Not exactly a slow day here on TWW, but I'm curious what everyone thinks the future holds. I realize predictions don't mean crap, but they're fun to make anyway.

So, predict the direction these indicators will take over the next month:
The DOW stock indicator, currently 10,667 {up, down, neutral}
Price of oil, currently $68.35 {up, down, neutral}
Unemployment rate, currently 4.9% {up, down, neutral}

My predictions:
DOW up, presuming Iran settles down or manages to be ignored.
Oil down, against presuming the Iran question gets answered.
Unemployment rate, neutral but downish.

What does everyone else think?

1/22/2006 8:59:40 PM

i don't know much aobut the others, but oil up.

1/22/2006 9:28:08 PM

the light at the end of the tunnel is a train.

1/22/2006 9:31:25 PM

Dow - Down slightly, because Iran has found a way to make people with money scared.
Oil - Up to almost $72 (wheee fake predictions), because Iran is scary.
Unemployment - Neutral, maybe up slightly, because oil prices are going to scare companies again.

1/22/2006 10:22:01 PM

DOW: up to 11,000
Oil: Roughly Neutral, ~$70
Unemployment: Down to 4.7%

1/22/2006 10:25:55 PM

Dow - down
oil - up
unemployment - up



Cmon bursting of real estate bubble. I need to buy a house

1/22/2006 11:27:07 PM

I predict that my new photoshop creation will not have much use or value.

1/22/2006 11:41:01 PM

I'll say the DOW will go back to 11,000, but then fall back to around 10,500, and hover there.
Oil will go to about $72 (Guess I'm w/Mindstorm on this)
Unemployment rate will go down by about .1%

The 1st two depend on Iran, as LoneSnark said. If everything works out, then the DOW would go way up in my mind. However, I just don't see that happening yet.

1/23/2006 7:56:06 AM

that metric is now an inverted curve... i forget the name of it, but it tracks short-term interest rates vs. long term interest rates.

every time short-term rates became higher than long-term rates, the economy was in a recession the next year. this has been true for the past nine recessions, according to USA Today (ya i know ok)

1/23/2006 10:35:52 AM

Quote :

"Historically, inversions of the yield curve have preceded many of the U.S. recessions. Due to this historical correlation, the yield curve is often seen as an accurate forecast of the turning points of the business cycle. A recent example is when the U.S. Treasury yield curve inverted in 2000 just before the U.S. equity markets collapsed. An inverse yield curve predicts lower interest rates in the future as longer-term bonds are being demanded, sending the yields down."

http://www.investopedia.com/terms/i/invertedyieldcurve.asp

P/Es are still pretty high, too, as they have been since '98/'99. You could argue (and I would) that the economy is up since the tech bust, but definitely not if your reference point is the mid '90s. For the future, it looks like we'll either have a) steady decline overall over the next 8-10 years or b) a new economic model, including new ideas about P/Es, new ideas about oil/commodity prices, etc.

1/23/2006 11:10:23 AM

Quote :

"oil - up unemployment - up"

That won't happen. One will be up, the other down. Oil prices drive inflation. Inflation has an inverse relationship to unemployment (except in jimmy carter's case). So if oil is up, unemployment will be down and vice-versa.

1/23/2006 11:19:20 AM

^ How do you figure?
There are different types of inflation. Monetary expansion will drive employment for the near-term, but shock drive inflation, such as oil prices, would be neutral at best, most likely driving unemployment higher as customers have less money to buy goods/services.

1/23/2006 11:32:21 AM

I don't know the answer or even have a good guess, but I think the long-term impact of Iran is being overrated.

1/23/2006 11:34:48 AM

I agree. Iran is going to turn out to be just another scare of the day.

1/23/2006 11:37:49 AM

Given that this inverse relationship is only theory and hasn't help up in all circumstances (stagflation), it has held up in many of the cases.

I'm assuming here that higher oil prices will bring higher inflation (which should make sense to most). If that happens, then trace the phillips cuve and see what happens to unemployment.

1/23/2006 11:42:18 AM

^(Abonorio, damn I am way late) Oil is a driver of inflation, but not the only one. The relationship between oil and inflation is one of appearance: if oil rises, it appears that the dollar cannot buy as much as before. It could be, however, the price of oil will be a completely different beast than it has been historically.

An upward trend in a commodity doesn't imply a weaker dollar. It only reflects the current state of the demand and supply of the commodity.

Quote :

"Today, most economists would view inflation and unemployment movements as reflecting both aggregate supply and aggregate demand disturbances as well as the dynamic adjustments the economy follows in response to these disturbances. When demand disturbances dominate, inflation and unemployment will tend to be negatively correlated initially as, for example, an expansion lowers unemployment and raises inflation. As the economy adjusts, prices continue to increase as unemployment begins to rise again and return to its natural rate. When supply disturbances dominate (as in the 1970s), inflation and unemployment will tend to move initially in the same direction. "

http://www.frbsf.org/econrsrch/wklyltr/el97-01.html

[Edited on January 23, 2006 at 11:49 AM. Reason : ^]

1/23/2006 11:48:07 AM

Quote :

"Yesterday, it was reported that the oil reserves of Kuwait are only half what was previously thought (but how do we know that the new figure is accurate?). "'Petroleum Intelligence Weekly (PIW) learns from sources that Kuwait's actual oil reserves, which are officially stated at around 99 billion barrels, or close to 10 percent of the global total, are a good deal lower, according to internal Kuwaiti records,' the weekly PIW reported on Friday [...] 'Kuwait's remaining proven and non-proven oil reserves are about 48 billion barrels.'" That means world reserves just dropped, as if by magic, by 5%"

http://today.reuters.com/business/newsarticle.aspx?type=tnBusinessNews&storyID=nL20548125&imageid=&cap=

OIL UP

1/23/2006 11:58:19 AM

Quote :

"The relationship between oil and inflation is one of appearance: if oil rises, it appears that the dollar cannot buy as much as before."

So if it appears that the dollar cannot buy as much, it might as well not be able to buy as much. You are correct, though, that oil prices is not the only factor in the rate of inflation. However, since oil is tied to essentially every single commodity sold on the open market, it is a large factor. We have, however, seen oil jump to $68 a barrel and have unemployment at or near the consensus of what the natural state of unemployment is (between 4.5 and 5.5%).

1/23/2006 11:59:40 AM

DG, only two hits on Google News (Reuters and The Durka Durka Times). Is "Energy Intelligence" who released the article a lobbying firm? Sounds a little suspicious...

1/23/2006 12:11:45 PM

^^ Inflation by itself does not breed employment, it is monetary expansion that drives employment in this way. Oil prices, by the way, are independent of monetary expansion. We can have high oil prices and high monetary contraction, with resultant high unemployment.

1/23/2006 1:51:03 PM

I know who to ask:




NASTRADAMUS!

1/23/2006 1:55:50 PM

I find that the best predictions about economics are based on broad, cursory samples of previous events.

1/23/2006 10:52:59 PM

Wow. Abonorio really doesn't understand the Phillips Curve at all.

1/23/2006 11:26:34 PM

maybe he should write a column about it

1/23/2006 11:35:11 PM

Maybe I should.

How don't I get the phillips curve? Inverse relationship between inflation and unemployment. I could take someone without an ounce of econ education in them and trace things on that graph and they would understand. It's a pretty simple concept.

ABout that column... I wish I still wrote I'm sure more than half of Technician readership are happy that I don't still write.

1/24/2006 10:26:36 AM

super ben,i dunno, but here's their website

http://www.piwpubs.com/

1/24/2006 10:37:00 AM

Short term:

Dow Down.

Price of Oil up.

Unemployment up.


The scare with Iran will continue to overinflate oil prices for the next couple of months creating a dampening effect on the US economy through spring into the traditionally sluggish summer. The slightly sluggish economy will cause new home sales to continue to fall (a factor that has sustained economic growth so far) and US consumers will become more conservative and spend less.

I don't want to say recession but until the US economy adapts to the new situation things will seem pretty bleak.


Long Term-

Dow Up

Oil steady

Unemployment down

1/24/2006 11:25:39 AM

within 2006

DOW: up to 11,000

NASDAQ: up to 2,620

Oil: Break the $75 mark at some point, and settle around $72-73

Unemployment: Down to 4.8% (number of underemployed people up from current by the end of the year)

Price of Gold: $600/oz

1/24/2006 12:05:47 PM

^ meant to say number of underemployed up 8% from current

"underemployed" are unemployed people who have remained jobless long enough (6 months) to lose unemployment benefits.

don't let the term "unemployment" fool you. there will be a considerable amount of pain felt before things really turn around.

1/24/2006 12:09:37 PM

eh

[Edited on January 24, 2006 at 1:31 PM. Reason : a]

1/24/2006 1:30:38 PM

bttt

2/13/2006 5:10:04 PM

Check back w/me in about a month.

2/13/2006 8:35:59 PM

Quote :

"Price of oil, currently $68.35 {up, down, neutral}"

Quote :

"i don't know much aobut the others, but oil up."

Quote :

"Oil - Up to almost $72 (wheee fake predictions), because Iran is scary."

Quote :

"Oil: Roughly Neutral, ~$70"

Quote :

"oil - up"

Quote :

"Oil will go to about $72 (Guess I'm w/Mindstorm on this)"

Quote :

"OIL UP"

Quote :

"Price of Oil up."

Quote :

"Oil: Break the $75 mark at some point, and settle around $72-73"

Well, the one thing that you could all agree on is wrong so far.

Oil is trading at $61 a barrel right now. Pump prices have risen though.

2/14/2006 2:11:26 AM

Quote :

"Oil - Up to almost $72 (wheee fake predictions), because Iran is scary."

You're allowed. That's how the price of oil is determined in the real world anyway.

[Edited on February 14, 2006 at 7:26 AM. Reason : -]

2/14/2006 7:26:25 AM

So, not quite a month yes, 8 days short, but here is where we are so far:
The DOW stock indicator, was 10,667, went up to 10,932
Price of oil, was $68.35, went down to $61.24
Unemployment rate, was 4.9%, went down to 4.7%

I got a 3.0 out of 3.0, depending on whether or not you accept "downish" to mean "down".

radu got the next closest score (2.5) (said neutral, it wen't down)

SandSanta and skokiaan got the lowest scores, (0.0)

[Edited on February 14, 2006 at 10:42 AM. Reason : .,.]

2/14/2006 10:42:33 AM

this is early in the year

we'll have to keep bumping this to see how it goes through the year, and at the end of

2/14/2006 11:54:17 AM

^ over the next year?

Quote :

"predict the direction these indicators will take over the next month"

2/14/2006 12:27:11 PM

my bad

2/14/2006 12:39:09 PM