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Jeff Miller  

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  • Weighing The Week Ahead: Approaching Dangerous Curves? [View article]
    mitchad1 - There has been a light reduction in the Fed balance sheet due to timing of settlements and payments It will not be shrinking. See here for clarification: http://on.wsj.com/PPmimj?

    Good question and thanks for your thoughts.

    Jeff
    Nov 4, 2012. 09:53 AM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: A 3-Day Homestretch [View article]
    mitchad1 -- I do prefer to track the changes in forward earnings, but I also check the numbers at the S&P site. The year-over-year is still slightly negative: http://bit.ly/waHMp7--

    I am delighted that you are doing well in the minefield:)

    Jeff
    Oct 31, 2012. 08:15 PM | Likes Like |Link to Comment
  • Reality Check: Analyzing Earnings Season So Far And Looking Cautiously Ahead [View article]
    Some observations about the ECRI chart, correlation, causation, and misleading data mining --

    1) The chart shows a (brief) period of strong correlation between the ECRI WLI and stock prices. In the next sentence you quote Rosenberg as saying that the Fed balance sheet highly correlated to stock prices during most of this same time. There is a lot going on at that same time, and the causal model is challenging. For starters, the Fed acts when it sees the need for additional economic stimulus. If it is perceived to be successful, economic indicators would improve. So what is the correct causal model? There are statistical controls to investigate this.

    2) I am curious about why you believe that the ECRI WLI represents "fundamentals" and that stock prices should in fact be related to this index. For starters, you do not even know the index components (although a group of observers has now reverse engineered the elements). It is an interesting list, but geared to forecasting the business cycle, which is not quite the same as the stock market cycle.

    3) I have seen many charts of the sort you are showing, so easy to do in these modern times. Someone takes two data series and adjusts the scales to show a dramatic period of correlation. The beginning is chopped off because that does not fit. The end of the series "proves" the point that the author is trying to make, or else the chart would never see the light of day. There are hundreds of candidates for this purpose. I have debunked a number of them, but it takes time to do this. Meanwhile, the rebuttals never get the same attention as the original chart.

    I applaud what you are doing in your writing and your business, and I admire your entrepreneurial spirit. Let me suggest something for you. Take the underlying data series depicted in the chart and go back farther. You will quickly see what I mean.

    And finally, I understand the desire to challenge traditional sources and methods. Critical thinking is crucial, and you are obviously a fan. The trick is to apply the same skepticism to what you read at Zero Hedge.

    All of this assumes that you are a truth seeker. I look forward to an expanded version of the chart.

    Jeff
    Oct 21, 2012. 07:32 PM | 2 Likes Like |Link to Comment
  • Weighing The Week Ahead: Premature Verdict On Q3 Earnings? [View article]
    GaltMachine -- I understand that there are numerous rules that seem to enhance earnings -- things like a downgrade of a bank's debt actually improving the balance sheet. It is not generally a matter of decision, but one of accounting rules.

    I'll put this on the agenda for a deeper look, but that's all I can offer right now.

    Interesting question, as is the whole "quality of earnings" concept.

    Jeff
    Oct 21, 2012. 02:40 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Premature Verdict On Q3 Earnings? [View article]
    A nice article by John Tobey discusses the tech earnings, the Barron's cover, and inferences drawn from insufficient data. Take a look! http://seekingalpha.co...?
    Oct 21, 2012. 02:33 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Premature Verdict On Q3 Earnings? [View article]
    dancing diva -- I read all of Steven's articles at GEI, and we also have an occasional correspondence on methodological issues. As you suggest, I think highly of his work.

    As you would guess, I read dozens of articles in preparation for my WTWA pieces. Only a few are actually included. I try to find those that make the relevant point most clearly. Sometimes I will also note a contrary viewpoint.

    I also welcome pointers to themes or sources that I missed. With all of that in mind, Steven's approach to this topic is another riff on the seasonal adjustment theme. He takes unadjusted data for the current month, the past month, and the corresponding year-ago months. He then compares the monthly change in the year-over-year results. I think that this is too vulnerable to eccentricity in any of four specific months. He thinks that recent years are not typical for seasonal adjustments.

    In any case, his conclusion seems to have moved from an earlier entry in this series where he said that March, 2012, was a tentative peak and possible recession marker. So I see Steven's approach as different, but not necessarily "deeper."

    The Chinese GDP issue is actually similar. People are too skeptical about seasonally adjusted data. It is just a tool that you learn and use when appropriate.

    Jeff
    Oct 21, 2012. 02:25 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Premature Verdict On Q3 Earnings? [View article]
    Colin -- Concerning Spain, on most issues I let the market tell me whether it was good news or not. The Spanish 10-year yield dropped to 5.42%, far below the 7 - level that was being cited as worrisome. (I noted this in my daily diary at WSAS http://bit.ly/TpwJxT.

    Concerning seasonal adjustments, I note that most of the critics (and I don't know if this is true of you) have never done a single analysis using this method. They don't know how, nor do they know what is actually accounted for. They chime in when their own seat-of-the pants approach suggests that something is wrong and also when it fits their purpose.

    I agree that these adjustments can be difficult to do accurately, especially when something unusual is happening in the current year, but it is generally much more meaningful than adjusted data. To see this go to my link on China and read the article very carefully.

    (BTW, I congratulate you for combining your studies, your poli sci background, and your writing skill in your columns here on SA. I have so far resisted making any comments there, but perhaps I'll offer a few suggestions).

    Jeff
    Oct 21, 2012. 11:26 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Premature Verdict On Q3 Earnings? [View article]
    Last Boomer -- You are accurate on the numbers, so the question is what is expected. Prior to this year, we have had some years of earnings growth without an increase in stock prices. It all depends on where you start.

    See Dancing Diva and Tom Armistead comments below.

    A key question!

    Jeff
    Oct 21, 2012. 11:03 AM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Premature Verdict On Q3 Earnings? [View article]
    june1234 -- I agree. Google earnings were poor and might well have had the same market effect even if released at the right time. I just could not resist sharing a little humor:)

    Jeff
    Oct 21, 2012. 10:55 AM | 3 Likes Like |Link to Comment
  • Why Individual Investors Must Be Critical Consumers Of Information [View article]
    dcw25 -- Yours is a key question. The very low yields are certainly a reflection of economic problems -- both in the sense of investors' flight to quality and as a policy response.

    There is an economic debate about how to avoid a Japan-style liquidity trap and the effectiveness of new policy tools. I suspect that Friedman would not be convinced. Most economists would like to seem more cooperation from fiscal policy.

    The nominal GDP camp has gained a foothold reflected in the QE3 announcement.

    So the answer is that we are using tools that are designed to affect expectations about the future as much as the current reality.

    Good question, and I wish I had a better answer!

    Jeff
    Oct 19, 2012. 12:20 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
    mitchad1 -- Felix may be correctly cautious in the short term. (The trading model now has only a small position in TLT). You and I might feel that this is a better long-term opportunity.

    Felix and I often reach different conclusions. It is healthy to force yourself to take different perspectives.

    I do agree that the data this week seem pretty constructive.

    Jeff
    Oct 17, 2012. 09:10 PM | Likes Like |Link to Comment
  • Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
    Freddy -- If you look at the start of this article, you will be reminded that this was exactly my prediction.

    Meanwhile, the reported data show little support for your GDP forecast.

    We must be driven by data, and willing to adjust.

    Jeff
    Oct 17, 2012. 09:07 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
    Cliff -- Actually I did not say anything about causation, so it is really not correct to call me confused -- at least not about that!

    I agree with the general thrust of your comment. It is a theme that I have frequently written about myself, most recently on the effects of QE.

    Nearly every market or economic indicator has a host of correlations with other indicators. Finding an appropriate causal model is a challenge, and we often lack the right statistical controls.

    I think that the best interpretation of the source I cited is a simple trend-following indicator.

    Since you have raised the interesting question of causality, I recommend this post: http://bit.ly/QJ9mKH

    I specifically take up a challenge to explain currency manipulation to the average person. I am sorry that I have not yet read your book, but I am interested in how you would explain the question from this cited post.

    The key problem? You say that a falling USD does as much or more harm than a rising. one. The problem is that the groups affected are quite different. Exports arouse passion because the effects are clumped into major impacts on businesses and jobs. Imports have much smaller effects on a larger number of people.

    No one votes based upon higher import prices. It is part of the reason that economists all favor free trade while the average person does not.

    Good topic, and thanks for the suggested readings.

    Jeff
    Oct 15, 2012. 02:32 PM | 1 Like Like |Link to Comment
  • Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
    Elected presidents do this all of the time. Haven't you noticed how unhappy liberals and unions have been with Obama?

    As usual, you restated your position without answering either of my questions:

    Last time a Fed bank President was named as Fed Chair?
    Last time a President sought tight money?

    Uninformed opinion adds little to the investment process. Since you make your calls based upon cycles and Fibonacci, this may not matter to you. If you want to discuss fundamentals, you need to do some more homework.

    Too bad no one really asks you to back up your positions when you are on CNBC!

    And I'm done here.

    Jeff
    Oct 14, 2012. 07:59 PM | 6 Likes Like |Link to Comment
  • Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
    Speculating that the choice would be a "hawk" is premature at best. Why would you even think he would pick a Fed bank President? When was the last time that happened? Ever?

    Hubbard is a possibility. In any case, it is good strategy for candidate Romney to cater to a wing of his party by bashing the Fed, Bernanke, and easy money. You have to attack existing policy to win.

    A President Romney would have a different problem. Who was the last President to encourage tight money? Has there ever been one?

    Jeff
    Oct 14, 2012. 06:24 PM | 4 Likes Like |Link to Comment
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