Inbox jammed with the latest barrage of daily economic data points and previews?
Feeling overwhelmed at the prospect of wading through the reports and trying to figure out what the market consensus is?
Well you don’t have to feel alone anymore. Cleve Rueckert at Birinyi Associates, feels the very same thing. What’s more, he thinks it’s all probably become a bit of a wasted effort anyway.
In fact, he says, the indicator bombardment may be entangling views, creating noise and distracting attention.
As he notes on Wednesday, the number of indicators investors are faced with on a daily basis has soared over the last decade:
How useful all the data points are, meanwhile, is debatable.
In his opinion (our emphasis):
In our college history courses we learned that World War I Daily & Monthly Basis occurred primarily because of the “entangling alliances” in Europe. Today’s investors are facing a dilemma of “entangling indicators.” While we certainly agree that some indicators are useful, recently there has been a quest for ever more descriptive and predictive economic indicators. Over the last eight years the number of indicators deemed to be “important” has doubled from roughly forty-eight per month to now over one hundred.
1 On a daily basis we are bombarded by an average of five indicators, many of which are overlapping or redundant and frequently contradictory. There are no fewer than three distinct consumer confidence measures; at least ten tell us about housing; six measures of employment; and many gauges of economic growth (page 2). Additionally, these examples are only the ones that pertain to the US economy; today’s market moves because of reports ranging from Chinese GDP to expected German exports to Greek debt.
In short, he asks: How can you be an investor with this storm of news clouding the marketplace?
His answer: You can’t.
Related links:
DIARY – Economic Indicators in Germany from September 1 - Reuters
DIARY – European Central Bank (ECB) events to October 1 - Reuters
US economic indicators – Economicindicators.gov