Markets this week

A much quieter week, without a G20 summit or anything else to create havoc.

No major bank collapsed or anything, it is almost as if everything has calmed down.

Anyway, here's the week-on-week changes:

FTSE: down 45.96 (1.14%)

DOW: up 65.79 (0.82%)

£: down $0.0181 (1.22%)

£: up €0.0126 (1.15%)

Oil: up $0.59, £0.85 or €1.40 (let this highlight the difference between commodity and currency fluctuation).

Gold: down $25, £9.52, €2.92 (so the dollar moved dramatically as measured in gold or €, whilst the €price hardly changed.

A final thought - there is a good reason why news reports mention the percentage rise, as well as the points rise of financial markets. Here is a display of the FTSE and the DOW (revalued into a common currency, in this case £ sterling). It shows their performace since the beginning of December 2008, re-indexed so that their recent peaks at the beginning of the year appear as 100. Again, as always on this blog, data is recorded weekly, not minutely or daily.

I feel that this shows how similar the performance of the two markets have been, in performance, when measured in a common currency. Since early March, both have recovered most of the losses experienced in February.

Irish cancel Christmas

The Irish budget was annoucned yesterday, and as usual for Irish budgets, it got little coverage in the British news. Compared, say, to a UK budget. This is entirely reasonable.

It is generally very contractionary, which makes sense only if Ireland believes itself to be near bankruptcy. One feature I found less than friendly was in the social welfare expenditure section. A €171m saving is being made by:

Removal of provision for a Christmas bonus payment in 2009.

Which, to me, amounts to cancelling Christmas.

Circuit guide/bad joke

ITV-F1 have a video guide to the Shanghai circuit (shaped like a Shang character in the Chinese alphabet, apparently). It involves a blindfolded Nico Rosberg decribing it, whilst tracing (or attempting to trace) the circuit. All well and good but not very interesting. The only reason I mention it is, in case of Nico off-roading, I want to pre-empt anyone making the joke: you're meant to follow the actual track, not the one you drew blindfolded.

Half a US Great Depression, every bit a world one

The first half of the title comes from Paul Krugman, in his comparison of this recession against the Great Depression, finding it half as bad (how big does something have to be to acquire capital letters?). It should be noted that the peak date presaged a long slow decline, which is important for comparing the implications with those below).

The second half of the title comes from this report, hat tip to the Economist's Free Exchange blog.
In summary, for the world as a whole, industrial output is falling in just the same way that it did in 1929-30, the stockmarkets are falling FASTER as is the volume of world trade (albeit from a higher base, but without the help of protectionism). They also assess the policy responses of leading economies and find that central banks were equally slow (6 months after peak industrial production) to cut rates, but that they have cut them further, despite starting from a lower base (this uses the Fed, Bank of England, ECB and the central banks of Japan, Sweden and Poland, and although it doesn't explicitly say it, I must assume Germany and France for the earlier response details - it says 7 countries). It predicts that policymakers won't repeat the 1931-2 error of hiking rates to maintain gold parity (or these days, dollar parity). It shows also that the money supply (this time across 19 countries, I assume this disparity is due to data availability) had risen far faster over the period 2004-08 than in 1925-1929. They believe that the money supply has continued to rise (despite quantitative easing, this is not automatic, since most money is created through lending, not printing) which it didn't in 1929 (before catastrophically collapsing in 1931). Finally, they show that fiscal stimuli offered by governments have been much greater than they were.

Basically, they summarise that the situation is FAR worse than 1929-31, but that our collective response has been much better, so things might end up worse, or not quite as bad as the 1930s.

My view: we're doomed (but then I'm not very good at prediction).

Updated baseline scenario

Tired of partial explanations of what's gone wrong and what is being done to fix it?

Baseline Scenario have updated their description of the "baseline scenario" that forms the basis of their analysis of what is occuring.

Key points: Situation a little worse than they suspected it to be last time, Obama policies well-meaning, internally consistent but misguided, and that the US situation is more significant than any other.

This would be perfect, to me, except for the last point (see next post).

Rubens complains about tyres

Auto Motor und Sport quotes Rubens as saying that he asked for the intermediate tyres when the rain came down, but was given wets, and that a couple of laps later he was again refused, on the grounds that "it was about to rain heavily". Another couple of laps later, of course, it did start tipping it down, but had his original suggestion been followed (like Timo Glock) he would probably, nay almost certainly, have been in a position to win the race.

Shame.

Also, if you remember the Ferrari press spokesman claiming that Kimi was ready to head back out if the race restarted, whilst Kimi was busy eating ice cream, dressed in shorts...

(Found on a forum, yes, I sometimes read forums - only when bored at work, of course).

A few other points

My pre-race predictions of fuel stops:

Firstly, I can't be judged on those who brought their stops forward for wet tyres, but for the other drivers, I was closer with my guesses than either James Allen or the BBC pre-race show.

Vettel stopped L13 (2 later than Allen and the BBC predictions, 1 earlier than mine).
Rosberg Glock and Sutil stopped on L15 (as Allen predicted, 3 later than BBC, 2 earlier than mine).
Webber stopped L16 (1 later than Allen said, 4 later than the BBC, 1 earlier than my prediction).
Trulli stopped on L17 exactly as I predicted, and he weighed the same as Rosberg, Glock and Webber, so my assesment is reasonable (Glock surely pitted early to prevent both Toyotas stopping on the same lap).
Raikkonen stopped earlier than I imagined, and put on wets, on a dry track. Apparently Ferrari thought the downpour was starting on lap 18.
Button stopped exactly as I predicted, on lap 19, 3 laps later than James Allen's prediction and 4! laps later than the Beeb expected.
Barrichello stopped the following lap, one earlier than I imagined.

Basically, even with the fuel loads published, any guesses about fuel seem subject to a "give or take a couple of laps" degree of inaccuracy.

Last year's leading drivers [2008 points](2009 points so far):
1. Hamilton [98](1)
2. Massa [97](0)
3. Raikkonen [75](0)
4. Kubica [75](0)
5. Alonso [61](4)
6. Heidfeld [60](4)
7. Kovaleinen [53](0)
8. Vettel [35](0)

This only goes to show how different this year's pecking order is. We should allow for the fact that Vettel and Kubica came close to big scores in Melbourne, and that Malaysia was no normal race, but still Brawn have already exceeded their 2008 total (they managed that after one race!)

Immediate response

Well, track action finished an hour ago, and the race was "ended" half an hour ago, but still, this is my version of an immediate response.

1. Congratulations Timo Glock. He judged his tyre choices perfectly, managing to put on inters, when nobody else did, on a track that clearly (he was quicker by 8-12 seconds than other drivers) suited them. When they wore out (he'd been pushing to take further advantage) all the other drivers had given up on their full wets, and so he switched to full wets (on an increasingly sodden track) just as everyone switched to inters. He therefore saved himself from stopping AGAIN for wets.

2. My prediction for dry then wet more or less came true. Whoever had fuelled for slightly longer than it remained dry benefitted. As it turned out, Heidfeld took best advantage, finishing 2nd.

3. My finishing predictions were better this weekend than last, at first glance. Here's my points score:
Thursday: 6/16 (5 drivers in top 8, Jenson correctly placed)
Friday: 6/16 (5 drivers in top 8, Jenson correctly placed)
Saturday: 7/16 (5 drivers in top 8, Jenson and Jarno correctly placed)

Only Heidfeld, of the top 8, did I not predict at all, whilst I "only" chose 4 drivers who didn't score. Compare this to Trulli and Bourdais surprising me in Melbourne, with 8 drivers chosen who didn't feature. Let's see how those figures improve (or don't) over the rest of the year.

For the record, the result and the championship positions:

Win: Jenson Button
2nd: Nick Heidfeld
3rd: Timo Glock
4th: Jarno Trulli
5th: Rubens Barrichello
6th: Mark Webber
7th: Lewis Hamilton
8th: Nico Rosberg

Drivers' Championship:
1. Button 15 points
2. Barrichello 10
3. Trulli 8.5
4. Glock 8
5. Heidfeld 4
6. Alonso 4
7. Rosberg 3.5
8. Buemi 2
9. Webber 1.5
10. Hamilton 1
11. Bourdais 1
12. Everyone else 0

Constructors' Chamionship:
1. Brawn 25
2. Toyota 16.5 (despite both starting from the pits in Australia)
3. BMW 4
4. Renault 4
5. Williams 3.5
6. Toro Rosso 3
7. Red Bull 1.5
8. McLaren 1
9/10. Ferrari and Force India 0.

Yes, that's right, only Ferrari and Force India are yet to score (last season's best and worst team, excluding Super Aguri).

Early days still, but as it stands, Trulli and Jenson could be the title fight. Interestingly, with Trulli's half point, this season could be even closer than the last two seasons....