by Jerome a Paris
Tue Jun 24th, 2008 at 09:39:49 AM EST
Oil prices since 1990, and current forward curve for deliveries till 2013
That graph, more than any other I've seen before, shows that the market has absolutely no friggin' clue as to where oil prices will go into the future. Betting that it will remain where it is for the foreseeable future (and futures up to 2016 are the same) is just the "default" position when you don't know better. Or it shows perfect balance between those that think that it will go up, and those that bet it will go down (hardly an argument that speculators are to blame for the current runup in prices...).
Given that until recently, the "default" position was that prices would come back down to 20$/bl, this is actually quite a massive change in expectations, and a sign, in my mind, that the market has actually come round to the idea that prices are going nowhere but up - fighting, along the way, deeply ingrained common wisdom, massive pundit inertia and, more than anything else, profound denial by almost everybody that this may be happening. It's a bubble! It's speculators! It's above ground factors!
The dollar and the euro, in yuan
Not directly to the previous graph, but nevertheless an interesting trend, as it shows the currently exponential reevaluation of the yuan against the dollar - along with its steady devaluation against the euro. whether for political, commercial or other reasons, China is increasingly focusing its trade efforts towards Europe, and indeed its surplus with Europe overtook that with the US last year - not a surprising feat considering that it is devaluing its money despite the record trade imbalances. It's in fact quite amazing that Europeans are squealing so little. Wimps, a preference for imported deflation, or superior economic growth which makes it bearable?
Building permits, and builder's morale
A bonus graph, showing that the expectations of a "V"-shaped recovery in the US housing market are not yet borne out by reality.
Housing Index Show Deeper Slump.
The S&P/Case-Shiller home-price indexes, a closely watched gauge of U.S. home prices, show price declines continued to get steeper in April, with prices in every region surveyed now showing year-over-year drops.
The goldilocks economy that financiers claimed they had brought us (low inflation, strong growth) is turning into a perfect storm of bad news (inflation, bust, inequality, poverty, etc...)
Addendum: the source for the graph is this note by Crédit Agricole (pdf)