Moronic Hedonics
Well, today the markets are moving in a snap-back fashion to the post-Fed "head fake" that is not unusual. The problem is that in the process, volatility measurements are moving to new lows. This implies that volatility will also "snap back" to its normal range. So, either the market is about to surge higher and faster or it is due for a sharp correction. Since we have reached the 1540 to 1560 range of resistance mentioned yesterday for NDX, I am voting for the latter as the likely scenario. Also, yesterday's drop, although modest, technically qualified as a distribution day. Followed up by a sharp, holiday-assisted rise on lower volume, the reasonable interpretation is that upside is limited, at least in the short term.
Now to the title of today's rant. For those not fluent in bureaucratic doublespeak, hedonics is the term applied by government statisicians to "quality adjustments" made to series of economic data. Two recent articles by Walter Williams and Bill Gross discuss the implications of these adjustments on the GDP numbers and inflation statistics, respectively. Walter Williams argues in his analysis that GDP figures are inflated by almost 3 percent! Obviously, this has significant implications for an economy that is purportedly growing in the 3-4% range. Ancedotally, it seems reasonable that this is more realisitc, since the economy "feels" like it is growing at a rate more like 0.5 to 1.0% a year. Job growth (whose numbers are similarly manipulated) also "feels" more in line with these more modest growth numbers. Read the full text of this excellent analysis here : GDP growth not as advertised
Bill Gross has penned a missive along the same lines, blasting the Fed's bean counters for underestimating inflation. This also seems to agree with real-world experience as anyone who has bought a gallon of gas, a cup of coffee, groceries or a house can readily attest. His guesstimate of the false reduction in the inflation figure is around one percent. This also fits the goals of our elected and appointed leaders to accomplish their economic dirty work with no one being the wiser and complaining. Namely, our President can say that the economy is strong and our Federal Reserve Chairman can say that inflation is sufficiently under control that interest rates don't need to be raised further, faster. Don't miss this one! Haute Con Job
Now to the title of today's rant. For those not fluent in bureaucratic doublespeak, hedonics is the term applied by government statisicians to "quality adjustments" made to series of economic data. Two recent articles by Walter Williams and Bill Gross discuss the implications of these adjustments on the GDP numbers and inflation statistics, respectively. Walter Williams argues in his analysis that GDP figures are inflated by almost 3 percent! Obviously, this has significant implications for an economy that is purportedly growing in the 3-4% range. Ancedotally, it seems reasonable that this is more realisitc, since the economy "feels" like it is growing at a rate more like 0.5 to 1.0% a year. Job growth (whose numbers are similarly manipulated) also "feels" more in line with these more modest growth numbers. Read the full text of this excellent analysis here : GDP growth not as advertised
Bill Gross has penned a missive along the same lines, blasting the Fed's bean counters for underestimating inflation. This also seems to agree with real-world experience as anyone who has bought a gallon of gas, a cup of coffee, groceries or a house can readily attest. His guesstimate of the false reduction in the inflation figure is around one percent. This also fits the goals of our elected and appointed leaders to accomplish their economic dirty work with no one being the wiser and complaining. Namely, our President can say that the economy is strong and our Federal Reserve Chairman can say that inflation is sufficiently under control that interest rates don't need to be raised further, faster. Don't miss this one! Haute Con Job
posted by Matt Butler at 1:44 PM
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