Click on image to download full 2011 Economic Forecast report
“I have been a little bit optimistic lately, and for those who know me, that’s a relatively unusual thing,” said Christopher Thornberg, founding principal of Beacon Economics at “What’s Next LA?,” the recent 2011 Los Angeles Economic Forecast conference, cosponsored by the Graziadio School of Business and Management.
Despite an onslaught of recent statistic depicting the economy heading back into downturn, including the falling Case Shiller Home Price Index, Thornberg used some “quantitative easing” of his own, offering peace of mind to audience members with a variety of statistical analyses. Thornberg noted that these “shocks to the economy” are only transitory, and predicted positive growth of 4 percent in the second half of this year, 3 percent in 2012, with things slowing down in 2013.
Brad Kemp, director of regional research at Beacon Economics, also offered a presentation on the Los Angeles regional economic forecast, which can be viewed in full here:
Weekly Snapshot • Chinese premier Wen Jiabao declares inflation victory (FT)
• New orders for durable goods in the U.S. increased 1.9%, to $195.6bn (ESA)
• U.S. real GDP grew at an annual rate of 1.9% in the first quarter of 2011 (ESA)
• U.S. new home sales down 2.1% from April level, but up 13.5% a year ago (ESA)
• International Energy Agency will release 60 million barrels of oil next month (MSNBC)
• The Fed held interest rates, no hint of further asset purchases (FT)
• Fed cut its forecast for 2011 GDP growth to 2.7% to 2.9% from a 3.1%-3.3% (AP)
• U.S. existing home sales fell 3.8% in May; down 15.3% from a year ago (AP)
• Bank of England hints at second round of quantitative easing (Reuters)
• John Paulson’s hedge fund lost $500m from investment in Sino-Forest (Economist)
• Greek Prime Minister survives vote of confidence (FT)
• Japan’s exports fall 10.3% yr/yr versus forecast 8.4% drop (Reuters)
Market Barometers
Weekly Charts
Lots of interesting developments in the commodities markets this week. Here’s a neat chart, courtesy of FT.com, reminding us how energy markets and political developments have always been deeply interconnected.
Source: www.ft.com
All About Oil
When the International Energy Agency decided to release 60 million barrels of oil from its strategic oil reserves over the next month, the markets were taken somewhat aback. Oil prices tumbled on the news putting more downside pressure on an already shaky commodity weakened by a sluggish economic recovery. The announcement stirred up quite a bit of a debate among analysts. A perfectly timed announcement one might think as the West sends a clear signal on oil to some of the oil producing countries who elbowed OPEC into not increasing the supply of oil in their recent meeting.
Although the IEA’s role is not to manipulate prices, several said they saw it as a more of a policy move designed to bring down commodity prices at a time when western governments are struggling with unemployment that remains high and consumers that are hurting from high commodity prices.
Libya’s conflict and the often quoted supply-disruption argument is clearly visible in the difference between the two most widely watched oil futures contracts: Brent Crude Oil traded in London and Light Sweet Crude Oil (West Texas Intermediate Contract) traded at NYMEX. In recent months the roughly $15 premium of Brent Crude over Light Sweet Crude had many traders baffled into thinking this would be a temporary anomaly. Not quite, as we learned…
Whether it is the supply shortage or the rise of a new type of contract that will dominate prices in this market remains unclear. It also remains questionable to what extent the IEA and other governmental organizations can actually influence commodity prices in the long term. However, we have now arrived at a price level that has captured some traders’ attention as they evaluate technical and momentum factors in their next trading decision. Although we don’t like to commit to a specific price target, you can rest assured that oil prices won’t stay here for an extended period of time. Traders already staked out numerous price targets on both sides of the trend line. Having just taken some profits from this week’s clear sell signals, I am staying on the side lines for now. But like many others, I will be watching closely to see which side of the trend line these prices will be on next week.
Connecting The Dots
It isn’t every day that the president of a country writes an op-ed piece, let alone the premier of a major global economic power like China. Please consider: How China plans to reinforce the global recoveryby Wen Jiabao. I’m not quite sure what to make of this article but it does feel strange it would appear now.
Similarly, one must question the intent and timing of this week’s IEA’s decision to try and keep a lid on energy prices. This leaves us to wonder what, if any, alterior motives might be at play here. Below are some recent events and news stories that cry out for someone to connect the dots and tell us if there are indeed too many coincidences. Who would like to connect the dots?
• Fed cuts U.S. economic growth forecast
• Fed holds interest rates on hold but is concerned about inflation
• $14.3 trillion U.S. debt ceiling—out of cash in August
• IEA decides to release 60m barrels of oil from strategic reserves
• Oil price plunges over 4% on Thursday
• China’s food price inflation is at record levels
• Concerns about Chinese property prices persist
• Hedge fund loses $500m from investment in Sino-Forest
• Chinese Premier Wen Jiabao writes an op-ed piece in the Financial Times
• Hang Seng snaps three-week losing streak, ends up 1.9%
• Shanghai up 2.2%, its biggest intra-day gain in four months
• Chinese banks see biggest jump on HK and Shanghai bourses
Good luck and good investing!
Clemens Kownatzki, MBAis an adjunct professor of financial risk management at the Graziadio School of Business and Management, as well as the founder and CEO of FX Investment Strategies, a Registered Investment Advisor. In addition to running his investment advisory firm, he is a contributing author at SeekingAlpha.com and BusinessInsider.com. He also authored the book, Money Music 101, available on Amazon and Kindle, in addition to publishing the popular investment blog www.fxinvestmentstrategies.com along with a weekly newsletter.Disclaimer
Neither the information nor any opinion contained in this communication constitutes a solicitation or offer by us to buy or to sell any securities, futures, options or other financial instruments or to provide any investment advice or service. Each decision by you to do any investment transactions and each decision whether a particular investment is appropriate or proper for you is an independent decision to be taken by you. In no event should the content of this communication be construed as an express or an implied promise, guarantee or implication by or from us that you will profit or that losses can or will be limited in any manner whatsoever. Past results are no indication of future performance. Please note that there is no requirement and no commitment to make any payments to FX Investment Strategies LLC in order to access our published information be it via email or via website publication. All information is publicly available without any required monetary consideration. Any payments or donations made by you are deemed to be voluntary and cannot be considered as payments for investment advice given to you.
Can’t view this video? Click here to open in new window.
“Twitter in Japan,” a film produced by Bassett & Partners (http://blog.bassett.tv), features the expert commentary of Charla Griffy-Brown, PhD, associate professor and discipline lead of information systems at the Graziadio School of Business and Management at Pepperdine University. She contributes to a discussion of the cultural relevance of Twitter in Japan during and after the devastating earthquakes that took place in March 2011.
The video taps a study that demonstrates a rise in emotive keywords, such as shock, sadness, love, and hope, in the Japanese Twitter-sphere post-disaster. Griffy-Brown notes the connection between Twitter and haiku, a poetic form that took root in Japanese culture hundreds of years ago.
Charla Griffy-Brown, PhD
Dr. Griffy-Brown serves as the director of the Center for Teaching and Learning Excellence. The Center aims to advance the School’s understanding of marketplace dynamics affecting working professionals given current and future economic challenges, while also enhancing teaching effectiveness in delivering business education that has relevant and practical value and affirms a higher purpose for business practice.
She also serves as editor-in-chief of Technology in Society, an international journal dedicated to the economic, political and cultural dynamics of our technological business world, published by Elsevier Ltd. The journal focuses on the social forces that shape technological decisions and the choices that are open to society with respect to the uses of technology. Dr. Griffy-Brown has been a contributor to the journal since 2007.
Dr. Griffy-Brown is a member of the Center for Applied Research, undertaking the mission to promote relevant research that makes an impact on the business community, as well as foster engagement between industry leaders and Graziadio Faculty for research opportunities.
She currently serves as part of an international research team examining technology and business development issues. In 2004, she received a research award from the International Association for the Management of Technology in which she was recognized as one of the most active and prolific researchers in the technology management and innovation field. A former researcher at the Foundation for Advanced Studies on International Development, Tokyo, Dr. Griffy-Brown has also served as associate professor at the Tokyo Institute of Technology. Dr. Griffy-Brown’s research is currently funded by an SAP University Alliance Grant, and she also has funding from the Pepperdine Voyager/Lilly Foundation, and the Rothschild Research Endowment as well as the Graziadio School of Business Funds for Excellence.
She has worked for NASA at the Kennedy Space Center and has taught innovation/technology management courses in Australia, Singapore, Indonesia, Malaysia, and Japan. Dr. Griffy-Brown has also served as a consultant for the United Nation’s Global Environmental Facility and the European Commission. Dr. Griffy-Brown’s publications include more than 40 articles as well as books in the areas of technology management, information systems, and techno-economic development. She has also conducted information systems research at large enterprises such as American Honda Motor Corporation, as well as in more than 100 small- and medium-sized enterprises in Japan, the U.S., and China.
Dr. Griffy-Brown is a Harvard University graduate, a former Fulbright Scholar and holds a Ph.D. in Technology Management from Griffith University in Queensland, Australia.
