Tag Archives: Data

World Bank Opens New Public Data Initiative

At data.worldbank.org, access to all the world bank’s data is now available for free.  Included are easy to use ways for accessing and presenting the data, as well as giving you tools to analyze the data for every country, anytime.  For those who are proponents for open data sets, this is a big moment.  See the youtube video for an overview of the program:

Latest IMF World Economic Growth Predictions

Do commodity futures accurately predict commodity prices?

From Econbrowser’s Menzie Chinn:

This paper examines the relationship between spot and futures prices for a broad range of commodities, including energy, precious and base metals, and agricultural commodities. In particular, we examine whether futures prices are (1) an unbiased and/or (2) accurate predictor of subsequent spot prices. While energy futures prices are generally unbiased predictors of future spot prices, there is much stronger evidence against the null for other commodity markets. This difference appears to be driven in part by the depth of each market. We find that over the last five years, it is much harder to reject the null of futures prices being unbiased predictors of future spot prices than in earlier periods for almost all commodities. In addition, futures prices do approximately as well as a random walk in forecasting future spot prices, and vastly outperform a reduced form empirical model.

Hit the link if you want to see the specifics. To paraphrase, this doesn’t mean that futures prices are guaranteed to predict actual commodity prices, but on average they are right. For financial analysts, that may be all that they need to hear. If on average, I could hedge my bet that the commodity price will reflect the futures prices, why wouldn’t traders use the forward momentum to drive prices upward? More so, when a major buyer like an oil refiner (in the case of oil) was squeezed and makes a major sell off in order to keep from paying a higher price on oil, would the momentum generated in the other direction drive prices drastically lower until a major player decided to cover their bets and drive the price up again?

This graph (from the paper) shows the average t-stats against the trade volume:

What I take from this is that the greater the variability, the less accurate futures are in predicting prices. Seeing that oil is at the highest trading volume but the least t-stat lets me assume that the oil market isn’t where a strategy could take advantage of the statistical phenomena. What could happen though is that as trading volume increases as traders try to capture the predicted commodity prices from future prices, (a la driving up the futures price) you end up with greater variability in price over all.

That’s doesn’t sound too good for price stability. If it is actively known that such a statistical relationship exists, and trader’s can’t exploit it, then one would conclude that commodity prices are accurately priced. However, if such a statistical relationship exists, trader’s knowingly exploit it, and variability in pricing occurs greater than its historical variation, then one can conclude that commodity prices are derived from speculation.

Recycle your cell-phone, its worth a fortune!

Here is why you shouldn’t just throw away your cell-phone, but recycle it! Some say to do it for the environment’s benefit. Save energy this, prevent waste that. But I think a true ecopreneur would look at this statement

For every 1 million cell phones recycled, 75 pounds of gold, 772 pounds of silver, 33 pounds of palladium and 35,274 pounds of copper are recovered.

That’s 75 pounds of Gold X 16 ounces X $1133.600 per ounce which = $1.35 million. 772 pounds of silver x 16 ounces x $18.1 per ounce = $223,571.  33 pounds of palladium x 16 ounces x $501 per ounce = $264,528.  35,274 pounds of copper per ounce x $3.5748 per ounce = $126.10

Total = $1.8 million dollars for every 1 million cell phones.

Yeah, OK, that only amounts to $1.80 per cell phone but imagine bringing economies to scale and legally require citizens to dispose of e-waste to specific collection centers and wallah! A viable business opportunity.  Don’t agree? Multiply $1.8 x 276.6 million cell phones in the U.S.  That’s around $500 million dollars in recycling revenue, and that is only from cell-phones! Imagine what other e-waste would yield…

PS:  $1.8 * 4.1 billion cell phones in the world = $7.4 billion. Yeah, that’s right. $7.4 billion dollars. For cell-phone e-waste alone. Is any CEO right now reading this?

Oh yeah, we get to save the environment too. Forgot to mention that.

Inflation? What Inflation?

From Free Exchange

Lisa simpson was wrong about intelligence and happiness

Remember this?

It was from a Simpson’s episode when Homer has a surgery that removes a crayon from his cranium that inadvertently maximizes Homer’s brain activity a la Flowers for Algernon.

Now, take a look at this graph from the Economix blog:

Looks like Homer should have been happier after removing the crayon.

History of natural gas and oil prices

Just recently read an article from the Economic Review by the Federal Reserve Bank of Kansas (here) about energy price states.  I thought that this particular graph from the report (here) highlighting energy prices and recessionary cycles over the course of 40 years gives some perspective on the run up of natural gas and oil prices.

Continuing this trend means guaranteed higher energy prices in the future. How high do energy prices have to go in order to provide incentive for alternative means to be viable?