Tuesday, July 29, 2014

On what evidence is there a consensus

I have a hard time seeing any effect that could not be interpreted in either direction.  Did the red line have any effect on the blue line that made it different from the blue line during any other recession?

Obama: Tin Horn dictator of the world

He gives orders to Israel, starts trouble in the Ukraine,  and support rebellions in Middle East. He and that delusional pompous ass of a Secretary of State.

The presidential hand of wisdom

I think Bohner cringes whenever Obama puts up the paternalizing hand and the photos start snapping. When dealing with Obama, make you you are always at arms length.

20% market correction baked in?

Yahoo Finance is reporting a couple of analysis who say it has already started. Here is one:
Market Watch: The primary indicator that Cook uses is the “Cook Cumulative Tick,” a proprietary measure he created in 1986 that uses the NYSE Tick in conjunction with stock prices. His indicator alerted him to the 1987, 2000, and 2007 crashes. The indicator also helped to identify the beginning of a bull market in the first quarter of April 2009, when the CCT unexpectedly went up, turning Cook into a bull.

What is a Cumulative Tick?

I am sure he is measuring market entropy, or its complement, market redundancy. He wants to know if the combination of ways the market delivers information is balanced with the combination of trades.  When they are out of balance, the 'temperature' of the market will correct, up or down, to bring them into balance. This is Plank's curve type of analysis, measuring degrees of freedom in a Shannon optimized system. Looking at Fibonacci relationships does a bit of this, it looks for redundant estimates of value which can be eliminated, or decorrelated.  ZeroHedge does a lot of this, looking for redundant correlations.

How would I do entropy analysis?

Pick an index, say the SP500, and run a windowed Huffman encoder over the thing.  Vary the window size and the number of 'bits' until all the encoded trades are closes to each other in terms of -pLog(p), p being the probability of that trade out of the total trades in the window.  Then discount stock which make the resulting -pLog(p) curve out of balance from a standard Plank, reward stocks which make it look like a standard Plank. In other words, make the decoding tree look like a minimum NlogN spanning tree. When that happens, the market is delivering the maximum value with the minimum number of trades, that is minimal redundancy.

Nieto, Brown reaffirm SouthWest Federadtion independence

In a stunning blow to the Coward in Texas, Brown and Nieto reaffirm Federation independence from the United States of New York.
MEXICO CITY – Gov. Jerry Brown suggested Monday that Texas Gov. Rick Perry’s ordering of National Guard troops to the U.S.-Mexico border to address the surge in border crossings is misguided, urging politicians instead to heed the “religious call … to welcome the stranger” in addressing the crisis.

Read more here: http://www.sacbee.com/2014/07/28/6588043/jerry-brown-urges-religious-call.html#storylink=cpy

Rick Perry, socialist coward

Texas has seized its own border, been granted independence and now wants to rejoin the United States of New York. He is no founding father, simply a coward and socialist.
Texas Gov. Rick Perry compares the role of National Guard troops at his state’s border to the deterring effect that cop cars stationed along neighborhood roads have on crime.
Perry, in an exclusive interview with The Daily Signal, said even though the 1,000 military troops he activated to help manage the border crisis in his state will not be authorized to make arrests, the sheer presence of the military will deter illegal activity.
“It’s a powerful reminder that what you are doing is a crime,” said Perry, who has been a critic of the White House’s response to the border crisis. “It’s just like a law enforcement effort in your neighborhood, where you see a parked patrol police car on the corner, and the bad guys see it and don’t commit a crime.”

Maryland adopts slavery

Chris Van Hollen supprts the Maryland decision to enslave brown skinned Latinos.

CNews: Rep. Chris Van Hollen (D.-Md.)

 Congressional Budget Office that Van Hollen said indicated enactment of the Senate immigration bill (which gave illegal aliens a "path to citizenship') would "reduce the deficit and increase long-term economic growth."

The distribution of the constituents of vacuum

This chart I stole from Richard Bader, a chem professor at tin Ontario. He says:
Fig. 3-5. The radial distribution function Q1(r) for an H atom. The value of this function at some value of r when multiplied by Dr gives the number of electronic charges within the thin shell of space lying between spheres of radius r and r + Dr.
Now to me this is just the minimum redundancy distribution of the basic exchange spectrum between the constituents of the vacuum. If we consider 'light' as an exchange between two constituents of the vacuum which happens at some center frequency and has a spectra indicating variation in the exchange rate, then we have distributed that spectrum in the hydrogen atom, energy level one charge position.  The peak of this spectrum is where a bundle of Higgs mass more closely matches its Compton frequency.  At that peak, the greatest amount of the light spectrum is contained. To the left of that peak, the spectrum of light is high, the right sidelobe, byut the degrees of freedom are low, so there is not clear match between any bundle of Higgs mass that can stabilize the spectrum.  To the right of the peak, the spectrum of light contained is the low frequency part of its spectrum, which has greater degrees of freedom and greater bundles of Higgs mass can easily contain the spectrum.  Light spectra is essentially maximally contained within the orbital.

This spectrum should follow the -pLog(p) Shannon condition. Log(p) gives the number of degrees of light spectra, and p gives the frequency. In terms of sphere packing, the the most densely packed region of spheres is at the peak.  From the view point of a Poisson distribution, it looks like three to four spheres are queued up, and some sort of estimation like this should tell us what the relative number of spheres, and size relationships are that make up the vacuum.  If we know, for example, that the log function from the peak, out to the long end, is about 16, then we can take a shot at estimating distribution of motions available to spheres of 'light' at the surface of the sphere. The point to the left of the peak should be the Higgs bandwidth limit of the vacuum. There should be a minimizing phase shift between the two constituents that are light vacuum quants, the phase shift going from zero to the left, and increasing to the right; and at the peak the shift, minimum.

Monday, July 28, 2014

Is the Fed keeping rates down?

It just seems odd that short term treasury bills on the fed portfolio are strangely small, and have gotten miniscule since the crash. So how much is the Fed responsible for keeping short term rates down? I dunno, ask an expert. But there are reasons to believe the economy is crap and rates are low, even without the Fed's help.

Fisher seems to be the resident expert. He says:

"My sense is that ending our large-scale asset purchases this fall will not be enough. The FOMC should consider tapering the reinvestment of maturing securities and begin incrementally shrinking the Fed's balance sheet. Some might worry that paring the Fed's reinvestment in mortgage-backed securities might hurt the housing market. But I believe the demand for housing is sufficiently robust to continue improving despite a small rise in mortgage rates."

"Those of us who are the current trustees of the Fed's reputation—the FOMC—must be especially careful that nothing we do appears to be politically motivated."
He is essentially saying the Fed should get out of the DC bailout business. That means replace DC as I cannot imagine how a bunch of delusional swamplanders can do anything coherent. 

What does Krugman say:
Instead, we should wait until there’s really clear evidence of overheating in the form of sharply rising prices. The risks of moving too soon versus too late are not symmetric.

Wait for inflation? If we see a sharp rise in inflation, we can be sure that DC has started another recession.

Neo Fisherites

Fisher was another in a long line of mistaken economists who thinks disfinflation and rates are  correlated because of some expectation theory.  Plain simple math and flow of funds explains it, no need for the magic.  Here lets look over the entire 30 years since 1981:
There, I have even made it extra large, lets look. 1960, rates rise, inflation rises, until we get a recession. 1970, same, 1980, same.  Notice 1981, rates stayed high, inflation rose, until the recession, where rates and inflation diverged.  Note there is one exception to the rule, the Clinton period, in which DC began running a surplus, that is the one exception I find.  2003, rates and inflation mostly correlated, though inflation was slow to catch up, and rates slow to start rising. Then the crash. Since the crash we have mostly declining inflation and zero rates. The one exception was a dead cat double bounce. Overall, since 1980, rates have gone from 15% to zero and inflation has gone from 12% to 2%.

So we have two exceptions. 1) They diverge around recessions, and 2) they diverge when government runs a surplus. But otherwise, it is rates down inflation down. Take away those two exceptions, and most of the period has a likely 65 or better correlation between low rates and low inflation.

The theory is simple, the Fed is a monopoly and dominates the market.  When its earning are optimized, it is extracting funds from the economy. The earnings go to Congress, mostly, which should cause inflation having multipliers less than one.  And Congress does cause sudden inflation, just before each recession.

What about now?

I am not an expert on Fed flow of funds, but we had two months of a whopping 2% inflation, and are likely entering a long running bouncing recession. I do not think the Fed is working hard to keep rates down, they are naturally low (but I could be wrong) The current situation is rule 1 and 2, government spending large deficits combined with the Obamacare cost adjustment, the normal periodic recession induced by DC.