Thursday, 18 May 2017

No adjustment to models and April CPI inflation comes in very close to my forecasts.

April 2017 USA CPI inflation has come in very close to my forecasts, made on this blog during early April.

No adjustment to models and April CPI inflation announcement on 12 May 2017 comes in at 2.2%, very close to my forecasts made more than a month ago:

The models I have followed most closely are geometric gasoline and geometric oil with 2 month moving average data being used for the latter. These models forecast 2.28% and 2.33% for April CPI, even without any adjustment in the models to take into account March's figures.

So what we appear to have is slowly falling inflation because of the slowing in year over year increases min oil and therefore gasoline prices. Sub 2% inflation probably beckons (according to the BLS figures anyway) for later in the year, as shown in the above link.

Thursday, 27 April 2017

Gold holding on to $1264 by its fingernails.

Gold is struggling to hold on to $1264 right now and struggling to avoid breaking below the black line on the chart below. It's holding on for dear life as I write at $1264.30/1265.30 Bid/Ask. If it doesn't, the $1150-1260 range is again in play (gold triangle). I referred to this area as no man's land. Note also the large amount of trading along the black line in 2017, an attempt by the bulls to regain control.

The decision point may be when the black line and green line meet (horizontal support/resistance meets the black line at $1264):

Friday, 14 April 2017

Gold jumps over $1250 and $1264 resistances to land around $1280

Gold jumped over $1250 and $1264 resistances to land around $1280, back in the black pitchfork and therefore back into the initial uptrend channel of the potential new bull market:

$1145 target still in play despite bullish move in gold.

In my previous gold analysis, I proposed bullish and bearish targets:

Bearish potential target: $1145 at bottom line of blue pitchfork.
Bullish potential target: $1250 to resistance at bottom line of black pitchfork.

After hitting resistance at $1250 it looked possible that gold would resume its way down towards $1145. However gold has now popped above $250 and also above the $1264 resistance shown on the second chart to land near $1280, inside the black fork (3rd chart).

CPI inflation forecasts for March and April 2017

Here are my inflation model forecasts for March and April USA CPI:
The weakest model is Oil9. The others are quite consistent, using current oil and gasoline price action combined with EIA forecasts for oil and gasoline:

Month Oil8 OIl9 Oil10 Gasol11 Gasol12 CPI BLS actual
Feb'17 2.80 2.75 2.76 2.78 2.81 2.7
Mar'17 2.62 2.29 2.90 2.46 2.51 TBA
Apr'17 2.28 2.12 2.40 2.33 2.38 TBA

March CPI is to be announced any minute now.

US CPI Inflation forecasts for Mar and April 2017. Recorded 13 Apr 2017. These geometric and polynomial forecasts give lower inflation figures than purely linear (striaght line formula forecasts and match Feb's inflaiton well (2.7-2.8% against actual published 2.7%). They indicate figures of 2.5-2.9% for March and 2.3-2.4% for April, except for one outlier.
Linear forecasts for Feb and Mar were around 3.1-3.2 and 3.3-3.5 approx). I have modeified the models therefore to geometric models especially in the light of the bureau of Labor Statistics' US  Consumer Price Index inflation figures using geometric weightings for almost all of its components.

Video here explaining models with charts:


Thursday, 23 March 2017

My first geometric oil models for forecasting US CPI in 2017.

I have a new geometric oil model (well, 3 variants, models 8, 9 & 10) that have come up with slightly lower inflation figures than I had forecast before. I was looking into the possible uncertainties in the regression line analysis that undelies the models and there is some, due to the scatter in the data. Anyway, the best estimates are now shown on the following chart until July 2017:

This incorporates oil price data to February 2017 and also EIA forecast prices for the months up until July 2017.

I am now looking at models based on retail and wholesale gasoline prices (including current price action and EIA forecasts)

Also, the two videos are here (that were recorded in advance of the CPI report on 15 March):

Inflation Forecasting and Energy Prices Introduction to Concepts


CPI inflation forecast models for USA February and March 2017.

Saturday, 18 March 2017

Videos on inflation modelling February-March 2017.

I have made two YouTube videos, one on the relationship between energy prices, oil prices and inflation as measured by the Consumer Price Index (CPI) published in the USA and a second one that made forecasts for Feb 2017 and Mar 2017 CPI inflation figures using oil price data alone.

The estimate for Feb 2017 turned out to be a little high at 3.06% versus the 2.7% quoted by the Bureau of Labor Statistics. I still feel that the energy price change which is fuelled by a +100% move in oil year over year from the Feb 2016 low to the Feb 2017 high has not been fully factored in (the oil price change is +75% of you use monthly average prices). I am now developing a new gasoline based model that looks promising as an alternative to the oil price based model.

The two videos are here:

Inflation Forecasting and Energy Prices Introduction to Concepts


CPI inflation forecast models for USA February and March 2017.