Monday, February 3, 2014

Some evening news

Here's some reading:

Bespoke - ISM ruins the week already. I suspect it's a big outlier on bad data, and by March the US will look fine again. Til then, though, the market has been given a good reason to sell some more.

Calculated Risk - Goldman and Merrill agree with me that the weather's fucked all the data.

BI - Citi economic surprise index tanks. So people are selling stuff.

Bespoke - Vix at upper end of range. So either it goes higher, or it turns back down. Personally, I think it has to go higher, if only because I think the market really wants to complete that head and shoulders pattern it's drawing right now.

Ritholtz - the January barometer is bullshit. A lot of stuff in this article about fallacies in thinking. For example:
What we want to know is whether there is a rational explanation that could explain the causality. Is there some ongoing and repeatable force that is resulting in the correlation that we see? Alternatively, is it merely a coincidence, like having good trading days when you wear lucky socks?

This is where we run into some trouble with the January Barometer: No one has identified a reason why a negative first month of the year would be so significant to returns. Does it follow a change in investor attitudes, or perhaps a shift in risk appetite, or maybe new legislation for taxes that takes place on Jan. 1? Without some rational explanatory basis, we cannot conclude this is anything other than coincidence -- a mere correlation without any underlying reason. Like other such random past events, the correlation could simply fade over time.
In 2010, markets fell about 3.7 percent in January, but the S&P 500 had a full-year gain of 14.8 percent. If you followed the January Barometer that year and avoided U.S. equities, you left money on the table. However, you would have missed even more the prior year. In 2009, the S&P 500 fell about 6.3 percent in January and gained almost 26 percent, not including dividends, for the full year.

We also see false positives the other way -- when a positive January leads to a negative year.
But this is his most devastating point against the January barometer:
There are no guarantees that the median of all prior years will be the most likely outcome.

Reformed Borker (Bork Bork Bork!) - professors to EM countries - harden the fuck up! Seems the link is broken right now but it worked earlier today.

Chronicles of Brodrick - why isn't gold collapsing? Cuz China's on holiday, so why shouldn't gold go down? I mean, gold is a useless metal, right?

BI - bitcoin meetups are full of molesters and Neanderthals. Some chick goes to a bitcoin meetup and gets groped, then gets a lecture on why women are too stupid to understand bitcoin. Quote:
Entirely uninvited, and before I even have a chance to react, one guy proceeds to grab me by the waist and pull me into an awkward, grope-y side hug next to him on the bench. To reiterate, I’ve never met this man in my life. I try giving him the benefit of the doubt and make some quip about his being a friendly sort, but it gets uncomfortable pretty quickly when he puts his hand on my leg and leaves it there until I squirm uncomfortably.
 Later on,
Undeterred, I try to sidestep it and go on with my argument, concluding that what I am describing is “much more effective and efficient” than the current system. “Well,” he says looking at me knowingly, “Women don’t usually think in terms of efficiency and effectiveness”.
She should go to a goldbug conference.

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