morph into the next wave of near hyperinflation, in selected markets and asset classes. My thought is yes. A perpetual deflationary bog down over the next 3 years would have the ox so deep in the ditch that we would see overthrows of governments that would surpass the early 1930's. This may well and (possibly probably ) come to pass based upon the huge global systemic dislocations that we are learning about and are front row center in seeing practical negative "blowback" from the carnage of this multi generational blow up in credit created finance. John ------------------------------------ Oil rebounds above $61 on weak U.S. dlr, gains curbed Thu Nov 6, 2008 11:13pm EST By Fayen Wong PERTH (Reuters) - Oil reversed course and rose above $61 a barrel on Monday, buoyed by a weakening U.S. dollar, but gains were curbed as an increasingly gloomy economic outlook continued to weigh on near-term energy demand. Comments by OPEC member Libya that the oil-producing cartel was not considering cutting production again also kept the commodity at a 1- year low. U.S. light crude for December delivery rose 28 cents to $61.05 a barrel by 10:37 p.m. EST, having earlier fallen to $59.97, its lowest since March 22, 2007. London Brent Crude gained 42 cents to $57.85. "The pullback in the U.S. dollar is a key driver for oil's gains," said Toby Hassall, chief analyst at Commodities Warrants Australia in Sydney. "But a weak global demand outlook will continue to be the primary driver in oil market. With the U.S. non-farm payroll expected to be abysmal, there is nothing much on the demand side that can lift prices." The dollar extended losses against the yen on Friday, falling more than 1 yen from the day's highs on risk aversion. Oil prices have tumbled more than 9 percent this week as a raft of dismal economic data from the United States heightened worries about a protracted global recession and growing U.S. fuel stockpiles underscored slackening energy demand. The International Monetary Fund said on Thursday it expected 2009 global economic growth of 2.2 percent, down 0.8 percentage points from its October forecast. It also cut its 2009 baseline oil price projection to $68 a barrel from $100. Asian stocks fell on Friday on fears of a global recession, as layoffs and corporate profit warnings piled up in the face of a rapidly slowing global economy. Traders will be looking toward U.S. economic indicators due later on Friday, including government reports on October unemployment data and September wholesale inventories, to gauge how the world's largest economy is faring. OPEC NOT MULLING CUTS OPEC is not actively considering cutting production again as oil markets are still volatile, but the cartel could opt to meet before its next scheduled meeting in December, Libya's top oil official said on Friday. Shokri Ghanem also warned that continued low oil prices could force companies to cancel new projects, risking a shortage of oil in two years. In about three months, oil prices have plummeted nearly $90 from record highs above $147 a barrel, as the growing global economic crisis erodes energy demand in the United States, the world's largest energy consumer, and other industrialized nations. Slowing demand and the sharp price declines drove producer cartel the Organization of the Petroleum Exporting Countries to agree to cut output by 1.5 million barrels per day (bpd) at an emergency meeting last month. OPEC's seaborne oil exports, excluding Angola and Ecuador, will drop 310,000 bpd in the four weeks to November 22 and will have fallen 700,000 bpd from an August supply peak, an oil analyst who tracks future flows said.

To: Jon Koplik who wrote (10480)	12/4/2008 5:40:43 PM
From: TimF	Respond to of 33421

According to U.S. Treasury data, the five-year real interest rate from the TIPS market on 11/28/08 was 4.17 percent. Yesterday, it was 2.03 percent. That is a huge change over only a few days. What happened? It appears to be, in large measure, a figment of data construction. Here is how the data are made: Real yields on Treasury TIPS (Treasury Inflation Protected Securities) at "constant maturity" are interpolated by the U.S. Treasury from Treasury's daily real yield curve. These real market yields are calculated from composites of secondary market quotations obtained by the Federal Reserve Bank of New York. And this is what you find in the footnotes: Starting 12/01/2008, the TIPS yield curve will use on-the-run TIPS as knot points rather than all securities under 20 years. Why such a large difference between on-the-run (new) vs off-the-run (old) bonds, and why did the issue only arise now? I am not sure, and the Treasury website does not explain, but here is a guess. TIPS offer asymmetric inflation-protection. If the price level rises, your principal rises as well. But if the price level goes down, you get your initial nominal principal back. (Don't believe me? Click here.) A new TIPS bond is great when there is risk of deflation. It is a real bond if prices go up, but more like a nominal bond if prices go down. Heads you win, tails you win also. An older TIPS bond, however, is not as attractive. A lot of price inflation is already built into the adjusted principal. All of that inflation has to be undone by subsequent deflation before the nominal floor on the principal kicks in. As a result, when there is risk of deflation, the older bond has to offer a higher yield to compete with a newer one. In other words, after a period of inflation, an older TIPS is closer to a true real bond, whereas a new TIPS is an attractive hybrid. This fact could explain the large jump down in the inferred real interest rate when the Treasury changed the raw bond data it uses. And it can explain why the issue became significant only recently, as people have started to seriously worry about deflation, inducing Treasury to change its calculations. One implication of this hypothesis is that the real interest rate now reported is not a true real interest rate but is infected by the hybrid nature of these bonds. Yields on older off-the-run bonds may be more meaningful. Of course, my conjecture could be completely wrong, as this is not my specific area of expertise. Another possibility is that the difference between these bonds instead has to do with changing liquidity premia. But one thing I am sure of: It is best to be wary of data from the TIPS market. gregmankiw.blogspot.com

To: Jon Koplik who wrote (10480)	10/13/2009 11:04:47 PM
From: Jon Koplik	1 Recommendation Respond to of 33421

NYT -- Colorado Plans to Lower Minimum Wage in 2010 ......................................... October 14, 2009 Colorado Plans to Lower Minimum Wage in 2010 By DAN FROSCH DENVER — When Coloradoans voted to tie the state’s minimum wage to inflation, they were trying to make sure low-wage workers did not fall too far behind the cost of living. But their vote has had an unintended consequence: Colorado plans to lower its minimum wage next year because of falling inflation rates, becoming the first state in the nation do so. The state’s Department of Labor and Employment said Tuesday that it planned to lower the minimum wage to $7.24 from $7.28, after an August federal consumer price index report showed that the cost of living had fallen in the state. A public hearing on the issue is set for next month. Colorado is one of 10 states where the minimum wage is tied to inflation. The others are Arizona, Florida, Missouri, Montana, Nevada, Ohio, Oregon, Vermont and Washington. “Colorado’s Constitution doesn’t give us any leeway,” said a state labor department spokesman, Bill Thoennes. “At this point, we don’t believe we have the option not to lower the minimum wage.” In 2006, in an effort to keep low-wage workers’ salaries commensurate with the cost of living, voters approved a change to the State Constitution that requires the minimum wage to be adjusted with inflation. As a result of the change, the minimum wage in Colorado has risen along with the cost of living. But this is the first time officials are faced with the prospect of lowering the wage to keep pace with a faltering economy. The federal minimum wage is $7.25 an hour, and it is illegal for most businesses in Colorado to pay workers less than that, so virtually all low-wage workers will see a drop of only 3 cents per hour. But advocates for poor Coloradoans say even that slight drop is enough to hurt people. “It’s not a lot of money, but for the people who are working for minimum wage, it means lot to them,” said Rich Jones, director of policy and research at the Bell Policy Center, a progressive research group in Denver that supported changing the Constitution. Mr. Jones said voters had approved the change because the federal minimum wage had not risen for years and Colorado’s inflation rates had remained relatively steady. He said he hoped employers would choose not to lower wages for their poorest workers even though state law will in all likelihood allow them to do so. Mr. Thoennes said the state labor department was discussing the pending wage decrease with the attorney general’s office. “This being such new territory for us,” he said, “we want to make sure we are not making any erroneous assumptions.” Copyright 2009 The New York Times Company.

To: Jon Koplik who wrote (10480)	6/9/2010 11:34:36 PM
From: Jon Koplik	Read Replies (1) \| Respond to of 33421

WSJ says (the "great") Pimco was WRONG again (on Treasurys, lately) ........................... MUTUAL FUNDS JUNE 10, 2010 Bond Giant Pimco Buys Treasurys in Recent Weeks BY MIN ZENG AND MARK GONGLOFF After months of deriding U.S. Treasury bonds, Bill Gross and his fund managers at Pacific Investment Management Co. have switched sides. Pimco had been the biggest and most vocal of a large group of Treasury bears, predicting that Treasury prices would fall, and yields rise, as the U.S. economy strengthens and the government borrowing binge continued. In the opposing camp was Pimco's chief rival, BlackRock Inc., which said in March that it was buying up Treasurys. So far, BlackRock's view has proven to be the winning bet. The debt crisis in Europe sparked a global flight to safe-haven assets such ... Copyright © 2010 Dow Jones & Company, Inc. All Rights Reserved.