Global Economic Intersection
Advertisement
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
  • Home
  • Economics
  • Finance
  • Politics
  • Investments
    • Invest in Amazon $250
  • Cryptocurrency
    • Best Bitcoin Accounts
    • Bitcoin Robot
      • Quantum AI
      • Bitcoin Era
      • Bitcoin Aussie System
      • Bitcoin Profit
      • Bitcoin Code
      • eKrona Cryptocurrency
      • Bitcoin Up
      • Bitcoin Prime
      • Yuan Pay Group
      • Immediate Profit
      • BitQH
      • Bitcoin Loophole
      • Crypto Boom
      • Bitcoin Treasure
      • Bitcoin Lucro
      • Bitcoin System
      • Oil Profit
      • The News Spy
      • Bitcoin Buyer
      • Bitcoin Inform
      • Immediate Edge
      • Bitcoin Evolution
      • Cryptohopper
      • Ethereum Trader
      • BitQL
      • Quantum Code
      • Bitcoin Revolution
      • British Trade Platform
      • British Bitcoin Profit
    • Bitcoin Reddit
    • Celebrities
      • Dr. Chris Brown Bitcoin
      • Teeka Tiwari Bitcoin
      • Russell Brand Bitcoin
      • Holly Willoughby Bitcoin
No Result
View All Result
Global Economic Intersection
No Result
View All Result

The Week Ahead: Central Bankers in the Spotlight

admin by admin
December 11, 2011
in Uncategorized
0
0
SHARES
6
VIEWS
Share on FacebookShare on Twitter

by Jeff Miller, A Dash of Insight

Now that the political leaders in Europe have acted, we are all left to wonder whether anything has changed.

europe-bandaidsThe framework is different, perhaps providing some comfort for the ECB if Draghi chooses to become more aggressive. The initial market reaction was positive, but everyone is still very cautious.

You can still weigh in on which TV Series most resembles the European soap opera!

I will offer some suggestions in the conclusion. First, let’s take a look at the data and news from last week.  Click on picture for larger image of Europe held together with bandaids.

Background on “Weighing the Week Ahead”

There are many good sources for a comprehensive weekly review. My mission is different. I single out what will be most important in the coming week. My theme for the week is what we will be watching on TV and reading in the mainstream media. It is a focus on what I think is important for my trading and client portfolios.

Unlike my other articles at “A Dash” I am not trying to develop a focused, logical argument with supporting data on a single theme. I am sharing conclusions. Sometimes these are topics that I have already written about, and others are on my agenda. I am trying to put the news in context.

Readers often disagree with my conclusions. Do not be bashful. Join in and comment about what we should expect in the days ahead. This weekly piece emphasizes my opinions about what is really important and how to put the news in context. I have had great success with my approach, but feel free to disagree. That is what makes a market!

Last Week’s Data

Last week was a bit light on data, and it was also a little soft. This was in contrast to the heavy-duty reports from the week before, which were all solid. It has not mattered for many weeks, with Europe-related headlines dominating over anything else. Eventually the news and data will matter. This week, as usual, we had mixed signals.

The Good

The economic story was mixed, but there is no indication of a current recession.

  • Europe moves closer to the required policy changes. I have encouraged readers to evaluate incremental progress rather than looking for a single bold solution. This continues to be the story. The concessions in national sovereignty related to budget control constitute significant progress.
  • Initial jobless claims fell to 381K, offsetting last week’s +400K result. The seasonal adjustments can be difficult at this time of year, so everyone watches the four-week moving average, which is also improving.
  • Consumer sentiment is recovering. It is difficult to measure job creation, but sentiment helps. The Michigan survey is strong, partly because it includes a continuing panel that changes over time. The effect of the debt ceiling pseudo-crisis and gas prices have influenced sentiment, but it is still relevant. Current levels remain poor, but the rebound is encouraging. I especially like Doug Short’s chart shows sentiment changes and recessions.

Michigan-consumer-sentiment-index

  • Income tax receipts are booming. Scott Grannis reports with good analysis (worth reading) and a nice chart.

Federal Revenues

  • Rail traffic — however measured — was higher. (Calculated Risk).

The Bad

The negative news reflects diverse fronts.

  • Forward earning estimates have stalled. My WSAS colleague Brian Gilmartin has been all over this story for months. Regular readers know that I think forward earnings provide a good valuation metric. I accept the bad with the good, so a stall in earnings growth is bad news. Brian does a great job of laying out the issues — profit margins, PE multiples, and what is at stake.
  • ISM Services was a bit light. The US increasingly has a service economy, so this matters. Steven Hansen has a somewhat contrary take. Steven has an effective and eccentric viewpoint on data, often finding angles that others miss. His analysis is worthy of respect.
  • The ECRI reaffirms the recession call. About two months ago the ECRI stated that we were “tipping into recession” but no time frame was provided. The ECRI has now (finally) provided a time frame for the prediction — the middle of 2012. The loud confirmation of their position is bad news (market unfriendly) for this week, but I regard it as questionable. At least we now have a time frame for their 100% forecast. My sources have a 25% or lower estimate for the same time period. I am working on a comprehensive analysis.

The Beautiful

Instead of giving another “Ugly” award to politicians, this week I want to emphasize some real winners. Here at “A Dash” I try to recognize strong data analysis and to expose hype. This week there were three excellent stories that used sophisticated data analysis to debunk stories that got widespread attention. We can only wish that as many people will read these great analytical articles as those who read the initial hype.

  • Barry Ritholtz exposes the Black Friday surveys. While the final Black Friday numbers were strong, the original data from surveys was overstated. This is an annual pattern from the survey which Barry has identified and highlighted. See the full story here.
  • Bonddad corrects the WSJ and Mish on interpreting temporary employment. This is an absolutely first-rate article, which I urge everyone to read. It illustrates the problems in using year-over-year changes and trying to make sharp interpretations of monthly moves. It is a testament to the difficulty of correcting superficial analysis, no matter how well-intended it might be.
  • Prof. James Hamilton exposes the “secret Fed loan” myth. The story about the secret Fed loans of $7.77 trillion suited politicians, Fed bashers, and perma-bears. That trifecta sent the story into Internet overdrive with hundreds of links and a gazillion readers. It is completely deceptive, including a questionable citation of Bloomberg.

I’ll get back to the “ugly” next week. It is much easier to find!

The Indicator Snapshot

It is important to keep the weekly news in perspective. My weekly indicator snapshot includes important summary indicators:

  • An Economic/Recession Indicator. I am evaluating several candidates. None confirm the ECRI forecast of an inevitable and imminent recession. These are sources that have a similar track record, greater transparency, but less PR. I realize that I am (long) overdue for making the choice for a new indicator. It has been a careful research process, and I expect the explanation to require multiple articles. Meanwhile, if something really bad were taking place, I would make it clear in the weekly updates. I see the recession odds over the next nine months as being less than 25%.
  • The St. Louis Financial Stress Index.
  • The key measures from our “Felix” ETF model.

The SLFSI reports with a one-week lag. This means that the reported values do not include last week’s market action. The SLFSI has moved a lot lower, and is now out of the trigger range of my pre-determined risk alarm. This is an excellent tool for managing risk objectively, and it has suggested the need for more caution. Before implementing this indicator our team did extensive research, discovering a “warning range” that deserves respect. We identified a reading of 1.1 or higher as a place to consider reducing positions.

Indicator Snapshot 12-09-11

Our “Felix” model is the basis for our “official” vote in the weekly Ticker Sense Blogger Sentiment Poll. We have a long public record for these positions. We voted “Bullish” this week.

[For more on the penalty box see this article. For more on the system ratings, you can write to etf at newarc dot com for our free report package or to be added to the (free) weekly ETF email list. You can also write personally to me with questions or comments, and I’ll do my best to answer.]

The Week Ahead

There are a number of economic reports this week, but I do not expect many surprises. Thursday’s initial claims add another data point in an important series.

The inflation data (wholesale and retail) are unlikely to surprise. Similarly, the Empire State Index is minor. Thursday’s capacity utilization will be significant when we reach capacity and see inflationary pressures.

Tuesday’s retail sales data will be important. The FOMC decision itself is not important, but the accompanying statement will be carefully parsed for any hint of a change in policy. The market (incorrectly) sees weakness and craves more aggressive Fed policy. The Fed disagrees, so I expect nothing.

In the aftermath of the FOMC announcement the Fed members are free to speak, so we will start hearing from them. Draghi is also on tap on Friday.

As usual, Mark Gongloff has the comprehensive data/earnings/speechifying calendar which we should all put on the bulletin board.

Trading Time Frame

Our trading accounts have not had any US equity exposure for several weeks. Felix has relegated everything to the penalty box. This suggests that a vote of “abstain” is more accurate, but the general picture is quite postive. I expect new trading positions this week. This program has a three-week time horizon for initial purchases, but we run the model every day and change positions when indicated.

Investor Time Frame

Long-term investors should continue to watch the SLFSI. Even for those of us who see many attractive stocks, it is important to pay attention to risk. Six weeks ago we reduced position sizes because of the elevated SLFSI. The index has now pulled back out of our “trigger range,” but it is still high. For investors desiring this risk management approach we raised cash when the trigger hit the range. We have also been cautious with new accounts. We still do not have an “all clear” signal, but I expect the SLFSI to decline next week. I am doing some buying, especially in energy.

Our Dynamic Asset Allocation model is also very conservative, with holdings in bonds and gold.

To summarize, we have a very conservative posture in most of our programs, recognizing the uncertainty and volatility. This week marks a more positive outlook.

A European Update

The story continues to play out as expected. Traders and market pundits want an instant and comprehensive solution. They think that government leaders are craven, stupid, or both. Economists write about ideal solutions and the ignorance of leaders.

It is pretty easy for the punditry to criticize, since none of them have ever had the actual responsibility of leadership. While it is not happening fast enough to suit traders, the leaders of European countries have been nudging their constituents toward a solution.

With the political commitment resolved, I expect more pieces to fall into place, including a leveraged EFSF and participation from China, the IMF, and sovereign wealth funds.

Investors who have played the volatility in line with my recommendations should be doing well. The strategy of buying fear and selling calls is winning on both ends.

Related Articles

Investing articles by Jeff Miller

Other Recent Investing Blog articles

About the Author


Jeff MillerJeff Miller has been a partner in New Arc Investments since 1997, managing investment partnerships and individual accounts. He has worked for market makers at the Chicago Board Options Exchange, where he found anomalies in the standard option pricing models and developed new forecasting techniques. Jeff is a Public Policy analyst and formerly taught advanced research methods at the University of Wisconsin. He analyzed many issues related to state tax policy and provided quantitative modeling which helped inform state and local officials in Wisconsin for more than a decade. Jeff writes at his blog, A Dash of Insight.



Previous Post

Will Bull Connor please pick up the white courtesy phone?

Next Post

30 Corporations Pay More for Lobbying than Taxes

Related Posts

Will The Fed Rate Hikes Crash The Stock Market?
Economics

Will The Fed Rate Hikes Crash The Stock Market?

by John Wanguba
March 31, 2023
How To Protect Your Portfolio Against Inflation And Interest Rate Hikes
Econ Intersect News

How To Protect Your Portfolio Against Inflation And Interest Rate Hikes

by John Wanguba
March 31, 2023
When Will The XRP versus SEC Case End?
Econ Intersect News

When Will The XRP versus SEC Case End?

by John Wanguba
March 29, 2023
Will The US Banking System Collapse?
Economics

Will The US Banking System Collapse?

by John Wanguba
March 29, 2023
Gold Versus Bitcoin, Which Is A Better Investment In 2023?
Econ Intersect News

Gold Versus Bitcoin, Which Is A Better Investment In 2023?

by John Wanguba
March 28, 2023
Next Post

30 Corporations Pay More for Lobbying than Taxes

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Browse by Category

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Browse by Tags

adoption altcoins bank banking banks Binance Bitcoin Bitcoin adoption Bitcoin market Bitcoin mining blockchain BTC business China crypto crypto adoption cryptocurrency crypto exchange crypto market crypto regulation decentralized finance DeFi Elon Musk ETH Ethereum Europe Federal Reserve FTX inflation investment market analysis Metaverse NFT nonfungible tokens oil market price analysis recession regulation Russia stock market technology Tesla the UK the US Twitter

Archives

  • March 2023
  • February 2023
  • January 2023
  • December 2022
  • November 2022
  • October 2022
  • September 2022
  • August 2022
  • July 2022
  • June 2022
  • May 2022
  • April 2022
  • March 2022
  • February 2022
  • January 2022
  • December 2021
  • November 2021
  • October 2021
  • September 2021
  • August 2021
  • July 2021
  • June 2021
  • May 2021
  • April 2021
  • March 2021
  • February 2021
  • January 2021
  • December 2020
  • November 2020
  • October 2020
  • September 2020
  • August 2020
  • July 2020
  • June 2020
  • May 2020
  • April 2020
  • March 2020
  • February 2020
  • January 2020
  • December 2019
  • November 2019
  • October 2019
  • September 2019
  • August 2019
  • July 2019
  • June 2019
  • May 2019
  • April 2019
  • March 2019
  • February 2019
  • January 2019
  • December 2018
  • November 2018
  • October 2018
  • September 2018
  • August 2018
  • July 2018
  • June 2018
  • May 2018
  • April 2018
  • March 2018
  • February 2018
  • January 2018
  • December 2017
  • November 2017
  • October 2017
  • September 2017
  • August 2017
  • July 2017
  • June 2017
  • May 2017
  • April 2017
  • March 2017
  • February 2017
  • January 2017
  • December 2016
  • November 2016
  • October 2016
  • September 2016
  • August 2016
  • July 2016
  • June 2016
  • May 2016
  • April 2016
  • March 2016
  • February 2016
  • January 2016
  • December 2015
  • November 2015
  • October 2015
  • September 2015
  • August 2015
  • July 2015
  • June 2015
  • May 2015
  • April 2015
  • March 2015
  • February 2015
  • January 2015
  • December 2014
  • November 2014
  • October 2014
  • September 2014
  • August 2014
  • July 2014
  • June 2014
  • May 2014
  • April 2014
  • March 2014
  • February 2014
  • January 2014
  • December 2013
  • November 2013
  • October 2013
  • September 2013
  • August 2013
  • July 2013
  • June 2013
  • May 2013
  • April 2013
  • March 2013
  • February 2013
  • January 2013
  • December 2012
  • November 2012
  • October 2012
  • September 2012
  • August 2012
  • July 2012
  • June 2012
  • May 2012
  • April 2012
  • March 2012
  • February 2012
  • January 2012
  • December 2011
  • November 2011
  • October 2011
  • September 2011
  • August 2011
  • July 2011
  • June 2011
  • May 2011
  • April 2011
  • March 2011
  • February 2011
  • January 2011
  • December 2010
  • August 2010
  • August 2009

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized
Global Economic Intersection

After nearly 11 years of 24/7/365 operation, Global Economic Intersection co-founders Steven Hansen and John Lounsbury are retiring. The new owner, a global media company in London, is in the process of completing the set-up of Global Economic Intersection files in their system and publishing platform. The official website ownership transfer took place on 24 August.

Categories

  • Business
  • Econ Intersect News
  • Economics
  • Finance
  • Politics
  • Uncategorized

Recent Posts

  • Will The Fed Rate Hikes Crash The Stock Market?
  • How To Protect Your Portfolio Against Inflation And Interest Rate Hikes
  • When Will The XRP versus SEC Case End?

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

No Result
View All Result
  • Home
  • Contact Us
  • Bitcoin Robot
    • Bitcoin Profit
    • Bitcoin Code
    • Quantum AI
    • eKrona Cryptocurrency
    • Bitcoin Up
    • Bitcoin Prime
    • Yuan Pay Group
    • Immediate Profit
    • BitIQ
    • Bitcoin Loophole
    • Crypto Boom
    • Bitcoin Era
    • Bitcoin Treasure
    • Bitcoin Lucro
    • Bitcoin System
    • Oil Profit
    • The News Spy
    • British Bitcoin Profit
    • Bitcoin Trader
  • Bitcoin Reddit

© Copyright 2021 EconIntersect - Economic news, analysis and opinion.

en English
ar Arabicbg Bulgarianda Danishnl Dutchen Englishfi Finnishfr Frenchde Germanel Greekit Italianja Japaneselv Latvianno Norwegianpl Polishpt Portuguesero Romanianes Spanishsv Swedish