Saturday, 30 April 2016

Econometrics, the Bane of our Existence: Weekend Reading

Fun though it is to have a punt at predicting the price of oil two years hence, it is constantly amazing to me that apparently hard-headed people fall for economic forecasting all the time, without once giving thought to the fact that (a) empirically, it has a staggeringly awful track record - you'd never take medicine from a physician with a history of failure like that; and (b) intellectually, it is bankrupt.

I could write my own lengthy & vehement essay on the wretched pseudo-science (and very likely will): but you'll probably prefer this, by a proper professor.


Thursday, 28 April 2016

Economists for Brexit

A strange week indeed in the world of this interminable Brexit referendum.

Firstly it appears that the polling 2 months out shows the race closer than anyone would believe. I am minded to be led by my own views that perhaps a really big chunk of the UK populace want to Leave the EU and it really makes little difference how many World Leaders or Dodgy Dossiers are rolled out by the Prime Minister and the Remain side; minds are made up.

In which case, it will be all about turnout on the day which makes predicting the outcome a fools errand. England may have been knocked out of the Euro's on the Monday - or perhaps they will be steaming through - how will the nationalistic fervour play out?

Anyway, today sees some very esteemed economists come out for Brexit and shoot a fair few of the Remain foxes. I have long respected Roger Bootle who I have known for years on and off.

Roger often gets things right, he was one of the ones noting in the early 2000's how spectacularly over-priced house prices had become and thus predicted much of the Great Recession. Few did, even if everyone claims to have done now 8 years later.

Only key issue that Leave seem to be grasping is that there is a trap in the whole EEA debate; a smokecreen of complex economic interpretation. The reason to Leave to EU is to control our borders and Government. Joining the EEA is a mis-step as it will allow the Euro-Elites to continue to impose free movement of people.

Today the economists show that the vast majority of trade is covered by the WTO and Ted Cruz wrote yesterday anyway that Obama is talking through his behind on the US approach.

It is about time the Leave campaign had a good whole week. 5 more and they can actually win, tall order though that is.

Wednesday, 27 April 2016

Meanwhile, Back In The Markets ... Big Events

Has anyone reported this in Europe?  On Monday, the new US LNG terminal at Sabine Pass was formally opened, sending out a cargo of gas bound for Portugal.  Yes, folks, that's an export terminal.  Shale gas is a-comin' our way.

The past week has seen a serious uptick across the energy commodities' forward curves - Brent up 7% across the whole structure, UK natural gas up 20% at the near-end, even coal up 5% at the back end.  Brent is still in modest, uninformative contango (as is gas) so a parallel upwards shift doesn't betoken an end to basic oversupply.  But hey, the producers will be happy enough to be able to lock in at higher prices.  20% in one week is not to be sneezed at - any fully-hedged UK utilities will be smiling broadly: any that were exposed will have been scrambling, maybe even to buy some of that US gas on a long-term contract.

And of course Sterling (spot) has had what some see has a post-Obama speech boost, though it's not at all as pronounced as the commodities - more within the range of general noise.

The opening ceremony at Sabine Pass could be seen as more significant than the COP21 "signing ceremony" in New York on Friday.  Signing? 
"The US, China and India - the three biggest climate polluters - have all committed to join the agreement, possibly as early as this year."
Possibly as early as that, eh?  Oh well.