How to interpret economic data in 2011-2012?
Hi I though l’ll share with you short article by Jeremy Hawkins:
Mounting concern about the health of the global economy has seen the central banks of even some of the faster growing countries turn to monetary easing in recent months. However, for some, the scope for cutting interest rates was exhausted a long while back and unconventional policy instruments have become increasingly familiar.
With financial markets more than ever the fiscal enforcer, public sector budgetary consolidation threatens to undermine an already fragile recovery in many advanced economies. The Eurozone is in risk of collapse, the UK has resorted to further quantitative easing and Swiss National Bank has reintroduced exchange rate targeting for the first time in more than thirty years. In the U.S., QE 2 now comes with a “Twist”.
In such an environment understanding the key macro-economic indicators is more important than ever and an ability to interpret those statistics that will determine if the Fed has something to shout about, vital.
(former Chief Economist at Bank of America http://www.londonfs.com/programmes/Economic-Indicators-and-Financial-Markets-in-New-York/Lecturer/)
December 12th – 13th, Manhattan – New York
Jeremy will be in Manhattan this December to explore with you the wealth of data currently available in the market, and identify the key indicators that really matter in today’s world.
For full details about this workshop, download a PDF brochure or follow the link below:
this is an interesting post in a discussion group that does not deal with dicretionary methods – it is very refreshing and brings up the issue of “Are we all automated traders”? Or do we have a part of the brain that looks at economic data and use our discretionary bias as well – Can we have split personality – i.e. on the one hand automated (do not look at news/data), on the other hand “discretionary”.
Going back to the original article you mention I disagree – I feel that most economists think A causes B when in fact B causes A. I feel that the entire field of macroeconomics is really one of assesing society’s social mood, nothing more than that – e.g. business owners expand when they are optimistic and contract when they are pessimistic (like now). Thus the most leading indicator for macroeconomics is not the economic data itself but social mood.So if social mood is the most leading indicator, how do you predict its path? Yes I know that many people will cringe when I mention “Robert Prechter” but I do believe that his desciption is the best – i.e. Elliott Wave patterns describe where stocks markets are going which in turn predicts where macroeconomic trends will go.
So what is the stock market telling us now? Primary Wave 3 (which should take out March 2009 lows) began May 2011. Initial Wave (1) of 3 ended 3 weeks ago. We are in Wave (2) of 3 countertrend rally for few more weeks. From then until Oct 2012 we should see spectacular crash in Wave (3) of 3. Some sort of major bottom should come Oct 2012. Real economy should go down with stocks.
The Fed/Govt, etc are completely irrelevant to market direction. FYI – I post on elliott waves more on another discussion group “Elliott Wave Theorists” for those interested.
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