PeakTrader.com

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PeakTrader said...

Some people are better shoppers than others:

"The GDP price deflator in calendar 2010 increased 1.0%, little different from a 0.9% rise in 2009 and less than half the 2.2% advance of 2008."

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morganovich said...

mark-

my comment was for the index through the 24th.

it was 101.1082 at the end of 2010.

it was 103.454 on 4/24/11.

that's a 2.32% increase in under 4 months.

that annualizes to over 7.1%.

i don't see your point about recent updates. what do you think has changed in the last 3 weeks?

you can pick a dozen items and say they are going down in price, but the prices of a billion certainly have not been.

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PeakTrader said...

Over the past two weeks, oil prices fell over 10%, along with other commodities.

Perhaps, 6% nominal growth, or 4% real growth and 2% inflation, will lift the housing market:

Inflation hits 2-1/2 year high, seen peaking
May 13, 2011

Stripping out volatile food and energy costs, core CPI rose a mild 0.2 percent from March. The 12-month increase at 1.3 percent was at its highest level since February 2010. The Fed, however, would like to see that closer to 2 percent over time.

Bill Gross Jan '07:

Bloomberg's Tom Keene: "...As you know, I'm a big fan of nominal GDP - this, folks, is real GDP plus inflation. It's the 'animal spirits' that's out there. You say be careful, Bill Gross. It looks real good to me, Bill. I see 6% year-over-year nominal. You say that's going to end?"

Pimco's Bill Gross: "...Ultimately, the inflation component affects the real growth component. To the extent that you have nominal GDP - in my forecast 3 to 3.5%, that's really not enough growth in terms of the economy itself to support asset prices at existing levels. And so, declining assets prices ultimately factor into eventually lower real growth. But that's not for mid-2007 but perhaps for later in the year."

Tom Keene: "When we look at six months of low nominal GDP, is that enough to link directly into the 'animal spirits" of the business investment component of GDP - the "animal spirits" of business men and women?"

Bill Gross: "Well sure it is. When you realize that the average cost of debt in the bond market - and therefore in the economy and this includes mortgages - it is about 5.5%. If you can only grow your wealth and service that debt at 3.5% rate, then that has serious implications.

When you go back to 1965, Merrill [Lynch] did this study - in terms of asset prices during periods of time when nominal growth grew less than 4%. Risk assets have been negative in terms of their appreciation and actually bonds have done pretty well. The question becomes why hasn't that happened yet, and I think we're simply in a period of time where there are leads and lags that are much like the leads and lags of Federal Reserve policy."

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PeakTrader said...

Nominal growth (real GDP and inflation) remains too low, with real GDP expanding 1.8% last quarter and core inflation at 1.3% over the past 12 months.

We need 6% nominal growth, e.g. 4% real growth and 2% inflation.

Unfortunately, we got a heavy dose of Obamanomics instead of Reaganomics. So, it'll take longer for the economy to recover.

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PeakTrader said...

Larry, the U.S. health care system is not a free market system. If it were, the quantity and quality of health care would rise, while prices would fall.

The U.S. has a health care system where quality and prices both rise.

Europe has a system where quality and prices both fall.

Overwhelming the U.S. system with more demand will likely raise prices even more and reduce quality.

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PeakTrader said...

Larry, Europe measures its infant mortality rate different than the U.S..

Also, U.S. life expectancy is higher than in Europe when the U.S. black population is excluded.

There are many other factors, e.g. more Americans own autos and guns.

European hospitals and medical equipment are substantially inferior compared to the U.S..

When you have "free" health care, you'll see a doctor more often, even when its not really necessary, which is costly.

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PeakTrader said...

Because the U.S. health care system is not a free market system, some Americans are paying $800 a month for health insurance, while others are paying nothing; some pay little for excellent insurance, while others pay more for poor insurance, etc..

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PeakTrader said...

There are many people like Larry. When health care costs rise even further and quality falls, the government will finish the job (i.e. nationalize health care).

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PeakTrader said...

Larry, your study uses data from the WHO, which ranks U.S. health care below Cuba.

Excluding significant factors on life expectancy will lead to inaccurate results.

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PeakTrader said...

The U.S. has the best health care industry in the world.

The U.S. only needs to scale back the 130,000 pages of health care regulations and allow much more free market flexibility (including limiting medical lawsuits and awards, along with unnecessary treatments; lowering standards to practice medicine, to increase labor; allowing insurance companies to sell health-care policies across state lines; and allowing more innovation) to reduce health care costs by 50% and maintain its huge quality advantage over the rest of the world.

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