Источник
Unexpectedly Intriguing!
Выбор редакции
02 апреля 2012, 16:47

Finalized: GDP Forecast for 2012Q1

  • 0

With the BEA's release of the third and final (for now) GDP estimate for the fourth quarter of 2011, we can now project ahead and finalize our forecast of the size of the U.S. economy in the first quarter of 2012. Our accompanying chart shows what pure momentum mixed with some statistical analysis would project: Our preferred "modified limo" forecasting technique anticipates that inflation-adjusted GDP for the first quarter of 2012 will be reported to be approximately $13,508.8 billion constant 2005 U.S. dollars when the BEA records its third estimate of this quarter's GDP at the end of June 2012. The BEA will provide its first estimate for this quarter at the end of April 2012, and its second estimate near the end of May 2012. To be more accurate in describing our forecast though, what we're really forecasting here is the level of real GDP in the U.S. for which there is a 50% chance of the actual recorded value of GDP being higher and a 50% chance of the actual recorded value of GDP being lower. We would be greatly surprised if we were dead on the mark! Using statistics, we can give the following probabilities for where 2012-Q1's level of inflation-adjusted GDP will be recorded. All values below are given in terms of constant 2005 U.S. dollars: There is a 68.2% probability that we'll see GDP recorded between $13,367.4 billion and $13,650.1 billion. There is a 95.0% probability that we'll see GDP recorded between $13,226.0 billion and $13,791.5 billion. There is a 99.7% probability that we'll see GDP recorded between $13,084.7 billion and $13,932.9 billion. We've set the default values in our tool below for forecasting the midpoint of our projected GDP range using our "modified limo" method: Previous Quarters Inflation-Adjusted GDP Data Input Data Values Three Quarters Ago (Billions of "Chained" U.S. Dollars) Two Quarters Ago (Billions of "Chained" U.S. Dollars) Most Recent Quarter (Billions of "Chained" U.S. Dollars) Next Quarter's Inflation-Adjusted GDP Estimate Calculated Results Values "Modified Limo" Estimate (Billions of "Chained" U.S. Dollars) One thing to note about our methods is that even if they turn out to be off-target, any significant deviation in the level of GDP recorded by the BEA and our projections can be taken as in indication of a significant shift in the direction of growth for the U.S. economy. In the event of such deviations, our forecasting method will self-correct, as can been seen in the chart we've included in this post. Looking further into the future, we continue to anticipate that the growth rate of the U.S. economy will remain positive but will also continue decelerating in the second quarter of 2012.

Выбор редакции
01 апреля 2012, 14:01

Astros to reject American League transfer - join SEC instead

  • 0

Astros Press Release 04/01/2012 7:01 AM EDTHOUSTON - Houston Astros Owner and Chairman Jim Crane announced today that the Astros will reject the decision by Major League Baseball to transfer the team from the Central Division of the National League to the Central Division of the American League, and will instead affiliate with the South-Eastern Conference of the National Collegiate Athletic Association. "We listened to our fans, who were almost unanimously upset at our being forcibly realigned into the American League, where we would lose all the rivalries we've developed throughout our history," Crane said. "After a lot of soul searching, we recognized that the best fit for both the organization and our fans is to become part of the SEC. If we're going to get realigned after our 50th year as a National League franchise, it's going to be on our own terms." The Astros realignment to the SEC will take place in January 2013. As part of the move, the Astros will acquire a university and integrate it into the team's operations. "It's just like how The Ohio State University works, if you think about it," Crane said. "Most modern universities are really professional sports franchises that operate academic institutions on the side for the tax advantages." "The hard part will be to launch the rest of the sports programs we'll need to compete as an NCAA Division I school," Crane continued. "We'll be calling up our entire AA and AAA organizations to fill in until we can establish a solid recruiting program." "One advantage we have is that many of our players went straight into the minors without attending any college, so most are eligible to play sports in the NCAA, where they can be on scholarship. A lot of them have solid high school experience in the additional sports we'll be looking for them to play, just like the kids at the schools they'll be competing against, who perhaps wouldn't be in college except for the opportunity to play sports." "We have a lot of challenges moving forward," Crane acknowledged. "I'm really looking forward to taking them on." "Frankly, I can't wait to find out if Brett Myers can quarterback," Crane concluded. More information will be posted at www.astros.com as it becomes available.

Выбор редакции
30 марта 2012, 14:25

How to Make Aluminum Stronger Than Steel

  • 0

Via Tom's Guide: This week, HTC is showing us that microarc oxidation process in action. The metal starts off as aircraft 6000 series aluminum, which is then hit with "10,000 volts of energy ... almost like lightning striking the phone." This causes a chemical reaction that creates the ceramic surface on the phone. HTC says the process makes the phone's housing three times stronger than stainless steel and even suggests users won't even need a case. See for yourself: Utter coolness. If it has a good battery, it will be very hard to even consider looking at other mobile phones, but that's more a function of Koomey's Law....

Выбор редакции
29 марта 2012, 13:36

Spring 2012 Edition: Who Really Owns the U.S. National Debt?

  • 0

The U.S. Treasury has revised its data indicating which nation's institutions through the end of the U.S. government's 2011 Fiscal Year, which ended on 30 September 2011. With that revision, we've updated our chart revealing who the biggest holders of all the U.S. government's public debt outstanding were as of 30 September 2011: Compared to the preliminary version of this chart, we see a large decrease in debt appearing to be held by the United Kingdom, but large increases in debt actually held by other foreign entities. This is due to the role of financial institutions in the U.K. acting as international intermediaries for the interests of other foreign entities. The Treasury Department's annual revision of this data accounts for the actual foreign ownership of U.S. government-issued debt. We note that some $1,773 billion of the U.S. government-issued debt we've recorded as being held by U.S. individuals and institutions as of 30 September 2011 was held by the U.S. Federal Reserve. The U.S. Federal Reserve then accounts for 28% of all the debt held by U.S. individuals and institutions and works out to be nearly 12% of all the nation's public debt outstanding, as the Federal Reserve increased its U.S. debt holdings by $807 billion during the U.S. governments 2011 fiscal year. Combined, the U.S. government-issued debt holdings of foreign individuals and institutions account for just shy of one-third of all the U.S. government's public debt outstanding. Previously on Political CalculationsWho Owns the U.S. National Debt To Whom Does the U.S. Government Really Owe Money? Summer Update: To Whom Does the U.S. Really Owe Money Winter 2011 Edition: Who Owns the U.S. National Debt? Spring 2012 Edition: Who Really Owns the U.S. National Debt? Data Sources: Board of Governors of the Federal Reserve System. Monthly Report on Credit and Liquidity Programs and the Balance Sheet, October 2011. Table 1. Assets, liabilities, and capital of the Federal Reserve System. Board of Governors of the Federal Reserve System. Monthly Report on Credit and Liquidity Programs and the Balance Sheet, October 2010. Table 1. Assets, liabilities, and capital of the Federal Reserve System. U.S. Treasury Department. Major Foreign Holders of Treasury Securities. Accessed 24 March 2012. U.S. Treasury Department. Monthly Statement of the Public Debt of the United States, September 30, 2011. Table III – Detail of Treasury Securities Outstanding, September 30, 2011.

Выбор редакции
28 марта 2012, 14:03

The Next Scary Hockey Stick Chart

  • 0

If Michael Mann's infamous hockey stick graph should be taken seriously as evidence that human activity is causing global climate change that must be stopped, or else it will trigger positive feedback effects that will result in a catastrophe that will ruin the lives of millions of people, what then are we to make of the following chart showing how the U.S. federal government is running up its own debt for the sake of loaning out money to college students? Here, we find that the federal government has sharply increased the amount of money it borrows for the sake of loaning it right back out to college students since 2008. Beginning in 2009, the net increase in those borrowings account for 2.9% of the entire increase in the U.S. national debt observed since 2008. That amount is above and beyond the amount directly added to the nation's total public debt outstanding by the federal government's annual budget deficits. In this case, the disaster that would directly affect the lives of millions of people means being forced at the direction of government bureaucrats into a dramatically lower standard of living for the sake of being able to make the payments on their student loans to the U.S. federal government, without any real hope of being able to discharge that debt through bankruptcy. That, in turn, has the real potential to indirectly hurt millions of other people, because student loan payments are rising at the rapid pace supported by the government-subsidized cost of tuition, even though college graduates are entering into jobs that pay far below what is required to both live well and to support their super-sized student loan debt. It is quite possible then that we have reached a point where higher education hurts the economic growth of the nation, rather than helps it: Student loans could be the next asset class to school the United States about poor debt management. Graduates are now forking over more of their disposable income in repayments than 10 years ago, defaults are rising and with Uncle Sam now directly holding $450 billion of student debt, taxpayers are on the hook again. That could put U.S. higher education in the embarrassing position of hindering, rather than helping to fuel, economic growth. Here's how: first, the size of the student loan market has mushroomed. Bachelor-degree debt at graduation has grown 250 percent over the past decade, according to finaid.org. At $867 billion, it exceeds both credit-card and auto debt in the United States, according to a study by the New York Federal Reserve. If this trend continues, by 2021 it'll be equivalent to 1.3 percent of GDP, triple its current level, assuming GDP cleaves to its 4.5 percent 15-year average nominal growth. Next, average payments have risen by 83 percent over the past decade while median income for those aged 25 to 34 has increased by just a fifth, according to the Bureau of Labor Statistics. That leaves less money for graduates to spend or save. Extrapolate ahead 10 years, and former students will be paying $125 billion extra a year. By then, that would equate to two-thirds of a percentage point of GDP.We wonder how the higher education bubble and federal budget crisis deniers will react to this hockey stick chart.... Data SourcesU.S. Treasury. Monthly Statement of the Public Debt of the United States, September 30, 2011. U.S. Treasury. Monthly Statement of the Public Debt of the United States, September 30, 2008. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2010 through September 30, 2011, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2010 through September 30, 2010, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2009 through September 30, 2009, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2008 through September 30, 2008, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2007 through September 30, 2007, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2006 through September 30, 2006, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2005 through September 30, 2005, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2004 through September 30, 2004, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2003 through September 30, 2003, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2002 through September 30, 2002, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2001 through September 30, 2001, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 2000 through September 30, 2000, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 1999 through September 30, 1999, and Other Periods. U.S. Treasury. Final Monthly Treasury Statement of Receipts and Outlays of the United States Government for Fiscal Year 1998 through September 30, 1998, and Other Periods.

Выбор редакции
27 марта 2012, 14:36

The Internet: Somebody Here Is Wrong....

  • 0

Carpe Diem's Mark Perry has been highlighting positive signs of economic recovery and expansion in the U.S. economy, including some indications that some the regions where the U.S. housing market has fallen the most may finally be bottoming out. Here, he points to a Wall Street Journal article that looks at the housing market of Phoenix, Arizona: As home prices continue to drop in most cities, a nascent real-estate rebound here holds lessons for the rest of the country. This sprawling desert metropolis was one of the hardest hit housing markets during the bust. Phoenix home prices declined 55% from 2006 through the end of 2011, and Arizona's foreclosure rate jumped to No. 3 in the nation in 2009. Hundreds of thousands of homeowners are underwater, meaning they owe more than their homes are worth. Now real-estate economists across the country are studying an early but surprisingly broad Phoenix turnaround. The sharp drop in home prices has brought new buyers into the market. Unlike other markets where housing recoveries have been snuffed out by big overhangs of homes for sale and foreclosed properties, inventories are lean here. Phoenix has hit a bottom," says Thomas Lawler, an independent housing economist who was one of the first to warn six years ago that prices in overbuilt metros were poised to fall. BloodhoundBlog's Greg Swann is a real-life real estate professional in the Phoenix metropolitan area market. Surprisingly, he has a very different perspective on the state of that housing market: Don't you love reading all that good news about the the Phoenix real estate market's recovery? Guess what? You're being lied to — as always. This is what's really happening: FannieMae and FreddieMac are holding foreclosed houses off the market, in anticipation of "selling" them to campaign donors. Meanwhile, the town is being picked clean, with prices being bid up by buyers convinced that houses are going out of style — a story we've heard before, yes? As an example, my BargainBot search, which is shared with hundreds of investors all over the world, is at less than 5% of it's peak. A search I use to select premium rental homes produces one listing this morning, where it stood at 45 homes in April of 2011. If Fannie and Freddie "sell" the homes they own to politically-connected "investors," the rental market in Phoenix will be slaughtered. And if they release the homes they have been hoarding into the MLS, Phoenix will hit a third bottom before the market can finally recover. You can call the news media idiots or you can call them liars. But any news from any official source about Phoenix real estate is dangerously misleading. While we know that Greg's typing "it's peak" will specifically annoy Mark on grammatical grounds, if we go past the post into the comments, he provides more observations that would seem to support his claim: > I know of REO real estate agent/teams who are starving for transactions now, another proof of shadow inventory. I started to see the demand-side shortage in April of last year, which is why I noted the numbers from then. We can track that Fannie/Freddie withholding starting in July of 2011, a huge drop-off in the number of homes released into the MLS. If you look at what they’ve dribbled out since then, it’s clear they’re cherry-picking. He also provided the following data to back his observation that both Fannie Mae and Freddie Mac are restricting the supply of housing in the Phoenix market: This chart shows month-by-month releases of lender-owned homes into the MLS from January 2010 to January 2012. This is our Market-Basket search, a subset of the market at large, but that search looks at precisely those bread-and-butter homes that matter most to us: Single-story stucco-and-tile 3-bedroom homes built since 1998. We can’t isolate reliably by owner in an MLS search, but the missing sellers are FannieMae and FreddieMac. They’re hoarding houses, and the artificial shortage they have created is what accounts for the current alleged “recovery.” But then, another Phoenix area real estate professional, Elizabeth Evans, did her own back-of-the-envelope calculations and found that the apparently restricted supply of lender-owned housing may not be that big of a factor in the Phoenix market: Fannie and Freddie have around 200,000 properties in their collective inventory. I can’t immediately find how many are in Arizona, so I will make a generous guesstimate. According to a March 1 article on Housing Wire, at the end of 2011 more than 23 percent of the Fannie Mae inventory was in California and the state with the second highest Fannie Mae inventory was Florida at 11.5 percent. There is no way the Arizona inventory could approach that of these two states, but let’s assume a worst case scenario of 8 percent of the GSE inventory situated in Arizona, or 16,000 properties. Some of these properties are located in other parts of Arizona, but let’s assume 75 percent of them, or 12,000 are located in the Greater Phoenix market. Some of these properties are not fit for occupancy, have residual title issues, or are otherwise unsaleable. Knock off 10 percent as unsaleable, and you are left with 10,800 properties. Not even the most efficient private sector company could do the paperwork amd fix up necessary to get 10,800 properties on the market at once, so let’s give the GSE’s a year to process and list all 10,800 properties in their existing inventory. That’s, ummmm, 900 properties a month. As of this morning, there are around 9,300 single family homes in Maricopa County and 11,400 in the entire MLS system listed as active. Even if 75 percent of the 900 monthly new listings by the GSE’s, or 675, are single family residences, they aren’t exactly going to dilute the inventory or significantly impact the imbalance of supply and demand. Last year, Fannie took back around 200,000 homes. I can’t quickly find how many Freddie acquired, but let’s assume these highly efficient agencies could process and sell another 200,000 properties in the same year. That means another 675 single family houses for a total of 1,350 a month that will go on the market. Dilutive? A little, but in an improving economy, I’m pretty sure these properties would be absorbed without a huge impact on price. If this guesstimate is anywhere near accurate, it proves how unnecessary the bulk sale program is in Arizona. The existing and pipeline inventory could be absorbed with minimum impact on or disruption of the market. This process is called an orderly liquidation. Orderly liquidation realizes the highest price for assets of an entity that must liquidate, exactly what the GSE’s need to accomplish. The bottom line is that one of these people here on the Internet is wrong. We just don't know which one. The only certainty we have is that Mark Perry will be also be very specifically annoyed by Elizabeth Evans typing of "exactly what the GSE's need to accomplish".... Image Credit: xkcd

Выбор редакции
26 марта 2012, 14:07

What President Obama Believes Will Happen With Iran

  • 0

On Friday, 23 March 2012, President Obama stated that tension with Iran was adding $20-$30 to oil prices: "The key thing that is driving higher gas prices is actually the world's oil markets and uncertainty about what's going on in Iran and the Middle East, and that's adding a $20 or $30 premium to oil prices," Obama said in an interview with the American Automobile Association (AAA) published Friday. So just how much tension is the world pricing in to each barrel of oil? One way to find out is to estimate how much the world's oil supplies might be disrupted if tensions escalate. To do that, we've re-engineered the math from one of our recent tools so that we can find out how much oil would need to be either added or removed from world production in order to change the price of a barrel of oil by the amount that President Obama, or you, might enter. Most of the other oil-related default data in the tool applies to the most recent figures we have from the U.S. Central Intelligence Agency, which at this writing, applies to 2010, and which we'll assume is similar to today's production figures. If you have more current data, enter it (the same applies for the values of the supply and demand elasticities for oil....) Since the tensions to which President Obama refers would primarily affect the supply of oil originating from Iran and the Middle East, the price of a barrel of oil should be that recorded for Dubai crude, which would be the benchmark for the region. Got all that? Great! Let's do some math!... Oil Production and Economic Data Input Data Values Daily Oil Production Data "Premium" in Today's Oil Price (per Barrel) Current Oil Price (per Barrel) Demand Elasticity Supply Elasticity Estimated Price Change Calculated Results Values Estimated Change in the Supply of Oil [barrels] For tensions with Iran or within the Middle East to add $20 to the price of a barrel of oil, that would suggest that the world's oil markets are expecting that the world's supply may be reduced by 5,574,855 barrels per day as a result of those tensions. If $30 has been added to the price of a barrel of oil, that would mean that the world expects the world's supply of oil to be reduced by 9,332,835 barrels per day. Using that latter figure, since Iran itself would account for 4,252,000 barrels of daily production, or 45.6% of the potential reduction in world oil supplies, that lower quantity suggests that President Obama believes that the tensions to which he refers are so great that they will negatively affect the supply of oil from additional nations in the region. Looking around the Persian Gulf, which would the the likely focus of such tensions, we find that the nations of the United Arab Emirates (2,813,000 barrels), Kuwait (2,450,000 barrels), Qatar (1,437,000 barrels) and Oman (867,900 barrels) would be the most affected, as these nations transport their oil by sea to world markets through the Strait of Hormuz. Combined with Iran, that would put the supply of 11,819,900 barrels of oil per day to the world's markets at potential risk of being cut off. The 9,332,835 barrels per day figure suggested by our back-of-the-envelope calculations is 79% of that value. One way to interpret this value is that the world's markets believe that the 11,819,900 barrels of oil output per day may indeed be affected, but they are currently factoring in a 79% chance that will actually happen. It could also mean that the world's markets are factoring in 100% odds that these oil supplies will be disrupted, but that a portion of the oil produced in these nations may reach world markets through other supply outlets other than through the Strait of Hormuz, such as through land-based pipelines. Regardless, it appears that a likely conflict involving Iran that cuts off that much oil through the chokepoint of the Strait of Hormuz would seem to account for the President's belief that as much as 30 U.S. dollars is currently being added as a "premium" to world oil prices. He's certainly factoring in quite a lot of supply disruption to arrive at that figure.

Выбор редакции
23 марта 2012, 14:21

Will Your Favorite Celebrity Couple Stay Together?

  • 0

Five years ago, Garth Sundem and John Tierney worked together to come up with a mathematical formula to predict which celebrity couples were doomed to split apart. Five years later, that original equation did an okay, but not great job in predicting which celebrity couples would survive the next five years. So Sundem and Tierney returned to the drawing board to take advantage of the new data the world had accumulated about the success of celebrity relationships over the previous five years, and have now come up with a new and improved mathematical formula that seems to work better, at least if the backtested results are any indication. Here's what changed in their own words: While the 2006 equation did a good job over all of identifying which couples were most likely to divorce, some of the specific predictions proved too pessimistic. Because Demi was so famous — and much more famous than Ashton — we gave their marriage little chance of surviving a year, but they didn't split until 2011. We were similarly bearish on Tom Cruise and Katie Holmes (because of his fame, his two failed marriages and their age gap), but they're still together. What went right with them — and wrong with our equation? Garth, a self-professed über-geek, has crunched the numbers and discovered a better way to gauge the toxic effects of celebrity. Whereas the old equation measured fame by counting the millions of Google hits, the new equation uses a ratio of two other measures: the number of mentions in The Times divided by mentions in The National Enquirer. "This is a major improvement in the equation," Garth says. "It turns out that overall fame doesn't matter as much as the flavor of the fame. It's tabloid fame that dooms you. Sure, Katie Holmes had about 160 Enquirer hits, but she had more than twice as many NYT hits. A high NYT/ENQ ratio also explains why Chelsea Clinton and Kate Middleton have better chances than the Kardashian sisters." More on the Kardashians later. For now, here's our newest tool, which is based on Sundem and Tierney's new and improved formula for predicting which celebrities are riding on the relationship Titanic. Celebrity Relationship Factors Input Data Values "Good" Fame: Number of search results since 1990 in New York Times archives "Bad" Fame: Number of search results since 1990 in National Enquirer archives Husband's Age Wife's Age Overexposure: Number of scantily-clad photos among the top five photos returned in a Google image search for the wife's name Dating: Number of months the celebrity couple dated before getting married Time: Years after getting married for which to calculate the percentage odds that the couple will still be married. Odds of Celebrity Marriage Survival Calculated Results Values "Good" to "Bad" Fame Ratio Percentage Chance of Still Being Married After Entered Number of Years Tierney describes how these factors can influence the outcome of the new formula: Garth's new analysis shows that it's the wife's fame that really matters. While the husband's NYT/ENQ ratio is mildly predictive, the effect is so much weaker than the wife's that it's not included in the new equation. Nor are some variables from the old equation, like the number of previous marriages and the age gap between husband and wife. In the fine tradition of Occam's razor, the new equation has fewer variables than the old one. Besides the wife's tabloid fame, the crucial ones are the spouses' combined age (younger couples divorce sooner), the length of the courtship (quicker to wed, quicker to split), and the sex-symbol factor (defined formally as the number of Google hits showing the wife "in clothing designed to elicit libidinous intent"). Now, back to the Kardashians. The default data in the tool above apply to the celebrity coupling of Khloe Kardashian and Lamar Odom, with the results using this default data indicating the probability that the couple will celebrate their 50th wedding anniversary. And from here, we'll let Garth Sundem describe the results: "I've calculated the chance of Khloe Kardashian and Lamar Odom celebrating their golden anniversary," he says, "Even when I extend it to 15 decimal places, the probability is still zero." To be fair, if any of the Kardashians could celebrate a 50th wedding anniversary, it probably would be Khloe. She'll just have to beat some very steep odds to do it though....

Выбор редакции
22 марта 2012, 13:58

The Failure of Pigou's Taxes

  • 0

Once upon a time, economist Arthur C. Pigou proposed that by imposing taxes upon things that might create excess social costs, those costs could be reduced. Called a "Pigovian Tax", a classic example of this kind of tax in action would be the special excise taxes that many states impose upon tobacco products, where the excess social costs might be the increased spending for health care to deal with smoking-related ailments. Here, if Pigou's taxes really work, we should see the consumption of tobacco products fall as the taxes imposed on them are raised substantially enough to affect the purchasing decisions of those who might consume them. Let's use the state of Hawaii as a case study here, because Hawaii has been greatly increasing their taxes on tobacco products over the last several years. Here, the typical excise tax imposed by the upon a pack of cigarettes has increased from $1.00 in 2000 to $3.20 per pack in 2011, with 60% of that increase having taken place since 2008. During that same time, the federal excise tax on tobacco has increased from $0.34 per pack to $1.01 per pack, and the typical retail price of a pack of cigarettes in Hawaii has risen from $4.05 in 2000 to $9.27 in 2011. But unlike every other state in the U.S., Hawaiians can't just jump in their cars and make a quick run for the border for the sake of buying bootleg tobacco products to avoid their state's very high tobacco taxes, which has risen to now rank fourth in the nation, behind only New York, Rhode Island and Connecticut. That means that if Pigovian taxes can really work to significantly reduce the consumption of tobacco products anywhere, they're going to work in the islands in the middle of the Pacific Ocean that make up the state of Hawaii. We've tapped the state's most recently issued report on its tax revenue collections from its excise tax on tobacco products for each of its fiscal years from 2000 through 2011. We then used that data, along with the state's tax on each 20-count pack of cigarettes, to calculate the equivalent quantity of packs of cigarettes consumed in the state for each of those years. Our chart below reveals what we found: Here, we see that the consumption of tobacco products actually rose in every year from 2000 through 2005, before beginning to fall in the years from 2005 through 2009. But we see that 2009 really marked a bottom in consumption - the consumption of tobacco products has bounced back in 2010 from that low point and has held steady 2011, despite the state continuing to increase its taxes on tobacco products in each of those years. What this data indicates is that whatever benefits that Pigovian taxes might be able to provide have diminishing returns. Past a certain point, they will fail to achieve their objectives of meaningfully reducing the excess social costs for the ails they are meant to fix. Instead, these kinds of taxes would appear to simply become a vehicle by which politicians may raise tax revenue by imposing a discriminatory tax policy aimed at an "undesirable" minority. This outcome is quite different from what we anticipated might happen when we last looked at Hawaii's taxes on tobacco. We're definitely surprised. References State of Hawaii. Department of the Attorney General. Report on the Tobacco Enforcement Special Fund. Fiscal Year 2010-2011. [PDF document]. 9 January 2012.

Выбор редакции
21 марта 2012, 14:15

The Effect of Apple's Dividend Announcement on the Future

  • 0

One day later, and we're still blown away by the effect of Apple's dividend announcement upon stock prices. Here's why. This is the only time we've ever observed stock prices leading a change in expected future dividend payments since we began regularly tracking dividend futures in December 2008! Most often, we either see changes in the expected future for dividends lead changes in stock prices, or alternatively, stock prices reacting to the effect of noise events that are of limited duration - with the most significant one being the reaction of stock prices to the Federal Reserve's first quantitative easing program. But this marks the first time in the years we've been watching dividend futures that the metaphorical cart actually led the horse! To mark the occasion, we've animated the "before" and "after" view of the future for both stock prices and dividends per share for the S&P 500 as it relates to Apple's 19 March 2012 dividend announcement. (Click the links above for larger, clearer versions of the image frames.) Here, we can see why investors would seem to have been focused on the expected dividend futures connected to the third quarter of 2012 in setting stock prices - with Apple's first dividend since 1995 to be paid out in July 2012, that event falls in the period covered by the dividend futures contracts for 2012-Q3. In the absence of noise, the change in the expected growth rate of stock prices will closely pace the signal given by the change in the expected growth rate of dividends per share. In the "before" frame of the animated chart, we see that the average of stock prices recorded throughout March 2012 to date would seem to be inflated above that value. But in the "after" frame of the animated chart, we can see that it is really closing in on where the S&P 500's expected change in the growth rate of dividends per share for the third quarter of 2012 would put them. To put that another way, investors are setting stock prices "rationally"! The Dark Cloud on the Horizon? Here's another view of the change in expected future dividends per share: Do note the comment on the right half side of the chart. We've just witnessed Item #1 with Apple's announcement. With this change now behind us, Item #2 now becomes the likely driver of major changes in stock prices. The only questions left are "which future will investors select?" and "when will they select it?" Our animated chart shows two possibilities for "which future", but doesn't have anything to say about the answer to the second question.... Yes, we already know which future, and also have a pretty good idea of when, but we no longer publicly offer such predictions....

Выбор редакции
20 марта 2012, 14:11

The New 800-lb Dividend Gorilla of the S&P 500

  • 0

On 19 March 2012, Apple (NYSE: APPL) announced that it would initiate paying regular dividends to its shareholders for the first time since 1995, effective with the end of the second quarter of 2012. Beginning in July 2012, the company will pay $2.65 in cash dividends per share each quarter to each of its stockholders. Using the stock's market opening price on 19 March 2012 of $598.56 per share, just after the company's announcement was made, we calculate that the annualized dividend yield for the stock is 1.77%. The effect of this change in the company's policy toward dividends will be felt in two ways. First, in the short term, because investors have been bidding AAPL shares upward in anticipation of the move, the immediate change will be for the company's shares should be fairly small, with the size of the move depending upon how closely investors anticipated the size of Apple's announcement - the more off they were in anticipating the actual change, the larger the effect of the announcement will be upon Apple's stock price. As that happens, we can expect that the value of the S&P 500 index will also adjust accordingly. At least, until other new information affects stock prices! Second, given that the company is presently the second-largest component of the S&P 500, which ranks companies according to their market capitalization, any changes in Apple's projected future dividend will have an immediate and pronounced effect upon the value of the S&P 500 index. Just see what effect the announcement had: And that's what now makes Apple the newest 800-lb dividend gorilla on Wall Street!

Выбор редакции
19 марта 2012, 15:45

Visualizing the Actual Price of Gasoline Across the U.S.

  • 0

We've been playing around with Google's Fusion Tables data visualization tools, which have been improved since our last experience in test driving them, and in doing so, we've created three interactive maps showing the price of gasoline around the United States. First up, using GasBuddy's list of average gasoline prices by state, our map showing the average price a motorist can expect to pay for a gallon of gas as of 18 March 2012: Next, here is our map showing the average combined federal, state and local excise taxes per gallon for each state in the U.S. as of 1 January 2012, as per the American Petroleum Institute: Our final chart shows the actual average price of a gallon of gas per state, removing the increases in cost imposed by federal, state and local government taxes throughout the United States: You might be pretty surprised to see that the price of a gallon of gasoline in Montana is the lowest in the United States, followed closely by Wyoming and Colorado, which is all the more remarkable because only Wyoming is ranked as an oil producing state. There is a big reason for this observed pattern, which we can illustrate using the following map of major crude oil pipelines in North America from 2001: As we can see, Montana (along with Wyoming and Colorado) directly benefit from their direct connection to low-cost oil being produced in Canada that is fed through multiple pipelines into those states, where it is then refined into the gasoline and other products that consumers use. So if you ever wonder what a President can do to lower the price of gas at the pump, especially one who believes that "we can't just drill our way to lower gas prices", just remind them that one thing they can do is to remove the barriers to building the pipeline infrastructure needed to inexpensively transport oil across the nation from where its cost is lowest to where it is highest. That would be, in fact, a constructive economic activity that would help secure the nation's ability to deal with the political instability that can affect world energy prices by their potential to disrupt energy supplies. You know, the sort of things that a President ought to take seriously and work to achieve if they're serious about being President. Even if the easiest path to achieving that national security goal mostly means moving themselves and the government's bureaucracy out of the way....