A few important conceptual milestones on the macro front over the past weeks.
First, it’s pretty clear the real economy is now collapsing both due to tight credit as all financial actors deleverage and as a result of a revision in growth expectations such as Keynes wrote so clearly about. Forced liquidity was not enough. An [...]
Lots of discussion on the intertubes about the summer CBO release – the nearest thing to an auditor’s report for the US government and it is reminiscent of descriptions of Enron or GM. Basically the Mae-Macs were off-balance-sheeet SIV’s. The debt just doubled bringing these on balance sheet, after already doubling once in the Bush [...]
I got some grief a while back posting “political” news to a finance blog, but I believe in the fundamental interconnectedness of all things. This week was a political week, with the Demo convention in the USA and a real ‘Hail Mary’ from the McCain campaign in nominating Sarah Palin (not of the Monty Python [...]
I’ve been watching and reading about events in Georgia and Ossetia with some interest.
Earnings season is tapering off with no real shocks, just a bunch of financial write-downs and a sense of general foreboding in all but the export sectors. Macro seems to have found a level for the time being, with the pressure on [...]
DeLong reports on well-known NYT technology writer Pogue trying to get a second Prius, and being stiffed.
[His local] dealership used to get, from Toyota Corporate, about 30 Priuses a month to sell. But starting in May, his allocations inexplicably dropped to about four cars–and base-model cars, at that. He said he’s actually calling people on [...]
DeLong weighs in on stock market valuations. From Warranted Stock Market Valuations and the Price-Earnings Equation Once Again:
It can be shown http://delong.typepad.com/sdj/2007/05/a_teaching_note.html that the “right” way to value the stock market is with the price-earnings equation:
P = E/[r - (1/θ - 1)ρ]
…
The current value of 28 for the price-to-moving-average-of-lagged-earnings ratio corresponds to [...]
DeLong weighs in on “fundamental indexing”. From “Fundamental Weighting” and Indexing:
Joseph Nocera reviews the bidding:
Passions Run High on Indexing: the Financial Analysts Journal… letters the magazine published in its March/April issue. André Perold, a finance professor at Harvard Business School, had written an article in a previous issue criticizing a new kind of financial product [...]
Good information display is a beautiful thing. I just had to post this chart from CEPR (pdf):
Historically, the open market trading desk in New York has been very good at keeping the market-determined federal funds rate close to the target, and the range of trading has been a narrow band around that same target. “Normal” [...]
Interesting long-term PE chart from Angry Bear via DeLong I would say this chart argues for a bear rally up to the PE 22 range some time soon, before falling back to the low teens…
Brad DeLong’s lectures at Berkeley have resumed; with the lectures in mp3 format on “http://www.j-bradford-delong.net/2008_mov/” unfortunately without any information in the file name other than the date. The course I’m most interested this term in is 101b – Intermediate Macro-economics. Some great charts below the fold: