Economists & Data

by Larry Levin



There has been a raft of interesting data recently. I find it interesting because it has been rather bad, far worse than economists expected in fact, and yet the market has continued to go up on apathetic volume. Of course, this is no longer surprising. What is definitely surprising though is how these economists can hold a job.

Which profession is it that you can be continually WRONG yet keep drawing a salary? Answer: meteorologist and economist. Hell, even the weather man gets it right far more often than economists. These economic soothsayers will always give you a straight and precise answer; however, you always know that it’s wrong.

The recent data to be off by varying degrees are found below.

1) Economists predicted S&P Case-Shiller home prices to show gains. The data actually showed housing prices continuing to fall; -0.2% last month.

2) Economists predicted consumer confidence to have only dipped mildly from the prior month. The data actually showed a shockingly large drop in consumer confidence. I suppose the egghead economist would rather use a math equation for this report rather than pick up a phone and speak to a human being. I'm guessing they would have been closer to correct had they used a telephone to contact the "consumer."

3) MBA purchase applications were expected to have improved - they did not. The data was far worse than expected. "With home prices continuing to drift amid an abundant inventory of homes on the market, potential home buyers do not see any urgency to lock in purchases." Wrong again Mr. Economist!

4) Being wrong 99% of the time is terrible, but this one is inexcusable: New Home Sales. This is an important metric to the entire country. The average egghead economist expected the data to show 360,000 sales; however, it was only 309,000. This monthly drop was so bad it has erased 100% of the gains made in 2009 and set a record low: the worst reading since records began in 1963! Economists? EPIC FAIL! As a reminder, this dismal data comes while your tax dollars are being plucked to give away to new home buyers. This colossal waste of money, as evidenced by the aforementioned data, will be ending very soon. What will happen then? The political response is always to double the failed policy - then triple it.

All of this data has come out just this week with more to come. Last week economists missed the weekly jobless claims data. What will tomorrow's weekly jobless claims data bring? My money isn’t on the economists predictions.



Previous Day's Trading Room Results:

Trade Date: 2/24/10

E-Mini S&P Trades*
(before fees and commissions):

1) Pivot sell @ 8:40am at 1098.50 = b/e (1 lot)

2) VA buy @ 10:23am at 1101.50 = -.50 & -.50 (2 lot)

3) VA buy @ 1:31pm at 1101.25 = -1.00 (1 lot)

4) 80% sell @ 2:08pm at 1101.50 = b/e & b/e (2 lot)

5) Algorithm positions (4)

6) "Reading the Tape" positions (7)...…combined Secret's, Algo, &
"Reading the Tape" total...+2.00



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