A Lot of Data

"This is referred to as data mining.  They slice and dice these numbers a thousand different ways.  They analyze patterns.  If your NSA, you look for suspicious patterns." - Leslie Cauley

The first thing that you always have to be careful of when look at a lot of data points is that you are not mining data to fit your theory rather than looking at all the data points from a rational perspective.  It is an easy trap to fall into as we are normally biased towards our own opinions and can spend hours explaining the virtues of our position (just listen to any sports enthusiast arguing about the referee calls).  However when the data points overwhelmingly in your favor you have to act and that is one of the arts of trading.

Recently there has been a slew of poor information and it all points to the economy slowing and at a far more rapid pace (actually all the analysts are expecting growth) than was anticipated by the market consensus.  The first and most recent data point was that PC sales fell by 14%.  This is the largest decline in the history of PC sales.  Pundits tried to push this aside as a migration to the tablet and the mobile phone and while I will admit that a lot of people have migrated to those platforms the underlying trend is worrying.

There is no way that the market implosion of PCs is only related to tablets.  This is a direct result of very weak consumer spending and a weak global economy.  Ask anyone who owns a tablet how much business they actually do on a tablet and the answer is normally not much.  This weakness will feed into weak chip sales, chip development, software and numerous other industries.  Remember when the NASDAQ was flying and technology was the place to be well it appears that those days are over and to me this is even more scary as without a technological recovery I am not sure what other industry can drag the global economy back on its feet.

The next data point is poor consumer spending numbers which have fed poor retail sales.  As I have mentioned repeatedly, the tax effects and increased costs of health insurance and other expenses combined with little to no job growth or increases in pay will have a massive impact on consumer spending.  This is starting to raise its ugly head as retail sales fell 0.4% in March.  Following this up was another poor number out of the consumer as consumer sentiment fell again in April.  Admittedly this is a preliminary number but it is not a good omen.

The final data point I want to talk about is the revelation from Pimco's Bill Gross that the Federal Reserve is now publishing different reports for different groups.  The Federal Reserve issues a separate release to lobbyists and congressional staffers.  In addition there are certain funds and banks that receive the data sooner than others!  Now why is it that some are insiders and others are not?  So much for independence and for looking out for the benefit of the economy!  No it is certain that they are cherry picking those who they want to benefit at the expense of everyone else and this is outright discrimination and needs to be stopped immediately.

Outside of that they did caution that the duration of their quantitative easing strategy was under consideration to be shortened.  In effect they are finally admitting that it is not working as why else would they start talking about curtailing it when nothing has recovered?  Should they stop printing I would expect a huge market correction for the simple reason that they are manipulating the market openly.  Stop manipulating and down it goes as all that the market will have for a backstop then will be poor economic data and outlook. 

As you all know I have been calling for this for a long time and I have been wrong to date but until the economic indicators turn themselves around there is no reason to be long the market particularly when the people controlling it are openly manipulating the data and providing it to their friends first!