Disclaimer. After nearly 40 years managing money for some of the largest life offices and investment managers in the world, I think I have something to offer. But I can't by law give you advice, and I do make mistakes. Remember: the unexpected sometimes happens. Oddly enough, the expected does too, but all too often it takes longer than you thought it would, or on the other hand happens more quickly than you expected. The Goddess of Markets punishes (eventually) greed, folly, laziness and arrogance. No matter how many years you've served Her. Take care. Be humble. And don't blame me.

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Wednesday, October 22, 2014

Hottest ever September

NOAA has just announced that the world has had its hottest September ever measured (click on charts to get bigger image; chart from here)

Average global monthly temperatures for September

This comes after the hottest May and June, 4th hottest July, and hottest August.  So it won't surprise you that this is also the hottest 12 months to September.  Note how obvious it is that 1998, always picked by the denialists as the starting point of their data set "showing" that the world is "no longer warming",  is a statistical outlier.

Average global temperatures, 12 months to September each year

The last 60 months have been equal warmest to the 60 months to September 2007.  Note that there is a 30 year cycle around the long term rising trend (the PDO, or Pacific Decadal Oscillation ; Into the Deep), as well as shorter cycles.  In the first of the down phases of this cycle (1880-1911) global temps fell.  Then the oscillation turned positive and temps rose for the next +-30 years, until 1945.  In the next down phase, global temps went sideways (not down).  Then a renewed up phase starting about 1980 (the 5 year moving average will lag the underlying data by 2 and a half years) and lasting until around 2005.  In the current down phase, global temps have gone on rising, only more slowly.  Just how fast will observed temperatures rise when the PDO again flips to an up phase?  At that point you will have the cycle/oscillation adding to the underlying trend. Scary.

Average global temps, 60 months to Sept each year

The only good news is that something is finally being done.  For example, China has imposed a tariff of 6% on imported coal.  This is effectively a carbon tax, because although it doesn't apply to domestic coal production, China imports most of its coal these days.  It is the world's biggest importer of coal, and not coincidentally, the world's biggest emitter of CO2.  And the tariff makes renewables relatively cheaper.  This step is in addition to a carbon trading scheme to be introduced into China's 8 largest cities in 2016 as well as other domestic programs to support renewables.

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