Regression versus correlation All readers will be aware of the notion and definition of correlation. The correlation between two variables measures the degree of linear association between them. If it is stated that y and x are correlated, it means that y and x are being treated in a completely symmetrical way. Thus, it is not implied that changes in x cause changes in y, or indeed that changes in y cause changes in x. Rather, it is simply stated that there is evidence for a linear relationship between the two variables, and that movements in the two are on average related to an extent given by the correlation coefficient. In regression, the dependent variable (y) and the independent variable(s) (xs) are treated very differently. The y variable is assumed to be random or ‘stochastic’ in some way, i.e. to have a probability distribution. The x variables are, however, assumed to have fixed (‘non-stochastic’) values in repeated samples.1 Regression as a tool is more flexible and more powerful than correlation.
Most Successful Speculation Ever PRINT THIS PAGE RESIZE TEXT by Addison Wiggin – May 2, 2011 "Bleeding America to the point of bankruptcy": Bin Laden dead, but the world's most successful leveraged bet lives on Dollar's bin Laden bounce doesn't last long… Abe Cofnas on the next big event to move currency markets "There are no investments anymore"… Doug Casey on how we're all being forced into speculation Mad grab for local tax revenue sparks revival of the "granny flat" "Wow, can I do that too?" readers react to a drug-and-bank corruption thread The man who executed the most brilliant leveraged bet in history is dead. "We, alongside the mujahedeen," Osama bin Laden was reported to have said in a speech delivered a few days before the 2004 presidential election, "bled Russia for 10 years until it went bankrupt and was forced to withdraw in defeat… "So we are continuing this policy in bleeding America to the point of bankruptcy." Al-Qaida pulled off the Sept. 11 attacks for somewhere in the vicinity of $500,000, according to the final report of the 9/11 Commission. By the end of fiscal 2011, the U.S. government will have spent $1.26 trillion fighting the wars in Afghanistan and Iraq, according to the Center for Defense Information. A total equal to nearly 9% of the national debt. "Every dollar of al-Qaida defeated a million dollars, by the permission of Allah, besides the loss of a huge number of jobs," bin Laden added in his 2004 speech. We don't know if Allah really gave his permission or not. But he certainly had plenty of help from eager participants across the West. Based on the figures above, bin Laden pulled off a 2,514,000:1 return. And that's just versus U.S. interests. When you figure in costs beyond direct war, the number is incalculable. Throw in the post-9/11 homeland security bureaucracy, for example, or the covert wars in Yemen and Somalia, future health care costs for wounded veterans, interest on the portion of the national debt that can be attributed to these costs… Makes you wonder why those students from George Washington University were cheering in front of the White House: Land of the (somewhat less) Free: Party now, pay later… Nor does it mean that just because the bad guy's dead the spending stops, the troops come home and the TSA is disbanded. Far from it. This morning, the State Department warned of "enhanced potential for anti-American violence" worldwide. Security's been beefed up at the New York airports. And so… bin Laden's leveraged gains keep piling ever higher.
In response to Top 1% Received 121% of Income Gains During the Recovery I received a couple of emails from readers that I would like to share. Reader "Gordon" wondered how it was possible for a group to get 121% of income gains. Here is the example I sent Gordon. Mary, Tom, and Joe work for the XYZ Corporation. They are the only three employees. Mary's salary rose from $100,000 to $200,000. Tom and Joe were informed of hardships in the corporation and their salaries fell from $100,000 to $80,000 each. In the above example, net salaries rose by $60,000. Mary's salary rose by $100,000 (more than 100% of the total). Quantifying Inequality Reader "Z" writes ... " Inequality in the US has been rising since the 80s. How do you justify your theory that inflation benefits the wealthy? Not qualitatively, quantitatively. " First, let's take a look at inflation as measured by the CPI (any alternative measure of inflation would suffice for this example). CPI Percent Change From Year Ago click on any chart for sharper image Except for a brief period in 2009, price inflation has been positive. The question is "Who Benefited?" I claim it is those with " first access to money " namely banks and the already wealthy. A few charts courtesy of Doug Short at Advisor Perspectives will prove my point. Nominal US Household Incomes From the above chart it appears the average and median households income has been growing nicely since 1967. If that's what you believe, think again. Real US Household Incomes In "real" (CPI-adjusted) terms, 50% of households are no better off than they were in 1988. Let's dig a litter deeper. Growth in Real Household Income by Quintile The above chart shows percentage income growth by quintile since 1967. Since 1988, the bottom, 4th and middle quintiles (a combined 60% of households) have negative real income growth. The next chart shows the same thing in a different way. Real Household Income by Quintile No matter what your timeframe, only the top quintile did well. And from 1980 until 2000 the top 5% got the lion's share of income gains. Ponder on that for a bit, then consider the following charts on total net worth. Nominal Total Net Worth Real Total Net Worth Total net worth includes stocks, bonds, real estate, pensions, etc. I cannot precise quantify quintiles but we all know (at least we should) who has the assets and who doesn't. The top 5 or 10% have most of the assets, the next 15% or so are OK and nearly everyone else is asset poor and high in debt. Millionaire Households The Wall Street Journal has some interesting stats on the Millionaire Population . According to the Chicago-based Spectrem group, there are now 8.6 million households in the U.S. with a total net worth (minus principal residence) of $1 million or more. There are now 1,078,000 households worth $5 million or more and about 107,000 people worth $25 million or more. The report also broke down today’s millionaires by occupation and former occupation if retired. Managers make up the largest group, with 17%, followed by educators (12%), corporate executives (7%), entrepreneur/business owners (6%) and attorneys and accounts. The $5 million-plus crowd, is dominated by senior corporate executives (17%) and entrepreneurs/owners (12%). Household Net Worth Chart from Spectrem Group There are about 114 million households. Of that number 8.6 million (7.5%) have a net worth of $1 million or more. 37 million households have a total net worth of $100,000 or more. Thus, 77 million households (67.5%) have a net worth less than $100,000. Counting underwater houses, I suspect most of them live paycheck to paycheck and have minimal if not negative net worth. So who did inflation benefit? The answer is those with assets and those with first access to money: the banks and the already wealthy. The poor do not have assets, they have debt. In spite of the often-heard mantra that "inflation wipes away debt", I suggest otherwise. Income typically does not keep up with expenses, and most have too few assets to inflate. The poor (last on the credit totem pole) overpay for their assets with cheap credit given to them at precisely the wrong times (as happened right before the housing bust). Inflation Clobbers Those on Fixed Income In case you missed it, please consider Hello Ben Bernanke, Meet "Stephanie" , my response to a reader on fixed income attempting to live on Social Security plus interest on a $16,000 CD. If routine price inflation did not benefit the banks and the wealthy at the expense of everyone else, we probably would not have it. The word that best describes the process is "theft". Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com "Wine Country" Economic Conference Hosted By Mish Click on Image to Learn More Thanks to Mish from globaleconomicanalysis.blogspot.com
Is This Why Gold Is Spiking Submitted by Tyler Durden on 08/14/2013 10:56 -0400 That JPMorgan has been scrambling day after day in the past week to meet gold delivery requests directed to its vault located deep under 1 CMP is no secret, at least not to our frequent readers. This peaked on Monday when, courtesy of a color-coded Comex scheme, we showed how panicked the lateral moves between various Comex gold vaults had become to preserve the illusion of physical availability. However, as yesterday's Comex report showed , instead of tapering, JPM was just slammed with yet another 70K delivery (registered to eligible warrant detachment), which will likely appear on either today's or tomorrow's settlement. And since the other gold vaults appear to have no more freely transferrable gold to hand over to JPM as everyone is now scrutinizing their every move under a microscope, JPM may no longer have the option of ignoring the mess its vault is in. Which means it has one option: to start buying the metal in the open market. And sure enough, breaking from the "standard" of the past 8 months, in which JPM was drowning in Issues, for both House and Customer accounts, the firm's House accounts just saw the largest Stop (i.e. taking delivery) since December of 2012, amounting to over 210K oz. Has JPM, flooded with demands for physical, finally thrown in the towel, and seeing that the deluge in delivery requests is "untapering", had no choice but to turn to the one place it has left to replenish its stocks: the market? Still, here is the big picture - until the 2103 August Stop, the balance for JPM House accounts was: Issues: 15,293 Stops: 636 And Clients: Issues: 17,458 Stops: 1,444 In other words, there is a ways to go. Source: CME Average: 4.78125 Your rating: None Average: 4.8 ( 32 votes) !-- -- Tweet !-- - advertisements - .AR_2 .ob_empty {display: none;} .AR_2 .rec-link {color: #565656;text-decoration: none;font-size: 12px;} .AR_2 .rec-link:hover {color: #565656;text-decoration: underline;font-size: 12px;} .AR_2 {float: left;width:50%} .AR_2 li {list-style: none outside none !important;font-size: 10px;padding-bottom: 10px;line-height: 13px;margin:0;} .AR_2 .ob_org_header {color: #000000;text-decoration:bold; margin-left: 0px; font-size:14px;line-height:35px;} .AR_3 .rec-link {color: #565656;text-decoration: none;font-size: 12px;} .AR_3 .rec-link:hover {color: #565656;text-decoration: underline;font-size: 12px;} .AR_3 .rec-src-link {font-size: 12px;} .AR_3 li {padding-bottom: 10px;list-style: none outside none !important;font-size: 10px;line-height: 13px;margin:0;} .AR_3 .ob_dual_left, .AR_3 .ob_dual_right {float: left;padding-bottom: 0;padding-left: 2%;padding-top: 0;} .AR_3 .ob_org_header {color: #000000; text-decoration:bold; margin-left: 0px; font-size:14px;line-height:35px;} .AR_3 .ob_ads_header {color: #000000; text-decoration:bold; margin-left: 0px; font-size:14px;line-height:35px;} -- - advertisements - Login or register to post comments 30814 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Goldman's Head Gold Trader On The Recoupling Between Gold (Which Is Up 14% YTD) And Money, And Why This Is 2008 All Over Again Is This Why Gold Is Outperforming? Is This Why Gold Is Selling Off? Is This Why Gold Dumped And Stocks Pumped Today? Is This Why Gold (And Europe) Is Underperforming US Stocks (For Now)?
The "Undisputed Housing Recovery" Is Unmissable On This New Home Sales Chart Submitted by Tyler Durden on 01/25/2013 10:23 -0500 Census Bureau New Home Sales Reality recovery St Louis Fed We could bore readers with the just announced New Homes Sales data from the Census Bureau , which put a somewhat largish dent in the "undisputed" housing recovery fairytale taking place in America (perhaps in the Hamptons, and triplexes in Manhattan where the NAR continues to launder Chinese and Russian oligarch money) such as: December new homes sales, seasonally adjusted annualized, dropped from an upward revised 398K (was 377K) to 369K on expectations of a 385K print; That this was the biggest M/M drop since February 2011; That months supply rose from 4.5 to 4.9, the highest since January 2012; That on an unadjusted, actual basis, a tiny 26K houses were actually sold in December, compared to 24K last December, of which just 2K in the Northeast; That a whopping 1,000 houses were sold in the $750,000 and over category That houses for sale rose to 150K, the highest since December of 2011 That the punditry already spun this as being due to lack of clarity over the Fiscal Cliff and tax hikes, when in reality with expectations of higher taxes, consumers would have spent more money on hard assets in December, but why not regurgitate generic stupidity... Or we could just show this chart of the non-seasonally adjusted, unannualized New Home Sales in the past decade, and ask: just where is this recovery everyone keeps on talking about ? Source: St Louis Fed Average: 4.8 Your rating: None Average: 4.8 ( 20 votes) Tweet Login or register to post comments 15731 reads Printer-friendly version Send to friend Similar Articles You Might Enjoy: Guest Post: Will John Paulson Be Wrong This Time? Pimco Vs Shilling: The Housing Bull Vs Bear Debate No Housing Recovery On This Chart Either The Chart That Proves The Fed's Policies Have Been A Failure 18.8 Million Vacant Homes In Q3, Seasonally Adjusted Homeownership Rate At Decade Low
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