Interesting Bloomberg article and survey on the forecasting prowess of Wall Street’s economists. I am less convinced that trading desks rely on their own economists predictions, but take that as you will.
Here are the top 10 according to Bloomie:
>
Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data, ability to repeat discredited memes, and lack of respect for scientific knowledge. Also, be sure to create straw men and argue against things I have neither said nor even implied. Any irrelevancies you can mention will also be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.
Faced with the choice between changing one's mind and proving that there is no need to do so, almost everyone gets busy on the proof. —John Kenneth Galbraith
Retail Sales in Jan rose .4% headline m/o/m, .7% ex auto's, .6% ex auto's and gasoline and .7% at the core. The headline figure was less than expected while the rest were slightly better. But, with respect to non headline sales, because Dec figures were revised lower, taking the two months together were about in line with forecasts overall. Sales rose in electronics, building materials, food/beverages, clothing, sporting goods, dept stores and restaurant/bars and fell interestingly for online retailers, health/personal care, furniture and motor vehicle/parts. Bottom line, headline sales were below expectations due to the greater than expected fall m/o/m...
read more »
Tweet
Facebook
Reddit
Digg this!
December 3rd, 2009 at 11:57 am
Krugman quoted Hatzius on his blog (http://krugman.blogs.nytimes.com/2009/07/15/deficits-saved-the-world/) as saying:
Hatzius: “The private sector financial balance—defined as the difference between private saving and private
investment, or equivalently between private income and private spending—has risen from -3.6% of GDP in the 2006Q3 to +5.6% in 2009Q1. This 8.2% of GDP adjustment is already by far the biggest in postwar history and is in fact bigger than the increase seen in the early 1930s.”
Krugman goes on to say: “That’s an interesting way to think about what has happened — and it also suggests a startling conclusion: namely, government deficits, mainly the result of automatic stabilizers rather than discretionary policy, are the only thing that has saved us from a second Great Depression.”
December 3rd, 2009 at 12:03 pm
It is tough to make predictions, especially about the future. – YOGI BERRA
Paul Tudor Jones in Market Wizards said “the most important rule of trading is to play good defense, not great offense. Every day I assume every position I have is wrong. I know where my stop risk points are going to be. I do that so I can define my maximum possible draw down.”
http://viewpointsofacommoditytrader.com/1262/dance-of-the-money-bees/
December 3rd, 2009 at 12:07 pm
Who cares? We are all just two steps away from the tree we came out of anyway. Of greater importance is the 30th anniversary of “London Calling” by The Clash, this great recession/depression is missing a great musical movement. The 70′s saw the birth of Punk. Whether you like Punk or not, it has influenced everything from Dave Matthews to Taylor Swift. There could be an argument that New York Dolls and Iggy and the Stooges started the movement earlier in the 70′s but no denying that the shitpool the U.S. and the U.K. ended up in at the end of the 70′s gave rise to the most powerful and influential genre of music since Jazz was invented. Go back and pull out your old Clash lps load them up on your Ipod and realize that this recession’s music sucks. Barry what is your opinion on London Calling? I think this could be a good weekend topic. Does this recession/depression have any great music?
December 3rd, 2009 at 12:10 pm
Leave it to Krugman to conclude that “the path to prosperity” is through a bigger government.
Personally I do not recall the government having exported much in the way of goods or services (for pay that is). I also do not recall much wealth creation from governmental agencies. Fannie Mae? Anyone want to do an IPO on FEMA?
December 3rd, 2009 at 12:21 pm
And the winner for the Astrology Today magazine’s 2009 Astrologer of the Year is….
Cayenne Sunshine of the Boulder, Colorado Kaleidoscope, who correctly predicted that Florida would have three category 2 hurricanes and that President Obama would choose a Portuguese Water Dog as First Dog.
December 3rd, 2009 at 12:32 pm
Yes, e.g. DARPA’s experiments with digital communications networks in the 1970′s led to no wealth creation whatsoever.
Unfortunately, Hatzius is predicting unemployment peaking in mid-2011. Bleah.
December 3rd, 2009 at 1:12 pm
In a crowd of 1024 economists each saying different things: I flip a coin ten times. On average, 1 economist will get all ten flips right. 10 of them will get 9 flips correct.
In fact, it looks a lot like the results from bloomberg, except that nobody is getting the flips 100% correct.
December 3rd, 2009 at 1:16 pm
“automatic stabilizers rather than discretionary policy, are the only thing that has saved us from a second Great Depression.”
right- i buy that-
like food stamps and unemployment compensation could stave off a huge economic catastrophe-
QE and ZIRP are not automatic stabilizers- nor were the many credit facilities created by the Fed nor the Fed purchasing worthless assets so the banks could load up on cash to meet capital requirements- nor the accounting changes that allowed banks to value assets above their true value- you know- mark to make believe-
ridiculous statement by Krugman
December 3rd, 2009 at 1:37 pm
Forget the predictions, everyone is wrong about the future most of the time.
Find the ten economists who make correct observations most frequently!
Most of the economists describe the economy of a world I am not familiar with. By and large the mainstream, Wall Street economists have called an end to the global recession. In the real world, the recession is getting much worse, and doing so at an accelerating pace.
A dispassionate examination of the mechanisms of commerce indicates more than money losses taking place. Instead, what is happening is a bankruptcy reorganization of the debt/energy finance paradigm, of modernity itself.
While the economists are taking curtain calls, the traders and financial system ‘owners’ are cashing out, closing their positions and swapping unredeemable securities to the Fed for Treasuries. They are voting with their feet, which they have been doing all along. Think on Goldman shorting the mortgage paper it was simultaneously marketing.
So far, these insiders have been 100% right. Too bad for the rest of us, eh?
December 3rd, 2009 at 1:49 pm
syphax Says: Yes, e.g. DARPA’s experiments with digital communications networks in the 1970’s…..
syphax, yes you are correct. DARPA has created value and stimulated a number of technologies. It is a program that has returned many times its value in creating new wealth and prosperity. It is also the exception to the rule, IMO.
December 3rd, 2009 at 1:50 pm
Shameless self-promotion alert:
I do a similar reality check every month as part of MarketWatch’s Forecaster of the Month.
Instead of looking at who’s best on the medium-term outlook a quarter ahead, we look specifically at who’s best at forecasting the high-frequency numbers that come out each week.
In the past year, here’s a list of the best forecasters:
Stephen Stanley, RBS Securities; Nigel Gault and Brian Bethune, IHS Global Insight; Maury Harris, UBS; Neal Soss, Credit Suisse; Brian Jones (independent forecaster); Spencer Staples, EconAlpha; John Silvia, Wells Fargo; David Greenlaw, Morgan Stanley; Michael Feroli, JP Morgan; Dean Maki, Barclays Capital.
This list is surprisingly stable, which means to me that some people are better at forecasting than others, and that it’s not just random chance. The MarketWatch consensus forecast we publish each week is the median forecast of the 10 top forecasters, and consequently, is more accurate than consensus forecasts that include people who aren’t good at forecasting.
http://www.marketwatch.com/column/Forecaster%20of%20the%20month
December 3rd, 2009 at 2:03 pm
from Yahoo- regarding Bernanke’s confirmation hearings-
“Geithner, who was chief of the Federal Reserve Bank of New York before taking the Treasury job, credited Bernanke with “enormous creativity and bravery” in confronting the financial crisis. “We’re lucky to have him in the job,” Geithner said.”
does anyone care what Geithner has to say about Bernanke? What a joke.
December 3rd, 2009 at 2:48 pm
Is Hatzius really that good or does he just know when complete exsanguination by the vampire squid is well-nigh?
December 3rd, 2009 at 3:12 pm
the bohemian Says:
This is not to be mistaken with Geithner’s ” enormous lack of creativity and cowardice” in confronting Blankfein, Dimon and Mack.
December 3rd, 2009 at 6:25 pm
@steve from virginia
+100
December 3rd, 2009 at 7:18 pm
The ranking is only for the four quarters ending June. Not very interesting: economists often get the story right one year with pure luck. I looked at the period 2003-2008 (will update once we get GDP figures for 2009):
http://raphaelkahan.blogspot.com/2009/11/gdp-forecast-update.html
December 4th, 2009 at 12:52 am
Phooey. “Explanations and forecasts are symmetrical and reversible.” Karl Popper. The reason the forecasts are so bad, particularly at the Fed, is they have no idea how the world works.