Chasing Fools Gold (aka Central Banker Alchemy)
By Tyler Durden
Remember the story of “The Philosopher’s stone?” In a nut shell it was an alchemical substance capable of turning worthless metals into gold. Today, much like those of yore, central bankers across the globe are engaging in that never-ending quest for the ability to turn the worthless – into the precious.
And to the ill-informed it seems they have indeed achieved it. That is, as long as you wrap it in the same cloth as found in “The Emperor’s New Clothes.” For if not – the naked truth becomes appalling clear. And it ain’t pretty.
Case in point: Brexit? What Brexit? To those not actively involved in European politics, or the needing to understand the fallout – It’s like it never happened.
However, if you want to take absurdity “up to 11” I propose you’ll hear something along these lines in the coming days from some next in rotation fund manager, economist, or Ivory Tower alchemist at large.. Ready?
“Brexit showed the market was just waiting for a market clearing catalyst to vault higher. With earnings season set to begin, the Fed. now on hold indefinitely for 2016, the ECB at the ready with its own “whatever it takes,” employment growth continuing and at near statistical full employment, stocks appear reasonably priced to extend their gains well above current levels.” Rinse, repeat.
That said, here’s what I’m more than sure you won’t hear: Brexit triggers an upheaval to the entire European Union dynamic where its certainty in remaining solvent, let alone standing past 2016 is now an open question. Further details for possible upheavals and contagion effects are currently unknown. Caution and solvency should be of the first order.
No, it’ll be more along the lines of the former with additives such as: “Employment numbers in the U.S. printed 280K plus smashing the expected 175K consensus. This proves we’re on the right track, and see – May was an outlier. Blah, blah, blah…”
Again, just for perspective: June’s 287K print is being touted “as proof” that May’s print of 38K was indeed “the outlier.”
Fair enough, however, with that 38K now being revised down by some 2/3rds to just 11K. Wouldn’t that mean the “outlier” was just proved to be even worse?
Think that last point through: 38K is revised down by so much it is within a statistic rounding error of a negative print. Now, a month later, where one is to believe the BLS (which very few do) has had a better look, as well as received more plausible and calculable statistics, has concluded the “outlier” is not to even remain the same or revised higher. No, it’s lower, and not by just a few thousand. More than two-thirds of the entire figure was jettisoned. Again, 38K (now 11K) is the “outlier?” What type of sorcery is this?
Only in the so-called “smart crowd” of statistical magicians can such a claim be made with a serious face. To anyone else – it’s laughable. However, the fool’s arguments don’t stop there. In fact – …read more
Source: Chasing Fools Gold (aka Central Banker Alchemy)
