What the Stock Market Really Thinks About the Economy

[Martin]

http://www.fivethirtyeight.com...ally-thinks-about.html

Some have tried to discredit Obama's plans based on recent stock market performance, but as usual, Nate Silver gives a much more in-depth and well-reasoned explanation about what's really going on. Not that Obama's plan is infallible or anything, just that we're gonna have to wait and see if it works out.

 

[newnameman]

LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

 

[MikeMike]

Originally posted by: newnameman
LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

Its like asking Fox News if Obama is doing good...

 

[yowolabi]

Originally posted by: MIKEMIKE

Originally posted by: newnameman
LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

Its like asking Fox News if Obama is doing good...

If he introduces bias into his data, then his argument should be easy to discredit.

But i've noticed that all you've done is attack the source. Care to explain?

 

[Phokus]

Nate Silver has been pretty much right about everything... a genius of a statistician.

 

[blackangst1]

Originally posted by: yowolabi

Originally posted by: MIKEMIKE

Originally posted by: newnameman
LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

Its like asking Fox News if Obama is doing good...

If he introduces bias into his data, then his argument should be easy to discredit.

But i've noticed that all you've done is attack the source. Care to explain?

Same way everyone here attacks Fox...it's P&N

 

[StageLeft]

If he introduces bias into his data, then his argument should be easy to discredit.

Everybody introduces bias, if not into the data in its conclusions, wrapped up in the final sentence of the piece.

 

[Sedition]

From the Article:

Instead, the stock market is engaged in something of a pity party

This is exactly as I had been thinking. Wall Street is run by spoiled brats when they don't get their way exactly as they see it they have a tantrum.

 

[Robor]

Originally posted by: blackangst1

Originally posted by: yowolabi

Originally posted by: MIKEMIKE

Originally posted by: newnameman
LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

Its like asking Fox News if Obama is doing good...

If he introduces bias into his data, then his argument should be easy to discredit.

But i've noticed that all you've done is attack the source. Care to explain?

Same way everyone here attacks Fox...it's P&N

They deserve it.

 

[Genx87]

Originally posted by: Sedition
From the Article:

Instead, the stock market is engaged in something of a pity party

This is exactly as I had been thinking. Wall Street is run by spoiled brats when they don't get their way exactly as they see it they have a tantrum.

You act as if Wall Street is a few people in the back room deciding if the market goes up or goes down. Wall Street represents markets that have millions of investors that make billions of trades. Millions of investors are voicing their opinion on where they think the economy and govt policy is going. By doing so the markets are tumbling.

 

[BoberFett]

Originally posted by: yowolabi

Originally posted by: MIKEMIKE

Originally posted by: newnameman
LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

Its like asking Fox News if Obama is doing good...

If he introduces bias into his data, then his argument should be easy to discredit.

But i've noticed that all you've done is attack the source. Care to explain?

Attacking the source is the only things this forum does.

LOL FAUX NEWS!!!1!!!!!

 

[soccerballtux]

Originally posted by: BoberFett

Originally posted by: yowolabi

Originally posted by: MIKEMIKE

Originally posted by: newnameman
LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

Its like asking Fox News if Obama is doing good...

If he introduces bias into his data, then his argument should be easy to discredit.

But i've noticed that all you've done is attack the source. Care to explain?

Attacking the source is the only things this forum does.

LOL FAUX NEWS!!!1!!!!!

That's a good point.
But there's a very good reason not to link to dailykos. Even if you can't disprove it directly, there are so many biased, disprovable articles from them that I don't even click a link if I know that's where it's going to lead me.

 

[miketheidiot]

Originally posted by: Genx87

Originally posted by: Sedition
From the Article:

Instead, the stock market is engaged in something of a pity party

This is exactly as I had been thinking. Wall Street is run by spoiled brats when they don't get their way exactly as they see it they have a tantrum.

You act as if Wall Street is a few people in the back room deciding if the market goes up or goes down. Wall Street represents markets that have millions of investors that make billions of trades. Millions of investors are voicing their opinion on where they think the economy and govt policy is going. By doing so the markets are tumbling.

of course markets and investors are fairly uninformed and irrational in the sort run too, and display lots of heard mentality.

 

[Fern]

Meh, interesting somewhat, but flawed IMO.

Who is geting layed off? Those who buy staples, or those who buy the luxury discretionary products?

His so-called CEI, or ratio of XLY to XLP has underlying, yet unstated assumption - namely that XLY and XLP move 'proportionately' to the same economic data. (Economic hard times hit both at the same time and in the same/identical way. Any deviance in those will skew results giving a false positive or negative.)

Is it not possible that broad economic bad news (such as latoffs of the lower and middle class) could lower the XLP (staples) more than the XLY (luxury/discretionary goods)?

(Why do I continue to see the corp elite ect still frolicing at fancy resorts while the layoff lines get longer?)

If the two indexes (XLY & XLP) don't necessarily respond alike, with XLY not hammered as hard because luxury/discretionary is not elastic as staples for any given bit of bad news, is CEI index will yield a higher number thus making the CEI (LT outcome) appear stronger for thre longer term than it really is.

I'd also like to know what the effect is on having McDonalds stock classified as a 'luxury". No doubt it's effect can be quantified and isolated, yet he has not done that.

Clearly McDonalds has benefited (or hurt less) by the more difficult times. FFS, they have a "Dollar Menu" now.

Also, I find his last paragraph conjecture (his personal interpretation):

the stock market is engaged in something of a pity party -- the prevailing emotions being fear and loathing. It is concerned about policies which might be burdensome to equityholders in large corporations while perhaps nevertheless being boons to economic recovery.

Well, OK. That is one explanation for the CEI movement (in additiona to mine above - the rich not hit as hard as the lower & middle class). But is his 'wishfull thinking' or accurate? Unfortunately, there is nothing his study to tell which.

Fern

 

[fskimospy]

Well Fern, of course it's conjecture. What did you think it was going to be? If people knew how things were moving with certainty the world would be a very different place. He offers a reasonable analysis backed up by fairly significant statistical correlation.

 

[StageLeft]

Originally posted by: miketheidiot

Originally posted by: Genx87

Originally posted by: Sedition
From the Article:

Instead, the stock market is engaged in something of a pity party

This is exactly as I had been thinking. Wall Street is run by spoiled brats when they don't get their way exactly as they see it they have a tantrum.

You act as if Wall Street is a few people in the back room deciding if the market goes up or goes down. Wall Street represents markets that have millions of investors that make billions of trades. Millions of investors are voicing their opinion on where they think the economy and govt policy is going. By doing so the markets are tumbling.

of course markets and investors are fairly uninformed and irrational in the sort run too, and display lots of heard mentality.

That's why reading the herd is every bit as important as the numbers in seeing where things will go.

 

[Fern]

Originally posted by: eskimospy
Well Fern, of course it's conjecture. What did you think it was going to be? If people knew how things were moving with certainty the world would be a very different place. He offers a reasonable analysis backed up by fairly significant statistical correlation.

I say he doesn't.

If you (I mean the collective 'you') understand what he saying you'll see that he is basically describing the CEI as an economic leading indicator. But because of his formula, this also means he describes the XLY indicator as a leading economic indicator. (Which begs the question, why bother with the CEI when you can just use the XLY?)

So, if there is an increase the CEI it indicates a gap (laggng gap) in the XLP.

In other words, the XLP stocks are undervalued. I've little doubt the analyists on Wall Street would not have been able to identified this themselves and move into XLP stock positions.

In other words, if his theory was correct/worked, it would tend to be self-canceling. (The market would sufficiently into XLP stocks until the gap was erased)

Again, the unstated yet important premise in his theory in that both XLP & XLY share the same degree of elasticity.

If he knew what he was doing, and didn't start out with any preconceived notions (as it appears he has), he would start by proving/demonstrating the similarity of elasticity (identical movement to the same 'market news")

I contend it's likely statistical 'tom-foolery' trumped up with fancy lingo to fool the intellectual superficial. And that if he does manage to be correct about the economic outlook it's more coincidence than anything else.

However, if you're confident in his prognostications, by all means quickly run and take a long position on XLP stocks/funds. You're sure to get rich

Fern

 

[MotF Bane]

Originally posted by: yowolabi

Originally posted by: MIKEMIKE

Originally posted by: newnameman
LOL, Nate Silver. He is about as unbiased as Dailykos. :laugh:

Its like asking Fox News if Obama is doing good...

If he introduces bias into his data, then his argument should be easy to discredit.

But i've noticed that all you've done is attack the source. Care to explain?

That's all P&N does when something shows up from Fox News.

 

[miketheidiot]

Originally posted by: Skoorb

Originally posted by: miketheidiot

Originally posted by: Genx87

Originally posted by: Sedition
From the Article:

Instead, the stock market is engaged in something of a pity party

This is exactly as I had been thinking. Wall Street is run by spoiled brats when they don't get their way exactly as they see it they have a tantrum.

You act as if Wall Street is a few people in the back room deciding if the market goes up or goes down. Wall Street represents markets that have millions of investors that make billions of trades. Millions of investors are voicing their opinion on where they think the economy and govt policy is going. By doing so the markets are tumbling.

of course markets and investors are fairly uninformed and irrational in the sort run too, and display lots of heard mentality.

That's why reading the herd is every bit as important as the numbers in seeing where things will go.

the herd is the numbers idiot

 

[Eeezee]

Originally posted by: miketheidiot

Originally posted by: Genx87

Originally posted by: Sedition
From the Article:

Instead, the stock market is engaged in something of a pity party

This is exactly as I had been thinking. Wall Street is run by spoiled brats when they don't get their way exactly as they see it they have a tantrum.

You act as if Wall Street is a few people in the back room deciding if the market goes up or goes down. Wall Street represents markets that have millions of investors that make billions of trades. Millions of investors are voicing their opinion on where they think the economy and govt policy is going. By doing so the markets are tumbling.

of course markets and investors are fairly uninformed and irrational in the sort run too, and display lots of heard mentality.

You mean herd, right? God I hate the internet

 

[StageLeft]

Originally posted by: miketheidiot
the herd is the numbers idiot

Why so angry?

By numbers I mean fundamental underlying values such as earnings. By herd I mean where things are priced now, which are an immediate representation of perceived value. They are not the same thing.

 

[Thump553]

If you follow this simplistic theory then I guess the markets expressed a great love for Obama and his recovery plans today. Somehow I suspect Fox News and the GOP shills will ignore this bogus theory today.

The markets have been crapping because of the horrendously bad and system wide problems we have. Most recently they grossly overshot to the negative. They will bounce (probably overbounce for a while).

What I'm really waiting to hear is some concrete information on regulation reform. A good sensible reform is far more important (and lasting) than boatloads of cash.

 

[Zebo]

I've never blamed Obama other than mortgaging our future to stave off proper reconciliation.- there are fundamental issues this author never mentions about 30 years in the making. For that you have to read Paul Craig Roberts and other economists.

 

[Fern]

Hmm..

The market looks to be quite sensitive.

I'm reading that the 'good Citi' news is from a letter the preisdent sent to employees remarking on a good 2 month period (Jan & Feb).

Those would be 'unofficial' and only internal numbers generated by Citi themselves as auditors are not allowed to issue opinions on 2 month periods. Nor are these numbers from any SEC reports (they are quarterly).

I've seen discussion that this rally may be from short-sellers covering their positions. Makes a lot of sense.

We'll have a better idea of what's going on when the 1st quarter results start coming in next month.

Edit: From additional reading looks like the rally may resulted from Bernanke's remarks this morning (basically promising thathe banks won't be allowed to fail. We'll see).

Fern