Although Commerce Department data for August showed a rise in August and a moderation of core inflation, this data should be considered warily as they may be a result of unusual incentives. Consumer confidence and housing are still down. Consumer spending rose 0.6% in August, the largest increase since April and more than expected. The …
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Category:3 The World of Money
Commodity prices underpin inflation
Many observers have noted the spike in food commodity prices, underpinned by interest in corn for ethanol in the US. There also appears to be a broader rise in prices of commodities which is bound to push up inflation. Last year the pressure on metal commodities from demand from China was observed. As the chart …
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Cost of food rising fast, driving inflation and hurting the poor
The cost of food is rising fast. We had been expecting this because of variations in weather patterns which we feared would upset cultivation. However, the sudden interest in corn for ethanol, since the warnings last year by the Stern Review, An Inconvenient Truth and IPCC, has also contributed to an increase. The chart here …
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APEC for climate change and trade
The principal messages from leaders meeting at the APEC summit recently concluded in Sydney Australia are to prioritise action to reduce climate change and to successfully conclude the WTO Doha round trade talks. These are entirely appropriate prime objectives. Unfortunately, the US, which is the largest per capita carbon emitter and world superpower, and Australia, …
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Should you invest in the company or its management … ?
A 2004 study, recently updated, adds to the debate about whether management or the company is the important focus of investment screening. The study, written by Steve Kaplan of the University of Chicago, Berk Sensoy of USC and Per Stromberg of SIFR, found that over 90% of successful VC-backed companies have the same business model …
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US August data modest
Retail sales and industrial output both slowed in the US in August. Shop sales grew 0.3% in August, below market expectations of a 0.5% rise and below July’s 0.5% increase, but excluding car sales, which are at their strongest in two years, retail spending actually declined 0.4% in August. Industrial output rose 0.2%, the slowest …
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Sub-prime losses estimates rising
Fed Chairman said during testimony to the the House Committee on Financial Services on 20 September that losses from sub-prime mortgages have far exceeded “even the most pessimistic estimates”. This statement is disappointing because it undermines any build-up of confidence that might be encouraged by recent rate cuts and liquidity injections. But worse, his comments …
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Hype over Chinese toys exaggerated
Recent hype about problems with Chinese manufactured goods was used as an excuse by some protectionist politicians and lobbies in the US to push for trade sanctions and even used as a tool to push for revaluation of the Chinese renminbi. The greatest hype surrounded the recall of more than 20 million toys by Mattel. …
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Chinese rates up again, but inflation still an issue
China’s central bank increased rates for the fifth time this year. The one year lending rate is now 7.29% as authorities attempt to ease inflationary pressure. However, the build-up of reserves continues as those that can borrow US$ at under 5%, like multinationals and foreign investors, do. The discrepancy between interest rates net of currency …
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The financial market risk of climate change
We’ve mentioned it before – people are getting together with lawyers to focus on polluters in the same way cigarette makers were targeted. On the same day that US rates were lowered investors and NGOs petitioned the SEC to clarify whether firms had an obligation to disclose how climate change might affect them. It is …
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