Why The Pacific Decadal Oscillator Means Five More Years Of Very Bad Fed Luck

Tyler Durden's picture

These days the Fed is blamed for everything: from liberating the world from oppressive regimes, to the resultant genocide that accompanies such a process, not to mention to reflating record bubbles that guarantee to wipe out another generaton's wealth as soon as this latest and greatest episode of central planning fails. Yet one thing the Fed can not be blamed for (yet) is the weather. And unfortunately for the Chairsatan, storm clouds are (literally) building up for the next five years. While some have blamed the recent surge in food prices on inclement weather, including floods here, droughts there, and massive conflagrations in Russia, the case is, as UBS points out, that weather over the next five years will likely be very unpredictable, and result in increasingly supply shocks and commodity price imbalances (at least for those commodities that are harvested; that the Fed's liquidity is at base reason for the surge in everything not nailed down, just look at the price action in items that do not need watering, or direct sunlight). Enter the Pacific Decadal Oscillator, and if UBS is right, things will continue to be ugly at least until 2016.

From UBS Julien Garran

The pacific decadal oscillator (PDO) has turned cold. We highlighted in Cost Push, December 2010, that the UN  Intergovernmental Climate Change Committee now forecast that the PDO would remain cold until 2016. The importance of this is that a cold PDO makes it four times more likely that there is a La Nina in any given year. There were three La Ninas in the ‘70s, we are currently experiencing our second in three years, and we will likely see another couple over the next five years.

La Ninas, combined with other climate change patterns, are immensely disruptive to food and fuel production. In the past 12 months we have seen major food production losses in Russia, China, Australia and Brazil. And, as we have highlighted before, La Nina generates major rain disruption to 70 percent of the worlds thermal and coking coal production for export.

The importance of cold PDOs, and frequent La Ninas is that each La Nina leaves behind lower food and coal inventory levels, tighter markets, and greater potential for disruptions and price spikes.

In the mining team, we believe that it is more than just a coincidence that all the major warm periods in the PDO over the past century coincided with bond bull markets (the 20s to the early 50s, the 80s and 90s) while all the cold periods coincided with extended bond bear markets (mid 50s to the late 70s, now?).

In other words, even the weather is now conspiring to end the Fed's (and the global banker cabal's) ridiculous monetary policy which as was highlighted earlier can be summarized in three words: "everyone is printing" and the smallest flashpoint of climatic instability leads to riots, revolutions, deaths, and mass starvation. If even god is sending a message to the Chairsatan, just what other signs does he need?

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truont's picture

All other tropical storms must bow before La Nina!


ZerOhead's picture

Ty... it's called Pacific decadal oscillation.

We are heading into a 15 year cooling trend before it bottoms. Not 5.

And a deep solar minimum may take this sucker down even further. Crop failures are pretty much going to be an ongoing phenomenon for at least the next 20-30 years.

Oh... and global warming? The global satellite temps are now back to where they were 30 years ago.

See fer yerself!


Meanwhile Al Gore and the 'tards' back at IPCC say the planet is melting up!


Do some research for yourself to see who is lying.

Spigot's picture

Any system that undergoes change from one relative extreme to another, in a period rhythm, is an oscillator. The term oscillation describes the dynamic of the system. The term oscillator describes the system itself.

blindfaith's picture

ah, oscillation is like a dog shaking the water off his back, and oscillator is the how.

Like ol' George Carlin said, mother nature is going to shake us off her back like a dog shakes off water.

plocequ1's picture

Well then, I guess i better order my new and improved Macbook pro now on credit before we are doomed, Or should i wait a couple of months?

knukles's picture

Hell, do one now and one later.  Catch up with all the new factory loaded auto obsolecent apps. 

plocequ1's picture

I have one now. Trust me, It comes delivered with a clean slate. No filth.

Harmonious_Dissonance's picture

Better pick up a few extra batteries for SURE: Laptop batteries never last, thats what sours me on the electric car.

Eagle1's picture

Strongly recommend you read the Browning Newletter by Evelyn Browning Garriss if you are at all interested in climate and the affairs of men.

velobabe's picture

men have affairs? whod da think†

velobabe's picture

men have affairs? whod da think†

treemagnet's picture

On a completely seperate topic - how do you explain CDS (Portugal for example) spreads to a woman - like my wife?  I've tried, maybe I'm not smart enough.

knukles's picture

Easier to explain to a woman why administering oral sex is beneficial to her.
Believe me.

johnQpublic's picture

a CDS in those terms is this:


honey ,you give me oral...you then guess whether i will ejaculate in your mouth

if you are wrong...you get anal

Rodent Freikorps's picture

It is a good source of protein?

johnQpublic's picture

depends which end you inject it from...see above

knukles's picture

JQ and Rodent... you guys are awesome!

A Man without Qualities's picture

tell her it's the cost of insuring against a loss, where the loss equals the probability of a default times by the loss given default.  

If she doesn't know what probability is, give her a die, tell her to roll it a thousand times and count the number of times she rolls a 6.

Harmonious_Dissonance's picture

This is quite intruiging! So you are saying the the fractional reserve, centrally planned, money printing, wealth funneling, modern banking embodiment of money, the means for economic activity, is unnatural? Well I certainly agree and hope nature will PURGE the abomination from the Universe!



Ancona's picture

That's why I live where I do. Even with the LaNina, we have had incredibly milkd weather, and zero landfalling hurricanes last year.

hellopahello's picture

sell sell sell.....................

Fortunes Favor's picture

...Fed's (and the global banker cabal's) ridiculous monetary policy...

 Medes and Persians are at the Gates  http://rosenthalcapital.com/blog/2011/02/rosenthal-rant-medes-and-persians-are-at-the-gates/

Bleeping Fed's picture

So you're saying that until 2016 all bad news can be blamed on snow?

knukles's picture

No, on seasonal adjustments for snow.

Pure Evil's picture

Nope again, we blame it on the Great ChairSatan's inability to control the weather.

It all revolves around Uncle Good Time Bennie.

Sudden Debt's picture

and Rain and Sunshine and Wind and Volcanoes and Earth shakes and Lightning and Solar flares and Oil and Gold and Silver and China and Russia and Europe and England and YOU!



Bleeping Fed's picture

Me?  I didn't do nuttin.  Except BTFD of course.

Judge Judy Scheinlok's picture

Does any one no fi topcallingtroll is still shrot equity. hehe. ouch.

Ancona's picture

Looks like someone hit coctail hour a bit early today.  ;-)

topcallingtroll's picture

No i.got out yesterday. I cant call shit anymore. Top or bottom calls.

gwar5's picture

It's all about the PDOs baby -- climate has nothing to do with carbon dioxide which is just essential plant food floating in the air. And PDOs are determined by the sun the cycles and ocean currents.

Bleeping Fed's picture

And we all know it's bad for plants to have more plant food in the air.

helicity's picture

Yeah, you've single-handedly upended the basic radiation physics which we've understood for 50 years. Sure dude!


Sean7k's picture

Maybe we need to keep a count on all the predictors of future economic behavior- funny, none of them work, but we keep coming up with more. 

Rodent Freikorps's picture

Don't forget the Sun.

helicity's picture

Betting on the reversal of the PDO oscillation is a bit of bigger gamble than UBS would like you to believe. One can never know when there's a true reversal of the index, as even during the 20-30 yr cycles, reversals still happen. One can see it more easily with the Wikipedia graph, which is finer:




InconvenientCounterParty's picture

Voice of reason on statistics is a good thing to have. Gotta admit, it sure does appear to be rolling over.

of course, I might be influenced by the snow advisory down to sea level in Cali today.

KinorSensase's picture

and on to the big climate picture.  change happens.  so it goes.



DarkAgeAhead's picture

And hedging for the next 50 years, check the Millennium Ecosystem Assessment.


Of particular interest here is the Summary for Decisionmakers and conclusion #3 regarding ecosystem services.

topcallingtroll's picture

What would happen if we had another "year without a summer" here in the USA? I believe the last one was 1816 but not sure. Google it. It seems to happen about every two hundred years.

Things that go bump's picture

That was due to Krakatoa blowing its top.  Something needs to spew a lot of soot into the atmosphere to get that sort of effect.  It was abnormally cool the summer Mount St. Helen blew and after Pinatubo erupted too.  The climate effects were well documented.  

A Texan's picture

No, Krakatoa was in 1883; Tambora in Indonesia was in 1815.   It was the biggest volcanic eruption in recorded history, and the only eruption rated a 7 on the Volcanic Explosivity Index since 180 AD. http://en.wikipedia.org/wiki/Mount_Tambora   http://en.wikipedia.org/wiki/Krakatoa 

Things that go bump's picture

Sorry, you're right.  My memory is not what it once was.  

MrSteve's picture

Local climate changes have influenced the quality of life for a long time, including the ergot poisoning in wet weather in northern Europe. The mind-altering quality of spores growing in rye bread was only recently appreciated and blessed by science, courtesy of the late Dr. Tim.

Things that go bump's picture

Ergot was also a traditional abortifacient and suspected to be a teratogen

snowball777's picture

How dare you leave Dr. Hoffman out of the discussion; 1 bad trip penance.

Tiny Dr. Tim found the light down Mexico way.

topcallingtroll's picture

Because of the possibility of a year without a summer such as 1816, it is not unreasonable to store six months of wheat vitamins salt and sugar. These are cheap and properly stored will last indefinitely. You can pass it along to your grandkids. A years supply of 1500 calories per day would be less than 500 dollars. You can supplement with tree bark (cambium), wild greens, insects, cats and dogs for variety. The army survival manual says that cat and dog livers are especially valuable nutrition.