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25 марта, 11:15

S&P 500 In The Week When The U.S. Treasury Curve Inverted

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The big news for the S&P 500 (Index: SPX) in the third week of March 2019 was the inversion of the U.S. Treasury yield curve on Friday, 22 March 2019, where for the first time since 2007, the yield of the 10-Year T-note dropped below the level of the 3-Month T-bill. Historically, that has been an omen for the onset of recessions in the U.S. economy, and

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22 марта, 14:53

Functional Cows

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It's Friday, it's been a long week, and what better way to go into the weekend than with a bit of fun recently featured at Reddit on the intersection of math and cows!If you want more, we'll point you toward Vincent Pantaloni's twitter feed, where he compares cow math to dance notation. Previously on Political CalculationsLearning About Economics From Cows Mathematical Formulas With Dance Notation

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21 марта, 11:26

1 in 16 Chance of U.S. Recession Starting Before April 2020

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As expected, with the U.S. economy decelerating, the U.S. Federal Reserve held interest rates steady, indicating that it would maintain its target range of 2.25%-2.50% for the Federal Funds Rate through the rest of 2019. The risk that the U.S. economy will enter into a national recession at some time in the next twelve months has risen to 6.2%, which is up by nearly two-and-a-half percentage points since our last snapshot of the U.S. recession probability in late-January 2019. The current 6.2% probability works out to be about a 1-in-16 chance that a recession will eventually be found by the National Bureau of Economic Research to have begun at some point between 20 March 2019 and 20 March 2020, according to a model developed by Jonathan Wright of the Federal Reserve Board back in 2006. The Fed's decision to hold the Federal Funds Rate steady through the rest of 2019 comes as indications that the established global economic slowdown has finally reached the U.S. economy, causing a portion of the Treasury yield curve to invert, with the yields of mid-term Treasuries dropping below the yields of short-term Treasuries, even as the Fed has stopped increasing the Federal Funds Rate. The Recession Probability Track shows where these two factors have set the probability of a recession starting in the U.S. during the next 12 months. The Fed also indicated it would begin slowing its policy of reducing its holdings of U.S. government-issued debt securities in May 2019 and stop reducing its quantitative tightening policy altogether in September 2019. Many bond market investors have cited this policy's role in creating a more contractionary monetary environment than would otherwise exist if the Fed had only been increasing the level of the Federal Funds Rate, where the so-called shadow Federal Funds Rate is effectively higher than the nominal Federal Funds Rate, contributing to the slowdown in the U.S. economy. If you would like to get in on the game of predicting the odds of recession starting in the U.S., please take advantage of our recession odds reckoning tool, which like our Recession Probability Track chart, is also based on Jonathan Wright's 2006 paper describing a recession forecasting method using the level of the effective Federal Funds Rate and the spread between the yields of the 10-Year and 3-Month Constant Maturity U.S. Treasuries. It's really easy. Plug in the most recent data available, or the data that would apply for a future scenario that you would like to consider, and compare the result you get in our tool with what we've shown in the most recent chart we've presented. The links below present each of the posts in the current series since we restarted it in June 2017. Previously on Political CalculationsThe Return of the Recession Probability Track U.S. Recession Probability Low After Fed's July 2017 Meeting U.S. Recession Probability Ticks Slightly Up After Fed Does Nothing Déjà Vu All Over Again for U.S. Recession Probability Recession Probability Ticks Slightly Up as Fed Hikes U.S. Recession Risk Minimal (January 2018) U.S. Recession Probability Risk Still Minimal U.S. Recession Odds Tick Slightly Upward, Remain Very Low The Fed Meets, Nothing Happens, Recession Risk Stays Minimal Fed Raises Rates, Recession Risk to Rise in Response 1 in 91 Chance of U.S. Recession Starting Before August 2019 1 in 63 Chance of U.S. Recession Starting Before September 2019 1 in 54 Chance of U.S. Recession Starting Before November 2019 1 in 42 Chance of U.S. Recession Starting Before December 2019 1 in 26 Chance of U.S. Recession Starting Before February 2020 1 in 16 Chance of U.S. Recession Starting Before April 2020

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20 марта, 12:49

Firearms Intercepted at U.S. Airport Security Checkpoints Since 2001

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Earlier this year, the U.S. Transportation Security Administration (TSA) made a bit of a splash in the news when the agency claimed to have intercepted a record number of firearms at U.S. airport security checkpoints for the third consecutive year. We wondered how that compared with previous years, so we mined through historical data reported by the TSA since 2001, going back to the federal government agency's origins in the aftermath of the 11 September 2001 terrorist attacks. The following chart reveals what we discovered. One of the things that stood out immediately in the historical data is that the TSA appears to have massively inflated its originally reported counts of the number of firearms it claims to have intercepted at U.S. airport security checkpoints in the years of 2005 through 2007, which it subsequently revised substantially downward. Comparatively smaller upward revisions were made for the years of 2008 and 2009. What we haven't been able to find is any official explanation for why the TSA was so far off on its counts during any of these years, where in the case of 2005, they were off by 1,557, originally claiming to have intercepted 2,217 firearms, where the revised count was reduced to 660. Meanwhile, the original count for 2006 was 2,075, which was off by 1,254 firearms from the revised count of 821. The original count for 2007 was 1,416, which was subsequently revised downward by 613 to 803. The agency appears to have used a consistent definition of what constitutes a firearm throughout all these years, so we can rule out any changes in what might have been erroneously counted as an intercepted firearm as an explanation. To date, the TSA has not responded to our inquiry seeking an explanation for the revisions to what appears to be its greatly inflated annual intercepted firearm counts during these years. We think that the TSA's reported data for more recent years is more reliable, which we can validate through other sources. For example, in 2017, the TSA obtained $1.45 million in civil penalties from gun-carrying travelers in an estimated 4,096 cases, which roughly aligns with the 3,957 firearms the agency reported intercepting in that year. [The difference in number could be attributed to the delayed processing of cases from 2016.] On a side note, the vast majority of these cases appear to be incidents where the traveler simply forgot they had a firearm in their carry-on luggage. These cases are not considered to be serious violations, where the average civil penalty paid per case processed in 2017 was $354. Travelers may pack firearms in their checked baggage, provided they are packed in a TSA-approved manner and are declared when the bags are checked in for a flight. Perhaps the easiest and lowest-cost way to reduce the number of intercepted firearms would be for the TSA to post more prominent warnings at airport luggage check-in counters and outside its security checkpoints at major airports, where the agency should also provide a secure, monitored space to allow law-abiding passengers to safely transfer firearms to their checked baggage. ReferencesU.S. Transportation Security Administration. TSA Year in Review. [2011, 2012, 2013, 2014, 2015, 2016, 2017, 2018]. Accessed 13 February 2019. U.S. Bureau of Transportation Statistics. Prohibited Items Intercepted at Airport Screening Checkpoints. [Online Database]. Accessed 13 February 2019. U.S. Bureau of Transportation Statistics. Table 2-16: Prohibited Items Intercepted at Airport Screening Checkpoints. [Online Text]. Accessed 13 February 2019. U.S. Department of Transportation Office of Airline Information. T-100 Domestic Market Data. [Online Database]. Accessed 13 February 2019. Kunkle, Frederick and Harden, John D. TSA goes for guns and money. Washington Post. [Online Article]. 18 October 2018.

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19 марта, 11:01

U.S. New Home Sales Market Cap Continues Shrinking

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New home sales in the U.S. continued their negative growth trajectory in January 2019, the data for which was finally published last week after having been delayed by the partial U.S. government shutdown earlier this year. Since that report came out shortly after we analyzed the relative affordability of new homes sold in the U.S. through the end of December 2018, we thought it might be more worthwhile to look at what that new trend means for U.S. homebuilders (covered by a variety of exchange traded funds, including BBRE, FREL, FRI, FTY, IARAX, ICF, ITB, IYR, JRS, KBWY, NRO, PKB, PPTY, PSR, RFI, RIF, RNP, RORE, RQI, RWR, SCHH, URE, USRT, VNQ, WREI, XHB, and XLRE, to name just a handful) and the nation's GDP, for which new home sales are a significant contributor. We've presented the trailing twelve month average for the market cap of new home sales in the U.S. from January 1976 through January 2019 in the following chart, where we confirm that new home sales peaked in March 2018 and have since been on a downward trend, falling back to levels last recorded in late 2016. The following chart presents the year-over-year growth rate of the trailing twelve month average of the U.S. new home sales market capitalization from January 2000 through January 2019, where we confirm that new home sales in the U.S. have become an economic headwind, showing negative year-over-year growth rates since they last peaked in March 2018. The last time a similar trend existed in the U.S. new home market was shortly after the first housing bubble began deflating in early 2006. The new residential sales data on which these first two charts are based is limited in that the U.S. Census Bureau only reports national median and average sales prices, while its data for the number of new homes sold is provided nationally and for major regions of the United States. From that data, it appears that the West region of the U.S., which includes Alaska, Arizona, California, Colorado, Hawaii, Idaho, Montana, Nevada, New Mexico, Oregon, Utah, Washington, and Wyoming, is seeing the most significant sales declines, while the Northeast and Midwest are seeing smaller drops, and growing sales in the South region, which have partially offset the declines recorded in the other regions. Zillow makes its existing homes sales data for many of these states available however, which provides a better idea of the home sales trends are developing at a more local level, where we can assume that new home sales will generally track along with existing home sales. We've done that for the states in the West region for which Zillow provides data in the following chart. Since March 2018, the total aggregate transaction value of existing home sales (the equivalent of market cap) for the West region states covered by Zillow's data has fallen by 14%, with California contributing 58% of the overall decline. The following list reveals that most but not all West region states covered by Zillow's data showed a decline in this measure since March 2018. Alaska (-8.4%) Arizona (-9.2%) California (-15.7%) Colorado (-21.1%) Idaho (+1.0%) Nevada (+2.0%) Oregon (-15.5%) Utah (-12.1%) Washington (-14.3%) While California has contributed the largest overall decline to the West region's home sales, it has only seen the second largest percentage decline. Colorado's much smaller real estate market has seen the aggregate value of its home sales drop by over 21% since March 2018. The sales declines follow 30-year conventional mortgage rates rising above 4.2% in February 2018. They had last been at that level in March 2017, which coincidentally marks the peak for when the last significant percentage decline in existing home sales took place in the West region. After that peak, mortgage rates went on to fall to 3.81% in September 2017, before rising slowly to climb just above the 4% level in January 2018 and then jumping to reach 4.33% in February 2018. Mortgage rates continued to rise until reaching 4.87% in November 2018, and then began to decline once more after the Federal Reserve abruptly changed its established monetary policy of steady, autopilot interest rate hikes at the end of that month. We'll review the recent trends for home sales in other regions in the near future. ReferencesU.S. Census Bureau. Census Regions of the United States. [PDF Document]. Accessed 25 April 2016. U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 15 March 2018. U.S. Census Bureau. New Residential Sales Historical Data. Median and Average Sale Price of Houses Sold. [Excel Spreadsheet]. Accessed 15 March 2018. U.S. Department of Labor Bureau of Labor Statistics. Consumer Price Index, All Urban Consumers - (CPI-U), U.S. City Average, All Items, 1982-84=100 [Online Application]. Accessed 15 March 2018. 

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18 марта, 11:07

The S&P 500 Survives Quadruple Witching, But What Next?

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The S&P 500 (Index: SPX) survived last week's quadruple witching on Friday, 15 March 2019. The last time the S&P 500 was at such a height was back on 9 October 2018, shortly after the market peaked at its record high closing value of 2,930.75 on 20 September 2018, just ahead of another quadruple witching day. Now the big question becomes "how long might that last?" After all, the quadruple witching event on Friday, 15 March 2019 means that the dividend futures contracts for 2019-Q1 have now expired, which puts 2019-Q1 in the rear view mirror, at least as far as its dividend futures are concerned, which was the principal assumption behind the redzone forecast we added to our spaghetti forecast chart for the S&P 500 earlier this quarter. With the current level of the S&P 500 right at the upper edge of our redzone forecast, its current level is currently consistent with the last two of the four possibilities that we outlined in our last edition. Investors might focus their attention to the even more distant future of 2020-Q1, in which we would still see the S&P 500 decline from its current levels, but more on the order of 3-5%. As if the way stock prices work wasn't already complex enough, the fourth option would be if investors split their attention between two different points of time in the future. In which case, we would expect to see stock prices fall in between the levels we described above, but would be weighted toward whichever future quarter has more strongly captured their attention. In that last scenario, through 15 March 2019, the level of the S&P 500 would suggest that investors are splitting their forward-looking attention between 2019-Q2 and 2019-Q3, with a slightly heavier weighting toward the more distant future quarter. Remember, it wasn't long after the S&P 500 reached its all-time high closing value on 20 September 2018 that our dividend futures-based model indicated that investors suddenly began shifting their attention from 2019-Q1 toward 2019-Q3, forcing the market into the early stages of what would become a correction. 2019-Q3 has become relevant for investors once again because if the Fed might consider hiking interest rates during 2019, they will most likely do so during this future quarter according to a recent Reuters poll. Should investors have reason to more fully focus their attention on this future quarter, the S&P 500 would be in for a rougher ride, as we also outlined in our previous edition: Investors may shift their attention toward the more distant future of 2019-Q3 or 2019-Q4. The expectations for the change in the rate of dividend growth in both quarters are similar, but unfortunately, following 2019-Q2, that growth is projected to sharply decelerate, which is an expectation that has been in the cards (or rather, in the futures), since mid-2018. If investors focus their attention in these quarters, the S&P 500 can be expected to experience a correction, falling by 10% or more. The Federal Reserve's Open Market Committee will meet later this week, where we will soon have a better idea of what they are thinking. In the meantime, let's catch up with the major market-moving market headlines since our last edition.... Friday, 8 March 2019 Oil drops 1 percent as economic outlook weakens, U.S. supply surges China February exports tumble the most in three years, spur fears of 'trade recession' China February soybean imports fall to four-year low amid tariffs, flat demand China's iron ore imports hit 10-month low in February on holiday break China's February coal imports tumble on uncertainty over curbs, holiday disruption China's February crude imports surge 22 percent; gas imports drop from January China's February trade surplus with U.S. narrows sharply to $14.72 billion German industrial orders post strongest drop in seven months Fed's Powell says no immediate policy responses needed to economy Wall Street extends losing streak after weak U.S. jobs data U.S. February job growth weakest in nearly one and a half years Instant View: U.S. February job growth stalls but wage gains strong Monday, 11 March 2019 Oil gains over 1 percent as Saudi stands by OPEC output cuts Bigger trouble developing in China: China auto sales fall 14 percent in February, mark eighth month of decline China hog prices hit 14-month high as African swine fever slashes output 'Zombie' enterprises hampering China's economic transformation: Chinalco Bigger stimulus developing in China: China central bank pledges more policy support as bank lending slides U.S. inflation forecasts decline, supporting rate-hike holiday U.S. business inventories rise, sales drop biggest in three years Wall Street snaps five-day losing streak despite Boeing's drop Boeing shares, vanguard of the Dow, hit hard after second 737 MAX crash Tuesday, 12 March 2019 U.S. EIA cuts 2019 world oil demand growth forecast Ctrl-Alt-Stall: India's engineers struggle for work as jobs crisis worsens S&P, Nasdaq rise on tame inflation data; Dow felled by Boeing Boeing shares take another hit as more countries ground 737 MAX 8 planes Wednesday, 13 March 2019 Oil up after U.S. crude stock draw, supply growth seen easing China orders banks to boost financial support to small firms Wall Street rises; Boeing up despite U.S. grounding of 737 MAX jets Thursday, 14 March 2019 Oil wavers as OPEC pushes supply cut need, demand fears weigh China and U.S. to push back Trump-Xi summit to at least April: Bloomberg Trump says he is in no rush to complete China trade deal China industrial output growth falls to 17-year low, more support steps expected China makes major U.S. pork purchase despite steep import tariffs, as hog virus takes toll Finally some stimulus traction? China Jan-Feb steel output rises from December on strong margins S&P 500 eases amid U.S.-China trade uncertainty Friday, 15 March 2019 U.S. oil retreats from 2019 high on soaring production Bigger stimulus developing in China: China's premier says ready to use more policy tools to help economy China to lower funding costs for small and micro firms by 1 percent point this year: premier Wall Street gains with tech; S&P 500 posts best week since November For the bigger picture, Barry Ritholtz identified 7 positives and 6 negatives in the news of the week that was!

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15 марта, 11:26

How Much Underwear Should You Pack on Vacation?

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From time to time, Political Calculations takes on the challenge of answering questions that other blogs avoid. Whether that's due to fear on their part, where a sensitive topic may be too far out of their comfort zone, or just because they cannot, we see such challenges as an opportunity. So let's talk about how much underwear you need to pack while you're traveling away from home. Not long ago, Ashley McIntosh of Brisbane, Australia's 97.3 FM radio posted the solution to a problem that we ourselves never appreciated existed. We'll let her explain.... Are you guilty of packing three times as many pairs of underwear as you could possibly need when travelling. *Raises hand* Or even worse... Not packing enough!? Well never fear, this nifty new math equation is here to the rescue ladies. And it seems pretty thorough. Karina Judd recently shared on Facebook group Meme Queens her saving grace. Not just that, but she has also created a public Google doc excel spreadsheet so the math is all done for you! That's all well and good, but what if you're packing in a rush right before leaving on your trip because you've procrastinated too long and you can no longer afford to take the time to fire up your personal computer to run Karina Judd's spreadsheet to calculate how many pairs of underwear you should pack? That's the kind of niche market that we seek to serve here at Political Calculations, where we've brought Karina Judd's undie math into the world of online ready reckoners you can run on your mobile! Just enter the indicated data below, and we'll sort out how much underwear you should pack for your travel. [If you're accessing this article on a site that republishes our RSS news feed, please click through to our site to access a working version.] Underwear Quantity Factors Input Data Values What is the minimum quantity of clean underwear that you wear per day? How many days will you be traveling? 1 2 3 4 5 6 7 Do you have any gut concerns, such as Irritable Bowel Syndrome (IBS) or lactose intolerance? No Yes If you expect it during your trip, what is the average heaviness of your period? N/A Light Moderate Heavy Have you had, or are you about to have a baby? No Yes How Much Underwear You Should Pack Calculated Results Values Quantity For the sake of simplicity, we've limited the tool to consider no more than a week-long vacation, where we've assumed you will not have access to clean underwear outside of what you pack (if you're traveling for longer than that, or have limited packing space, you might consider taking advantage of local options for doing laundry during your trip). We've also generalized the math a bit, to make it more universally applicable. The original math in Karina Judd's spreadsheet was developed by Jess Evans, who considered a number of additional factors that could affect your underwear packing needs, such as the temperature of your destination, whether the drinking water is "dodgy", and whether you will be able to do laundry while traveling, where the spreadsheet can handle a much longer trip. Previously on Political CalculationsUnderwear math is far from the strangest problem we've built tools to solve! Here's a sampling of some of the other quirky problems we've tackled over time.... What Are the Chances Your Marriage Will Last? Picking the Right Date for Valentine's Day The Indisputable Inter-Age Rule for Dating Men: What's Your Sex Appeal? Men: Are You Old Enough to Propose Yet? Should You Become Intimate with a Coworker? Is Your Personal Grooming Adequate? How Much Should You Spend on Gifts this Christmas? Should You Keep Your New Year's Resolution? Should You Call in Sick? Five More Minutes? Are You Too Good for Your Job? Should You Buy Something (or Not)? How Many Cups of Coffee Should You Drink This Morning? How Many Beers Should You Have at the Company Picnic? Earth Live: Walk, Bike or Drive? Should You Say It on the Grapevine? Should You Start or Stop Procrastinating? Should You Apologize? Should You Lie? Should You Quit Your Job? Should You Go Out with the Guys?... Are You Whipped? Do You Dare Run for Public Office? How Many Hours of Sports Can You Watch (Without Her Getting Angry)? Should You Stop to Put Gas in the Car? How Many Kids Should You Have? How Big Should Your Kids' Halloween Bucket Be? When Will You Become Obsolete? The Robin Hood Morality Quiz The Ultimate Mobile App Math Formula Explains Geek's Dating Drought Happy Valentine's Day!

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14 марта, 11:26

El Niños, La Niñas and Atmospheric CO2

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How much do El Niño and La Niña events affect the rate at which the level of carbon dioxide in the Earth's atmosphere changes? Before we answer that, it would help to know how El Niño and La Niña events affect the Earth's weather. Accuweather provides the following description of how both kinds of events start: El Niño is a part of a routine climate pattern that occurs when sea surface temperatures in the tropical Pacific Ocean rise to above-normal levels for an extended period of time. The opposite of El Niño, La Niña, is when sea surface temperatures in the central Pacific drop to lower-than-normal levels. These warm and cool phases are part of a recurring climate pattern that occurs across this section of the Pacific, known as the El Nino-Southern Oscillation (ENSO), according to the National Oceanic and Atmospheric Administration (NOAA). Changes in equatorial water temperatures can then affect wind and water currents, which is how something that starts as a local weather condition transforms into something that has a global weather impact. NASA explains what happens when an El Niño event gets underway: During an El Niño event, the surface waters in the central and eastern Pacific Ocean become significantly warmer than usual. That change is intimately tied to the atmosphere and to the winds blowing over the vast Pacific. Easterly trade winds (which blow from the Americas toward Asia) falter and can even turn around into westerlies. This allows great masses of warm water to slosh from the western Pacific toward the Americas. It also reduces the upwelling of cooler, nutrient-rich waters from the deep—shutting down or reversing ocean currents along the equator and along the west coast of South and Central America. The circulation of the air above the tropical Pacific Ocean responds to this tremendous redistribution of ocean heat. The typically strong high-pressure systems of the eastern Pacific weaken, thus changing the balance of atmospheric pressure across the eastern, central, and western Pacific. While easterly winds tend to be dry and steady, Pacific westerlies tend to come in bursts of warmer, moister air. Because of the vastness of the Pacific basin—covering one-third of the planet—these wind and humidity changes get transmitted around the world, disrupting circulation patterns such as jet streams (strong upper-level winds). We know these large-scale shifts in Pacific winds and waters initiate El Niño. What we don't know is what triggers the shift. This remains a scientific mystery. The large-scale shifts associated with El Niño events matter where atmospheric carbon dioxide levels are concerned because these events contribute to widespread hot and dry conditions that limit the ability of natural carbon sinks, such as tropical forests and plants, to absorb carbon dioxide from the Earth's atmosphere. The opposite situation occurs during La Niña, when these same natural carbon sinks in the tropics are less distressed and are able to pull substantially more carbon dioxide out of the air. You can actually see the difference in the seasonal variation for changes in the level of atmospheric carbon dioxide. The following animated chart presents sixty years of that data from October 1958 through September 2018, where we've color coded El Niño years in red, La Niña years in blue, and neutral years in gray, where we've also indicated the intensity of the events with lighter shading for weak years and darker shading for strong years. The chart will cycle from all years, to El Niño years, to La Niña years, and then to neutral years every five seconds before restarting its loop. If you're accessing this article on a site that republishes our RSS news feed where the animation doesn't play, you can either click through to our site to see the animation, or just simply follow the links in the previous sentence to access the individual charts used to make the animation. From the animation (or the individual charts), you can see that El Niños are associated with higher-than-average levels of change in the seasonal variation of atmospheric carbon dioxide, La Niña events are associated with lower-than-average levels of change, while neutral years tend to see seasonal variation in carbon dioxide levels that are pretty closely grouped about the average. We haven't seen anyone else put together a similar presentation, where we're taking the opportunity to do it ourselves! The Mauna Loa Observatory is the source for the atmospheric carbon dioxide data, while the intensity levels for the various El Niño and La Niña events from 1958 through 2018 is taken from Golden Gate Weather Service's summary for the Oceanic Niño Index.

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13 марта, 11:08

Celebrating 150 Years of the Campbell's Soup Company

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The Campbell Soup Company (NYSE: CPB) will celebrate its 150th anniversary of being in business in 2019. Founded in 1869 as the Joseph A. Campbell Preserve Company in Camden, New Jersey by fruit merchant Joseph Campbell and icebox maker Abraham Anderson, it wasn't until 1897 that the company developed and began selling the condensed soups that would come to define the company's brand in the United States and the world. What made Campbell's soups successful was the condensing process that John T. Dorrance developed in the late 1890s, which removed water from soup without removing flavor, where home cooks could simply add water to the company's new concentrated soup product and then heat it to be served. That innovation allowed Campbell's to use much smaller cans for their soup, which also made their soup more affordable to produce and ship, not to mention for consumers to buy. Previously, the company's uncondensed soups had cost consumers 30 cents for a large can, where its new condensed soup products, which were capable of making an equivalent amount of soup, could be sold profitably for just 10 cents a can. In 1898, Campbell's introduced the red and white labels that became the company's trademark for its line of condensed soups, which included Tomato, Consommé, Vegetable, Chicken, and Oxtail. Of these first five soups, Tomato became the company's most iconic product, where in 2010, Andy Warhol's painting of a single can of Campbell's Condensed Tomato Soup sold at auction for over $9 million. Today, Campbell's Condensed Tomato Soup is the company's second-biggest seller, with the company's ubiquitous Chicken Noodle soup having claimed the top spot in the years since its introduction in 1934, when it was originally rolled out as "Chicken with Noodle" soup. [On a side note, it became definitively named "Chicken Noodle" when famous radio performer Freeman Gosden flubbed the company's chosen name for the product, calling it "Chicken Noodle" on air. The company quickly adopted "Chicken Noodle" as the name of its newest soup, and the rest, as they say, is history.] Campbell's Condensed Tomato Soup is unique among American foods because of how little it has seemed to change over the 12 decades that it has been produced. Which is pretty amazing, considering that every single aspect of the product has changed over its 120 year history. Everything from the tomatoes, the way its made, the way its shipped, the cans, and even the labels have been changed incrementally over the years. But by far, the most noticeable change of all for American consumers has been its price. The following chart show how the price of the iconic Number 1 "picnic" size can of Campbell's Condensed Tomato Soup has changed since it first started to be sold in American grocery stores in January 1898, all the way through December 2018. The chart shows the history of the prices at which we've documented that American consumers have purchased it on a linear price scale, but if you would rather see it on a logarithmic price scale, please see this version of the chart. Today, the average sale price that Americans pay for a 10.75 ounce can of Campbell's Condensed Tomato Soup is about 8 times the cost of what they paid for its 1898 equivalent. If we do the inflation math over that 120 year period, it would seem the price has increased at an average annual rate of roughly 1.7%. But that price hasn't risen steadily as you might expect. For the first 75 years of its history, the average price that Americans paid for a single can was mostly flat, costing within a few cents of the same 10 cents per can price that American consumers first paid for a can of Campbell's Condensed Tomato Soup at the end of the 19th Century. In the last 45 years however, the cost of a single can has jumped eight-fold, which works out to be an average annual rate of increase of 4.7% during these last four and a half decades. Much Ado About Tomato Soup What can a single consumer food product say about life in America over the last twelve decades? Quite a lot actually, where we've really only scratched the surface.... The Price of Campbell's Tomato Soup Since 1897 - We've come a long way since we first began researching and presenting the price of Campbell's Tomato Soup back in 2015! The Tomato Soup Standard - Which makes more sense to use for money - gold or cans of tomato soup? The First Ad Ever for Campbell's Condensed Soups? - A local grocer in Alexandria, Virginia advertised for a special demonstration in their store for how to prepare a "New Concentrated Soup" costing 10 cents a can on 12 January 1898. The ad we found doesn't mention Campbell's by name, but the circumstantial evidence that it was is pretty strong. War and Soup - Campbell's may have won an arms race within America's food industry for feeding American troops during the Spanish-American War of 1898. Early Advertising Milestones for Campbell's Condensed Soups - We track down the oldest ad we could find that mentions Campbell's condensed soups by name, their first super-discount sale, the first ad to feature an image of a can of Campbell's condensed soup, and the first announcement that Campbell's condensed soups would soon be sold at a highly successful regional grocer called A&P.... Updated: The Price of Campbell's Tomato Soup Since 1897 - Filling in missing information and updating our price database through December 2015. Of Soup and Silver and the Zombie Apocalypse - Campbell's Condensed Tomato Soup cost just a dime when it was introduced, at a time when dimes in the United States were made out of silver. We do the math to figure out how many ounces of silver it would take to buy a can of soup throughout its history. Soup and Recession - we examine how recessions have affected the price of Campbell's Tomato Soup. Soup and Steel Tariffs - In 2018, President Trump's Commerce Secretary used a can of Campbell's Condensed Chicken Noodle Soup as a prop in his pitch to sell the administration's plans to impose tariffs on Chinese-produced steel. We calculate what those tariffs could do to the price of a can of the company's soup! Tomato Soup, Oil and Inflation - We looked at the history of oil and soup prices after World War 2, and show why Campbell's Tomato Soup is no longer the consumer bargain it used to be. Celebrating 150 Years of the Campbell's Soup Company - We present 120 years worth of price data for Campbell's Condensed Tomato Soup to celebrate the company's sesquicentennial. Image Credit: unsplash-logoPaweł Czerwiński

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12 марта, 11:02

A Mathematical Model of the Internal Dialogue of Plants

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Plants appear to have their own secret language. That controversial observation has been the focus of biologist Richard Karban's work for a number of years, which we'll introduce with the following four-and-a-half minute TEDEd animation that was produced several years ago, after Karban resuscitated what had been a debunked concept in the field with his findings from new, more rigorous research. If plants communicate with each other, knowing how and why they are communicating could have a very large impact on many fields. In 2013, Karban reflected on the potential for future applications: Plant communication may still be a tiny field, but the people who study it are no longer seen as a lunatic fringe. “It used to be that people wouldn’t even talk to you: ‘Why are you wasting my time with something we’ve already debunked?’” said Karban. “That’s now better for sure.” The debate is no longer whether plants can sense one another’s biochemical messages — they can — but about why and how they do it. Most studies have taken place under controlled lab conditions, so one of the major open questions is to what extent plants use these signals in the wild. The answer could have big implications: Farmers might be able to adapt this chatter, tweaking food plants or agricultural practices so that crops defend themselves better against herbivores. More broadly, the possibility that plants share information raises intriguing questions about what counts as behavior and communication — and why organisms that compete with one another might also see fit to network their knowledge. Plants however also appear to communicate within themselves as they respond to the complex stimuli in their environment, which is something that previous models of plant growth have not incorporated. While not the kind of inter-plant communication being actively researched by Kaplan and other biologists, this internal dialogue, or intra-plant communication, would appear to have considerable influence over how plants grow. That's the insight that four researchers at the Gran Sasso Science Institute (GSSI) and the Istituto Italiano di Technologia (IIT) in Italy, Fabio Tedone, Emanuela Del Dottore, Barbara Mazzolai, and Pierangelo Marcati, have developed in applying math to model how individual plants behave in response to the complex stimuli they receive in their environment. Here's a brief summary of what they set out to achieve in the press release announcing the preprint of their paper at bioXriv: ... the researchers set out to develop a mathematical model that describes the dynamics of intra-plant communication and analyses the possible cues that activate adaptive growth responses in a single plant. This model is based on formulations about biological evidence collected in laboratory experiments using state-of-the-art techniques. Compared to existing models, their model covers a wider range of elements, including photosynthesis, starch degradation, multiple nutrients uptake and management, biomass allocation, and maintenance. These elements are analyzed in depth, considering their interactions and their effects on a plant's growth. To validate their model and test its robustness, the researchers compared experimental observations of plant behavior with results obtained when applying their model in simulations, where they reproduced conditions of growth similar to those naturally occurring in plants. Their model attained high accuracy and minor errors, suggesting that it can effectively summarize the complex dynamics of intra-plant communication. In doing that, they were able to effectively model the plant growth described in the biological research they surveyed with 11 nonlinear equations: For our money, here was the most interesting finding in the paper's conclusion, which would come into play whenever Liebig's Law of the Minimum might apply: Interestingly, in stress conditions, e.g. when the saturating thresholds were reached, the dynamics showed a fast adaptation of the plant with a self-optimisation of internal resources and feedback stimuli, without the need of a a-priori optimisation assumption. The same self-adaptive behaviour was evident when branching vs elongation was analysed. This optimising behaviour is realistic but difficult to be biologically demonstrated. However, differently to some models [4, 19] that directly start by assuming the existence of an internal optimisation function which drives plant dynamics, in here we demonstrated it to be a consequently behaviour emerging from the dynamics of internal processes. Therefore, our model enforces the idea of an emerging behaviour in plants making use of an internal communication network for optimising the use of the internal resources, the exploration of the soil and the adaptation of internal processes, and results in an efficient growth strategy. Plants aren't just efficient, they're economical in the I, Pencil sense! ReferencesFabio Tedone, Emanuela Del Dottore, Barbara Mazzolai, Pierangelo Marcati. Plant behaviour: A mathematical approach for understanding intra-plant communication. bioRxiv 493999; doi: https://doi.org/10.1101/493999. 11 December 2018. Images from paper reproduced under terms of CC-BY 4.0 International License granted by the authors to bioRxiv. Kat McGowan. The Secret Language of Plants. Quanta Magazine. [Online Article]. 16 December 2013. Richard Karban. Can Plants Talk To Each Other? TEDEd. [Online Video]. 2 May 2016. Image Credit: unsplash-logoScott Webb

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11 марта, 11:05

The Number of Firms and Dividend Payers in the S&P 500

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Here's our entry in the competition for the chart of the day: Perhaps the most surprising information on the chart? Since 2014, there has been more than 500 firms in the S&P 500! ReferencesSilverblatt, Howard. S&P 500 Dividend Payers. Standard and Poor S&P Dow Jones Indices. [Excel Spreadsheet]. Accessed 2 March 2019. Mauboussin, Michael J. The Real Role of Dividends in Building Wealth. Legg Mason Capital Management. [PDF Documents]. 25 January 2011. Political Calculations. What Caused the Dot Com Bubble to Begin and What Caused It to End? [Online Article]. 15 December 2010.

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08 марта, 10:57

S&P 500 De-levitates After Dimmed Prospects for Trade Deal, Gloomier Outlook for Eurozone

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We're one week out from the expiration of 2019-Q1's dividend futures contracts, so we're using the opportunity to take a snapshot in time of the S&P 500 (Index: SPX), where we find that the index has dropped back into the redzone forecast range of our spaghetti forecast chart following investor disappointment that the U.S. and China haven't yet reached a trade deal, and the new information that the economic situation in the Eurozone has gotten gloomier. The redzone forecast range on the chart is based on the assumption that investors would largely focus their attention on 2019-Q1 during February and March 2019. That assumption has mostly held up, but since that forecast incorporates dividend futures, whose contracts will expire on Friday, 15 March 2019, we will soon run out of 2019-Q1 for investors to focus upon. Given the relative level of the S&P 500 today, that means one of four things will happen in the next week: Investors may shift their attention to 2019-Q2. If that happens, stock prices could rise 3-5%, since the quarter is projected to feature strong dividend growth. Investors may shift their attention toward the more distant future of 2019-Q3 or 2019-Q4. The expectations for the change in the rate of dividend growth in both quarters are similar, but unfortunately, following 2019-Q2, that growth is projected to sharply decelerate, which is an expectation that has been in the cards (or rather, in the futures), since mid-2018. If investors focus their attention in these quarters, the S&P 500 can be expected to experience a correction, falling by 10% or more. Investors might focus their attention to the even more distant future of 2020-Q1, in which we would still see the S&P 500 decline from its current levels, but more on the order of 3-5%. As if the way stock prices work wasn't already complex enough, the fourth option would be if investors split their attention between two different points of time in the future. In which case, we would expect to see stock prices fall in between the levels we described above, but would be weighted toward whichever future quarter has more strongly captured their attention. As our chart is currently drawn, after the dividend futures contracts for 2019-Q1 run out, the redzone forecast range assumes that investors will shift their attention toward 2020-Q1 (Option 3). We're going to leave the redzone forecast alone for the next couple of weeks, because it will provide a useful frame of reference even if that assumption proves to be wrong. Remember statistician George Box' immortal words: "Essentially, all models are wrong, but some are useful"! In this case, seeing how the trajectory of the S&P 500 changes with respect to it will give us information about how far into the future investors are focusing their attention that the context provided by market-moving news headlines will help confirm. Speaking of which, here are the stories we noted during the first week of March 2019.... Monday, 4 March 2019 Oil rises 1 percent on U.S.-China trade optimism, OPEC+ supply cuts Bigger trouble developing in China: China services growth eases to four-month low in further blow to economy: Caixin PMI Asian shares retreat as China targets slower growth Bigger stimulus developing in China: China to slash taxes, boost lending to shore up slowing economy China to cut value-added tax rate for manufacturing, construction sectors China raises budget deficit to 2.8 percent of GDP: policy report China's defense budget rise to outpace economic growth target Wall Street drops after weak data, healthcare slump Tuesday, 5 March 2019 Oil prices flat; focus on OPEC-led output cuts, Libya oilfield Bigger stimulus developing in China: China to take steps to boost domestic consumption this year: state planner China to slash taxes, boost lending to prop up slowing economy Factors that have propelled Chinese stocks to nine-month highs Fed's Kaplan says U.S. corporate debt a reason for rate hike pause Fed's Kashkari says wages show labor market still has slack Wednesday, 6 March 2019 Oil prices end mixed after U.S. crude stocks build sharply U.S. mortgage applications fall as loan costs rise Fed's Williams says slower U.S. growth is a 'new normal' Fed thinking about growing balance sheet again: K.C. Fed paper Wall Street sinks for third day as healthcare, energy slump Thursday, 7 March 2019 Oil edges up as tight global supplies offset economic concern Fed's Brainard sees fewer U.S. rate hikes Bigger trouble developing in Eurozone: ECB cuts growth, inflation forecasts Surprise! ECB's Draghi surprised colleagues with bold stimulus plans: sources ECB statement following policy meeting Wall Street drops for fourth day as ECB stokes growth worries We're posting this edition of our S&P 500 chaos series ahead of our usual schedule, which means we're missing linking Barry Ritholtz' latest succinct summary of major market and economic events for the first week of March 2019. Look for it late Friday at this link. Meanwhile, the next edition of this weekly series should arrive on schedule, sometime early on Monday, 18 March 2019.