John At The Center

I’m with the Fed view on this, but understand that it’s a very gray issue:

Fed officials also tended to see rising energy prices as a de facto tax, and thus a factor arguing against rate hikes. Given a relatively steady need for gasoline, the more money a household spent on fuel was less money that could be spent elsewhere. Some economists believe that the surge in energy prices and resulting assault on household wealth may have been one of the key factors creating the current global recession.

“The Fed should have paid some attention to the signals coming from oil prices and raised interest rates faster and higher than it did in 2004 to 2006,” said a paper released Friday in conjunction with a conference held by the University of Chicago Booth School of Business and Brandeis International Business School, in New York.

via Real Time Economics : Economists: Fed Won Risky Battle With Energy Price Surge.

Tobin’s stamp is on the $787 billion stimulus signed by President Barack Obama, former students and colleagues say. His philosophies are influencing Austan Goolsbee, a former Tobin student advising Obama, and Ben S. Bernanke, head of the Federal Reserve. Unlike Friedman, Tobin provides guidance for today’s problems, said Paul Krugman, a Princeton University economist.

“Hard-line doctrines don’t seem very appropriate at this troubled moment,” said Krugman, a New York Times columnist who also worked with Tobin at Yale from 1977 to 1979. “Tobin was never a guru in the way Milton Friedman was; he never had legions of Samurai ready to spring to the defense of his theories, but that’s part of why he is so relevant right now.”

via Bloomberg.com: U.S..

How high might the gold price go? Gold bugs talk excitedly about it reaching $2,300, which would match the January 1980 peak in real terms (see chart). Already the gold price is above its average since 1972 when calculated in today’s money. There is a limited supply of gold and lots of potential buyers—ideal conditions for a bubble, says Stephen Jen at Morgan Stanley. If gold is burnished by grim news, it seems likely to become still more alluring.

http://www.economist.com/finance/displaystory.cfm?story_id=13185396&fsrc=rss

the government made a massive change to the INVENTORIES figure (revising inventories from a rise of $6.2 billion to a fall of $19.9 billion).

via Paul Kedrosky: More on Q4 GDP Estimates.

It’s pretty much impossible to get one’s head around the sheer enormity of the numbers in Barack Obama’s first budget. But it’s important to try,

via US Budget Datapoint of the Day – Finance Blog – Felix Salmon – Market Movers – Portfolio.com.

Accumulating the difference, you find that Team Obama projects about 6 percent higher GDP in 2013 than do private forecasters.

via Greg Mankiw’s Blog: Rosy Scenario, or the Audacity of Hope?.

This is vital – it needs to be done through a joint BoE and Treasury effort.

While Chancellor Alistair Darling has already given the go-ahead for purchasing up to £50bn in financial assets (sterilised qualitative easing), King is still pursuing authorisation for up to £150bn of unsterilised reserve-funded asset purchases – quantitative easing.

via FT Alphaville » Blog Archive » Where’s our QE?.

In testimony today before the congressional Joint Economic Committee, Paul Volcker, who is chairman of President Barack Obama’s Economic Recovery Advisory Board, called for beefed up regulation to prevent future crises.

via Real Time Economics : Volcker Supports Popping Bubbles, Regulating Hedge Funds.

An intriguing look at how technology is changing financial markets, from an innovator on the frontlines of this revolution

Nerds on Wall Street tells the tale of the ongoing technological transformation of the world’s financial markets. The impact of technology on investing is profound, and author David Leinweber provides readers with an overview of where we were just a few short years ago, and where we are going. Being a successful investor today and tomorrow–individual or institutional–involves more than stock picking, asset allocation, or market timing: it involves technology. And Leinweber helps readers go beyond the numbers to see exactly how this technology has become more responsible for managing modern markets. In essence, the financial game has changed and will continue to change due entirely to technology. The new “players,” human or otherwise, offer investors opportunities and dangers. With this intriguing and entertaining book, Leinweber shows where technology on Wall Street has been, what it has meant, and how it will impact the markets of tomorrow.

David Leinweber, PhD (Pasadena, CA), is Haas Fellow in Finance at the Haas School of Business at UC Berkeley, and founder of the Center for Innovative Financial Technology at Haas. He is the founder of two pioneering financial technology firms and has consulted, published, and lectured widely on the use of advanced technology, artificial intelligence, and intelligence amplification in finance.

via Wiley::Nerds on Wall Street : Math, Machines and Wired Markets.

Cerebellum Capital is a hedge fund management firm whose investment programs are continuously designed, executed, and improved by a software system based on techniques from statistical machine learning.

The system is responsible for constantly creating its own new models for how the markets will move, testing those models, refining them, and learning trading strategies that take advantage of these predictive models. The system is provided with a wide variety of traditional and non-traditional, publicly available and licensed data streams as inputs to its model creation and improvement process. Cerebellum’s software system learning optimizes for a proprietary mix of expected return maximization, risk/volatility reduction across the portfolio, and portfolio independence from major markets when they trend downward. Cerebellum’s architecture for continuous improvement, self-diagnosis, and fault tolerance is based on a collective 30 years research in the area of statistical machine learning applied to real world, mission critical time-series problems.

via Cerebellum Capital.