Gaining Insight?

“The goal is to transform data into information, and information into insight.”

-Carly Fiorina

 

That would (should) be the goal of any coach, captain, or executive. Sadly, it’s not the goal of central planners. They are mostly dogmatic-academic types whose goal is to obfuscate the data into their thesis, and their thesis into more central plans.

 

Dr. Gary Klein did a great job outlining the risks of ideologues and flawed beliefs in Seeing What Others Don’t. Here’s how he distinguished “successes from failures” in idea generation and decision making (pg 120):

 

  NO INSIGHT                       <--              -->     GAINED INSIGHT

  1. Gripped by flawed beliefs                    Escaped the fixation of flawed beliefs
  2. Lack of experience                                Experience
  3. Passive Stances                                     Active Stances

 

If your premise is that a bureaucrat (with no market experience) can part the heavens and smooth economic gravity, you’re gripped by some serious human hubris. If every impotent market policy move is met with more policy moves, there is no insight in that.

Gaining Insight? - campfire cartoon 10.31.2014

 

Back to the Global Macro Grind

 

“So”, since 90 TRILLION Yen in money printing + the 3 arrows of “Abenomics” isn’t working, what did the Japanese announce overnight? “Three More Arrows”!

 

I seriously couldn’t make that up if I tried. And if a spend more than another sentence on what the 3 “new” policies are, today’s note is going to turn into a joke (1. “Stronger Economy” 2. “Welfare” and 3. “nominal GDP target of 600T Yen”).

 

Best of luck with that, dudes.

 

In other central-market-planning news this morning the Norwegians have proclaimed their mystery of faith to the world that they can solve for all that is #Deflating in Norway with “rate cuts.” They’re cutting by 25bps to 0.75% and say they “can do more!”

 

I bet they can!

 

Europe, meanwhile, is right confused this morning:

 

  1. Draghi says he doesn’t need to deliver more #cowbell, because #EuropeSlowing isn’t yet clear to him
  2. Weidmann (head of the Bundesbank) says he’s “skeptical” about QE’s impact on the real economy altogether

 

The problem with the pending Draghi vs. Weidmann debate is that they aren’t debating #GrowthSlowing, yet. As the European data continues to slow, and the German stock market continues to crash (-22% since April), you can bet your Madoff that will change.

 

In the meantime, what is a Global Macro risk manager of this central-planning experiment gone bad to do?

 

  1. Stay away from cyclical stocks and “reflation” (locally and globally)
  2. Stay with long-term government bonds
  3. Keep building up that new contrarian Gold position

 

Yep. Until Draghi starts freaking out Weidmann with more “data/information” (like Sweden and Finland reporting new lows in Producer Price (PPI) #Deflation of -2.2% and -1.1%, respectively, this morning), Euro Up = Dollar Down = Gold Up. I like that.

 

As you know, I’m all about showing you the love these days. But don’t confuse my love for life, liberty, and free-market capitalism with a love for any trade-able security. My goal is to like/dislike macro positions as they undergo Phase Transitions. That is all.

 

What could get me to move off of the 0% net asset allocation to Equities in both the US and International markets? That’s simple. The combination of my macro market signals and research information. Until growth stops slowing at an accelerating rate, I’m all set.

 

Our immediate-term Global Macro Risk Ranges (with intermediate-term TREND research views in brackets) are now:

 

UST 10yr Yield 2.08-2.20% (bearish)

SPX 1 (bearish)
DAX 9 (bearish)
VIX 19.90-26.62 (bullish)
USD 94.41-96.69 (neutral)
EUR/USD 1.10-1.14 (neutral)

Gold 1120-1148 (bullish)

 

Best of luck out there today,

KM

 

Keith R. McCullough
Chief Executive Officer

 

Gaining Insight? - z ben 09.24.15 chart


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