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14 декабря, 23:18

The Quantum Santa and the Solutions to Other Christmas Conundrums

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It's Okay To Be Smart's Joe Hanson addresses how the troubling physics of Santa Claus can ultimately be resolved by the science of quantum mechanics. Meanwhile, the question of whether all of Santa's reindeer are female has been raised because while all reindeer grow antlers each year, male reindeer typically lose their antlers a month or more before Christmas comes around, which would mean that if we see Santa's sleigh being pulled by reindeer with antlers, they would have to all be female because they lose their antlers much later. But at least one reindeer herder has an alternative theory that might explain how at least one of Santa's reindeer could be male. Click the iPlayer symbol in the lower left corner of the picture below for the audio explanation.... Finally, we'll leave you with one last Christmas conundrum - a mathematical puzzle: You can find the solution presented here.

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13 декабря, 11:04

Backfire Economics In China

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"Backfire Economics" is a series of posts by Mark Perry that focuses on the unintended, yet often predictable consequences of the tariffs that President Trump has imposed since launching his trade war strategy earlier this year. By our unofficial count, there are at least 24 entries in the series, the most recent one at this writing here, where each focuses on some aspect of how the President's tariffs on foreign-produced goods have negatively impacted U.S. businesses and people. Until now, we don't think that anyone has applied the "backfire economics" concept to the tariffs that other nations have imposed upon American goods as part of their trade war strategies with the U.S. And we may have a doozy with China's retaliatory 25% tariff on U.S.-grown soybeans, which were clearly intended to inflict economic harm upon American soybean producers and exporters. But before we can talk about that, we have to talk about a story that we were surprised to see in the news last week, which had the headline "China Is So Desperate for Pork That It's Buying American Again". It's definitely a clickbait headline, and it worked, because we clicked it and learned that China is experiencing a shortage of pork because of a highly infectious disease called African Swine Fever, which doesn't affect humans but is very deadly for hogs, all the more so because it has neither a vaccine nor an antidote. The first case was reported on 1 August 2018, and since then, it has spread as an epidemic among China's pig farms. A nightmare is unfolding for animal health experts: African swine fever (ASF), a highly contagious, often fatal disease of domestic pigs and wild boars, has appeared in China, the world’s largest pork producer. As of today, ASF has been reported at sites in four provinces in China’s northeast, thousands of kilometers apart. Containing the disease in a population of more than 430 million hogs, many raised in smallholder farmyards with minimal biosecurity, could be a monumental challenge.... East Asia’s first confirmed outbreak occurred on 1 August in Shenyang, a city in Liaoning province, China’s Ministry of Agriculture says. Investigators have traced the disease back through sales of pigs and concluded the virus has been circulating in the area since at least March, says Wantanee Kalpravidh, a veterinarian at the Food and Agriculture Organization’s (FAO’s) Emergency Centre for Transboundary Animal Disease in Bangkok. A genetic analysis suggests the virus is closely related to the strain circulating in Russia, scientists from the Institute of Military Veterinary Medicine in Changchun, and other Chinese institutions reported on 13 August in Transboundary and Emerging Diseases. “The increasing demand for pork has resulted in a great increase in the volume of live pigs and pork products imported to China,” heightening the risk of introduction, they wrote. The virus probably arrived in imported pork products, Kalpravidh says, which then infected pigs that were fed contaminated table and kitchen scraps. Since August, the epidemic of African Swine Fever among China's pig farms, which account for half of the world's population of pigs, has prompted the culling of more than a half-million pigs since it was first detected, where it now "has spread rapidly to more than half of China's provinces despite measures to contain it", with new outbreaks still occurring four months later. Part of what makes African Swine Fever so contagious is that the virus behind it is very resilient: "African swine fever virus can survive heat, putrefaction, smoking, partial cooking, and dryness and lives up to six months in chilled carcasses. The incubation period is from 5 to 15 days." That characteristic has prompted Chinese authorities to clamp down on the practices of transporting pigs out of regions impacted by the epidemic and feeding pigs table and kitchen scraps as they seek to gain ground on the epidemic. China has already banned the transport of live hogs from infected provinces and neighboring regions to prevent the spread of ASF and requires trucks carrying live animals to be registered and to use location-tracking systems. China has also banned the practice of feeding food scraps and swill to swine. Note that we keep coming back to the topic of feeding scrap human food, which often features pork as the leading protein in China, to swine. This is where China's retaliatory tariffs aimed at U.S. soybeans may now come into play. Since imposing a 25% tariff on U.S.-grown soybeans that has led Chinese buyers to shun the crop, China's primary soybean consumers, the nation's swine farms, have had to turn to substitutes for them. Earlier in the year, they were able to substitute Brazilian and Argentinian-grown soybean crops, but that doesn't appear to have been sufficient to meet the nation's demand for the protein-rich animal feed in the latter half of the year. Chinese authorities have responded by both lowering their standards for soybeans and also substituting other crops, where the available replacements likely do not share the the same high protein content that makes soybeans desirable to use as feed in raising hogs. So what do thousands of Chinese hog farmers, and especially the ones with very small operations, do to fill the protein gap? If you answered "increase the amount of leftover meat scraps they feed to their hogs", you have identified a potentially very serious contributing factor to the rapid spread of African Swine Fever in China, and also a deadly, if unintended consequence of backfire economics in action. Stopping an epidemic after it has gotten started is a lot like dealing with a cascade failure - it often requires an active intervention to significantly slow the rate of infection. In this case, the ideal intervention would be targeted at breaking the cycle where contaminated meat scraps are fed to healthy pigs, which would mean substituting protein-rich non-contaminated feed for this disease vector. The ideal substitute would involve buying and distributing large quantities of soybeans, where there is only one source China can turn at this time of year that has a large, harvested crop ready to export to meet its increasingly urgent need: the United States. So that's what China has done, where we now have a new clickbait headline to feature, ripped straight out of 12 December 2018's news: "Exclusive: China makes first big U.S. soybean purchase since Trump-Xi truce. As deals go, China's soybean buyers would appear to be getting a very good one as it is paying about $9.07 per bushel in spending $500 million for 1.5 million metric tons of U.S.-grown soybeans, where they've paid higher prices on average in recent years. The question now is whether it will be enough in time to arrest the "nightmarish" spread of African Swine Fever among China's hog farms? Mark Perry has 24 examples of where backfire economics from U.S. trade war tariffs are hurting Americans. We have one example where backfire economics from China's retaliatory tariffs has hurt China's population. How many more examples are out there?

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12 декабря, 11:05

The U.S. Stock Market Stopped Shrinking in 2018

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It's not much to write home about, but the number of U.S. firms whose stocks are publicly traded on stock exchanges in the U.S. increased for the first time in years in 2018. Admittedly, the increase of 2 firms from 3,484 in 2017 to 3,486 in 2018 doesn't really qualify as a dramatic reversal for the nation's stock exchanges, which once counted no fewer than 7,322 firms among their actively traded listings back in 1996. But it is the first real reversal that we've seen in these numbers in more than 22 years that isn't attributable to a change we made in the data sources we track, where the data from 2013 onward is taken from the number of firms that are included in the Wilshire 5000 total market index. Who knew that 2018 was the year that the U.S. stock market stopped shrinking? And will that reversal of trend continue next year? Data SourcesCraig Doidge & G. Andrew Karolyi & René M. Stulz, 2017. "The U.S. listing gap," Journal of Financial Economics, vol 123(3), pages 464-487. DOI: 10.1016/j.jfineco.2016.12.002. (NBER Working Paper No. 21181). Wilshire Associates. Wilshire Broad Market Indexes, Wilshire 5000 Total Market Index Fundamental Characteristics. [2013, 2014, 2015 (for month ending 06/30/2015), 2016 (for month ending 06/30/2016), 2017 (for month ending 03/31/2017)]. Wilshire Associates. Wilshire Broad Market Indexes, Wilshire 5000 Total Market Index Fundamental Characteristics. [PDF Document]. 29 June 2018.

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11 декабря, 11:13

Opposing Strategies in the U.S.-China Trade War

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In recent years, U.S. exports have typically peaked in the months of October through December because these months coincide with the harvesting of the U.S. soybean crop, which has become the nation's single largest export product to China. But not in 2018, because of the retaliatory tariffs that China's government has placed upon U.S.-grown soybeans as part of its trade war strategy with the U.S., which have led China's soybean buyers to effectively boycott the 2018 crop. The following chart shows the dramatic plunge in the year-over-year rate of growth in the value of U.S. exports to China that is a direct consequence of China's trade war strategy. In the absence of the trade war, such a plunge into negative growth territory would be a clear indication that China's economy is experiencing deep recessionary conditions. China's economy is indeed decelerating and appears to be facing a growing threat of deflation that would be consistent with some degree of contraction occurring within the country's economy, but we believe the negative impact indicated in the chart is being exaggerated by the impact of China's tariffs on U.S. goods. Perhaps a better question to ask is why don't we see a similar phenomenon develop in response to the tariffs imposed by the U.S. on the goods that China exports to the United States? The chart above confirms that the rate of growth of value of goods that the U.S. is importing from China is positive, which suggests that U.S. tariffs are having very little impact on U.S. demand for goods produced in China. The answer to that question has a great deal to do with the strategy the U.S. has pursued in selectively imposing tariffs on Chinese goods. Benedikt Zoller-Rydzek and Gabriel Felbermayr of the European Netork for Economic and Fiscal Policy Research (econPOL) have analyzed the U.S. government's tariff strategy and found a strong explanation for the apparent lack of impact (emphasis ours): On September 24th 2018, the United States introduced import tariffs on a wide range of Chinese products. The tariffs will affect US imports from China with a value that exceeds USD 250 billion - around 50% of all imports. In this analysis we show that, contrary to public opinion, the greatest share of the tariff burden falls not on American consumers or firms, but on Chinese exporters. We calibrate a simple economic model and find that a 25 percentage point increase in tariffs raises US consumer prices on all affected Chinese products by only 4.5% on average, while the producer price of Chinese firms declines by 20.5%. The US government has strategically levied import duties on goods with high import elasticities, which transfers a great share of the tariff burden on to Chinese exporters. Altogether, these estimates suggest that Chinese firms are paying for about 75% of the additional cost that the U.S. government's tariffs have added on top of the cost of Chinese produced goods, insulating U.S. consumers from paying the full cost of the U.S.-imposed tariffs. That additional cost is then contributing to the increased level of economic distress that has gained ground in China's economy throughout much of 2018. That is why the 90-day truce on new tariffs negotiated between China Premier Xi and U.S. President Trump, shaky though it may be, is still a big deal. Since the deal, China's government has indicated it would allow the following steps to be taken: China is said to be resuming imports of US liquefied gas and soybeans amid trade war truce Exclusive: China's Unipec to buy U.S. oil after Xi-Trump tariff truce China Is So Desperate for Pork That It's Buying American Again We'll have more to say on that last story in the very near future, where we think that the story is being driven in part by the backfiring of one aspect of the Chinese government's trade war strategy. We'll close with an update to our chart showing the overall impact of the U.S.-China trade war to date to the overall level of goods and services traded between the two nations. Through October 2018, the gap between the pre-trade war trend and the trailing twelve month average of the value of goods exchanged between the U.S. and China has widened to $1.6 billion, which has primarily been driven by China's effective boycott of U.S.-grown soybeans. ReferencesBoard of Governors of the Federal Reserve System. China / U.S. Foreign Exchange Rate. G.5 Foreign Exchange Rates. Accessed 7 December 2018. U.S. Census Bureau. Trade in Goods with China. Accessed 7 December 2018. U.S. Census Bureau. U.S. Trade Online. Accessed 7 December 2018.  

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10 декабря, 11:00

The Inverting Treasury Yield Curve and the S&P 500

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There was one major economic event that occurred last week and it shifted the forward-looking focus of investors, sending stock prices sharply downward as a result. That event was the partial inversion of the U.S. Treasury yield curve that took place on Tuesday, 4 December 2018. A yield curve inversion occurs whenever the yield, or interest rate, of a longer term bond or note issued by the U.S. Treasury Department falls below the level of a shorter term bond or note. This kind of event is often associated with an increased likelihood of an economic recession in the future, when businesses can expect to experience falling levels of earnings and cash flow, which is why stock prices would fall in the current day even though any economic distress is only in the potential outlook for the future and is not as yet guaranteed. For a quick recent history of the Treasury yield curve, check out TheFirsh's two-minute long animated chart of the curve's history since 1990. Recessions followed within 1-2 years of significant yield curve inversions that occurred in 1989-90, 2000 and 2006-07 (the animation ends at the end of November 2018, so it doesn't capture the latest inversion). Yield Curve's 28 years in 2 minutes [OC] from r/dataisbeautiful On Tuesday, 4 December 2018, the yield of the 5-year Treasury dropped to be lower than the yields of the 2-year and 3-year notes. Although the amount by which the 5-year note dropped below the 2 and 3 year notes is small, the negative implications of the event were amplified thanks to the highly influential New York Fed branch president John Williams, whose unfortunately timed and tone-deaf hawkish comments promising additional short-term interest rate hikes well into 2019 prompted investors to shift a significant portion of their attention beyond 2019-Q1 to the more distant future quarters of 2019-Q3 and 2019-Q4, where the expectation is already well established that these quarters will experience a significant deceleration in the growth rate of dividends. At a time when investors are sensitive to the potential for economic distress ahead, a Fed branch president announcing that they think the Fed should keep hiking interest rates well into 2019 is the equivalent of pouring gasoline onto a small campfire in a dried-out, under-maintained, underbrush-thick section of California's state forests. It's a stupid own-goal, on par with one of former Fed Chair Ben Bernanke's bigger mistakes. That was all it took to send stock prices sharply lower through the end of the first week of December 2018. The S&P 500 broke out of the final portion of our red-zone forecast, where we had assumed that investors would largely remain focused on 2019-Q1 through 7 December 2018, where we find that investors have instead shifted a little over 50% of their forward-looking focus toward 2019-Q3 or 2019-Q4 (there's not much difference in where the level of the S&P 500 would be for investors focusing on either future quarter). It's early, but it's looking like we're seeing the fifth Lévy flight event of 2018. That explains how and why the level of the S&P 500 got to where it is as of the end of Week 1 of December 2018. We've also come to the end of our redzone forecast period, where out of 20 days where the market was open (markets were closed on Wednesday, 5 December 2018 to mark the passing of former U.S. President George H.W. Bush), the S&P 500 closed within our forecast range on 10 of those days. While our redzone forecast turned out to be wrong for 50% of the actual observations, the lowest level of accuracy we've ever achieved over a forecast period, it proved to be very useful in detecting when investors shifted their forward-looking attention away from 2019-Q1 toward other more distant future quarters during the past month. We can also confirm that stock prices are not following the echo of October 2018's market volatility. While the Treasury yield curve inversion was the most significant, market-moving event of the first week of December 2018, other stuff happened too, where the stuff we think is worth noting is listed below.... Monday, 3 December 2018 Oil surges almost 4 percent on trade truce, expected supply cuts Factbox: Contrasting Chinese, U.S. statements on trade war agreement Trump tweets China to cut tax on U.S.-made cars, revs up auto stocks U.S. construction spending slows, factory growth readings mixed As Fed says on track, narrowing yield curve could complicate debate Dove: Fed's Kaplan sees challenges on rate path as global growth slows Dove: Fed's Quarles: Fed watching data but will not react to 'every wavering' Relief rally boosts Wall Street on U.S.-China trade truce Tuesday, 4 December 2018 Oil curbs gains amid trade, output cut uncertainty Geopolitics: If Iran can't export oil from Gulf, no other country can, Iran's president says Trump threatens tariffs if can't reach 'real deal' with China Mostly wrong: U.S. Treasury secretary says investors on edge over trade talks Wall Street tumbles, spooked by growth and trade worries Hawk (what really spooked markets and what investors are really "on edge" over): As markets turn, Fed says it is not fazed Fed's Williams says rate hikes 'over next year or so' still make sense Fed's Williams expects further U.S. rate increases into next year Loosening standards to prop up real estate market? U.S. regulators propose raising threshold on residential real estate appraisals Thursday, 6 December 2018 Oil dives nearly 3 percent after OPEC delays output decision Exclusive: China's Unipec to buy U.S. oil after Xi-Trump tariff truce Fed's Powell: U.S. economy performing 'very well' though benefits uneven Attempt to deflect responsibility from role in stock market rout: Tariffs have hit confidence, to slow U.S. economy: Fed's Williams Atlanta Fed's Bostic: Fed should proceed to neutral rate S&P 500, Dow slip on trade worries, but end off of lows Friday, 7 December 2018 Oil prices climb on OPEC-led cuts, but off session highs Reality starting to sink in? Fed policymakers signal turning point on U.S. rate-hike path St. Louis Fed's Bullard: Fed should halt further rate hikes Bullard: U.S. monetary policy at a 'crossroads,' rates appropriate Fed's Bullard says 'real risk' of yield curve inverting this month Wall Street tumbles, indexes post biggest weekly losses since March Meanwhile, Barry Ritholtz reviewed the week's major economy and market-related news and divided it up into its positives and negatives. Unfortunately, he missed the developing yield curve inversion as the week's biggest market-driving negative, but he picked up on other factors that we didn't cover. This week is a good example of why it's beneficial to take in a range of analytical viewpoints!

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07 декабря, 16:15

Rediscovering Nature: A Biomimetic Clock

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Biomimicry is an approach to developing new inventions and technologies that is inspired by the natural "solutions" to practical problems that plants and animals have evolved over eons, where human designers seek to replicate those solutions. Via Core77, we learned of a Kickstarter project by London-based design studio Animaro to develop a kinetic clock concept that is directly inspired by how some flowers open and close each day as part of their daily circadian rhythms. The following video shows Animaro's Solstice kinetic clock in action: At this writing, the project has five days left to go, but it has already cleared its minimum funding threshold and will be made, with deliveries estimated to begin in June 2019. We'll close with Loren Lewis' A day in the life of a Morning Glory, which shows off some of the natural inspiration for the Solstice kinetic clock. Previously on Political CalculationsRediscovering Nature: Cars Shaped by Fish Rediscovering Nature: Flapping Wings Harvesting Water from the Air The Singing Stones Slow Dance Inventions in Everything: Frog Umbrellas

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06 декабря, 11:14

Telescoping Median Household Income Back in Time

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According to Sentier Research, median household income in the United States increased to $63,220 in October 2018, a 0.3% increase over the firm's estimate of $63,007 for September 2018. The following chart shows the nominal (red) and inflation-adjusted (blue) trends for median household income in the United States from January 2000 through October 2018. The inflation-adjusted figures are presented in terms of constant October 2018 U.S. dollars. The single biggest takeaway from this chart is the growth streak that median household income has achieved during 2018. Since nominal median household income last saw a downtick in December 2017, in both nominal and inflation-adjusted terms, the income earned by the typical American household at the middle of the distribution of income in the United States has now set new record high values in each of the last ten months. At the same time, the year-over-year growth rate of median household income in the United States has started setting record high values as well, in nominal if not inflation-adjusted terms. The next chart shows this data from January 2001 through October 2018. At a year-over-year growth rate of 6.3%, October 2018 has recorded the fastest year-over-year growth for nominal median household income over Sentier Research's entire data series, which only extends back to January 2000 for their signature monthly household income data. Analyst's NotesDon't you hate running into a limit like that? What if we could telescope the estimates for monthly median household income to go further back in time? That's something we can do, where we simply need to apply the alternative method we developed for estimating monthly median household income in the U.S. that we developed to fill the gap for this data when Sentier Research suspended their income data reporting in the months between May 2017 and March 2018. The following chart illustrates the model we can use to estimate median household income in the era before Sentier Research's coverage begins, where the relationship provided by the data from January 2000 through March 2015 (shown in orange), is what we would test out with the monthly data that precedes Sentier Research's estimates. But there's a problem. We don't have any monthly median household income estimates before January 2000 to check our results against to assess the accuracy of our estimates. Instead, we will have to rely upon the annual estimates of median household income that the U.S. Census Bureau has been reporting since 1967. In using that data, we would expect to have a larger error in our estimates than we have had with Sentier Research's monthly estimates, simply because we're estimating income at intermediate points of time from when the Census Bureau samples its annual data. But we reasoned that so long as we can produce estimates using our alternate method that fit within the error range our estimates have with the annual data over the period where we can cross-check it with Sentier Research's estimates, we should be able to produce reasonably accurate results. So that's what we did. We found the results for our alternate method, which is based on actual data from January 2000 through March 2015, can reliably estimate monthly median household income all the way back to January 1986. We didn't have to stop there, except that we found that the differences between our modeled results and the U.S. Census Bureau's annual median household income estimates grew unacceptably large in the period preceding January 1986. We later identified the reason why. The survey that the U.S. Census Bureau used to collect income data from American households underwent a significant revision that was implemented in March 1987, where the data reported for the 1986 calendar year was both the first to be based entirely on households selected from the 1980 Census-based sample design rather than the 1970 Census-based sample, and also a larger number of smaller sampling areas. The March 1987 survey was also the first to collect a more detailed level of household income data for higher income earning households, but that impact would be relatively minor compared to the other changes in the survey's methodology. As we saw with the effects on reported median household income following the March 2015 revision to the U.S. Census Bureau's income survey, the Census Bureau's estimates for the period preceding 1986 are very different from what came after - the accuracy of the model we developed based on the available monthly data we have from January 2000 through March 2015 breaks down. In any case, what we've done is enough to nearly double the amount of data that's available to describe the trajectory of median household income in the U.S. on a monthly basis, which we can now provide from January 1986 through the present. And if we keep working at it, where we have some ideas for how to telescope the analysis even further back in time, we may be able to get all the way back to 1959 - nearly a decade before the Census Bureau even began reporting its annual estimates of median household income. And that's how we're celebrating our anniversary today! [If you want summarized links to our data sources and references, keep scrolling down past the "anniverary" section.] Celebrating Political Calculations' AnniversaryOur anniversary posts typically represent the biggest ideas and celebration of the original work we develop here each year. Here are our landmark posts from previous years: A Year's Worth of Tools (2005) - we celebrated our first anniversary by listing all the tools we created in our first year. There were just 48 back then. Today, there are nearly 300.... The S&P 500 At Your Fingertips (2006) - the most popular tool we've ever created, allowing users to calculate the rate of return for investments in the S&P 500, both with and without the effects of inflation, and with and without the reinvestment of dividends, between any two months since January 1871. The Sun, In the Center (2007) - we identify the primary driver of stock prices and describe a whole new way to visualize where they're going (especially in periods of order!) Acceleration, Amplification and Shifting Time (2008) - we apply elements of chaos theory to describe and predict how stock prices will change, even in periods of disorder. The Trigger Point for Taxes (2009) - we work out both when, and by how much, U.S. politicians are likely to change the top U.S. income tax rate. Sadly, events in recent years have proven us right. The Zero Deficit Line (2010) - a whole new way to find out how much federal government spending Americans can really afford and how much Americans cannot really afford! Can Increasing the Minimum Wage Boost GDP? (2011) - using data for teens and young adults spanning 1994 and 2010, not only do we demonstrate that increasing the minimum wage fails to increase GDP, we demonstrate that it reduces employment and increases income inequality as well! The Discovery of the Unseen (2012) - we go where so-called experts on income inequality fear to tread and reveal that U.S. household income inequality has increased over time mostly because more Americans live alone! We marked our 2013 anniversary in three parts, since we were telling a story too big to be told in a single blog post! Here they are: The Major Trends in U.S. Income Inequality Since 1947 (2013, Part 1) - we revisit the U.S. Census Bureau's income inequality data for American individuals, families and households to see what it really tells us. The Widows Peak (2013, Part 2) - we identify when the dramatic increase in the number of Americans living alone really occurred and identify which Americans found themselves in that situation. The Men Who Weren't There (2013, Part 3) - our final anniversary post installment explores the lasting impact of the men who died in the service of their country in World War 2 and the hole in society that they left behind, which was felt decades later as the dramatic increase in income inequality for U.S. families and households. Resuming our list of anniversary posts.... The Toolmaker's Tool (2014) - we make the code we use for creating online tools available to all! Replacing GDP with the National Dividend (2015) - we explore our development of an alternative measure of economic welfare that can replace GDP. The Gamblers Who Invented Modern Encryption (2016) - we discover that a group of gamblers seeking to break the law in Missouri back in 1905 put together many of the elements that underlie secure electronic communications and financial transactions in 2016! The Isolation of El Niño (2017) - we advance the development of a global economic indicator for Earth! Telescoping Median Household Income Back in Time (2018) - we find a way to nearly double the available supply of monthly median household income estimates with reasonable accuracy. Data Sources for Median Household Income From January 1986 Through October 2018U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Population. [PDF Document, Online Database (via Federal Reserve Economic Data)]. Last Updated: 28 November 2018. U.S. Bureau of Economic Analysis. Table 2.6. Personal Income and Its Disposition, Monthly, Personal Income and Outlays, Not Seasonally Adjusted, Monthly, Middle of Month. Compensation of Employees, Received: Wage and Salary Disbursements. [PDF Document, Online Database (via Federal Reserve Economic Data)]. Last Updated: 28 November 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 Database (via Federal Reserve Economic Data)]. Last Updated: 14 November 2018. References for Median Household Income From January 1986 Through October 2018Sentier Research. Household Income Trends: January 2000 through May 2017, March 2018 through October 2018. [Excel Spreadsheet with Nominal Median Household Incomes for January 2000 through January 2013 courtesy of Doug Short]. [PDF Document]. Accessed 25 September 2018. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars to develop the analysis presented in this series.] U.S. Census Bureau. Historical Income Statistics. Table H-5.  Race and Hispanic Origin of Householder--Households by Median and Mean Income:  1967 to 2017. [Excel Spreadsheet]. Accessed 5 December 2018.

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05 декабря, 11:04

Dividends by the Numbers for November 2018

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November 2018 marked a generally solid and otherwise unremarkable month for the U.S. stock market's dividend payers. And with that being the case, we took advantage of the opportunity to do some minor rework to the main charts we present in our "Dividends by the Numbers" series. Starting with our chart showing the monthly number of dividend increases and reductions!... The main change here is that we're revising the threshold for the number of dividend reductions that corresponds to recessionary conditions being present in the U.S. economy. This change reflects the addition of a number of oil and gas royalty trusts (mainly related to new oil shale drilling firms) whose stocks began publicly trading circa 2011-2012, and whose dividends are paid out monthly as a fixed percentage of their earnings rather than being set independently. That latter operating characteristic adds some additional noise to the number of dividend increases reported each month and, given their usually much lower quantity, quite a lot of additional noise to the number of dividend cuts announced each month. To compensate for the much increased level of noise in the number of dividend cuts announced each month since January 2012, we've raised the threshold indicating recessionary conditions being present in the private sector of the U.S. economy from 10 to 25. Our next chart zooms in on just the lower portion of the first chart to focus only on the reported number of dividend cuts. Following the so-called "Great" Recession, an elevated number of dividend cuts has been associated with two main phenomena: economic distress or changes in tax policies. Economic distress is self-explanatory, where when the business environment for companies dims to the point where they struggle to earn profits or to sustain the cash flow needed to pay out dividends to their shareholders, dividends get cut, which is what makes this measure a very simple indicator of the health of the economy. Meanwhile, because influential shareholders have the ability to control the timing and amount of dividends they might receive, changes in tax policy can also have a visible effect on the number of dividend cuts announced each month, where this impact typically occurs in the final quarter of a calendar tax year and the first quarter of the next tax year. That's enough discussion on the changes we've made to the presentation of our charts. Let's get to the numbers behind November 2018's dividend metadata!... 3,724 U.S. firms declared dividends in November 2018, an increase of 70 over the 3,654 recorded in October 2018. That figure is also an increase of 206 over the number recorded in November 2017. In November 2018, some 92 U.S. firms announced they would pay an extra, or special, dividend to their shareholders, an increase of 54 over the number recorded in October 2018. That figure is also a decrease of 17 from the total recorded in November 2017. 165 U.S. firms hiked their dividend payments to shareholders in November 2018, a decrease of 7 from the number recorded in October 2018, which is a decrease of 20 from the 185 dividend rises announced in November 2017. A total of 20 publicly traded companies cut their dividends in November 2018, an increase of 7 over the number recorded in October 2018 and a decrease of 2 from the 22 recorded in November 2017. Just 1 U.S. firm omitted paying their dividends in November 2018, a decrease of 1 from the number recorded in October 2018. That figure is also a decrease of 5 from the number of firms that omitted paying dividends back in November 2017. The changes to the charts aren't the only change we're introducing this month. We've also added a level of artificial intelligence to automate the reporting of these monthly figures. Because Ironman is slowly becoming A.I. (but is already self-aware!) We'll drill down to do more analysis of the firms that announced dividend cuts in November 2018 later in the month. ReferencesStandard and Poor. S&P Market Attributes Web File. [Excel Spreadsheet]. Accessed 3 December 2018.

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04 декабря, 11:00

Falling Prices, Rising Incomes Boost New Home Affordability

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The relative affordability of new homes being sold in the United States has improved in recent months, where rising mortgage rates, falling new home sale prices, and rising incomes has combined to produce that outcome in the national level data. The following chart shows the history of interest rates for 30-year conventional fixed rate mortgages in the U.S. from April 1971 through October 2018. Through October 2018, 30-year conventional mortgage rates in the U.S. have risen to 4.83%, the highest they've been since April 2011, having risen from 3.90% in October 2017. The rising rates are making it more costly to afford the monthly payments for high-priced homes in the regions of the U.S. that have been experiencing shortage conditions, which is causing those markets to significantly slow. According to Tendayi Kapfidze, chief economist at LendingTree, the jump in rates will eventually mean lower demand — and lower home pricing as a result. But it's not all good news. Rising rates also equal smaller homebuying budgets — which could put a damper on those lower prices. In fact, when comparing the average mortgage payment from 2017 with what today's average rates would allow for, Kapfidze says borrowers can afford to borrow about 10% less than just one year ago. "As most buyers budget based on monthly payments, the median buyer is now able to bid significantly less than before," Kapfidze said. "This means at each price point, the number of buyers is falling, reducing demand. This has had immediate effects on the number of houses sold and will over time reduce the pace of home price increases." We can see some of this dynamic playing out with the raw median new home sale prices reported each month by the U.S. Census Bureau. The following chart presents those prices for each month from January 2000 through October 2018, where the data from July through October 2018 will be subject to some revision during the next several months. Median new home sale prices peaked at $343,400 in December 2017. Through the preliminary data for October 2018, they have fallen by nearly 10%. The median new home sales price data sees quite a bit of noise from month to month, which we can smooth out by calculating a rolling, trailing twelve month average for the series. The following chart does that for the U.S.' monthly median new home sales prices in the period from December 2000 through October 2018, showing its relationship with the U.S.' monthly median household income estimates, where we've likewise calculated the rolling trailing twelve month average. Here, we see that U.S. median new home sale prices have mostly been flat from April 2018 through August 2018, but also that they have been declining in the months since, even as the U.S.' median household income has continued increasing. That combination means that the relative affordability of the median new home being sold in the U.S. has been improving, which we can confirm with the following chart showing the ratio of the trailing twelve month averages of median new home sale prices and median household income. After peaking at 5.45 times median household income in February 2018, the relative level of affordability of new homes in the U.S. has improved in 2018 as median household incomes have continued to rise while median sale prices have fallen. The preliminary value of the ratio in October 2018 is 5.28. Though they have become more affordable during 2018, they're still very expensive, where we would have to go back to October 2014 to find the affordability ratio at a similar level, where many real estate markets within the United States are still experiencing what may be considered to be shortage conditions, even as the market for new homes in the U.S. has decelerated. ReferencesFreddie Mac. 30-Year Fixed Rate Mortgages Since 1971. [Online Database]. Accessed 2 December 2018. Sentier Research. Household Income Trends: October 2018. [PDF Document]. Accessed 28 November 2018. [Note: We've converted all data to be in terms of current (nominal) U.S. dollars, and are using a projection for September 2018's estimate.] U.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 2 December 2018.

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03 декабря, 11:09

Back in the Box with the S&P 500

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The fourth and final week of November 2018 saw the S&P 500 return back to the box, so to speak, as investors shifted their forward-looking attention back toward 2019-Q1 in setting current day stock prices. The "box", of course, being the red-zone indicated in our spaghetti forecast chart that projects the level of the S&P 500 based on how far forward in time investors are looking.... The big news of the week, which prompted the shift in the level of stock prices, was Federal Reserve Chair Jerome Powell's speech to the Economics Club of New York, which investors interpreted as his taking a much more dovish stance than he was indicating in previous weeks, where the Fed is now expected to back off on plans to continue its series of quarterly rate hikes well into 2019. Instead, the CME Group's FedWatch Tool now indicates that after a quarter point rate hike in December 2018, the Fed is now expected to raise short term interst rates in the U.S. just once in 2019, at its June 2019 meeting. The following table shows the probabilities of rate hikes associated with upcoming FOMC meeting dates (please click the image for a larger version): Looking back at the alternate futures chart for the S&P 500, it's pretty remarkable that the trajectory of the S&P 500 has more closely followed our dividend futures-based model's unadjusted forecast for investors focusing on 2019-Q1. That trajectory only exists because of the echo of the Lévy flight event that took place in early October 2018, without which, and without last week's reaction to Apple's bad news, our standard model's forecast for the S&P 500 with investors focused on 2019-Q1 would have more closely fit within the redzone forecast we added to the chart in early November. Still, what neither we, nor anyone else, can do is to anticipate the specific news events that might prompt investors to suddenly shift their attention from one point of time in the future to another, which provides much of the genuine randomness that characterizes this portion of the volatility behind changes in stock prices. Speaking of which, here are the more noteworthy news headlines we identified in Week 4 of November 2018. Monday, 26 November 2018 Oil breaks above $60/bbl, but doubts about growth curb gains Seeing the bigger picture: oil price slump is part of broader Asian pullback Wall Street rallies as Cyber Monday shoppers log on Microsoft's stock market value catches up with Apple After the bell: Trump says he expects to raise China tariffs: Wall Street Journal Tuesday, 27 November 2018 Oil prices edge lower ahead of G20, OPEC meetings Fed wants smallest possible portfolio, says Vice Chair Clarida Fed's Bullard: 'cracks' in growth may shape Fed 2019 debate Wall Street reverses losses after White House adviser's trade remarks Exclusive: China not seriously considering U.S. Treasuries as trade war weapon - envoy Wednesday, 28 November 2018 Oil falls below $60/bbl after 10th straight U.S. crude build U.S. new home sales drop to more than 2-1/2-year low Fed's Powell, in apparent dovish shift, says rates near neutral Fed's Powell: Financial risks 'moderate' despite vulnerabilities Wall Street jumps as Powell hints interest rate hikes may taper off Thursday, 29 November 2018 Oil rises as Russia indicates open to cuts with OPEC U.S., China exploring deal to delay more tariffs, start talks: WSJ Fed retunes message for 2019, opening door to 'slow down' Fed minutes: Further hike 'warranted soon,' debate opened on pause Wall Street edges down as tech, bank stocks weigh Friday, 30 November 2018 Oil tumbles on supply glut; Wall Street up on G20 comments U.S., Canada, Mexico sign trade deal, Trump shrugs off Congress hurdle Trump says some good signs on talks with China Chinese official says 'consensus steadily increasing' in U.S. trade talks Wall Street rises on trade hopes; S&P, Nasdaq post best weeks in 7 years After the Friday Close, Before the Monday Open China, U.S. declare 90-day halt to new tariffs: White House U.S., China agree trade war ceasefire after Trump, Xi summit Over at The Big Picture, Barry Ritholtz has divided the week's major economy and market-related news into six positives and six negatives, covering the week through the market close on Friday, 30 November 2018. He does this every week as an exercise to minimize the effect that his biases may have in affecting his outlook in assessing investments, which is something that we recognize as a valuable service, because we use it for the same purpose. We're happy to feature it each week because it's valuable in maintaining an objective outlook that we find makes it easier to identify new opportunities sooner than we otherwise might, which is a bit like having a super power. How do you keep from getting trapped after a bias of yours sends you down a blind alley?

30 ноября, 11:27

Shopping For The Biggest Ideas in Math

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For Black Friday 2018, we updated our tool that uses math to help thrifty shoppers set individual spending limits for each the gifts that they might give to the people they know this holiday season. If you used the tool, you're very likely the kind of person who likes maths enough to use them to solve everyday problems. What's more, the odds are that you know somebody else who shares that mathematical affinity. So why not give them the biggest ideas in math, the stories of breakthrough insights and the inspirations behind them, as assembled by the editors and staff of Quanta Magazine, in The Prime Number Conspiracy. Here's Quanta's understated promotional video for the book: If that's not your friend's cup of tea, you might consider going in a different direction. If you ever wondered, as we did, if self-driving cars can solve traffic jams or if we know all the things they can or should be distracted by, or whether such a vehicle could be taken over by a hacker, we have another suggestion that seems very well suited for our ever-more artificially intelligent system modeled world: Hannah Fry's Hello World: Being Human in the Age of Algorithms, which explores the ethical dilemmas that come part and parcel with society's growing use of computer technologies. Finally, if you're looking for something lighter, why not a book by a mathematician who has also established themselves as a stand up comedian? Matt Parker covers some of the territory contained within our other two suggestions, but takes things to the n+1 level in Things to Make and Do in the Fourth Dimension. In it, he shares the lessons of advanced maths that makes it possible keep all the cords from your earbuds from getting tangled, or how to make a paper flexagons, and also the most mathematically optimal way to find a suitable mate, which would be an added selling point if they're still single. At the very least, that math is a lot easier to solve than the formula for explaining why they're still single....

29 ноября, 11:23

U.S. New Home Market Continues Deceleration

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It is increasingly looking like the market for new homes in the U.S. peaked in August 2018. That's bad news for homebuilders (Indices: ITB, PKB, XHB) and for the U.S. economy. The following animated chart shows both the nominal and inflation-adjusted trailing twelve month average for the market capitalization of new homes sold in the United States from December 1975 through the preliminary data reported for October 2018. In it, we can see that the trailing year average market cap for U.S. new homes sales peaked in July 2018 at $20.32 billion in nominal terms, or $20.61 billion in terms of constant October 2018 U.S. dollars. The animation will show each chart for five seconds - if you're accessing this article on a site that republishes our RSS news feed and cannot see the animation, please follow the links to the individual nominal and inflation-adjusted charts. That deceleration in the months since August 2018 has been significant. So much so that we've opted to also present the nominal and inflation-adjusted year-over-year growth rates of the U.S. new home sales market cap's trailing year average since January 2000, where we discover that we would have to go back to the March and April 2006 to find a similarly slow rate of market cap growth for new homes being sold in the U.S. Once again, if you want to see the charts individually, please follow the links for the nominal growth rate chart or the inflation-adjusted version. This kind of data may go a long way to explaining why the Fed's new chair has suddenly become rather dovish regarding the Fed's plans for setting the level of interest rates in the U.S., where sales in California's very high-priced markets appear to have been particularly hard hit by the Fed's recent series of rate hikes. Data SourcesU.S. Census Bureau. Median and Average Sales Prices of New Homes Sold in the United States. [Excel Spreadsheet]. Accessed 28 November 2018. U.S. Census Bureau. New Residential Sales Historical Data. Houses Sold. [Excel Spreadsheet]. Accessed 228 November 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. [Text Document]. Accessed 14 November 2018.