Economic Rigor

Found a very nice data series from the ABS. It's the extended Labour Series data set (6291.0.55.001 - Labour Force, Australia, Detailed - Electronic Delivery, Apr 2012 ) It gives a very detailed snapshot of the Labour force and employment, breaking down into age, sex and marital status Been playing around with some of the data to see if there really is a "man drought". This is the perception that there are less men than women in the optimum dating/marriage years.Women are always complaining of this effect, so I'm curious whether this is actually true or not based on the statistics. To calculate this, we will first make some assumptions (like good little economists we are):- Assumption 1: Prime dating/marriage years are 20-34 for both Male and Female. Assumption 2: We are assuming that all males and females are heterosexual. Obviously this is not totally correct (most studies put the level of homosexuality in a population at 2%), but if we apply this to both men...

As the inevitable hype recedes and sanity takes hold, it is important to revist the valuation of the Facebook shares. From the get go, the IPO issue price of $38 a share was ridiculous. To get that valuation, you would be looking at 100% earnings growth for the first two years, plus a terminal growth rate of 20%. Not going to happen in this economy. For mine, this price was pure hubris from Facebook (or more likely, their investment banker partners, looking for fees) Anyway, I updated my valuation, as Facebook ended up selling more shares through the IPO than was previously expressed. Due to the increase in shares (Class A and Class B) outstanding to 2,138,085,037 but with the same residual income method, cost of capital and earnings growth, I now have a share price of $17.90 per share. Still below the current Facebook market price of $34.02 so I would expect some softening of the share price still.

Been having a look at historical returns and variance of returns over the last 10 years for the ASX 200. Here is what I have come up with. Quite interesting. Show just how bad a year 2008 was for the stock market in Australia. Huge risk and a huge negative return. And just how good the three years 2003, 2004 and 2005 were...good returns and low risk. 2012 is looking a lot like 2006 so far...low returns and risk slightly lower than the norm. Not a great time to be throwing money at the share market in my opinion, especially as I can only see the risk increasing over the short to medium term. The graph also shows a bit of a negative correlation between returns and risk. The higher the risk, the more negative the return.

Source : ABS 6202.0 Labour Force Australia Interesting to see the growth in Female employment since 1978, especially compared to Male employment which has been flat since the early 80's.Shows that the vast majority of growth in employment has been due to the ladies entering the workforce. Also interesting to see the effect since the GFC...basically no employment growth. However, that is still better than the US and Europe so we shouldn't complain too much

Wow...Got that one wrong didn't I. I guess the business heads on the Reserve Bank Board were able to convince the rest that such a huge cut was warrented. For mine, I do believe this was an emotional reaction to the inflationary figures. In my opinion, the economy that doesn't really deserve such stimulus, especially with the Carbon Tax due any minute now which will certainly add to price levels. Better to have waited to see the effect of that and then hit the monetary price lever. A case in point is the recent Unemployment data which stated that seasonally adjusted unemployment dropped 0.2% to 4.9% for April (trend was unchanged at 5.1%). Hardly the figures for a looser monetary policy. I think the Reserve go it wrong.

This prediction could be wrong. For the first time in two months, the Goat-a-meter is pointing to the negative as far as interest rates are concerned....but only just. Because of the small amount of negativity, I believe the Reserve will hold their fire this time, but if there is a second negative month, I will definitely be predicting a cut next month. Anyway, the goat is going out on a limb here. Every economist seems to be pointing to a cut this month. It will all depend on the business people on the board. Which brings me to the board. Who would be voting.... Glenn Stevens (Economist) Philip Low (Economist) Martin Parkenson (Government) John Akehurst (Energy) Jillian Broadbent (Retail) Roger Corbett (Media, Pharama, Retail) John Edwards (Academic) Heather Riddour (Business) Catherine Tanna (Gas)

Shock news today over the CPI figures. Surprisingly low, mainly due to the segments "Food and non alcoholic beverages" and "Recreation and Culture" (which both experienced drops of over 2% for the quarter) Pundits are now factoring a cut of 0.25% at the May Reserve Bank Meeting with a 100% probability However, looking at the raw figures from the ABS, the biggest drop (of over 30%) was in Fruit products. This strikes me as a movement to normal prices after the temporary effect of the Queensland Floods/Hurricane of 2010/2011 (which elevated fruit prices in 2011). The "Recreation and Culture" drop was mainly caused by international and domestic travel prices effects (probably due to the increase in the Australian dollar and the fact the rest of the world is in the toilet) So in my opinion, this low number could be construed as just a return to equilibrium. I wonder if th Reserve will see it that way. Anyway, according to my model, I still have t...