That assumes, of course, that the macroeconomic issues are the only major ones.
And remember what the Saudis did in the mid 70s -- they (who tie everything together in a sense) can open the floodgates in late October and make the final decision.
Fair-Parke is still predicting a G.W.Bush win in November. A historical ~90% accuracy rate is not be to ignored lightly.
Going into this election, the main caveat is that the underlying macroeconomic model has systematically underpredicted the magnitude of the changes in the U.S. Fed discount rate.
I tried -5.25% real GDP growth in Q1-3 of 2004, 2.5% inflation, and 0 quarters of growth greater than 3.2% and still got a dead heat (Republicans getting 50% of the vote). I don't think that growth has been that bad for 3 quarters since before the 1973-4 recession (maybe going all the way back to 1938, but I don't have older numbers handy). Somehow I suspect that this equation overweights inflation relative to growth because of lack of data during periods of very low growth.
Agreed -- predicting what the price of oil will be this November hinges mainly on understanding which way the Saudis will jump (since they are the only OPEC producer with the capacity to increase output or the political will to reduce it). The futures markets are in the same sort of difficult position as those betting on future US short term interest rates. A small group of people make the decision rather than a market, so it's all about understanding their likely incentives and behavior (ok -- Alan Greenspan tries harder to be predictable than Ali Al-Naimi).
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timeasmymeasure
no subject
Date: 2004-07-15 02:55 pm (UTC)And remember what the Saudis did in the mid 70s -- they (who tie everything together in a sense) can open the floodgates in late October and make the final decision.
===|==============/ Level Head
no subject
Date: 2004-07-15 03:36 pm (UTC)Going into this election, the main caveat is that the underlying macroeconomic model has systematically underpredicted the magnitude of the changes in the U.S. Fed discount rate.
[Saudis]
Yes.
no subject
Date: 2004-07-15 03:50 pm (UTC)===|==============/ Level Head
It gets worse at the boundries
Date: 2004-07-15 05:08 pm (UTC)yep -- cartels do make predictions much harder
Date: 2004-07-15 05:47 pm (UTC)