On the Economy: 12/06/2007 - Principles of the Stock Market - Investment Strategies, Analysis & Intelligence for Seasoned Investors.

On the Economy: 12/06/2007

Principles of the Stock Market

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ECONOMIC VIEW. It’s getting harder and harder to believe any data releases by the US government. We all know inflation is way up yet the government says it isn’t. For one big reason because it ignores gasoline, heating costs and food prices. That approach came a decade or so ago and has helped the US government immensely by keeping “colas” down, cost of living increases in many safety net plans, thereby hurting Americans (another example of how democracy or what’s fair for the masses has eroded in recent decades). Then we have Gross Domestic Product, whereby Q3 GDP was just reported as up an amazing +4.9% while we all know the economy was falling sharply because of the subprime mess which began in late July/early August. Ok, maybe GDP was up because of inventory building but when inventories back up like they’ve been doing, that’s a sign of pending trouble. And over the last few reports, what do we make of the JOBS report, whereby a reported loss of -4000 jobs for August was revised into a gain of +110,000 jobs the next month. Jeepers, creepers! . Schwartz View: All we can do is let traders play their games with the numbers. I remember ‘Trader Vic” Sperandeo in his great two books published in the 1990s (get them on Amazon.com) writing that traders trade off these numbers, even start positioning when the first estimates come out. So forgive me if I can’t believe any data by the government anymore. (And then just consider what other countries like China and Russia announce. Gosh, they can just say anything.. Especially after last week’s Russian election, many saying it was the most corrupt, rigged election ever.) So beware out there regarding any government stats; please! Beware yesterday’s terrific gain in Nonfarm Productivity, up +6.3%. Be aware that the number is suspect and could indicate bad or good news. If it’s accurate it can indicate worker efficiency but it could also just indicate the opposite, fewer people working.

Posted 12-06-2007 8:20 AM by Richard Schwartz

Filed under: Principles of the Stock Market, Richard Schwartz, GDP, Inflation, Jobs Report

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