Macro Trends/Forecasts

Jeff Miller

"The Man Who Called Dow 20,000" --CNBC

Confirmation Biases - Market Analysis on Oct 2nd, 2019

My cross-country move is closer to completion.  My car should arrive today.  My furniture in one week.  Mrs. OldProf and I can visit our new home, but are in temporary lodgings for the next week.

I observed from 38,000 feet yesterday, watching most of the typical stories unfold.  I need (and plan) to write more on each of these topics, but here are some key points:

* Everyone who has been "warning" (including those doing so for many years) are seizing on some one-month data points as confirmation.  It is confirmation bias, because the same sources ignore the good economic news.

* To make things more frightening, we hear creative terms like "manufacturing recession" from people who do not even know the actual definition of a recession.

* The ISM report, according to their own analysis, is consistent (if annualized) to GDP growth of 1.5%.  The below 50 readings in manufacturing are widely misinterpreted.

* The ISM commentary says nothing about the Fed or the need for lower interest rates.  It says a lot about trade issues.  These are affecting sales and input costs.  It is affecting business confidence.

* Political issues are getting even more attention.  People love to speculate about something more than a year away.  It may be great fun, but it is a poor foundation for your investing.  A good example are the Medicare-for-all plans which have no real chance of passage no matter who is elected.

* This morning's TV describes the week's trading as "panic."  Good for headlines, I guess.

Overall -- recession odds have not changed much although market technicals are worse. 

Most importantly, the real-time economics lesson continues.  Those who do not understand the advantages of global trade seriously miscalculated the consequences of a trade war. Monitoring trade talk progress is the most important element of news for both investors and traders.

Jeff Miller provides Economic Analysis as well as Market Forecasts as one of the original contributing analysts at FATRADER. A quantitative modeling expert and former university professor who is the #1 Economics contributor at Seeking Alpha, Jeff is regarded as an expert on economics, market reaction to news events, and computer-based trading.
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