Economic Change is Happening Yesterday

Data lag is a big problem.

Right now we have the following occurring:

1) Unemployment ticked up
2) Corporate profits continue to decline
3) Job postings are down
4) WIRP is down
5) The Gold Put/Call Ratio is down
6) The SPY Put/Call Ratio is up
7) Class 8 truck sales looks like 2009

And all of this is on a data lag because it takes a few weeks to gather the data.  Then it takes a few weeks to write and publish the report.

That means that as of yesterday when I put that list together, we are even farther down this road than the data shows.  Plus I noticed most of this stuff in July so we're talking a major data lag.  By the time the data catches up it will be too late.

And a little FYI, the media sentiment lags the data lag by a few months so don't wait for them to report what's happening now.  They'll be late by a few months and call it breaking news.

Journalists Should Write and Not Speculate

Do you get car advice from your barber?  Do you get spiritual advice from your banker?  Do you get insurance advice from your grocer?  No.  Nobody does.  But everybody gets financial advice from journalists.

Here's a little secret.  Journalists almost never have enough depth of knowledge to be taken seriously. They report the news.  They are incapable of interpreting it.

Case in point.  The unemployment rate ticked up yesterday while companies simultaneously posted fewer jobs.  I read a story where the writer actually argued that this is a good thing.  But it's not.  It never is.  Ever.

You see.  An expanding economy is a good thing and a shrinking economy is a good thing.  However, for an economy to expand it needs employees to fill all the new jobs.  Shrinking job openings and an increase in people hunting for jobs means the economy is shrinking, not expanding.  

Now those data points (unemployment and job postings) are early indicators.  So we should monitor them closely.  We should not say the economy is shrinking.  We should not say it is continuing to expand.  We should say it looks like something might be happening.  Let's verify.

When journalists are reckless we all lose.  Journalists should report new from experts and stay out of speculation.