A Tale Of Two Memes

It was the best of times,
it was the worst of times,
it was the age of wisdom,
it was the age of foolishness,
it was the epoch of belief,
it was the epoch of incredulity,
it was the season of Light,
it was the season of Darkness,
it was the spring of hope,
it was the winter of despair,
we had everything before us,
we had nothing before us,
we were all going direct to Heaven,
we were all going direct the other way

— Charles Dickens, A Tale Of Two Cities

Markets around the world are caught between two competing memes. One is the official propaganda line – that the economy is “recovering” as if from a cold and “modest” growth is expanding – and the other is what might be described as the ECRI view – that the economy is in a deepening recession concealed by faulty estimates of economic metrics.

One thing is clear – the economic data releases such as NFP and Advance GDP are not useful data about the economy, even though the stock and bond markets may react violently. Even Goldman admits that the data is “economically meaningless,” in other words, it has zero predictive value.

Once you realize that the data flow is useless, then it should not take you long to figure out that data, models, Fed policies and all the discussion and “conclusions” derived from that data flow by economists, bloggers, journalists et al. are also useless.

That leads you to the obvious conclusion that the only people worth listening to are those who understand that the data flow is useless and have formulated their own analysis independent of the meaningless “data” – ECRI, Hussman, and of course YVT – who are all on the bearish side.

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