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Gas Prices and Recessions

On February 24, 2012, in Commodities, Economy, by Tim

Anyone wondering about the relationship between rising gasoline prices and recessions might want to have a look at the chart below from the St. Louis Federal Reserve’’s FRED data base and observe that we seem to have “escaped a bullet” last year. But, if gas prices go as high this spring and summer as many are predicting, we may not be so lucky this year.

Energy Department data for retail gasoline prices only goes back to 1990, so, Labor Department data from the Consumer Price Index is used instead, presumably the only difference being that you get the CPI Gasoline index instead of gas prices on the left.

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Asset Class Mean Reversion

On February 24, 2012, in Bonds, Commodities, Stocks, by Tim

Here’s another fascinating chart by Jake over at EconomPicData in which the reversal of fortunes (well, at least, relatively speaking) for various asset classes is plotted in a scatter chart, a graphic format that, in my view, is underused by those wielding spreadsheets.

Of course, upper right being best and lower left being worst, it’s clear to see which assets have been the most consistent performers. But, interestingly, going back to the start of 2011 and using the iShares Barclays 20+ Year Treasury ETF (TLT), Long Treasuries are still outperforming spot gold, the former up 29.3 percent and the latter 25.1 percent higher.

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Friday Morning Links

On February 24, 2012, in Uncategorized, by Tim

MUST READS
Gas prices rise 12 cents this week – CNN/Money
Europe Faces Pressure as G-20 Mulls IMF Role – Bloomberg
Argentine advice for Greece: ‘Default Now!’ – RT News
An Agreement That Few Believe – Comstock Partners
European Banks May Tap ECB for $629 Billion Cash – Bloomberg
German showdown with IMF looms as Bundestag blocks rescue funds – Telegraph
Why Won’t The Fed Talk To Financial Reform Advocates? – Baseline Scenario
Current Housing Bust Much Worse Than Great Depression – The Big Picture
Bank of America stops selling mortgages to Fannie Mae – Housing Wire
Why the mortgage settlement is a fair deal – CNN/Money
Is the Smart Money Heading for the Sidelines? – NetNet
Mean Reversion – EconomPicData

MARKETS/INVESTING
Oil rises to fresh 9-month highs above $108 – AP
Gold holds near $1,780/oz, eyes second monthly gain – Reuters
Why bonds are risky right now for your portfolio – Globe & Mail
Why U.S. Treasuries Won’t Always Be a Haven – Bloomberg
Inflation Expectations & Stocks Still Moving In Lockstep – Capital Spectator
How short and long term players will combine for a gold price increase – Mineweb
India to import 5000 tonnes of silver, price to exceed $60/oz – Mineweb
Gold climbs nearly 90 times in 100 years – BullionStreet
Fight the Fed with silver and gold – MSN Money
Great day for gold – MarketWatch

ECONOMY/WORLD/HOUSING/BANKING
Why the U.S. Economy Could Go Haywire – TrimTabs
The return of schools of thought in macroeconomics – voxeu
Atlanta Fed Survey Finds Long-Term Inflation Worry – WSJ
UK GDP growth for 2011 revised down to 0.8% – Guardian
Germany Isolated over Resistance to Expanding Euro Bailout – Spiegel
Greece’s Lenders Have The Right To Seize National Gold Reserves – GoldCore
Bank of Canada: Home Price Decline May Cause Consumer Spending Shock – Bloomberg
Comments on Existing Home Inventory – Calculated Risk
Ranieri: The Case for Converting Foreclosures to Rentals – WSJ
Republican House Bill Would Strip US Fed’s Jobs Mandate – CNBC
The Bernanke Uncertainty Principle – Macro Rants
Why We Can’t Believe the Fed – CFR

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