Macro Trends/Forecasts

Jeff Miller

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

Setting the Bar Too High

The much-awaited trade news is about to be released. I expect almost everyone to become a critic.

They will point out that the agreement is not comprehensive.

It will not be perfect.

The US will not get everything it wants.

In particular, it will not "solve" the intellectual property problem.

As a citizen, you might care about all of these things and be willing to accept a recession to get them.  As an investor, your goal should be quite different.  It is enough for the self-inflicted pain to end.  And that is where we should set the bar.

The trade war has hit GDP by at least 1%, reduced corporate earnings, and crushed business investment.  Many thought it would be "easy" because they did not understand the fundamentals of free trade.  18 months ago I wrote that people were about to get a real-time lesson in economic.  They did, but waiting to see the secondary and tertiary effects takes a long time.

Free trade is the question that has the greatest consensus among professional economists and the greatest disparity with non-economists (even the smart ones).  Intelligence is not the problem; training and tools are important.

It will therefore take some time to get the economy where it should be.  Those relying on charts will see new patterns.  Those relying on "leading indicators" will also get a lesson in how context can change the message.

I'll write more this weekend, but get ready!

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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