Peter drinks coffee, plays chess, teaches finance, and does some fun econometrics time-series stuff. He also cooks dinners, detrends return series, and supports various political causes. He abuses the English language with love and affliction, but believes that officer Crabtree still beats him with a few horselengths. He is a reformed Molskinista, an avid Marxist (of the Grouchoian kind), and a fan of 1980s Britcoms.
Stocks rose. On the New York Stock Exchange Tuesday, 2,513 stocks advanced and 782 declined on volume of 1.2 billion shares.
Bonds advanced. The 10-year note rose 13/32, or $4.06 for every $1,000 invested, to yield 4.885% Wednesday, and the 30-year note was up 21/32 to yield 5.006%.
The dollar weakened. The euro was at $1.2852 from $1.2785 late Tuesday, while the dollar was at 115.79 yen from 116.10 yen.
The lower reading on consumer inflation raised hopes that the Federal Reserve’s rate-lifting campaign has ended; the DJIA had climbed to within 81 points of its all-time high. The Labor Department’s consumer price index increased by 0.4% in July, up from a 0.2% increase in June. This is in line with analyst expectations. The less volatile core CPI grew 0.2% last month. Thus, without the influence of volatile food and energy, the core CPI grew below expectations. On a yearly basis, the core CPI is up 2.7%. Additionally, the wholesale inflation also showed moderating inflation pressures.
The housing prices show signs of some well-neededmoderation.
Just a couple of interesting blogs…
Greg Mankiw enters into the ongoing debate between Jeremy Siegel and John Bogle on passive investing in NYT. The core point is Siegel’s recently advanced idea of fundamental investing – creating indexes that reflect fundamental or value directed valuation ratios, capitalizing on systematic mispricing in the markets and the inability of active managers to reap value. Mankiw sides with Bogle. And it is easy to see why from an efficient market perspective.
On the happiness front, there is a small piece on Money and Happiness in the Wall Street Journal. My point is that I would rather cry 0n the backseat of a Bentley than a Hyundai.
In other PA political news, Hazleton, PA, faces a lawsuit. Recently, mayor Lou Barletta and Hazelton council members passed a controversial legistlation that was to punish those who hire or rent to illegal immigrants. Landlords would be fined $1000 per illegal immigrant. This act also made the English the town’s official language. This is a sad infringement on civil liberties. I do not support any sides of the current illegal immigration debate. Any legislation on any level attempting to change the status quo would make the situation worse – nothing Pareto optimal here. What worries me is that other communities across the United States have requested information on this proposal for use in their own municipalities
The debate on what colleges do for a living continues. I am a strong believer in the objective certification model of eduction, an approach recently suggested by the federal Commission on the Future of Higher Education. Already and unexpectedly, there is some tension brewing. There is a crisis in higher education and the sooner we solve it, the better for the students.
SEC’s Cox plans to look further into protecting Baby Boomer assets, which is a good idea considering the assets Baby Boomers have amassed during the last 50 to 60 years.
In his first speech since becoming Treasury Secretary, Henry Paulson voiced support for a strong dollar and said America “must welcome competition, not run away from it” if the country wants to maintain a competitive advantage. He also argued for the overhaul of the social security system and warned for the foreign energy dependence. He seems to follow the general GOP dogma.
In the political arena, Charlie Cook sees November rout and Al Sharpton blasts Lieberman.
Sadly, the Swiftboaters have set sights on Murtha. Clearly, truth has nothing to do in politics any more and there are many who have sold their integrity to the lowest bidder for scraps. At least Dr. Faustus sold his for eternal life and not a few cheap and meaningless political points.
Integrity seems to be ebbing all around in PA. Republicans have financed a Green Party candidate’s entrance into the Senate race, hoping to syphon off voters from Casey. Green Party candidate Carl Romanelli, making his first bid for statewide elective office, acknowledged Monday that Republican contributors probably supplied most of the $100,000 that he said he spent gathering signatures to qualify for the Nov. 7 ballot. Santorum must be very, very and very afraid. He is running one of the weakest Senate campaigns in this cycle.
Nothing more about Joementum this afternoon, but I can tell you that there will be more news about him.
It is unbelievably hot here in Central PA and the temperature is expected to hit 100F.
WSJ and BBC both report that Fidel Castro undergoes surgery. Castro is 79 years old and transfers power to his 75 year old younger brother, Raul. This is not surprising, he has been in bad health lately. The question now becomes, when can I smoke a Cuban legally. I am willing to take bets.
Jomentum is cool. Both the Daily Kos and Wonkette sacrifice serious binary resources into the analysis of Joementum, or rather the lack of it. If the Colbert Report is discussing Joementum, clearly there is something to talk about. BTW, Mitt Romney is out. No link’s necessary …
CNN is taking on www.youtube.com and allows now users to post content. The White House is updating its pressroom, which originally was built atop a filled in swimming pool. These new changes will help the pressroom to communicate more drama.
Smut stinks. Howard Stern is not working out for Sirius. It posts wider loss, but the subscriber base is increasing. According to Sirius it added 600,460 subscribers; it has 4.7 million at the end of the quarter. The company expects to have 6.3
million subscribers by the end of 2006. Previously it expected 6.2 million. Last week, XM posted a wider loss for Q2 and cut their subscriber estimate. XM, which has seven million subscribers, expects to end the year with between 7.7 million and 8.2 million.
The appeal of ETFs is shifting to Main Street. This is a positive and very interesting development, which in the long run changes the structure of both the mutual fund and the private financial advisor industries.
The question of maturity is always relative. New web-start ups lure executives away from eBay and Yahoo. Only 7 years ago, staid old economy companies – GE, IBM, CA – lured lost people to the upstarts. Does this new development mean that eBay and Yahoo are both old economy companies now?
And the Beirut stock market reopened for trade today. One of Beirut’s main indexes, the BLOM, closed 4.1% lower at 1,230.22.
Blogosphere
Political Calculations discusses Greg Mankiw’s perspective on the Federal Funds Rate. Mankiw’s method is attractive in that it incorporates two of the economic factors that the Fed is chartered to influence through monetary policy: the rate of inflation (measured as 12-month change in the Consumer Price Index for Urban consumers, less food and energy) and the rate of unemployment.
Voluntary exchange discussess the economics of World War I. A book edited by Stephen Broadberry and Mark Harrison for specialists and folks interested in history discussess the economic factors behind the war. The reviews are interesting here and here.
From teaching and Wall Street, I do another exucrsion to politics, not primaries or realpolitik or academic politics. We all know that academic politics is as nasty and possibly more callous than real life politics where the stakes are considerably higher than in the Ivory Towers. But the Ivory Towers pursue politics with the same pathological ruthlessness as politicians.
EconoPundit refers to a blog dedicated to revisit the UK’s position in Europe by calling membership referendum, EU Referendum. There Richard North assembles a series of Reuters, EPA, and AP photos credited to various photographers. In itself this is hardly different from other websites that collect evidence of military atrocities against civilians. This is different. North astutely examines the sequence, timing, and clothing worn by those in the photos. North arrives to the not very surprising conclusion that he rescue workers are highly likely Hezbollah soldiers. That is a fine and commendable action. However, North argues that these rescue workers stage “rescue photos” using dead children repeatedly as props.
The Daily Kos is on the ball, again. NYT endoreses Ned Lamont in the CT democratic primary and not the incumbent, Joe Liberman (the guy who was Al Gore’s vp candidate back in 2000). The story offers a new twist in the bizarre saga that is the 2006 CT democratic primary. Joementum seems to flounder. There are substantiated rumors (whatever that means) that Joementum is seriously considering an independent run if he loses the primary. Looking at the pools, it seems to become a three-way race.
For those who have forgotten it, back in 2000, when Liberman was the vp-candidate, he was also running for reelection to the US Senate. He lost the general election, but got re-elected to the Senate. From a signalling perspective, I always found it puzzling that he did not throw his entire energy into becoming vp. Did he know that CT voters would re-elect him even if he did not campaign seriously for re-election? Was he expecting a pull from Al Gore’s presidential ambition? Or did he not expect to win the presidental election, but wanted to keep his cushy Congressional gig? Or he was not thinking or he did not care? And what would have happened if Al Gore wins and Liberman becomes the vp and is also re-elected to the Senate. That would have been a fun constitutional nut to crack, so to speak. As a vp, he’d be chairing the senate, and CT vote get a new senator to replace him.. Somehow, I do not know what he was thinking. He may not be thinking at all. He has known for a long time that he has lost touch with his core Democratic voter base. Did he chose to ignore them?
We may wonder how far do the mighty fall, but we sure can see why they fall …
BP, Shell, ConocoPhillips and all the other major players have reported impressive profits with gas prices well above $3.00. A few weeks ago, I was in Berkeley and I was surprised to find gas being cheaper in the Bay Area than in Lycoming or Union county in central PA.
Econobrower blog had a pretty good review of the economics of oil companies last year. A post really worth reading.
Exxon Mobil said its earnings surged 36% during the second quarter to a whopping $10.36 billion or $1.72 a share. This is the second largest quarterly profit ever recorded by a publicly traded U.S. company (Exxon also owns the top spot for the $10.71 billion it raked in during last year’s fourth quarter). Exxon’s sales were nothing to sneeze at, either, totaling $99.03 billion, well up from the $88.57 billion at the same time a year ago. The company chalked up its impressive gain in per-share profit to its stock-buyback push, higher refining margins and higher realized prices for crude oil and natural gas.
Royal Dutch Shell reported a 40% profit surge as the benefits of high oil prices dwarfed production headaches in Nigeria and legal costs.
Luckily for oil companies and unfortunately for consumers and energy-thirsty businesses, energy prices have showed no hint of settling down. Crude-oil futures have been trading well north of $70 a barrel for several weeks now on the New York Mercantile Exchange — today, crude was moving higher again, pushing above $74 a barrel near midday — and the national average retail price for a gallon of unleaded gasoline is hovering near $3 a gallon.
Over at the Capital Spectator, the analysis of the fundamental pricing relationships in the commodity markets reflects the commonly and widely held belief that this is not a blip on a radar screen. High prices are here to stay and it is time to act accordingly. Econbrowser looks at the impact of $80 barrel price.
Nobody is bearish on the oil price; this is a bubble. Again.
Jomentum is cool. Both the 