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Odds on a Trade Truce: Soybean Edition

The gap between US and Brazil soybean prices is (finally) shrinking: Source: CNBC. CNBC notes: “Narrowing US-Brazil soybean price differentials imply greater market optimism on the potential for a Trump-Xi trade deal or at least a de-escalation of US-Sino trade tensions in advance of the G20. This positive sentiment stands somewhat in contrast to other asset markets, including equities,” the Citi strategists wrote. The gap last week was 13-15% while the tariff implies a wedge of 25%, given durable tariffs and no tariff evasion. Is the market justified in its optimism? This account from BI made me wonder. [A]s soybean prices plummeted in August, and Trump threatened to hit China with more tariffs, Aistrope dropped his chores and jumped on a plane to China for a trade mission arranged by the...

Always Learning: They Make 300 Feet White Bags

For soybeans, among other things. Source: Bloomberg. Notes: 300-foot plastic bags sit filled with soybeans and corn. Photographer: Daniel Acker/Bloomberg End-of-September stocks. Source: Bloomberg. Note: The end-of-year salvation through higher prices has not materialized yet, at least in futures. Thanks, Trump!

Which Observation Is Not Like the Others: US Inward FDI Again

Plotting nominal dollar value of inward FDI understates the collapse in inflows. Here is the ratio to GDP, and — considering how FDI covaries with the stock market’s level — the real S&P 500 (As I recall, working on this topic during the dot.com boom, the dollar’s strength was the other important factor — but that hasn’t changed much over the last three years.) Figure 1: Inward US bound FDI as a ratio to nominal US GDP (blue, left scale), and real S&P 500 (red, right scale). NBER defined recession dates shaded gray. Trump administration denoted by orange shading. Deflation using CPI. Source: OECD, BEA 2017Q3 advance via FRED, Robert Shiller, NBER, and author’s calculations. Note that given the correlation between stock prices and FDI, I would’ve expected higher levels of inflows. I...

Out of Sample Regression Prediction of Mass Shooting Fatalities

Does a Trump dummy “work”? Reader sam writes: i think you’re putting too much weight into too few observations. Some things to make your analysis more convincing 1) show the if predictive accuracy increased with a trump dummy OUT OF SAMPLE or 2) try placing the ‘trump dummy’ variable a few months before or a few months after and see if that changes the coefs. i doubt you’ll see much of an effect. I did (2). sam is wrong. I address (1) by estimating a regression 1982q4-2016q4: f = -14.838 + 0.083pop Adj.R2 = 0.08, N = 137, DW = 1.84, bold denotes significance at 10% msl using HAC robust standard errors. Where f denotes mass shooting fatalities per quarter, pop is average monthly population in millions. Here is a graph of actual cumulative, estimated cumulative, and upper 90% prediction inte...

Three Graphs and a Regression Equation

And we are less than one-third of the way through November. Cumulative casualties seem to be rising at a faster and faster pace. Figure 1: Cumulative mass shooting fatalities (dark red), non-fatal injured (pink), from 1982M08, through November 8, 2018.. Orange denotes 2017M01-2018M11, light orange 2016M11-2017M01. Source: Mother Jones, accessed 11/8/2018, and author’s calculations. The frequency of mass shooting events seems to be increasing. A negative binomial count regression (estimated using QML) indicates 1.6 more events per month under Trump (estimate statistically significant a 1% msl). Figure 2: Mass shooting event count, from 1982M08, through November 8, 2018.. Orange denotes 2017M01-2018M11, light orange 2016M11-2017M01. Source: Mother Jones, accessed 11/8/2018, and author’s calc...

Why Kobach Lost

This graph of Kansas employment during the Brownback years is suggestive. Figure 1: Kansas nonfarm payroll employment (dark blue) and civilian employment (pink), in thousands, s.a. Light green shading denotes Brownback administration; very light green shading denotes Colyer administration. Source: BLS, and author’s calculations. Compare Kansas against her neighbor Missouri to see how far Kansas lagged as a consequence of Brownback’s policies. Figure 2: Missouri nonfarm payroll employment (blue) and Kansas (red), in logs 2011M01=0. Light green shading denotes Brownback administration; very light green shading denotes Colyer administration. Source: BLS, and author’s calculations. Or, it could be just the sheer mendacity, mean-spirited criminality, and quasi-fascism of the candidate. Observat...

Time Series Evidence on the Minimum Wage Impact in Minnesota vs. Wisconsin

Is the partial derivative of fast food employment with respect to the minimum wage negative? Maybe, maybe not. Does a higher minimum wage decrease young adult employment? Maybe, maybe not. Does a higher minimum wage raise fast food restaurant prices? Not noticeably. These conclusions (reported in this working paper written by Louis Johnston and me) stand in contrast to those obtained by Noah Williams, and reported in this CROWE Policy Brief. If one saw the following battery of graphs provided in the Policy Brief, one could plausibly think the answers to all three questions were unambiguously “yes”. Well, the temptation to do “ocular regressions” is why academic economists do econometrics. Let me elaborate. A paper critically influential to my education as an economist was Ed Leamer’s “Let’...

US Goods Exports and Trade Policy Uncertainty

At a minimum, trade policy uncertainty has risen. Whether that has resulted in the stagnation in exports is an open question. Figure 1: Log ratio goods exports to GDP, both in Ch.2012$ (blue, left scale), and US trade policy categorical index (red, right scale). NBER defined recession dates shaded gray. Source: BEA 2018Q3 advance, policyuncertainty.com, NBER, and author’s calculations.

Scenes from Artemisia: An Opera of Passion, Betrayal and Art

This Saturday, the Center for Contemporary Opera presents scenes from an opera composed by Laura Schwendinger, libretto by Ginger Strand. Leonard Nimoy Thalia TheatreSaturday November 3rd, 2018 8pm2537 Broadway at 95th StreetNew York City tickets Conductor Sara JobinStage Director Fred AmbrosePianist Jerome Tan Cast: Artemisia Augusta CasoTommaso Blake FriedmanSusanna Jennifer SgroeAbra/Tuzia Anastasiya RoytmanElder 1 Daniel Folz-MorrisonElder 2 Kevin Johnson Synopsis Artemisia Gentileschi was born in Rome in 1593, the eldest child of the Tuscan painter Orazio Gentileschi and was one of the most important followers of the Caravaggist style. Artemisia Gentileschi achieved renown in an era when women painters were not accepted by patrons and was the first women member of the Accademia di Art...

Mass Shooting Casualties through 28 October

Regression 1982q4-2018q3: f = -18.52 + 0.028pop + 5.182trump Adj.R2 = 0.18, N = 144, DW = 2.07, bold denotes significance at 10% msl using HAC robust standard errors. Where f denotes mass shooting fatalities, pop is population in millions, trump is a dummy variable for Trump administration. One can interpret this as follows: a Trump administration quarter is associated with 5.2 greater fatalities from mass shootings, or 20.8 on an annualized basis. (Over 1982q4-16q4, the average frequency per quarter is 4.876). Inclusion of a deterministic time trend yields a negative coefficient on population, and a trump coefficient (4.093) significant at 11% msl. Figure 1: Cumulative mass shooting fatalities (dark red), non-fatal injured (pink), from 1982M08. Orange denotes 2017M01-2018M10, light orange...

Strong GDP growth, weak fundamentals

The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 3.5% annual rate in the third quarter. That’s the second quarter in a row that the number has come in above the 3.1% average for the U.S. economy over the last 70 years, and is well above the 2.2% average rate since the recovery from the Great Recession began Real GDP growth at an annual rate, 1947:Q2-2018:Q3, with the 1947-2018 historical average (3.1%) in blue and post-Great-Recession average (2.2%) in red. This brings the Econbrowser Recession Indicator Index all the way down to 1.1%, among the lowest levels we ever see. The U.S. remains clearly in the expansion phase of the business cycle. GDP-based recession indicator index. The plotted value for each date is based solely on information as it would have been ...

US Treasury Yield Curve Website, Today…

Is it just me? I’ve tried 3 browsers and my iphone… https://www.treasury.gov/resource-center/data-chart-center/interest-rates/Pages/Historic-Yield-Data-Visualization.aspx. Or is there something SecTreas Mnuchin doesn’t want us to know.

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