July 2009 Archives

These are my links for July 28th through July 29th:

• COULD YOU SURVIVE WITHOUT MONEY?MEET THE GUY WHO DOES: DETAILS Article on men.style.com men.style.com: Fashion and Lifestyle News from the Online Home of GQ and Details - His dwelling, hidden high in a canyon lined with waterfalls, is an hour by foot from the desert town of Moab, Utah, where people who know him are of two minds: He's either a latter-day prophet or an irredeemable hobo.
• Foreign Policy: Jay-Z Schools Us In U.S. Hegemony : NPR - But the limits on his ability to use this power recalls the debates about U.S. primacy. Should he use this power to its fullest extent, as neo-conservatives would advise, imposing his will to reshape the world, forcing others to adapt to his values and leadership? Or should he fear a backlash against the unilateral use of power, as realists such as my colleague Steve Walt or liberals such as John Ikenberry would warn, and instead exercise self-restraint?

These are my links for July 27th:

• The End Of Fossil Fuel - Forbes.com - Americans, who constitute 4% of the world population but consume 25% of its energy, will have radically different lifestyles. Production of everything will have to be re-localized. Instead of our food traveling an average 1,500 miles before it reaches us, it will have to come from nearby and use organic methods instead of requiring 10 calories of fossil fuel inputs for every calorie of food we eat.
• Traders Profit With Computers Set at High Speed - NYTimes.com - “This is where all the money is getting made,” said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. “If an individual investor doesn’t have the means to keep up, they’re at a huge disadvantage.”
• The End Of Fossil Fuel - Forbes.com - Americans, who constitute 4% of the world population but consume 25% of its energy, will have radically different lifestyles. Production of everything will have to be re-localized. Instead of our food traveling an average 1,500 miles before it reaches us, it will have to come from nearby and use organic methods instead of requiring 10 calories of fossil fuel inputs for every calorie of food we eat.
• Traders Profit With Computers Set at High Speed - NYTimes.com - “This is where all the money is getting made,” said William H. Donaldson, former chairman and chief executive of the New York Stock Exchange and today an adviser to a big hedge fund. “If an individual investor doesn’t have the means to keep up, they’re at a huge disadvantage.”
• Scientists Worry Machines May Outsmart Man - NYTimes.com - The Kurzweil version of technological utopia has captured imaginations in Silicon Valley. This summer an organization called the Singularity University began offering courses to prepare a “cadre” to shape the advances and help society cope with the ramifications. THE CULT CONTINUES!

These are my links for July 27th:

• Chinese-American Children Sent to Live With Kin Abroad Face Tough Return - NYTimes.com - “I advise all Chinese families, do not send your kids away, no matter how hard, because that loss cannot be made up,” she said. “Money is not so important. Nothing can make up for the sensation of love between parents and children.”

The results are in this morning and the prediction was wrong this time!  Last Friday’s historical volatility close was 0.1444, DOWN from 0.214090  the Friday before that.  For the last two predictions the model made, I had one correct and one wrong.

For this week’s prediction, you have to read my S&P500 Option Volatility tweet (you can follow me on Twitter here), I will continue to keep score on Monday mornings to see if this model truly is 60% accurate for predicting the direction of volatility.

These are my links for July 25th:

• NASWA WWW Shortwave Listening Guide -

These are my links for July 24th:

• Oh glory be! 8 stones in one month! - Go Discussions - Following the advice of the good people here, I shifted from a few long, leisurely face-to-face games a week, to banging out fast games on KGS. And I shifted from slowly doing a few hard go problems, to running through easy ones until they became natural.

These are my links for July 21st through July 22nd:

• YouTube - This Week in Public Comment - OMG!
• The Great American Bubble Machine : Rolling Stone - Goldman Sachs is SATAN!

These are my links for July 20th:

• Nassim Taleb: clown of quantitative finance « Locklin on science - As such, Taleb is merely setting himself up as some sort of heretical alpha monkey of the quants for stating the obvious, the misleading, and occasionally the gratuitously wrong-headed and untrue. - LOL HERETICAL ALPHA MONKEY OF THE QUANTS
• TheHill.com - IG: Treasury 'failed' to adopt bailout safeguards - Barofsky said that while the TARP program that Congress passed amounts to $700 billion, the total federal government support since 2007 for the economy and the financial sector could reach a far higher figure of $23.7 trillion. The government has committed significantly more money through a variety of other federal agencies and programs. 24 TRILLION DOLLARS??????

This week's data visualization post is actually a very well made video about the Credit Crisis by Jonathan Jarvis. I learned a few things from this video myself and its a fantastic way to see how we got into this mess, and who was ultimately responsible for setting this shit ball rolling (GREENSPAN).

These are my links for July 19th through July 20th:

• Stocks, Oil Rise on Optimism Earnings Show Slump Is Bottoming - Bloomberg.com - “Corporate profits are beating expectations by their widest margins in a year, pushing most equity markets within a whisker of new year-to-date highs and the dollar toward its 2009 lows,” John Normand, head of global currency strategy at JPMorgan Chase & Co. in London, wrote in a research note. - PUMPED UP WITH STIMULUS MONEY
• Stocks, Oil Rise on Optimism Earnings Show Slump Is Bottoming - Bloomberg.com - “Corporate profits are beating expectations by their widest margins in a year, pushing most equity markets within a whisker of new year-to-date highs and the dollar toward its 2009 lows,” John Normand, head of global currency strategy at JPMorgan Chase & Co. in London, wrote in a research note. - PUMPED UP WITH STIMULUS MONEY
• Who coined"Chillax?" - I found this funny.
• Frank McCourt, Author of ‘Angela’s Ashes,’ Dies at 78 - Obituary (Obit) - NYTimes.com - I’d say to myself, ‘Well, someday you’ll think it’s funny.’ And the other part of my head will say: ‘No, you won’t — you’ll never think this is funny. This is the most miserable experience you’ve ever had.’ But later on you look back and you say, ‘That was funny, that was absurd.’ ”

Everyone is so hoping that the market is bottoming because they all want to recoup their losses from last year, especially us 401k holders.  For some strange reason, corporate profits appear to be beating expectations and everyone is hoping (wishing) that the market has bottomed and turned the corner.

“Corporate profits are beating expectations by their widest margins in a year, pushing most equity markets within a whisker of new year-to-date highs and the dollar toward its 2009 lows,” John Normand, head of global currency strategy at JPMorgan Chase & Co. in London, wrote in a research note. [via Bloomberg]

What everyone forgets is that these corporate earnings, especially if you are a bank, are based on the backs of the American taxpayer and bailouts. Sure some corporate earnings are legitimate but most of these earnings defy common sense and logic.  That's why the US Dollar is heading lower, we're going to destroy our greenback at the expense of trying to stabilize the markets with phony earnings.

Call me an old cranky fart but we'll be in for one more decent run in the S&P500 before it takes another big dump.  Things are lining up for a classic short squeeze where we'll see the S&P500 run up between the 1131 and 1210 levels. This time I'll be dumping before that and rotating some of my recent 401k profits into cash, waiting for the capitulation in the markets (which hasn't happened BTW) to go on a buying spree.

As I wrote in my last S&P500 Option Volatility Report, I predicted that volatility in S&P500 options would close higher on this past Friday than the Friday before that.  The results are in this morning and sure enough the prediction was correct!  Last Friday's historical volatility close was 0.214090, UP from 0.213821 the Friday before that. 

For this week's prediction, you have to read my S&P500 Option Volatility tweet (you can follow me on Twitter here), I will be keeping score on Monday mornings to see if this model truly is 60% accurate for predicting the direction of volatility.

These are my links for July 18th:

• Northern Gray Treefrog - Northern Gray Treefrog (Hyla versicolor) and Southern (Cope’s) Gray Treefrog (Hyla chrysoscelis) Southern Gray Treefrog is a State Endangered Species
• Northern Gray Treefrog - Northern Gray Treefrog (Hyla versicolor) and Southern (Cope’s) Gray Treefrog (Hyla chrysoscelis) Southern Gray Treefrog is a State Endangered Species
• Hyla chrysoscelis - Wikipedia, the free encyclopedia - We found this little guy on our deck after the wicked overnight wind/rain storm

These are my links for July 17th through July 18th:

• Chinese Question Police Absence in Ethnic Riots - NYTimes.com - The bloodletting here on July 5, in which ethnic Uighurs pummeled and stabbed ethnic Han to death, was just the latest episode in a nationwide upswing in large-scale street violence that had already prompted concerned officials in Beijing to look for new ways to defuse such outbursts. In all of the recent cases, not only were officials and security forces unable to contain the violence, but average people clashed with the police en masse — a sign of the profound distrust of local authority throughout much of China.
• Atheist Melon | Unreasonable Faith - If the roles were reversed. Brilliant.
• AAR Railroad Reporting Marks - An AAR (Association of American Railroads) reporting mark is two to four letters that uniquely identifies the owner of a piece of railroad rolling stock. The reporting mark is generally derived from the assigned company's initials. All cars in interchange service must be labeled with a reporting mark.
• AAR Railroad Reporting Marks - An AAR (Association of American Railroads) reporting mark is two to four letters that uniquely identifies the owner of a piece of railroad rolling stock. The reporting mark is generally derived from the assigned company's initials. All cars in interchange service must be labeled with a reporting mark.
• Investors.com - It's Not An Option - It took just 16 pages of reading to find this naked attempt by the political powers to increase their reach. It's scary to think how many more breaches of liberty we'll come across in the final 1,002.

These are my links for July 17th:

• Sudden Debt: A Plan For Debt Relief - Debt relief must happen within the context of comprehensive transformation of the economy. It would make no sense whatsoever to provide debt relief, only to see borrowing come roaring back.

I was, and still am, against any governmental stimulus plan.  The plain and simple answer as to why is because they don't work and usually create noise in the economy.  The only way things will get better is when the mal-investment is worked out of the system and assets flow from the weak hands to strong hands. 

Now with talks of another stimulus plan floating around, on the heels of this year's $787 Billion stimulation, I can't help but wonder if we would make the same mistake twice?

The stimulus plan passed in February “is executing pretty much as expected,” yet it “won’t affect the economy’s primary problems, which are falling values of assets like homes and stocks,” said Doug Holtz-Eakin, who was director of the Congressional Budget Office from 2003 to 2006 and is now president at DHE Consulting LLC in Washington. [via Bloomberg]

Executing pretty much as expected? Wait, and it won't affect the economy's primary problems?  Why the hell should we dream of stimulating a second time? 

Want to know how to really help the situation and truly firm up the economy FAST.  Have the government bailout all middle to lower class residential property owners by forgiving their second mortgages.  A large chunk of foreclosures will go away immediately, people will have debt relief and the ability to spend again, and all those subprime portfolios will start to perform again.

My friend at Paper Economy is testing out his new data visualization engine and he pulled together a scary chart of Year over Year house prices in Phoenix, Arizona. Can you believe it? We are below 2000 prices?

This is truly a frightening chart and I suspect that real estate prices could go even lower in Arizona, and the rest of the country for that matter, if people continue to get laid off.  This would confirm my observation from earlier this year about real estate and equity prices having further to fall.

These are my links for July 15th through July 16th:

• Xavier Llorà » Blog Archive » Large Scale Data Mining using Genetics-Based Machine Learning - We are living in the peta-byte era.We have larger and larger data to analyze, process and transform into useful answers for the domain experts. Robust data mining tools, able to cope with petascale volumes and/or high dimensionality producing human-understandable solutions are key on several domain areas. Genetics-based machine learning (GBML) techniques are perfect candidates for this task, among others, due to the recent advances in representations, learning paradigms, and theoretical modeling.
• Edward O. Thorp - His hedge funds and his personal portfolio have been profitable in 42 of the subsequent 43 years. Based on his work, he and Jay Regan launched the first market neutral hedge fund in 1969. Dr. Thorp, with Claude Shannon, also invented the first wearable computer in 1961 to win at roulette. He has also written Elementary Probability (1966), The Mathematics of Gambling (1984) and numerous mathematical papers on probability, game theory, and functional analysis.
• Paper Economy - A US Real Estate Bubble Blog: Burning Like a Phoenix: Crash and Burn for Phoenix Area Residential Home Prices - When a boom goes bust many participants would be happy to simply snap back to the life as it was in the pre-boom era but that’s just wishful thinking… the reality is, it will be many years of cleaning up the aftermath during which time prices will likely overshoot the mean and drop lower than anyone expects.
• First half foreclosures break records - Jul. 16, 2009 - "What this means is, despite the intensity of the efforts on the part of government and lenders we don't have a handle on foreclosures yet," said Rick Sharga, a spokesman for RealtyTrac. - WHAT THIS MEANS IS THAT GOV'T INTERVENTION DOESN'T WORK.
• Verleger Predicts $20 Oil This Year on ‘Devastating’ Crude Glut - Bloomberg.com - “Prices would be much lower today, but for the very large incentive to build inventories,” Verleger said. “You need forward buyers, which we had when people were fearing inflation, but as concerns turn toward deflation” that will no longer be the case. - MAYBE
• At a Factory, the Spark for China’s Violence - NYTimes.com - During a four-hour melee in a walkway between factory dormitories, Han and Uighur workers bludgeoned one another with fire extinguishers, paving stones and lengths of steel shorn from bed frames. - IT'S US VS THEM MENTALITY.
• Yoga Retreats With Chores Attract the Weary and Unemployed - NYTimes.com - Now he spends his days on the Himalayan Institute’s 400-acre wooded campus, practicing hatha yoga and meditation, studying spiritual texts, biking, walking and preparing meals in the institute’s kitchen. In exchange for his cooking duties and an annual fee of $3,000, he gets a private room, three vegetarian meals a day and unlimited access to the institute’s classes, seminars and other events. - ONE DAY I WILL START A NEURAL NET OR ENGINEERING RETREAT AND CHARGE MONEY FOR SPIRITUAL AWAKENING
• At a Factory, the Spark for China’s Violence - NYTimes.com - During a four-hour melee in a walkway between factory dormitories, Han and Uighur workers bludgeoned one another with fire extinguishers, paving stones and lengths of steel shorn from bed frames. - IT'S US VS THEM MENTALITY.
• Yoga Retreats With Chores Attract the Weary and Unemployed - NYTimes.com - Now he spends his days on the Himalayan Institute’s 400-acre wooded campus, practicing hatha yoga and meditation, studying spiritual texts, biking, walking and preparing meals in the institute’s kitchen. In exchange for his cooking duties and an annual fee of $3,000, he gets a private room, three vegetarian meals a day and unlimited access to the institute’s classes, seminars and other events. - ONE DAY I WILL START A NEURAL NET OR ENGINEERING RETREAT AND CHARGE MONEY FOR SPIRITUAL AWAKENING
• Economy in China Regains Robust Pace of Growth - NYTimes.com - The robust growth in China’s economy came as the United States and several other leading economies remain mired in recession, hobbled by the aftereffects of bad lending, weak real estate markets, and the uneven results of economic stimulus packages. - NOTE, THEY ARE USING AGGRESSIVE BANK LENDING
• Rail Funds Give Chicago Hub a Lift - WSJ.com - Rail congestion in Chicago is so bad that some freight is taken off trains at one side of the city, driven across town on trucks and placed back on another train. Paul Nowicki, assistant vice president at Burlington Northern Santa Fe Corp., said that is particularly true for perishable goods transiting Chicago via Western states.

I know that this is late but I just dusted off my S&P500 option volatility prediction model.  For this week only, I will be posting my S&P500 volatility predictions on my blog, after that I will be posting the predictions on Monday mornings via my Twitter account. 

You can follow me on Twitter here. 

FYI, this model is correct roughly 60% for the direction of volatility only, its no good for actual magnitude. 

Some strategies to use in cases where the index option volatility is predicted to increase would either be a long straddle or long strangle.  In cases where the volatility is predicted to decrease you'd consider using a short straddle or short strangle instead.  60% odds are very good and with good money management you have a great edge!

Here is the prediction: For the week ending 7/17/09, a historical volatility (HV) predicted close for the S&P500 is 0.2736, UP from last week's close of 0.2183. Remember, the direction is what counts in this model (UP or DOWN), not the actual HV number.

These are my links for July 14th through July 15th:

• Property Values - What You Get for ... $89,000 - NYTimes.com - Move to Springfield Mass.
• China’s Foreign-Exchange Reserves Surge, Exceeding $2 Trillion - Bloomberg.com - “Hot money is flowing back,” said Sherman Chan, an economist with Moody’s Economy.com in Sydney. “China has the strongest prospects out of all major economies.” - A LOT OF IDLE MONEY LOOKING FOR A HOME. TREAD CAREFULLY.
• Property Values - What You Get for ... $89,000 - NYTimes.com - Move to Springfield Mass.
• China’s Foreign-Exchange Reserves Surge, Exceeding $2 Trillion - Bloomberg.com - “Hot money is flowing back,” said Sherman Chan, an economist with Moody’s Economy.com in Sydney. “China has the strongest prospects out of all major economies.” - A LOT OF IDLE MONEY LOOKING FOR A HOME. TREAD CAREFULLY.
• Mobius Says Derivatives, Stimulus to Spark New Crisis (Update1) - Bloomberg.com - A “very bad” crisis may emerge within five to seven years as stimulus money adds to financial volatility, Mobius said. Governments have pledged about $2 trillion in stimulus spending.
• Germans flock to gold bars vending machine at Frankfurt airport - Online gold dealers — who offer a discreet armoured-car delivery for large purchases — are reporting boom times. The World Gold Council said that individual purchases started to rise dramatically in the last quarter of 2008 and have broken all records in the first quarter of this year.

I agree with fund manager Mobius that derivatives are a bad thing but banks love them because they make a lot of money from them.  The problem I see is that all the recent acqusitions of failing derivative portfolios (Bear Stearns, Lehman Bros) by other firms, such as JP Morgan, allows fewer and fewer firms to have more and more derivatives.  All you need now is one large financial institution to go down and you'll drag the entire system down.

Here's what Mobius has to say about derivatives:

“Banks make so much money with these things that they don’t want transparency because the spreads are so generous when there’s no transparency,” he said.

Remember, too big to fail is very dangerous because large complex systems have to fight really hard to remain organized in the face of some large negative events.  In Nature, the more complex and organism is, the quicker it can destabilize.

Regarding the stimulus money.  First off I love the stimulus money because my engineering industry is benefiting greatly from it and its preventing a lot of my friends from being laid off.  However, the long term danger I see is that we're either going to create another inflation boom or spend ourselves broke, maybe both.

Here's what Mobius as to say about being stimulated:

A “very bad” crisis may emerge within five to seven years as stimulus money adds to financial volatility, Mobius said. Governments have pledged about $2 trillion in stimulus spending.[via Bloomberg]

Most likely he's right but I'm not too sure about the timing of it.  I guess we'll have to wait and see.

I wanted to take a moment and say thanks to Tibor, one of my 12 readers, for forwarding me some really interesting research papers on modeling NFL and NBA games with neural nets. There are some really good nuggets of information in those papers, especially the discussion on setting the right momentum and learning rates.

I used that information to fiddle around with my neural net model and I'm posting some recent results from my DRAFT NFL neural net point spread model.  As you can see, the model is pretty good at determining if the home or visiting team will win (a negative sign means the home team wins) but the predicted spreads are way off relative to actual spreads.

This leads me back to developing some sort of ranking system to feed the model, which I wrote about in my "Thoughts on Ranking Football Teams" post.  The good news is that the research papers that Tibor sent me allude to a type of football match system where the model learns the results of previous games and then applies its statistical analysis to new match ups.  Despite this good nugget of information, I feel that I have a long way to go to get something solid before the season starts.

In the interest of science, and because I love my 12 readers, I'm uploading my EasyNN Plus data file for this particular model.  However, you'll have to have the full version of EasyNN Plus to use this file because the model uses 980+ example rows and the test version only allows you 100 rows.  If you follow the link above and buy EasyNN Plus from there, I will get a small commission from Steve.

These are my links for July 13th through July 14th:

• Bus rapid transit - Wikipedia, the free encyclopedia - Bus rapid transit (BRT) is a term applied to a variety of public transportation systems that use buses to provide a service that is of a higher speed than an ordinary bus line. Often this is achieved by making improvements to existing infrastructure, vehicles and scheduling. The goal of these systems is to approach the service quality of rail transit while still enjoying the cost savings of bus transit. The expression BRT is mainly used in North America; in Europe and Australia, it is often called a busway, while elsewhere, it may be called a quality bus.
• Comments Dead, Twitter Holds Smoking Gun - At the recent Real-Time CrunchUp 2009, Khris Loux, CEO of one of the web's largest commenting services, announced the "death of the comment". This declaration was extremely significant as Loux's JS-Kit is currently installed on over 600,000 sites. He blames the death on social media sites like Twitter and Flickr and the rise of "parallel channels away from [the] product". In essence, dialogue has moved from a singular destination to a series of parallel but separate social networking channels. - I DON'T KNOW ABOUT THAT, TWITTER IS A LOVE/HATE THING.
• Approval by a Blogger May Please a Sponsor - NYTimes.com - When Ford Motor flew her to Detroit this year for a test drive of the Fusion hybrid, she says, she expressed her true assessment on her blog, saying that she thought the vehicle would work for a family with teenagers, but would not fit the needs of her three children and a dog. “I still wrote my honest opinion,” said Mrs. Presnal, who did not receive a fee from Ford, but had her travel expenses paid. “If you don’t, in the long it’s going hurt your credibility.”
• Chinese Steel Inquiry Broadens Beyond Rio Tinto - NYTimes.com - It now includes accusations of widespread bribery in business dealings, as well as allegations that the four workers paid for detailed government trade and manufacturing data to give Rio Tinto executives an edge in iron ore negotiations with Chinese state-controlled steelmakers. - WAIT, BRIBERY IS NORMAL BUSINESS PRACTICE THERE!
• China Seeks Dominance in Clean Energy - NYTimes.com - China has built the world’s largest solar panel manufacturing industry by exporting over 95 percent of its output to the United States and Europe. But when China authorized its first solar power plant this spring, it required that at least 80 percent of the equipment be made in China. When the Chinese government took bids this spring for 25 large contracts to supply wind turbines, every contract was won by one of seven domestic companies. All six multinationals that submitted bids were disqualified on various technical grounds, like not providing sufficiently detailed data. This spring, the Chinese government banned virtually any installation of wind turbines with a capacity of less than 1,000 kilowatts — excluding 850-kilowatt designs, a popular size for European manufacturers. - HAHA, TYPICAL TACTICS BY CHINA, REMEMBER WE FEED THEM OUR MONEY FOR CRAPPY PRODUCTS, LET'S STOP THAT AND BUILD IN THE USA!
• China Risks Apple’s Reputation by Letting Factories Flout Law - Bloomberg.com - Apple Inc., which relies on Chinese manufacturers for its iPhones and iPod music players, found 45 of the 83 factories it audited last year didn’t pay proper overtime and 23 provided less than minimum wage, according to its 2009 progress report on supplier responsibility. The Cupertino, California-based company required them to adjust practices to ensure correct payments, it said in the report.
• Neural Network Prediction of NFL Football Games - Neural Network Prediction of NFL Football Games - Here's how he did it. Got a high accuracy rate but nothing on point spreads

I think I'm going to start a new weekly data visualization feature on Neural Market Trends, starting with the OECD.  I love web sites that take complex, and sometimes boring data, and displays them in a visually pleasing way. This week's data visualization feature is the OECD Factbook eXplorer which is maintained by the Organization for Economic Co-operation and Development.

The OECD is an organization that compiles all kinds of data for many countries and then allows you to display that onto a flash based map. You can easily find data about fertility, employment, and inflation rates for different countries, all with the click of a mouse, and display them on a colorized map. You can zoom in and out, drag the map around, and add more information from pull down menus.

The eXplorer also has a scatter plot, a timeline, a data dashboard, and you have the option to see your data visually and in table form simultaneously.  What's even better is that you can also create data queries and download them into Excel spreadsheets or CSV.

Below are three screenshots of different displayed data visulaizations I created in seconds flat:

Fertility Rates per Country

Electricity Generation per Country

Labour Rates for Europe

As you can see, the OECD website is rich on data visualization and is very useful for researchers, bloggers, and students!  Take some time and poke around in there, you'll be amazed at what you find!

These are my links for July 12th through July 13th:

• Twitter is not for teens, Morgan Stanley told by 15-year-old expert | Business | guardian.co.uk - "Teenagers do not use Twitter," he wrote. "Most have signed up to the service, but then just leave it as they realise that they are not going to update it (mostly because texting Twitter uses up credit, and they would rather text friends with that credit). They realise that no one is viewing their profile, so their tweets are pointless."
• Blytic - My buddies new data website. Looks pretty neat.
• OECD Factbook eXplorer for analysing country statistics - Oh this is sweet! Love the data visualization!
• Bernanke May Explain Fed Exit Strategy in Testimony Next Week - Bloomberg.com - The Fed pumped $1 trillion into the banking system over the past year through bond purchases and emergency loans, doubling assets on its balance sheet. Reassuring investors that inflation won’t exceed forecasts once the recession ends will give the Fed more credibility, said Dean Maki, chief U.S. economist at Barclays Capital Inc. While policy makers have spoken about specific tools they may use, they haven’t laid out a strategy. - YOU BETTER START TALKING BENNIE!
• Bernanke May Explain Fed Exit Strategy in Testimony Next Week - Bloomberg.com - The Fed pumped $1 trillion into the banking system over the past year through bond purchases and emergency loans, doubling assets on its balance sheet. Reassuring investors that inflation won’t exceed forecasts once the recession ends will give the Fed more credibility, said Dean Maki, chief U.S. economist at Barclays Capital Inc. While policy makers have spoken about specific tools they may use, they haven’t laid out a strategy. - YOU BETTER START TALKING BENNIE!
• Emerging Markets Priciest Since 2007 When Shares Fell (Update2) - Bloomberg.com - The MSCI gauge trades at 15.4 times reported earnings, compared with 14 for the Standard & Poor’s 500 Index, according to weekly data compiled by Bloomberg. When developing nations last commanded a premium, the 22-country benchmark sank 54 percent in the next year.

I've made some serious headway last week in analyzing NFL football data to model game point spreads.  I was able to determine with great accuracy (84%), using backfitting, what team would win a matchup. I did this by building a backpropogation model from 2007-2008 data with about 20 matchups as the prediction set.  The only bad thing I discovered was that the point spread prediction was way off.

As I wrote before, backfitting is NOT the way to go for building this type of  model and the fact that the magnitude of the actual point spread was off bore that out.  You might be asking yourself right about now, "if this is not the way to go, why did Tom do this?" 

I did this because I'm still in my data discovery phase looking for relationships and tinkering around.  Now that I understand various data relationships and can detemine the winners relatively well, the next step, and perhaps the hardest now, is determining the ranking system.  I suspect that the ranking system will help get the game spreads closer to what they should be for future games.  If all goes well I should be making spread calls on this blog for the next season as a way to determine if my model is worth a sh*t.

Call me an old cranky fart but I'm not buying the recent drop off in $VIX as a return to the happy days of market madness, its just too manipulated for me. 

Ben and the Fed have dumped trillions of dollars into the markets and that's bound to smooth things over for a while, but ask yourself this: is it sustainable? With unemployment rising and the markets seemingly to have hit a brick wall lately, the answer is NO! 

These are my links for June 26th through July 9th:

• For Firstborns, Secondhand Fits the Bill - THIS new frugality is celebrated by anti-consumerism groups, dreaded by retailers, and mused over by social scientists who say we might be on the cusp of raising a new generation of depression-era babies. Not only are children named after their grandparents these days, but all those Rubys, Sadies and Harrys at the playgrounds may end up thinking like them as well.
• For Firstborns, Secondhand Fits the Bill - THIS new frugality is celebrated by anti-consumerism groups, dreaded by retailers, and mused over by social scientists who say we might be on the cusp of raising a new generation of depression-era babies. Not only are children named after their grandparents these days, but all those Rubys, Sadies and Harrys at the playgrounds may end up thinking like them as well.
• WNYC - The Leonard Lopate Show: Back to Basics (July 08, 2009) - Awesome. Got to pick this up.
• Historical Database: Spreads/Totals - Sports Handicapping, Betting & Picks - SBR Forum -
• NCAA Basketball Tournament Bracket and Results - databaseSports.com - Here we go, what I'm looking for.
• Football Results, Statistics & Soccer Betting Odds Data - soccer statistics
• The Man Who Shook Up Vegas - WSJ.com - But what separates Mr. Stoll from these professionals and makes him so frightening to bookmakers is that he's not hoarding his information -- he's distributing it to the public. In fact, anyone who wants Mr. Stoll's advice can visit his Web site, drbobsports.com, and buy a subscription package for anywhere from $25 to $2,495. All that pandemonium on Thursdays in Las Vegas was no coincidence: That's the day Mr. Stoll sends an email to his subscribers telling them which college football teams to bet on the following weekend.
• 7 lbs Pizza With 4.5 Inches of Topping | SadAndUseless.com - This is the most disgusting thing, food wise, I've ever seen!
• Op-Ed Columnist - The Best Kids’ Books Ever - NYTimes.com - A mountain of research points to a central lesson: Pry your kids away from the keyboard and the television this summer, and get them reading.
• Technology Review: New Drug Kills Cancer with Few Side Effects - The drug, called olaparib, is the first success story from a new and highly personalized approach to anticancer drug development. This strategy harnesses a concept known as synthetic lethality, in which a drug is designed to work in tandem with the molecular glitch underlying a specific kind of cancer.
• Kodachrome Fades to Black - WSJ.com - Digital technology has transformed picture-making and much else about contemporary life. The pace of change shows no signs of slowing down. But photography, by preserving figments of the present for the future, is innately elegiac.
• Seneca the Younger - Wikipedia, the free encyclopedia - The older I get the more classics, history, and biographies I read.
• Florida High Speed Rail - The Florida High Speed Rail Authority website.
• California High-Speed Rail - The California High Speed Rail main website
• Manhood for Amateurs: The Wilderness of Childhood - The New York Review of Books - People read stories of adventure—and write them—because they have themselves been adventurers. Childhood is, or has been, or ought to be, the great original adventure, a tale of privation, courage, constant vigilance, danger, and sometimes calamity. - AMEN! Kids needs to be outside exploring their world, its wonderful out there Hobbes!
• L.A. Firm Wins Design Contract for $2B Underground High-Speed Rail Terminus in Hong Kong - Real Estate Channel Global News Center - Hong Kong-based Mass Transit Railway Corp. Ltd. has selected AECOM Technology Corp. (NYSE: ACM) of Los Angeles, CA and its joint venture partner to design the project. The design contract is for $82 million. AECOM's revenue from this project is expected to be about US $38 million, the company says in a prepared statement. The multi-level terminus will have a footprint of more than 25 acres with a topside commercial development north of the proposed West Kowloon Cultural District - between the existing Airport Railway Kowloon Station and the West Rail Austin Station. - THIS IS GOING TO ROCK!

In the early part of this year, I had a discussion with a coin dealer who was selling American Eagle Gold Proof coins. He quoted me a price with a large "over the spot" spread fee. I asked him why and he said that the US mint had suspended making them and are no longer in stock.

Production of United States Mint American Eagle Gold Proof and Uncirculated Coins has been temporarily suspended because of unprecedented demand for American Eagle Gold Bullion Coins. [via US Mint]

Just the other week I had a chance to talk with the same coin dealer again and he said that the spreads have come down and people are buying as much gold as they can get their hands on. I wonder what all this means? ;)

I've come across some very interesting, albeit very initial, relationships in NFL data. The actual point spread between teams seem to have a strong relationship with the defense's pass interception ability, the attempted rushing by the defense, and sack yards by the defense.

Way more interesting stuff that I'm not listing at the moment.