Tuesday, April 23, 2013

Inflation and Gold and World Weariness

Two from FT Alphaville:
Breaking bad inflation expectations
A pattern is evolving in the world of inflation expectations.

It goes something like…

QE/government intervention is announced, people interpret this as inflationary, risk-on mentality ensues, a good opportunity to lock-in yield is provided for anyone who recognises the yield curve is mispriced — in the sense it is pricing in too much inflation/higher interest rates — the expectations turn out to have been misplaced, the curve corrects, confidence is lost until a new round of QE or government intervention is announced.

And so on.


This cycle has been going on since 2008, and is — if anything — only getting more pronounced.
The latest reversal to “oh dear, it looks like we were wrong about the inflation” is possibly amongst the most severe, largely because the bounce-back has involved the five-year TIP security and not just the two-year....MORE
And:
And Goldman closes its gold short recommendation
...The shake out in bullion is thus supposedly complete (for now).

Which shouldn’t really be a surprise given the amount of PR emails we’ve been receiving of late telling us about the phenomenal demand being witnessed on the physical side, in some cases reports of tangible gold buying being up as much as 200-400 per cent.

While that may very well be true, it’s not exactly a shocking reaction to that level of a correction. Also, the incentive to lock-up spot gold in vaults makes much more sense when you can profit from a better cash and carry forward rate....MORE
The writer, Izabella Kaminska is most likely the best financial journalist on the beat right now.
There are others who are near that same level, CNBC's John Carney has flashes of brilliance, Felix Salmon at Reuters, Heidi Moore when she was Deal Journal's "Warrior Goddess" (Google it) before moving to the Guardian, former MarketBeat honcho Matt Phillips, now at Quartz (and re-published at RealClearMarkets), the FT's Martin Wolf, Reuters' John Kemp and Joe Silha on energy and in the why-don't-they-write-more-column: Gillian Tett and Mark Gongloff.

But for day-in, day-out writing Izabella is probably the best and I think she's getting sick of it.
Not the job but rather the dimwits.
And the hustlers. Who aren't even creative (or at minimum, amusing)
And the ideologues.
And the pseudo-sophisticates.
And the whole cast of characters that turn up whenever lucre is the topic.

Because at bottom this money thing is a bit grubby.
Which is why I love it, sharp elbow and all.

Or as the mathematicians say R DR R
Teacher:  So y = r cubed over 3. And if you determine the rate of change in this curve correctly, I think you'll be pleasantly surprised.
[The class laughs except for Bart who appears confused.]

Teacher:  Don't you get it, Bart? Derivative dy = 3 r squared dr over 3, or r squared dr, or r dr r.
 "Bart The Genius" (7G02)

Earlier:
Goldman Closes Gold Short, Negative on Other Commodities