Bob Elliott has a differing opinion on employment surveys, as he tweet stormed 1/7/23 :
Myth: the HH survey is better at predicting turns than payrolls, particularly the first report.
Fact: The divergence between the two measures (adjusted for definition differences) is random and has no leading signal one way or the other through time. https://t.co/vwX5t5Ha8D
Where the market leads the Fed follows seems a theory that is likely to dominate in 2023. The Fed Mintues they all sang from the same songsheet--no rate cuts in 2023. Was their heart really in it or do they feel cornered and are just saying it. It lacked conviction which is fair enough if you look at the measures of uncertainty for U3, GDP, and CPI. Which given that uncertainty, you should also doubt what the Fed says as well as observe how bad they have forecasted inflation and guided on rates vis the dots. What do you think of thier core PCE 3.5% forecast for 2023? I am taking the under on that one. There is a view that inflation softens, but not enough or even reaccelerates in the back half of 2023 and 2024. But, just look at inflation forwards---all around or lower than 2.5% and strip out the 50bp wedge and you get sub 2.0% core PCE. Now, I want you to find me a single person who thinks those inflation forwards are correct. Which makes me think that there is a position accident building where those positioning for higher inflation via forward structures well outnumber those (that would be 0) who believe in a quick return to 2.0% for core PCE, given thier obsession with ex-housing services inflation being a bit recalcitrant. Personally, I don't agree with the recession forecast, so if that were to materialize then I suppose the inflation ought to end up even lower.
Undervalued necessities with big divides and pricing power…..MLP’s. As you one coined “The anti bubble”. I’m in a just pay me mood. Market may average 10% but it doesn’t compound at that. Rarely does it beat 8% compounding. I think the MLPs will. We shall see
This is the best newsletter I get. I have done well following your advice and hope it continues. Best wishes for a happy and healthy new year. I would like to “give back” by donating to a favorite Haymaker charity. Do you have one?
We are just as bullish on the upside potential for energy, but in our uneducated few the timing of it is less than certain. In our experience, high-conviction trends take longer to play out than expected.
Bob Elliott has a differing opinion on employment surveys, as he tweet stormed 1/7/23 :
Myth: the HH survey is better at predicting turns than payrolls, particularly the first report.
Fact: The divergence between the two measures (adjusted for definition differences) is random and has no leading signal one way or the other through time. https://t.co/vwX5t5Ha8D
It is amazing how antsy people are to pile money into equities despite an obvious primary downtrend. A trading frenzy with each green bar.
Where the market leads the Fed follows seems a theory that is likely to dominate in 2023. The Fed Mintues they all sang from the same songsheet--no rate cuts in 2023. Was their heart really in it or do they feel cornered and are just saying it. It lacked conviction which is fair enough if you look at the measures of uncertainty for U3, GDP, and CPI. Which given that uncertainty, you should also doubt what the Fed says as well as observe how bad they have forecasted inflation and guided on rates vis the dots. What do you think of thier core PCE 3.5% forecast for 2023? I am taking the under on that one. There is a view that inflation softens, but not enough or even reaccelerates in the back half of 2023 and 2024. But, just look at inflation forwards---all around or lower than 2.5% and strip out the 50bp wedge and you get sub 2.0% core PCE. Now, I want you to find me a single person who thinks those inflation forwards are correct. Which makes me think that there is a position accident building where those positioning for higher inflation via forward structures well outnumber those (that would be 0) who believe in a quick return to 2.0% for core PCE, given thier obsession with ex-housing services inflation being a bit recalcitrant. Personally, I don't agree with the recession forecast, so if that were to materialize then I suppose the inflation ought to end up even lower.
Undervalued necessities with big divides and pricing power…..MLP’s. As you one coined “The anti bubble”. I’m in a just pay me mood. Market may average 10% but it doesn’t compound at that. Rarely does it beat 8% compounding. I think the MLPs will. We shall see
Well done Dave, keep up the good work, and have a prosperous and happy new year.
This is the best newsletter I get. I have done well following your advice and hope it continues. Best wishes for a happy and healthy new year. I would like to “give back” by donating to a favorite Haymaker charity. Do you have one?
Thanks for your excellent analysis!
We are just as bullish on the upside potential for energy, but in our uneducated few the timing of it is less than certain. In our experience, high-conviction trends take longer to play out than expected.