Archive | Economy

Mark Blyth at Google on Why Austerity Is So Dangerous

Tuesday, June 11, 2013

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In this talk, Mark Blyth (Brown) works through some of the material in his

FCX: A Play on Copper and Declining Growth

Wednesday, September 21, 2011

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Is copper really a base metal? Hardly. It’s one of the most important leading indicators of global growth and especially producer sentiment in emerging markets. That’s why the dour outlook from mining heavyweights in recent days is such a cause for concern. Rio Tinto (RIO), Cargill, and Codelco have all provided warnings about weakening demand as their customers seek to delay shipments. (FT) My outlook on commodity demand and especially copper has shifted from positive to vaguely negative over the last several…

Panic in the Real Economy

Monday, August 8, 2011

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While we scrutinize the order flow and charts of various complex financial products, the Awl has a poignant reminder that n% market declines will translate into xn jobs lost in the real economy. Should you panic? The experts say no, but the experts don’t understand just how close you’ve been cutting it lately, how you’ve been keeping so many balls in the air without even considering how you’re going to get away with it should any of them drop, how…

Trading the Politics of the Debt Ceiling Debate

Monday, April 11, 2011

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I had a few quotes in a recent Reuters article on how to trade a government shutdown – the gist is that, while the shutdown news cycle hadn’t uniquely generated any trade opportunities, an actual shutdown was likely to do so. Of course, an agreement was reached late on Friday sufficient to avoid a shutdown, but last week’s confrontation was just a dress rehearsal anyway – the real drama will occur when the debt-ceiling limits are reached in…

Buried Ledes

Saturday, April 2, 2011

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I tweeted yesterday (@volatilitytrade) about how the Wall Street Journal buried the lede on the March unemployment numbers (“Hiring Shows Growing Strength”—since removed), and now The New York Times has followed suit, with the headline “Job Growth Suggests Resilience of U.S. Recovery”. In the seventh paragraph, we find the following: Yet March’s numbers also offered more than a few cautionary signs that the national economy was not cured of all its ills. The…

The FIRE Economy is Back

Wednesday, March 30, 2011

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A third of U.S. domestic profits in 2010 came from the finance sector, according to recent data from the Dept. of Commerce Bureau of Economic Analysis. (Table 12) That’s the highest percentage since 2007, and is rivaled only by the credit-bubble years of 2001-2006. Maybe the end of QE2 will bring this ratio back toward a reasonable level. Otherwise, the only way to understand the U.S. economy as healthy is if your definition of “economy” starts at 14th…

The Bears Are Back in Town

Friday, August 27, 2010

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In addition to the spate of disappointing headline economic numbers this week, there’s been an effusion of bearish sentiment in the news. The doom and gloom first buzzed my radar on Saturday, with the New York Times story, “In Striking Shift, Small Investors Flee Stock Market”. Investors withdrew a staggering $33.12 billion from domestic stock market mutual funds in the first seven months of this year, according to the Investment Company Institute, the mutual fund industry trade group.…

Wasting a Good Society on Finance

Wednesday, August 25, 2010

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This is one of those off-message rants that marks, I guess, one of the real differences between “blogs” and “old media,” and if you’re only here for the options stuff, you can skip this post. From 1990 to 2006, the GDP share of the financial sector in the broad sense increased in the United States from 23% to 31%. -Már Gudmundsson, Bank for International Settlements, 2008 This point has been made many times before – and…

Employment Report: Two Americas

Saturday, March 6, 2010

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Wall Street evidently neglected to read beyond the headlines Friday stating, as The New York Times put it, “Jobless Rate Holds Steady, Raising Hopes of Recovery”. One need look no further than paragraph two to find the other side of the story that the rest of us already know: “The monthly snapshot of the job market released by the Labor Department on Friday was hardly cause for celebration....”

Equity-Dollar Correlation: The Long View

Friday, January 22, 2010

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A major story in late 2009 was the negative correlation between equities and the U.S. dollar. In the chart below, I show the correlation of the logarithmic daily price changes of the S&P 500 and the U.S. Dollar Index futures composite. It appears the attention has been well deserved: both the 3-month and 1-year rolling correlations are the lowest they’ve been in at least two decades. No sooner than some investors began noticing the negative correlation, others started calling…

Retail Vampirism

Thursday, January 7, 2010

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Marco Arment comments smartly on this NYT story describing the arrangement among stores like H&M and Wal-Mart and their suppliers, whereby the suppliers give stores credit for unsold products and instruct stores to destroy the items instead of sending them back: It’s unfair to criticize these two companies for a practice that’s incredibly common in the entire industry, spanning nearly every product category and nearly every major retailer. The wastefulness of this is disgusting,…

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Jared Woodard specializes in trading volatility as an asset class. With over a decade of experience trading options and other volatility products ... Read More

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