Inflation watch -- Headline inflation rolling over.

Inflation data was released recently.  The headline rate of inflation continues to roll downwards towards zero as the chart shows.  (Source: Federal Reserve)  With oil prices no longer going higher it is likely the headline inflation rate will continue declining.  'Core' inflation (red line)  has been stuck at 1% for the last few months but the longer term trend looks downwards to me as well.  The housing component is stuck in negative territory.

Overall the trend is down for all the sub components of inflation. 

Late Night Linkage

Postings have been light due to some business related demands.  Here's some links to my recent reads from the last few days.

Humor
Vuvuzela -- Will it blend? Youtube

Gold
Telegraph - did BIS gold swap spook the markets?

China
From Chinadaily - Property restrictions continue.
Chinadaily - Home price appreciation slows.
Chinadaily - Rate of lending slows in China.

Residential
From CalculatedRisk - A Chapter 13 bankruptcy can wipe away a 2nd lien.

Commodities
From FT -- The financialization of commodities.

LNG
From Hellenicshipping - A lot of spare LNG ships standing idle.

Lumber
Globe and Mail - Canada exporting lumber to China.

Sovereign debt
CalculatedRisk - How much debt is there and what is the probability of default?  It's a multi part series. Good stuff.
GMO - White paper on defaults in history. Very good. Intend to write longer blog post about this.

BP / Oill spill
WSJ - BP has replaced old cap, trying new one in an attempt to stop leak.  (This is at least 24 hours old.)

Euro
Telegraph - Legal challenges to bailout of Greece.
WSJ - Moody's downgrades Portugal.

Debt
Annaly - The debt deleveraging continues.

Unemployement claims and Google Trends. Not much clarity.

Ok call that a whiff. . .  Initial unemployment claims were released today and showed a decline.  I'm going to keep my eye on these series and see if the two continue to diverge  . . .

Google Unemployment Trends rising. Will initial claims follow suit?

I recently mentioned the correlation between Google Trends data on unemployment and initial unemployment claims data published by the government.  As you can see, in the short period of time since that last post the Google Trends data has risen dramatically.

I do not know if this is due to all the newly unemployed Census workers re-entering the ranks of the unemployed or if it is actually due to an 'unexpected' jump in initial claims.  We'll have more clarity in a few hours.

Either way the trend is not positive . . .

Source:
Federal Reserve, Google

Late Night Linkage

Some links of stuff I've been reading recently:

http://alephblog.com/2010/07/05/watch-the-state-of-the-states/

Canadian home sales falling.  Prices next?
http://globaleconomicanalysis.blogspot.com/2010/07/vancouver-home-sales-drop-30-percent.html

A different look at Dr. Copper
http://humblestudentofthemarkets.blogspot.com/2010/07/dr-copper-teeters-over-abyss.html

China home prices
http://www.telegraph.co.uk/finance/china-business/7875713/Chinas-property-market-braced-for-30pc-drop.html

Payroll number may take a header next month due to birth death model
http://jessescrossroadscafe.blogspot.com/2010/07/note-to-mish-bls-added-145897-imaginary.html

Greece -- Default now or later? Good reads.
http://www.nakedcapitalism.com/2010/07/greece-is-restructuring-debt-now.html
http://mpettis.com/2010/06/what-might-history-tell-us-about-the-greek-crisis/


Iran discovers large gas fields
http://www.hellenicshippingnews.com/index.php?option=com_content&task=view&id=109332&Itemid=79

More oil found in North Sea
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7873355/North-Sea-oil-hopes-rise-of-the-biggest-discovery-in-a-decade.html

Libya eyes purchasing stake in BP.  Cue irony.
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7873702/Libya-eyes-stake-in-bargain-BP.html

China building more nukes
http://www.chinadaily.com.cn/business/2010-07/06/content_10069093.htm

BP considering selling assets to pay fines
http://www.bloomberg.com/news/2010-07-05/bp-said-to-consider-selling-colombia-venezuela-fields-to-pay-spill-costs.html
http://www.telegraph.co.uk/finance/newsbysector/energy/oilandgas/7866766/China-seeks-9bn-of-BP-assets-in-Argentina.html


Ozzie mine tax revised
http://seekingalpha.com/article/212933-miners-win-as-australian-government-revises-mining-tax

ECRI predicts more frequent recessions in future
http://www.businesscycle.com/news/press/1887/

Steven Keen gets some more press on his Minsky model predicting what will happen next.
http://www.nakedcapitalism.com/2010/07/steve-keens-scary-minsky-model.html

http://www.creditwritedowns.com/2010/07/mandelbrot-fractals-and-the-art-of-roughness.html

Recent jobs report was not good
http://www.thereformedbroker.com/2010/07/03/the-truth-about-those-job-numbers

Review and backstory of the book "This Time is Different" by NYT

I have previously brought up the book 'This Time is Different" and how the history of sovereign defaults is very instructive considering our current situation in history.  The New York Times recently had a long review of the book and the authors. They started working on the book in 2003 and it was published last September.  Great timing!

Some great quotes :

Their handiwork is contained in their recent best seller, “This Time Is Different,” a quantitative reconstruction of hundreds of historical episodes in which perfectly smart people made perfectly disastrous decisions. It is a panoramic opus, both geographically and temporally, covering crises from 66 countries over the last 800 years. “
There is so much inbredness in this profession,” says Ms. Reinhart. “They all read the same sources. They all use the same data sets. They all talk to the same people. There is endless extrapolation on extrapolation on extrapolation, and for years that is what has been rewarded.”

One interesting point in the book and the article is how often we forget the past with respect to country defaults:

Mr. Rogoff says a senior official in the Japanese finance ministry was offended at the suggestion in “This Time Is Different” that Japan had once defaulted on its debt and sent him an angry letter demanding a retraction.

Mr. Rogoff sent him a 1942 front-page article in The Times documenting the forgotten default. “Thank you,” the official wrote in apology, “for teaching the Japanese something about our own country.”

If you are at all interested in finding a great historical context for what is going on right now throughout the world I strongly suggest you read the book.

Is Google Trends providing a sneak peak into the employment situation?

The employment report was released today and the results were weaker than expected.  From Bloomberg the consensus was for +105,000 private sector jobs while the number was actually 83,000.  Here's a little insight on who was not surprised.

Google Trends provides very interesting data regarding search terms over time.  One of the data series reported daily is the unemployment index consisting of search terms such as 'unemployment' and 'unemployment benefits'.   As you can see from this Google chart the growth of the unemployment index peaked in early 2009 and until very recently was consistently declining.

Comparing the year over year percent change in the 30 day smoothed Google Trends unemployment index to the Four Week Initial Claims as reported by the government is very instructive.  While there is noise it is very impressive how similar the trends and turning points are for each data series.

The recent 'unexpected increases' in Initial Claims coincides with the Google data basing and again turning upwards.  If you want to handicap future unemployment and initial claims reports starting with Google Trends will improve your odds. 

Other Google Trends reports are available on a plethora of topics and you'd be amazed at what you'll find.

Additional reading:
Voxeu.org

Predicting Initial Claims for Unemployment Benefits -- Hyunyoung Choi, Hal Varian