Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
American -- As one who has been both an academic and a developer of proprietary models, I am familiar with the sometimes parallel paths.
As described in the original article, Bob Dieli started development of this method in the late 70's and continued work when at the Continental Bank and Northern Trust. Put another way, there are many pioneers. http://bit.ly/VQo4lb
There are now many more papers discussing some of these relationships. The key difference here is the identification of a specific relationship that has worked in real time over decades.
Weighing The Week Ahead: What Lies Beyond The Cliff? [View article]
Hi Gang -- Concerning who is compromising: My observation is that opinions on this topic reflect more on the observer than on what is really happening. My Republican friends sound like most of those commenting here -- the President has done nothing. My Democratic friends think that Obama has offered a lot. (See this piece for an example of this thinking: http://politi.co/X89n1I) My own conclusion is that both Boehner and Obama moved quite a bit and got pretty close to agreement, about $400 billion on a $4 trillion deal.
Concerning leadership: There are many ways to lead. Offering proposals, appealing to the public, back-channel negotiations, and trying to bring parties together are all examples. Some who think that Obama is not leading seem to believe that he should just concede. You might compare this with how President Bush handled the TARP debate --- essentially turning the issue over to Hank Paulson. There was some pain in the process, but some crucial legislation was passed. Some would call this good leadership by Bush.
Similarly, the noted House Speakers from history did not win acclaim by blocking everything. Even Gingrich now points with pride to how he was able to cooperate in legislation.
Weighing The Week Ahead: Decision Time? [View article]
Lloyd -- the behavior of legislators from the safest of safe seats is a matter of record. I am picking it up in several of the sources that I follow.
If you want to understand what is happening, you have to know about this -- which is why I report it. There is nothing emotional about it.
The key question is whether centrists from both parties can cut a deal. We saw movement from both sides on the top tax rate issue. It would now help if Obama made further spending concessions, but my read is that a deal could be close if the House got to vote on it.
You remind me of my students from the 80's. I was trying to teach about Reagan's various astute moves on the budget. It was analytical, but students did not want to accept the idea that their hero would (for example) try to crush the Soviet Union by outspending them on defense - -whether we had the money or not. What I described is now history.
So you are welcome to your opinion, but you would do better to analyze and predict.
Will U.S. Recession Be Confirmed Friday? [View article]
The chart readings are only preliminary, which is why the authors called for three readings of 80% before a recession signal. The initial ratings are often smoothed.
Weighing The Week Ahead: Approaching Dangerous Curves? [View article]
Tom -- I have been watching this pretty closely. Fewer have taken the Norquist "pledge" this time. Some Tea Party types have been moderating a little. And finally, there are enough votes without them.
Part of the idea, of course, is to reach a decision at a time as far removed from electoral pressure as possible.
I'm sure we'll have more to discuss on this theme!
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?
Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
Stanley -- I repeat that the Romney data is in the "good" section only because that has been the market reaction -- right or wrong.
I subscribe to The Hill and already had the article bookmarked for later mention. Most of the article refutes what I called the tortured logic about Romney firing Bernanke.
There is a good reason to insulate the Fed from elections. Even if Bernanke is replaced in 2014, it is unlikely to have an immediate effect on Fed policy. People attribute too much power to the President -- another of my frequent themes.
Profiting From QE3: Spotting The Mistakes [View article]
Shaggieman -- I'm writing here about Fed policy, which I do not expect to change after the election --- at least not right away. I know that Romney has said he would replace Bernanke, but he may not have the chance to do so for two years.
Obama could have replaced Bernanke (a Republican, appointed by a Republican), and he gave it some thought before deciding against it.
Once in power, Republicans will want economic stimulation of all sorts.
I'll save comment on non-Fed policy for now, maybe writing something after tonight's debate.
To conclude, I am not assuming an Obama victory, although the current odds seem to be about 2-1. A lot can still happen.
Weighing The Week Ahead: The Lull Before The Storm? [View article]
Cautious Investor -- These are all good points. I certainly agree that many if not most fund managers are having trouble navigating when policy decisions have such an important role.
One problem is that they have never studied political science or public policymaking. Without this background, the actions of the decision makers does not seem rational. These people are not doing what they themselves would do if they were in power.
As I frequently write, you need to put aside your own political preferences and concentrate on forecasting behavior and decisions. Since this is my sweet spot, I have done well with my forecasts on the Fed, Congress, and (so far) Europe.
In topics where I have less personal background, I work to find the right sources, ignoring the instant experts on Europe and China.
garyjohnson -- It is amusing --and proves my point -- that you find the Liesman analysis to be "liberal." His reports describe Fed Policy and their current thinking, which is pretty much mainstream with a GOP slant. The Fed Chair has been a Republican for a long time, even when reappointed by a Democratic President.
It is only the Ron Paul slant and the current election environment that make things appear to be different.
So I agree with everything you say, except that the debate is not between liberals and conservatives, but between mainstream republicans and Tea Partiers.....
John - Thanks for noting the limited nature of what I was suggesting. Sometimes I like to take a different approach to get people to step back and examine a question differently.
I also love it when we get a good discussion going. That said, it does seem like some in the commentariat are determined to see the worst in anything and even add a political twist.
Thanks for joining in, and for your great suggestions for further discussion.
Back to my trading screen, iPad news feeds, financial TV on TIVO. Now what should I do with that calculator?
Weighing The Week Ahead: Time For Some Fireworks? [View article]
Cautious One -- For starters, I watch every piece of economic data from around the world. It is how I start my day. I frequently comment on these items in my diary at the Wall Street All Stars site, where we also have some pretty good discussions.
There are hundreds of data points like the ones you mention. My objective is to sort through the mass of data and highlight things that are most important. I also try to find some items that most people probably did not see anywhere else.
I had to smile at your citation of the China PMI dropping .2 of a point. Do you really think this is big news? Do you know how this index is calculated? Like most surveys, they do not tell you response rates or margin of error. The historical sequences are abbreviated and the methodology not documented very well. Do you even trust this? (I have noted in the last few weeks that the real data in China might be even worse, citing stuff about car sales that you probably did not see elsewhere).
Your assessment that the rate of economic growth is slowing is exactly what I have been writing for weeks. A difference is that I also look for things that might go right. At the moment, the two things to watch are confidence (consumer and business) and housing.
I welcome your additions with both analysis and data, and I explicitly invite people to disagree:)
Meanwhile, instead of saying what you do not like about the latest news from Europe, let me offer a little two-part challenge:
1) What would be the elements of an acceptable solution -- participants, programs, size, etc.
2) Is there any way to monitor progress (or lack thereof) to such a solution, or should we all just wait until it is finished?
Weighing The Week Ahead: Any Help From The European Summit? [View article]
Jeremy -- I know about the existing program. There are proposals to strengthen it in various ways --- size, who guarantees, etc.
I do quite a bit of research for each article, and this theme came up several times. Here is how one source put it (also citing a speech by Draghi): "Third, and most urgent, retail bank runs must be prevented. The best way would be for the EFSF or its successor fund to explicitly guarantee all national deposit insurance systems in the euro area. Such “deposit reinsurance” would bolster the integrity of the euro area and immediately enhance trust in its banks. Of course, strong European-level supervisory structures should eventually be built to prevent moral hazard. It will take more time to combine these different pieces into a consistent European banking policy framework. The current moment calls not for perfect fine-tuning, but for swift and bold commitments."
How Investors Can Get An Edge From The European Crisis [View article]
I did not say that they were "improving." I said that each party was getting more from the compromise than they would have from an imposed solution that many pundits wanted a year ago.
This is the nature of compromise. And with democracies it takes time.
The message from the governments right now seems to be that there is too much austerity. That bargain will probably change a little to provide the Greeks and (perhaps the French) a little more room to recover.
This is not all about the current debt/GDP ratio......
Business Cycle Forecasting: The Superlative Results Of Robert F. Dieli [View article]
As described in the original article, Bob Dieli started development of this method in the late 70's and continued work when at the Continental Bank and Northern Trust. Put another way, there are many pioneers. http://bit.ly/VQo4lb
There are now many more papers discussing some of these relationships. The key difference here is the identification of a specific relationship that has worked in real time over decades.
Thanks for the references!
Jeff
Weighing The Week Ahead: What Lies Beyond The Cliff? [View article]
Concerning leadership: There are many ways to lead. Offering proposals, appealing to the public, back-channel negotiations, and trying to bring parties together are all examples. Some who think that Obama is not leading seem to believe that he should just concede. You might compare this with how President Bush handled the TARP debate --- essentially turning the issue over to Hank Paulson. There was some pain in the process, but some crucial legislation was passed. Some would call this good leadership by Bush.
Similarly, the noted House Speakers from history did not win acclaim by blocking everything. Even Gingrich now points with pride to how he was able to cooperate in legislation.
Jeff
Weighing The Week Ahead: Decision Time? [View article]
If you want to understand what is happening, you have to know about this -- which is why I report it. There is nothing emotional about it.
The key question is whether centrists from both parties can cut a deal. We saw movement from both sides on the top tax rate issue. It would now help if Obama made further spending concessions, but my read is that a deal could be close if the House got to vote on it.
You remind me of my students from the 80's. I was trying to teach about Reagan's various astute moves on the budget. It was analytical, but students did not want to accept the idea that their hero would (for example) try to crush the Soviet Union by outspending them on defense - -whether we had the money or not. What I described is now history.
So you are welcome to your opinion, but you would do better to analyze and predict.
Jeff
Will U.S. Recession Be Confirmed Friday? [View article]
All explained here: http://seekingalpha.co...
Weighing The Week Ahead: Approaching Dangerous Curves? [View article]
Part of the idea, of course, is to reach a decision at a time as far removed from electoral pressure as possible.
I'm sure we'll have more to discuss on this theme!
Jeff
Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
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
Weighing The Week Ahead: Will Q3 Earnings Disappoint? [View article]
I subscribe to The Hill and already had the article bookmarked for later mention. Most of the article refutes what I called the tortured logic about Romney firing Bernanke.
There is a good reason to insulate the Fed from elections. Even if Bernanke is replaced in 2014, it is unlikely to have an immediate effect on Fed policy. People attribute too much power to the President -- another of my frequent themes.
Jeff
Profiting From QE3: Spotting The Mistakes [View article]
Obama could have replaced Bernanke (a Republican, appointed by a Republican), and he gave it some thought before deciding against it.
Once in power, Republicans will want economic stimulation of all sorts.
I'll save comment on non-Fed policy for now, maybe writing something after tonight's debate.
To conclude, I am not assuming an Obama victory, although the current odds seem to be about 2-1. A lot can still happen.
Jeff
Understanding The Business Cycle -- The Key To Investor Success [View article]
Many believe that the cycle is getting shorter -- the ECRI for one, but they have convinced others.
I contend that there will be a lot of variation, and this recovery will involve a longer period of aggressive policy action.
While we may disagree about interpreting data, why don't we agree that the discussion is not "silly" -- -OK? That does not add anything.
Jeff
Weighing The Week Ahead: The Lull Before The Storm? [View article]
One problem is that they have never studied political science or public policymaking. Without this background, the actions of the decision makers does not seem rational. These people are not doing what they themselves would do if they were in power.
As I frequently write, you need to put aside your own political preferences and concentrate on forecasting behavior and decisions. Since this is my sweet spot, I have done well with my forecasts on the Fed, Congress, and (so far) Europe.
In topics where I have less personal background, I work to find the right sources, ignoring the instant experts on Europe and China.
Thanks for your thoughtful comment!
Jeff
Has CNBC Lost Its Mojo? [View article]
It is only the Ron Paul slant and the current election environment that make things appear to be different.
So I agree with everything you say, except that the debate is not between liberals and conservatives, but between mainstream republicans and Tea Partiers.....
Thanks for joining in!
Jeff
Get Real About Economic Progress [View article]
I also love it when we get a good discussion going. That said, it does seem like some in the commentariat are determined to see the worst in anything and even add a political twist.
Thanks for joining in, and for your great suggestions for further discussion.
Back to my trading screen, iPad news feeds, financial TV on TIVO. Now what should I do with that calculator?
Jeff
Weighing The Week Ahead: Time For Some Fireworks? [View article]
There are hundreds of data points like the ones you mention. My objective is to sort through the mass of data and highlight things that are most important. I also try to find some items that most people probably did not see anywhere else.
I had to smile at your citation of the China PMI dropping .2 of a point. Do you really think this is big news? Do you know how this index is calculated? Like most surveys, they do not tell you response rates or margin of error. The historical sequences are abbreviated and the methodology not documented very well. Do you even trust this? (I have noted in the last few weeks that the real data in China might be even worse, citing stuff about car sales that you probably did not see elsewhere).
Your assessment that the rate of economic growth is slowing is exactly what I have been writing for weeks. A difference is that I also look for things that might go right. At the moment, the two things to watch are confidence (consumer and business) and housing.
I welcome your additions with both analysis and data, and I explicitly invite people to disagree:)
Meanwhile, instead of saying what you do not like about the latest news from Europe, let me offer a little two-part challenge:
1) What would be the elements of an acceptable solution -- participants, programs, size, etc.
2) Is there any way to monitor progress (or lack thereof) to such a solution, or should we all just wait until it is finished?
Thanks,
Jeff
Weighing The Week Ahead: Any Help From The European Summit? [View article]
I do quite a bit of research for each article, and this theme came up several times. Here is how one source put it (also citing a speech by Draghi): "Third, and most urgent, retail bank runs must be prevented. The best way would be for the EFSF or its successor fund to explicitly guarantee all national deposit insurance systems in the euro area. Such “deposit reinsurance” would bolster the integrity of the euro area and immediately enhance trust in its banks. Of course, strong European-level supervisory structures should eventually be built to prevent moral hazard. It will take more time to combine these different pieces into a consistent European banking policy framework. The current moment calls not for perfect fine-tuning, but for swift and bold commitments."
http://bit.ly/Jd4idO
Thanks for helping me clarify this distinction.
Jeff
How Investors Can Get An Edge From The European Crisis [View article]
This is the nature of compromise. And with democracies it takes time.
The message from the governments right now seems to be that there is too much austerity. That bargain will probably change a little to provide the Greeks and (perhaps the French) a little more room to recover.
This is not all about the current debt/GDP ratio......