At tepid pace in monthly employment gains, this labor market recovery has been similar to the recovery after 2001 recession, if not much worse. Two charts to put the current labor market condition in comparative perspective – another “jobless recovery”.
(graph courtesy of Wells Fargo Economics)
(graph courtesy of Northern Trust)
In reading Campbell Harvey’s research on gold, I thought the following 3 charts were most interesting.
1. the real price of gold in the last 200 years
– the current period of price surge of gold has been extraordinary, even dwarfing the gold bubble in late 1970s. The #1 fact to bear in mind is gold price will eventually tumble in a very big way – it’s fool’s game that you think you can time the market.
2. how the gold price is related to real interest rate
– in my mind, I always think real interest rate plays a bigger role in determining the price of gold than any other factors, incl. inflation.
3. three elasticities of gold price: a. jewelry demand; b. investment demand; c. technology demand
– jewelry demand responds negatively to gold price: as price increases, fewer people can afford it in countries like India and China, where gold jewelry is popular.
– the waning jewelry demand is more than offset by increasing investment demand, especially in the age of ETFs.
– technology demand (or rather supply) responds to gold price very slowly due to the fact innovation in mining gold takes time, but eventually it will catch up.
Cheng Li, an expert on factions within Chinese Communist Party, analyzes the new ‘balance’ of power. Unlike the previous generation of leaders, it seems that consensus will be reached more easily, as 6 out 7 of the members of the top decision-making body are from the same faction.
With Obama reelected, the question of “fiscal cliff” is back to the spotlight. Here is a nice video introduction of the issue from WSJ:
Mike Mayo on the abrupt resignation of Citigroup’s CEO, Vikram Pandit.
While waiting for the announcement on Monday for this year’s Nobel prize in economics, I have this Bob Shiller interview to recommend:
Ray Dalio of Bridgewater Associates updates his outlook on the Europe, the US and emerging markets, and what keeps him up at night.
His view that the success of the great deleveraging depends on the right balance between fiscal austerity and debt monetization is interesting and insightful.