Wanna Bet ?

My pal James Pethokoukis is a 2002 Jeopardy! champion — so I don’t lightly challenge his knowledge of either the esoteric trivia or data driven facts.

However, when he — along with Messrs. Wesbury, Mankiw, & Kudlow — declared unequivocally that, since there have been no negative quarters of GDP, there is no Recession, I picked up that challenge. As the publicly available GDP data I pulled from the Bureau of Economic Analysis and the Federal Reserve Bank of Philadelphia showed, these gentlemen were incorrect: Recessions can and do begin with positive GDP data.

While no one can say for sure as of May 10, 2008 we are definitely in a recession, I certainly see plenty of evidence suggesting that is a very strong possibility.

Similarly, James cannot say for sure that a +0.6% = No Recession — though I graciously concede he also has some evidence to back up his claims. Indeed, Jimmy P. is so confident, he is now calling this The Recession That Wasn’t.

Well, we will find out soon enough eventually. Hence I propose the following bet: If a recession is eventually declared by the NBER, and if in between the official start and finish points there is any month in the first or second quarter of 2008, I win. In other words, if any part of Q1 or Q2 2008 is part of a recession, James loses. 

If there is no recession, or it there is one, but it doesn’t include any month in Q1 or Q2 2008, James wins.

Loser buys dinner for 4, at the restaurant of winner’s choice. Why 4? Winner’s and loser’s spouses are included. The wager includes dinner, wine, car valet, and tip.

James, do we have a bet?

Category: Data Analysis, Economy, Financial Press

Halfway Through the House-Price Bust?

Category: Real Estate

Fooling_someEvery now and again, CNBC puts on a superlative show.  Friday morning’s Squawk Box was one of those times when they hit the ball out of the park.

As I was heading out the door to work, I heard David Einhorn of Greenlight Capital begin chatting about shorting stock, soft SEC enforcement, and Allied Capital (ALD). CNBC also announced that William Ackman of Pershing Square Capital was coming on in a while.

Einhorn discussed his presentation at Jim Grant’s conference Private Profits, Socialized Risk as well as his book, Fooling Some of the People All of the Time: A Long Short Story.

So before leaving the house, I TiVo’d Squawk, and then headed off to work. I watched the show Friday evening, and it was fantastic.  Watch the videos below and see if you agree.

• The Short & Short of It
Short selling can be good for the markets, with Owen Lamont, DKR
Fusion, David Einhorn, Greenlight Capital and CNBC’s Steve Liesman

click for video


• Whistle-Blowing pt. 1

Activist investors face challenges convinsing regulators to face the facts, with William Ackman, Pershing Square Capital Management and David Einhorn, Greenlight Capital Management

click for video


• Whistle-Blowing, 2

click for video


• Hedging Your Bets

Discussing fraud on Wall St., with David Einhorn, Greenlight Capital Management president

click for video




Fooling Some People site

The Speech

Book:  Fooling Some of the People All of the Time: A Long Short Story

Jim Grant’s conference presentation Private Profits, Socialized Risk

Category: Credit, Derivatives, Financial Press, Video

Quote of the Day: On a Great Danger Approaching

Category: Psychology

Oil Bubble?

Category: Commodities, Earnings, Energy, Psychology, Technical Analysis, Valuation

Signs of a Housing Bottom?

Category: Contrary Indicators, Real Estate

What’s Next for Crude Oil ?

Category: Commodities, Contrary Indicators, Energy, Psychology, Technical Analysis

Trichet Warns of `Protracted’ High Inflation

Unlike the Federal Reserve, Trichet and the EC are very concerned with high Inflation:

Click for Video

Remember, the EC has a single charge — maintaining price stability — and is not concerned with maximizing growth . . .

Trichet Sees `Rather Protracted’ High Inflation
Gabi Thesing and Christian Vits
Bloomberg, May 8 2008

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Category: Federal Reserve, Inflation, Video

Subprime Mortgages: America’s Latest Boom and Bust

Category: Books, Real Estate

Oil = $124

Category: Commodities, Energy