Posts filed under “Research”

Bob Farrell’s Rule #9 in Action

I think it’s likely that I introduced Bob Farrell’s Market Rules to Remember to the blogosphere (albeit to a smaller audience), as they’d been an integral part of my upbringing in the business and I was eager to share them when I started blogging.  (BR posted them here in August 2008.)

That said, let’s have a look at Farrell’s Rule #9 which states:

9. When all the experts and forecasts agree – something else is going to happen.

With the understanding that it’s early August, that there are almost five months left in the year, that the Trading Gods will frown upon what I’m about to do and that I’ll wind up with copious amounts of egg on my face, I offer up the following look at what the consensus was saying with regard to year-end S&P500 levels just a very short time ago (originally via a Bloomberg terminal and circulated liberally).  I simply do not have it in me to list any individuals’ names; I’ll leave it to the reader to figure out the who’s who.  Caveat:  There may have been updates to these forecasts since the time I first received them, but these were, in fact, the forecasts not all too long ago.  And I recently attended a meeting at which one strategist who’s officially in spitting distance of the mean provided attendees a “whisper” number closer to the high.  Oh well.

(We closed last year at 1257.)

So, the one thing that we could easily have inferred from this data when it was published was that the S&P would not close at (or near) 1400, which is now a cool 17% move from yesterday’s close in the context of an economy that is losing steam by the day.  1600 or 1200, yeah, but 1400, no way.

With that, I humbly ask the Trading Gods to be merciful in their punishment of me.  My intention — to demonstrate in real-time one of Farrell’s Rules — was noble.  Frankly, given our current circumstances, I find the prospect of a 17% gain between now and year-end fairly remote.  But I have been wrong a couple thousand times in my career.  Only time will tell if I should have waited until January 2012 to publish this, but that would evidence a total lack of cojones on my part; I’ll take my medicine at the appropriate time.

Category: Analysts, Data Analysis, Economy, Really, really bad calls, Research

Not Too Stimulative

Obama had one shot at a stimulus package when the economy was reeling from the near economic collapse of 2008.  Some members of his team argued it needed to be bigger (it did), but for whatever reasons they did not prevail.  What was needed then — as now — was to put money to work…Read More

Category: Current Affairs, Data Analysis, Economy, Research

Rosie v Krugman

Invictus writes: I could not help but be struck by the different positions — both articulated on Friday –  on federal spending taken by two economists for whom I have the utmost respect — Paul Krugman and David Rosenberg.  In his daily missive Friday, Rosie went off on federal spending: Government spending, in the United…Read More

Category: Economy, Research

CFNAI — Toeing the Line

The Chicago Fed’s National Activity Index (CFNAI) printed this week.  The CFNAI is among my favorite indicators that no one seems to follow (though it is covered monthly by Calculated Risk and usually David Rosenberg).  It is an amalgam of 85 distinct economic indicators that gives a very accurate read on the economy.  The folks…Read More

Category: Data Analysis, Economy, Research

Read It Here First: Labor Market Slack

A Bank of America Merrill Lynch research note on the abysmal nonfarm payrolls number for June contained this graph: A February 2010 Big Picture post on slack in the labor market contained this graph: My comment at the time, which holds true today: I’d postulate that only when this gap starts to close meaningfully will…Read More

Category: Data Analysis, Economy, Employment, Research

Time Running Out?

A mention by David Rosenberg in a recent note sent me scurrying to find this report from the San Francisco Fed in August of last year.  The report — remember, it was almost one year ago — used the Leading Economic Indicators to assess the probability of another recession within the next 24 months (from that date,…Read More

Category: Analysts, Cycles, Data Analysis, Economy, Research

Fade the Inflation Hysteria

Tons of talk and pixels being spilled over the imminent inflation threat.  It bears an eerie resemblance to what we heard from the likes of Jerry Bowyer and Art Laffer two years ago.  I’d fade it now, exactly as I suggested back then (here and here, the latter piece co-authored with Bonddad): Exhibit A —…Read More

Category: Commodities, Current Affairs, Cycles, Data Analysis, Economy, Inflation, Markets, Research, Wages & Income

MER: Pondering How Things Might Have Been Different

Invictus here. I’m halfway through Greg Farrell’s Crash of the Titans: Greed, Hubris, the Fall of Merrill Lynch, and the Near-Collapse of Bank of America. Perhaps I’ll post a thorough review when I’m done with it. So far, so good, though I’ll confess it’s a bit like watching one’s own funeral — very morbid; sad…Read More

Category: Research

The U.S. Wealth Barbell

Duly noted in a research piece by Merrill Lynch, the wealth gap continues to widen, poverty grows: The following article caught our attention on the Wall Street Journal Online, “Millionaire Population Soars – Again.” The Wall Street Journal is reporting on a survey performed by Phoenix Marketing International’s Affluent Market Practice. According to the survey,…Read More

Category: Current Affairs, Data Analysis, Economy, Research

Refi Madness: The Heat is Frying your Brain (Redux)

It is a very hot August and the heat seems to be getting to people on Wall Street. In Washington the greater heat stems from fears about the impact of the economy and housing on the mid-term elections. As a result, Wall Street is expecting a big “surprise” in the form of a massive GSE…Read More

Category: Credit, Real Estate, Really, really bad calls, Research