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Another example of BBC treating audiences like they’re school children: PS - Richard Scott grow-up

admin — Thu, 15 May 2008 14:31:16 +0000

Oil prices are rising because of speculation. The current supply, believe it or not (I don’t care), exceeds demand, even taking into account China. The speculation is a result of uncertainty and people moving into commodities (rather than equities).
The rise in wheat prices are partially the result of increased demand for meat in China. Not a ‘western style diet’. More meat requires more food for livestock. But it’s not the principle factor. Last year there were several droughts. Not least in Australia. Similar things happened to major rice producing countries last year. Blaming China is wrong and misleading.
There is not a linear relationship between inflation in China and the prices of Chinese exports. That would be overly simplistic in the extreme. China is going to suffer from inflation, but as a side effect of increased prosperity and modernisation. Rather than a simplistic relationship between food and oil prices.
There is a weak causal relationship between biofuels and the price of food.
Chinese imports are one of the factors that has helped control inflation in the UK. A minor factor given the percentage of Chinese goods as proportions of inflation indices.
The Government measures of inflation are reliant on indices. So to say prices “on average have risen 3%” is an unwarranted generalisation based on an index. Real inflation may differ. A better phrase would be that prices tracked by X index have risen. Anything else is lazy.

With that in mind please watch the following:

And ask yourself whether it did a good job. I think it is misleading and does a poor job of explaining things. One gets the impression that Richard Scott thinks the increased wheat prices are because of Chinese people eating vast quantities of toast.

Note to self

admin — Mon, 17 Mar 2008 22:23:27 +0000

Certain Nasdaq tech stocks have, in my opinion, been unfairly tarnished by the fuckwitted problems in the financial sector. They are bargains and had I the cash between one and two years time I’d be laughing. During the dot-com bust it was horrible to watch loads of companies that were fundamentally sound dragged down with idiotic companies. The stock for companies that survived could have been picked up dirt cheap. Had I the foresight to invest, which is easy in retrospect.

The market hasn’t bottomed by any means, but here’s my theory, pulled out of my arse: 1) The tech sector is going to reach a bottom faster than other sectors, not quite as fast as Eliot Spitzer reaching a bottom via an escort service, but within two months. 2) The exact time a bottom is going to be reached is difficult to predict, but less so in the tech sector (there’s unlikely to be bad news to come) than other sectors. But a short loss is worth swallowing for the long term gains. 3) The risk in much of the tech sector is different from other sectors because of transnational assets and sales. It’s diverse rather than localised risk.

With regards of everything other than tech - it’s not bottomed yet because there’s more bad news to come. Anyone that thinks that isn’t the case is being naïve. The Fed does not make moves of the magnitude made over the weekend without reason. History will tell. What I hope is that rationality wins the day, everyone calms down, stops thinking in the short term, and most markets bottom in the next few weeks. But what I hope, indeed, what I say, is pulled from my arse, and is a poor excuse for a blog entry. And could be bollocks.

Here’s what I’d buy, in my imaginary bet:

Intel (Nasdaq symbol INTC) - $20 is not a fuckload off it’s 8 year low and is a bargain. Intel is going to dominate the chip market for the imminent future. Hasn’t been hit by stocking up on a twit load of flash memory.

Nvidia (Nasdaq symbol NVDA) - $20 is nowhere near Nvidia’s lows, but Nvidia has shown surprising resilience in the face of competition from AMD (inc. ATI) and Intel, in both the on-board graphics/motherboard market at the graphics card market. Huge global sales/assets.

Sun (Nasdaq symbol JAVA) - $16 - post acquisition of the ubiquitous MySQL, is a bargain. There will be more webservers and more MySQL. Doesn’t matter which Linux distribution a webhost runs, they still need MySQL.

In two years time I’ll find out if I’m right or not.

Henry Paulson believes in a strong Dollar policy

admin — Thu, 13 Mar 2008 15:25:30 +0000

Heh. Heh. Heh heh heh. Lol. There’s potential for much drama today (I reckon), you can watch it live on Bloomberg. Naughty Carlisle. Heh. The stock markets will not close far down, but that’s not the point - it’s specifically about the rate of growth.

In other upcoming news from this armchair economist:

March 14th – Iranian parliamentary elections. Watch oil prices in the next few weeks. If it hits $140, we’re all fucked economy-wise, at least temporarily. More possible than most people realise because they don’t know how OPEC works or the proportion of Iranian oil on the world market.

Interesting times as always.

FYI - a recession is often thought of as a negative change in the rate of growth. The rate of growth is not the same as negative growth. So when people say “the economy is slowing”… You get the idea; something slowing is a negative change in the rate of growth. It’s like negative acceleration when a car slows down. The press is generally too fuckwitted to work that one out.