10-year T-note futures (ZN M0)
April 23, 2010Michael Kahn
April 21, 2010The Scale Is Tilting Toward the Sellers
Kahn 4-21-10
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The Return of a Dismal Dollar
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Oil Can Top $100/barrel Soon Enough
SPX vs % of NYSE stocks above 50 DMA
April 20, 2010
$CPCE, 4/19/10
April 19, 2010
DJ Utilities vs SPX, 4/19/10
April 19, 2010
vix (9/9 – 4/10)
April 13, 2010
Taxing “fat cats”
March 30, 2010The Rich Can’t Pay for ObamaCare (WSJ 3/30/10)
PDF copy of article
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The 2% Illusion (WSJ 2/26/09)
http://online.wsj.com/article/SB123561551065378405.html
PDF copy of article
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Obama’s Tax Evasion
http://online.wsj.com/article/SB120847505709424727.html?KEYWORDS=capital+gains+tax
PDF copy of article
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Old Money, New Money Flee France and Its Wealth Tax – washingtonpost.com.
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Foreign Direct Investment and the Domestic Capital Stock
(American Economic Review 95, 33-38, 2005)
Desai (2005)
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Christina Romer (2007)
“…we find that a tax increase of one percent of GDP lowers real GDP by about 3 percent, implying a substantial multiplier. An important part of that effect appears to be due to the procyclical behavior of investment”
page 37 of http://www.econ.berkeley.edu/~cromer/RomerDraft307.pdf
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The Rolling Stones have paid just 1.6% tax on their earnings of £242m over the past 20 years.
http://www.thisismoney.co.uk/tax/income/article.html?in_article_id=411323&in_page_id=77
Fibonacci numbers in science
March 9, 2010Yamagishi Michel E Beleza, “Nucleotide frequencies in human genome and fibonacci numbers” (Bulletin of Mathematical Biology 70(3), 643-53, 2008)
article (PDF): fibonacci
URL: ttp://www.springerlink.com/content/p140352473151957/fulltext.pdf
futures markets and the price of crude oil
February 23, 2010WSJ
July 8, 2008
http://online.wsj.com/article/SB121547293036933987.html?KEYWORDS=onions+and+futures
The Onion Ringer
Congress is back in session and oil prices are still through the roof, so pointless or destructive energy legislation is all but guaranteed. Most likely is stiffer regulation of the futures market, since Democrats and even many Republicans have so much invested in blaming “speculators” for $4 gas.
Congress always needs a political villain, but few are more undeserving. Futures trading merely allows market participants to determine the best estimate – based on available information like supply and demand and the rate of inflation – of what the real price of oil will be on the delivery date of the contracts. Such a basic price discovery mechanism lets major energy consumers hedge against volatility. Still, “speculators” always end up tied to the whipping post when people get upset about price swings.
As it happens, though, there’s a useful case-study in the relationship between futures markets and commodity prices: onions. Congress might want to brush up on the results of its prior antispeculation mania before it causes more trouble.
In 1958, Congress officially banned all futures trading in the fresh onion market. Growers blamed “moneyed interests” at the Chicago Mercantile Exchange for major price movements, which could sink so low that the sack would be worth more than the onions inside, then drive back up during other seasons or even month to month. Championed by a rookie Republican Congressman named Gerald Ford, the Onion Futures Act was the first (and only) time that futures trading in a specific commodity was prohibited, and the law is still on the books.
But even after the nefarious middlemen had been curbed, cash onion prices remained highly volatile. In a classic 1963 paper, Stanford economics professor Roger Gray examined the historical behavior of onion prices before and after the ban and showed how the futures market had actually served to stabilize prices.
The fresh onion market is highly seasonal. This leads to natural and sometimes large adjustments in prices as the harvest draws near and existing inventories are updated. Speculators became the fall guys for these market forces. But in reality, the Chicago futures exchange made it possible to mitigate the effects of the harvest surplus and other shifts in supply and demand.
To this day, fresh onion prices still cycle through extreme peaks and troughs. According to the USDA, the hundredweight price stood at $10.40 in October 2006 and climbed to $55.20 by April, as bad weather reduced crop yields. Then it crashed due to overproduction, falling to $4.22 by October 2007. In April of this year, it rebounded to $13.30.
Futures trading can’t drive up spot prices because the value of futures contracts agreed to by sellers expecting prices to fall must equal the value of contracts agreed to by buyers expecting prices to rise. Again, it merely offers commodity producers and consumers the opportunity to lock in the future price of goods, helping to protect against the risks of future price movements.
Tellingly, the absence of that option for onions now has some growers asking Congress to lift the ban. But instead of learning from its onion mistakes, the political class seems eager to repeat them.
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