Digital Universe

I am increasingly intrigued by the possibilities of the new digital world, photography, HD Videos, music, architecture, cable internet, iPhone, Hubble. 01010101 applied to endless combinations and creative applications, recording space and time, blurring the distinction between real and synthetic, live and recorded, here or there. time and space and mans place in the heavens.

Austria 2009 Timelapse (HD) from Christian Vanhove on Vimeo.

Architecture HD Slideshow from Christian Vanhove on Vimeo.

The Hubble Ultra Deep Field in 3D from Ardeleanu Mihai on Vimeo.

NASA | The Last Mission to Hubble from NASA Goddard on Vimeo.

Sunday Morning BLUES

I like to start my day with a bit of soulful Blues.

Perhaps some replays but its all cool. Life often is colored blue.

P

A New Romance

Ambrose Evans-Pritchard: Bernanke needs fresh money blitz as U.S. recovery falters

By Ambrose Evans-Pritchard
The Telegraph, London
Thursday, June 24, 2010

http://www.telegraph.co.uk/finance/economics/7852945/Ben-Bernanke-needs-...

Federal Reserve chairman Ben Bernanke is waging an epochal battle behind the scenes for control of US monetary policy, struggling to overcome resistance from regional Fed hawks for further possible stimulus to prevent a deflationary spiral.

Fed watchers say Mr Bernanke and his close allies at the board in Washington are worried by signs that the US recovery is running out of steam. The ECRI leading indicator published by the Economic Cycle Research Institute has collapsed to a 45-week low of -5.7 in the most precipitous slide for half a century. Such a reading typically portends contraction within three months or so.


Key members of the five-man board are quietly mulling a fresh burst of asset purchases, if necessary by pushing the Fed's balance sheet from $2.4 trillion (L1.6 trillion) to uncharted levels of $5 trillion. But they are certain to face intense scepticism from regional hardliners. The dispute has echoes of the early 1930s when the Chicago Fed stymied rescue efforts.

"We're heading towards a double-dip recession," said Chris Whalen, a former Fed official and now head of Institutional Risk Analystics. "The party is over from fiscal support. These hard-money men are fighting the last war: They don't recognise that money velocity has slowed and we are going into deflation. The only default option left is to crank up the printing presses again."

Mr Bernanke is so worried about the chemistry of the Fed's voting body -- the Federal Open Market Committee (FOMC) -- that he has persuaded vice-chairman Don Kohn to delay retirement until Janet Yellen has been confirmed by the Senate to take over his post. Mr Kohn has been a key architect of the Fed's emergency policies. He was due to step down this week after 40 years at the institution, depriving Mr Bernanke of a formidable ally in policy circles.

The Fed's statement this week shows growing doubts about the health of the recovery. Growth is no longer "strengthening"; it is "proceeding." Financial conditions are now "less supportive" due to Europe's debt crisis.
The subtle tweaks in language have been enough to set bond markets alight. The yield on 10-year Treasuries has fallen to 3.08 percent, the lowest since the gloom of April 2009. Futures contracts have ruled out tightening until well into next year.

Yet the statement may understate the level of angst at the board. New home sales crashed 33 percent in May to an all-time low of 300,000 after the homebuyer tax-credit expired, confirming fears that the housing market has been propped up by subsidies. Unemployment is stuck at 9.7 percent. Manufacturing capacity use is at 71.9 percent. The Fed's "trimmed mean" index of core inflation is 0.6 percent on a six-month basis, a record low.

"The US recovery is in imminent danger of stalling," said Stephen Lewis, from Monument Securities. "Growth could be negative again as soon as the fourth quarter. There is no easy way out since fiscal stimulus has already been pushed as far as it can credibly go without endangering US credit-worthiness."

Rob Carnell, global strategist at ING, said the Obama fiscal boost peaked in the first few months of this year. It will swing from a net stimulus of 2 percent of GDP in 2010 to a net withdrawal of 2 percent in 2011. "This is very substantial fiscal drag. On top of this the US Treasury is talking of a 'Just War' against the banks, which will further crimp lending. It is absolutely the wrong moment to do this."

Kansas Fed chief Thomas Hoenig dissented from Fed calls for ultra-low rates to stay for an "extended period", arguing that loose money risks asset bubbles and fresh imbalances. He recently called for interest rates to be raised to 1 percent by the autumn.

While he has been the loudest critic, he is not alone. Philadelphia chief Charles Plosser says the Fed has blurred the lines of monetary and fiscal policy by purchasing bonds, acting as a Treasury without a legal mandate. Together with Richmond chief Jeffrey Lacker they represent a powerful block of opinion in the media and Congress.

Mr Bernanke has fought off calls from FOMC hawks for moves to drain stimulus by selling some of the Fed's $1.75 trillion of Treasuries, mortgage securities, and agency bonds bought during the crisis. But there is little chance that he can secure their backing for further purchases at this point. "He just has to wait until everybody can see the economy is nearing the abyss," said one Fed watcher.
Gabriel Stein from Lombard Street Research said the US is still stuck in a quagmire because Mr Bernanke has mismanaged the quantitative easing policy, purchasing the bonds from banks rather than from the non-bank private sector.

"This does nothing to expand the broad money supply. The trouble is that the Fed does not understand broad money and ascribes no importance to it," he said. The result is a collapse of M3, which has contracted at an annual rate of 7.6 percent over the last three months.

Mr Bernanke focuses instead on loan growth but this has failed to gain full traction in a cultural climate of debt repayment. The Fed is pushing on the proverbial string. The jury is out on whether or not his untested doctrine of "creditism" will work.

"We are now walking on deflationary quicksand," said Albert Edwards from Societe Generale.

ECRI - Business Cycles, inflation, deflation, and gold

ECRI Weekly Leading Indicators Widely Misunderstood

By lakshman - June 23rd, 2010, 7:00AM

There’s been much attention to our work of late, culminating in a report this Tuesday from Bank of America listing several critiques of our Weekly Leading Index (WLI). Apparently, the clinching argument is that “If a single indicator always accurately predicted the trajectory of the economy, the demand for Wall Street economists would be significantly reduced.”

To some Wall Street economists, it may seem self-evident that there should be strong demand for their views. But this is not at all clear to us as far as their recession-forecasting function is concerned. After all, a 63-country IMF study on economists’ recession-forecasting prowess concluded that “The record of failure to predict recessions is virtually unblemished.” In contrast, the IMF subsequently noted that ECRI “has actually had a very stellar record” of recession forecasting.

As we outlined in our 2004 book, Beating the Business Cycle, there is no Holy Grail of economic forecasting, even among our large array of state-of-the-art leading indexes, of which the WLI is but one. It seems that many of the self-styled experts on the WLI either haven’t read the book, or simply don’t understand the parts of the book where we repeatedly state, in no uncertain terms, that ECRI does not use models.
We aren’t entirely surprised. Virtually the entire analytical community has been trained to believe that any and all quantitative approaches to forecasting must involve models, i.e., simplified representations of reality. The idea that there could be rigorous quantitative approaches that are not model-based seems to be entirely beyond their ken. Their understanding of analytical techniques is so model-soaked that it reminds us of an insightful comment from psychologist Daryl Bem: “It takes a very intelligent and non-parochial fish to realize that his environment is wet.”

So it is with economists who cannot imagine that ECRI’s leading indexes are not model-driven or based on back-fitting of data. Thus the BofA report notes that “the ECRI (sic) and other leading indexes . . . fit the business cycle better ex post than ex ante” and that “This is an example of a broader issue in all statistical models of the economy. The data fit much better in-sample than out-of-sample.”
They just don’t get it. While this may be a valid criticism of statistical models of the economy, ECRI’s leading indexes are not, in any sense, statistical models of the economy.

BofA’s ignorance of the facts continues in their use of a 1993 (yes, 1993!) Dallas Fed study of the Commerce Department’s LEI to impugn the WLI. The Fed paper correctly points out that the-then LEI got revised a lot — a situation that hasn’t changed now that the Conference Board maintains the index. However, none of what the Fed reviewed in 1993 had anything to do with the WLI, which is the target of the current BofA report.

Furthermore (not that we’re fans of the Conference Board’s LEI) but the Dallas Fed study may not be valid in the first place, since the results are based on a Bayesian model chosen by the Dallas Fed to generate recession and recovery signals from the LEI. In other words, it isn’t clear whether failures highlighted in that report have to do with the LEI itself or the assumptions and the specifications of the Bayesian model used in that study.

Still, the BofA’s latest forecast of a “recovery, stronger than what we saw in the early 2000s and 1990s, but weaker than V-shaped recovery in the early 1980s” is very much in line with what ECRI predicted — in August 2009. At that time, we said the recovery would be “at a stronger pace than any the United States has seen since the early 1980s.”

BofA’s parroting of our forecast from late last summer reminds us of Jon Stewart’s segment on Nowcasting where experts describe something that’s already happening as though it’s coming (Jason Jones starts at three-minute mark).

Bottom line, neither the “experts” predicting that the sky is falling based on the WLI, nor the other “experts” indulging in misinformed WLI-bashing in an effort to discredit the super-bears, have a real clue to what the WLI is all about. We created the WLI not to be an infallible, stand-alone recession-forecasting machine, but as one small part of a much larger array of leading indexes (each made up of many economic indicators) — like the especially prescient U.S. Long Leading Index. This array amounts to a sophisticated sequential signaling system of the economy’s cyclical turning points. The WLI is designed to be interpreted in this broader context, and its message today is quite simple: A slowdown in U.S. economic growth is imminent, but a new recession is not.

bp Chart, for Estragon

Here is a chart of bp, courtesy of AmenRa -

"BP
Spinning top day. Almost an inverted hammer (I said almost). Still trapped by candle body from the long down day on 6/9/10. Still below the 0.0% retrace. Still below EMA(10). No daily 3LB changes (reversal is 43.86)."

On Jun 22, 2010, at 4:29 PM, Estragon wrote: "Does BP go up or down tomorrow?"

reply...

Who knows?

If they start collecting "all the oil", then good chance of up

Commodity complex incl oil will likely pull back, maybe hard, if so, bp goes down tomorrow with the rest...

The markets in general (read SPX) are teetering - scrimage line at 1100 with bulls and bears pushing each other back and forth between 1050 and 1150.  Break below 1050-1040 then it is a free fall to 950, if that does not hold, 875.  On the upside, we probably don't see 1250 again this year...but, never say never

Surfs UP

Dig your Cool new ID Photo.

"Time to go to the Sea."

HD Video shot with a Canon 35MM SLR camera in waterproof housing.

Time to Go in the SEA! from allan wilson on Vimeo.