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« Weighing the Week Ahead: A Deluge of Data | Main | Are You Smarter than a Doctor? »

August 29, 2011

Comments

oldprof

Doubtful -- Many observers who share your concern are looking at the slope in different parts of the curve. Try the ten-year/thirty year spread, for example. There are many, many indicators that have NEVER looked as they do going into a recession -- corporate profits, balance sheets. I don't like calling things 0 or 100%, but there are too many people taking a few data points and drawing exaggerated conclusions.

As to the chart you cite, it is difficult to discuss in this format, but you obviously see something different from what most would. If you want to go back so far, you need some adjustment for the size of the labor force. We are in a bad place on job losses, but not the stuff of recessions.

I try to let the data speak to me -- and I do so every week, in objective terms, with regularly reported position changes.

Thanks for joining in.

Jeff

oldprof

Frank -- Sorry to be so slow in responding to your comment. It has been pretty hectic. The link is excellent, and I have made a note for future reference.

Thanks!

Jeff

Doubtful

Yes, the yield curve is "different this time". How can you claim it's not?

It's more or less impossible for the yield curve to invert when rates are at the lower bound. That's why it's different. We now have to look at Japan as the better model, not our own recent history. In Japan's case, they went in to recession when the yield curve flattened.

In many places where the yeild curve CAN still invert, it HAS e.g. many emerging markets. What does that tell you about the US?

Also, on unemployment claims, I don't see why you say "Never a recession at this level":

http://research.stlouisfed.org/fred2/series/IC4WSA

None of the above means that there HAS to be a recession, but I suspect you're torturing the data just as much as the "parrots".

Frank Newitt

Great post. I recently read an interesting piece on the blog of an Australian boutique hf (Helix Partners) on the same subject that you might want to take a look at: http://www.helixpartners.com/market-commentary/post-hoc/

rs

Hear hear.

Another reason to like Prof Jeff besides the intellectual honesty is his resemblance to the affable Wayne Knight ("Newman" but a moral, more handsome version).

louis

Jeff, great post today!
FWIW,I routinely refer to the "parrots" you describe as "one of the bobble heads on one of the OFTAA channels".
For example,"the other day I heard one of the bobble heads on one of the OFTAA channels saying XXX but a week before the same bobble head on another OFTAA channel said YYY". I no longer refer to any of these guys by name nor name their platform.
OFTAA channel? -ONE F#%KING THING AFTER ANOTHER channel.

jdb

Jeff,

I think this is very sad. It's tempting to think of it as being just a lack of character in the players. But, I wonder if it's postmodern thought and those raised within it. It could produce a mental state where the concept of trying to find external reality is foreign to the mind.

I read awhile back about researchers trying to determine the degree to which young people believed in the concept of external objective reality. But, they were surprised in the initial going that they had to spend time explaining the actual concept of that to the students. They couldn't understand the concept itself. It wasn't only that they didn't believe in it, they had trouble actually conceptualizing it.

Maybe, that's a part of what is going on. If so, I think we are in a world of hurt.

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