imported post
Data on steroids:
We have been watching, with no small degree of skepticism, a stream of improving Macro-economic data. Color us unconvinced. Many of the key releases have been fraught with misleading headlines obscuring much weaker data beneath, and last month was no different. From Inflation to Federal Deficit to Unemployment Rates to Industrial Output to recent GDP (and its revisions), nearly every data point comes with an asterisk.
When we look back at this period of economic home runs, we will call it the season of steroids.
Like Major Leaguers, the Data is on the Juice.
Take the Leading Economic Indicators (and revisions) from the Conference Board. The changes to the LEI now register a
flattening yield curve as a positive for future economic activity. Only in the alternative universe where the Conference Board lives is this considered a positive. The CB now requires the yield curve to
actually invert before it bodes negatively for future economic growth.
The Board was apparently not pleased that 8 of the 10 past LEIs were
negative. Hey, if you don’t like what the indicators are suggesting, than
why not just change the model? And that’s exactly happened. Taking a page from the BLS handbook (Birth Death adjustment, anyone?), the Conference Board reduced the utility of LEIs for investors. Their work now falls into the category of economic cheerleading.
http://bigpicture.typepad.com/comments/2005/08/juiced_data_1.html
Reminds me of tech stocks do not earnings. :shock:
