Sunday, April 19, 2015

Shut Up, the US Recovery is Real

Recently, I have come to know of a prominent bank's forecast regarding interest rates and also some currency views. It isn't that hard to find such information these days, many of the banks publicly publish their "Market Outlooks" daily or weekly on their websites, just that it isn't so obvious to those who are not looking for it.

However, I am tried of hearing things by all these "forecasters". They might as well be fortune tellers with crystal balls, since their consistency and accuracy is about as good as mine - meaning nobody keeps track of it and they can say whatever the hell they want. Hell, the banks ought to hire me to vet their views, I can immediately punch holes into half of their jack-shit analysis which they stole of some article written by someone else.

But I do keep track of what they say. It is super clear to me. They all are restricted massively by career risk. After making a few bold calls, if they are wrong, they all just follow the market herd consensus. They cannot afford to be wrong again while the rest of the market is right. Once people forget about their past calls, they try to be bold again.

I've heard some people say that these bold forecasters just like to be different, to be contrarian. I disagree. They are speaking their mind and they are throwing out their best guess on what they think is right, even though that might not agree with the market. However, because of career risk, they shy away from saying what they think is right if they are wrong long enough, to saying what they know will be safe for their career. It's tough for me to respect their views anymore.

After seeing one such... professional financial fortune teller (some of you might call them economists) flip flop all over the place about everything he has said previously, I just shake my head.

Here are some key herd views that everyone has. Like literally everyone:

The Fed will raise rates end of this year.
The Fed's dot plot forecast is accurate.
The US recovery is REAL.

So, is the Fed's dot plot forecast accurate and they will raise rates based on that?

LIFT OFF IN 3, 2... Oh wait fellas, postponed. But next month we'll do it!

Whoa, what happened to all those rate hikes? DID THEY LIE AGAIN, WTF?!
(Source: FRED)

I mean, the Fed has been so open, transparent and honest about what they have said since 2009 about their rate guidance. Is it even remotely possible that they will lie again and again and again and again and again and again and again?


So, is the US recovery real? Unemployment is down to 5.5% (pffft, in Singapore, what are we at, 2%?). I mean, who gives a crap about labour participation rate, right? The unemployment rate is more important!

Plus, the quality of the jobs does not matter at all. Quantity over quality. Part time jobs, full time jobs, they are all the same! As long as you have a job, you should be happy, right? Part time jobs for everybody!!!

I know for some people, they might be confused, but I am being very sarcastic here with my commentary. To me, this whole thing is a joke.

However, I honestly do think that they Fed will hike rates this time. Everyone would not be able to believe it and mass panic and confusion ensues. We go back down to zero again.

Hey, if economist can shout out stuff that doesn't seem to make sense, why can't I talk about all the crap that is floating around in my head too? Anyway, I am sure whatever I think is totally inconsequential. For one, I get paid diddly squat to share my thoughts, while these guys in suits and ties get paid well enough to drive sports cars to work. Obviously, you get what you pay for, right?

So, step right up ladies and gentlemen! Make an investment, TODAY! I am sure you can offload your purchases to the next greater fool tomorrow. Trust me, I am an (unpaid) economist!

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