Month: February 2022

Russia currently produces 10 million/bbl of oil/day, about 10% of world production, making it the world’s third largest producer and the second largest exporter. Fear of those supplies being disrupted is causing oil prices to gyrate. Roughly speaking, every $10…

The Friday File: In the 1960s, it cost NASA about $6,000/kg to launch a spacecraft into orbit. It cost the Soviets about $8,000 to do the same. Through 2005, no reduction in prices was observed. Since then, however, they have…

While US-Russia trade outside of commodities is trivial, Russia’s Ukraine invasion will slightly boost US inflation as commodity prices in general and energy prices in particular rise on fears of delivery disruptions. This will also result in slightly slower growth…

Over the past year, house prices have risen a whopping 18.8%, due largely to Covid-19 and the WFH phenomenon. To wit, over the past 12 months the largest house price gains have been in warm weather cities like Phoenix, Tampa,…

Dating back to 2012, the Fed has correctly predicted the fed funds rate, a rate they literally control, 37% of the time, core inflation 29% of the time, unemployment 24%, and Real GDP growth 17%. Moreover, the Fed is consistently…

Generally, buying a commodity today is less costly than agreeing today to buy for future delivery because of storage costs and risk. Sometimes, however, the current commodity price exceeds the cost of buying it today for future delivery. This describes…

The 2-yr Treasury rate is 1.60%, the 10-yr, 2.00%, a difference of just 40bps. Due to high inflation, the Fed is planning to raise short-term rates by at least one percentage point and maybe 1.75 percentage points by 12/31/22. Raising…

To best understand how inflation is likely to play out, many variables need to be properly forecasted. They are, in no particular order, inflation expectations of workers, bargaining power of workers, productivity growth of workers, pricing power of firms, the…

Since cratering in spring 2020, the US economy has dramatically outperformed the economies of other developed nations. The only exceptions, labor force participation and inflation. While the labor force has recovered or nearly in other wealthy nations, here it’s substantially…