Archive for May, 2009

• Thanks Vets
  Eddy Elfenbein, May 25th, 2009 at 8:26 am

  

• Weekend Poll
  Eddy Elfenbein, May 22nd, 2009 at 10:09 am

• Have a Great Weekend!
  Eddy Elfenbein, May 22nd, 2009 at 9:56 am

  The weather is beautiful so don’t expect much posting here today. Also, I finally broke down and joined Twitter (EddyElfenbein) so you can follow me there in 140-character-or-less increments.
  I hope everyone has a great weekend!

• The First Trading Day of the Month
  Eddy Elfenbein, May 22nd, 2009 at 9:39 am

  So far this decade, the market hasn’t done very well except for one small phenomenon—the first trading day of the month. Through yesterday, the S&P 500 is down 39.5% for the decade. But the market has returned over 21% on the first day of the month (neither figure includes dividends).
  What’s interesting is that first days of the month occur less than 5% of the time, so sitting out the rest of the time would have been a smart strategy. How’d you like a job that probably improved your performance if you took over 20 days a month?
  

• “Mother of inflated hope/Mistress of despair”
  Eddy Elfenbein, May 21st, 2009 at 2:06 pm

  The Chronicle of Higher Education interviewed economist Stephen Ziliak.
  In haiku.

  Q. How does writing verse
  Help your students understand
  A math-based science?
  A: Thought transportation —
  Newton’s laws might still abide,
  Listen: Einstein’s train.
  Q: A labor union
  Protects workers from abuse —
  But what does it cost?
  A: Green Knights of Labor,
  free Haymarket Anarchists,
  cost less than Madoff.
  Q: Debt plus recession —
  Which is the better move:
  saving or spending?
  A: Treasury shoppers
  choose plain broth over duck soup,
  Nudge this paradox.
  Q: Regarding Wall Street,
  Do virtues of laissez-faire
  Apply as elsewhere?
  A: Traders are human,
  swapping vices for virtues
  and vice versa.
  Q: Mom and Dad, I’m home!
  The job market is nasty —
  Where is my bedroom?
  A: Invisible hand:
  Mother of inflated hope,
  Mistress of despair!
  Q: Haiku might seem dumb
  to bean counters and stuffed shirts —
  Students disagree?
  A: In this other world
  wild orchids freely blossom —
  haiku GDP.

• First They Came for My Natty Bo…
  Eddy Elfenbein, May 21st, 2009 at 11:30 am

  USA Today reports:

  WASHINGTON (AP) — Consumers in the United States may have to hand over nearly $2 more for a case of beer to help provide health insurance for all.
  Details of the proposed beer tax are described in a Senate Finance Committee document that will be used to brief lawmakers Wednesday at a closed-door meeting.
  Taxes on wine and hard liquor would also go up. And there might be a new tax on soda and other sugary drinks blamed for contributing to obesity. No taxes on diet drinks, however.
  Beer taxes would go up by 48 cents a six-pack, wine taxes would rise by 49 cents per bottle, and the tax on hard liquor would increase by 40 cents per fifth. Proceeds from the new taxes would help cover an estimated 50 million uninsured Americans.

  I bet Obama would never tax appletinis or mojitos.

• Very Short Post on MO
  Eddy Elfenbein, May 21st, 2009 at 11:13 am

  If you’re looking for a nice yield, it’s hard to find something better than Altria Group (MO). The company just declared a quarterly dividend of 32 cents a share. That comes to 7.8% a year. The company has decent cash flow so I don’t see the dividend being cut to pieces.

• Disturbing Segment on CNBC
  Eddy Elfenbein, May 20th, 2009 at 2:12 pm

  On CNBC, Jeff Macke starts acting weird, then very weird. You know it’s bad when Dennis Kneale is the sane one.
  I’ve watched this clip a few times and I have no idea what Macke is talking about. It seems like he’s referring to some inside joke, but I don’t get where he’s going. Poor Dennis just backs away.
  
  (Via: Clusterstock)

• Gold Vs. the S&P 500
  Eddy Elfenbein, May 20th, 2009 at 12:42 pm

  Here’s a look at how gold has done against the S&P 500:
  
  Here’s the same graph but I divided the two numbers (S&P 500 by gold):
  
  On the day of the inauguration, exactly four months ago, the ratio slipped below 1.0. The ratio has previously bounced off 1.0 on November 20. Since the inauguration, it’s closed above 1.0 only once and that was on April 17 which was the day of Citigroup‘s (C) **cough** “earnings” report.
  Interestingly, the S&P has stayed roughly even with gold over the past few weeks which puts the rally in a different light.
  My view is that we’ll test 1.0 again. If the market likes what it sees, then we might move much higher.

• Nouriel Roubini in TNR
  Eddy Elfenbein, May 20th, 2009 at 7:56 am

  Saturday Night Live recently had a strange skit about a talk show hosted by the Bee Gees. Honestly, it wasn’t terribly funny but what struck me was that one of the guests was supposed to be Nouriel Roubini (I think it was Fred Armisen).
  The Roubini character was the straight man in the skit, but it’s telling that he’s reached the point where he can be a typical “important person” you’d see on a talk show, even a parody of one.
  Roubini is probably the hottest economist in the world right now. More tellingly, we live in a time where there is a hottest economist in the world.
  Roubini just got another honor, a profile in the New Republic. It’s a pretty good profile. One complaint I have is that these profiles often try a tired formula—that the person’s ideas are an outgrowth of who they are. The New York Times tried that recently with Freeman Dyson and it didn’t work.
  The truth is that you often can’t see a connection between important thinkers and their personalities or backgrounds. This sort of game can easily descend in psycho-babble. It will read something like, “He’s ideas are outside the mainstream and in high school, he was…wait for it…an outsider. Hello, Theme!!”
  There’s even a theory that the stalemate in economics between investment (the male) and savings (the female) was finally broken by Keynes, the homosexual. That’s totally loopy to me but hey, it’s not my idea.
  I’ve never met Roubini, but I would think the interesting angle to take is that he seems to be the opposite of his ideas—the playboy professor with the buzzkill forecasts.
  Unquestionably, Roubini is an important thinker. However, I was glad to see the profile mention that Roubini hasn’t been as prescient as many people believe:

  Anirvan Banerji, an economist with the Economic Cycle Research Institute, has been particularly dismissive of Roubini’s forecasting abilities: “The average time between recessions is about five years in the postwar period,” he says. “So, if you forecast a recession one year and it doesn’t happen, and you repeat your forecast year after year … at some point the recession will arrive.”
  And Roubini has undeniably overshot. In 2004, he predicted that the oncoming recession would precipitate the crash of the dollar. The crisis has mainly buoyed it. On September 1, 2005, three days after Hurricane Katrina made landfall, Roubini told Reuters that economic disaster was imminent. What followed instead was a bump in financial activity that forestalled the recession for more than two years.

  If you’re waiting for Jon Stewart to do a sanctimonious takedown of Roubini, I wouldn’t hold your breath. Though I nearly choked when the profile mentioned Nassim Taleb, “who also predicted a catastrophe in his book The Black Swan.” The old adage is true: It’s not what books say that’s important, it’s what people assume they say that’s important.
  I’m glad to see Roubini get the attention, fame and fortune he deserves. But I have to add we shouldn’t judge economists by how accurate their macro forecasts are. That’s a losing game. Instead, we should focus on the power of their ideas to explain the economy, and see the connections that they see.
  If you want to be a prognosticator, then go on the record with specific advice. If not, then you should try to explain the economy as clearly as you can.