CIRCULAR REASONING IN THE STOCK AND BOND WORLD

ONE GROUP OF OVERLY JITTERY INVESTORS  PURCHASE  MORE SHORT TERM BONDS THAN LONG TERM ONES.   THE SAME GROUP OF INVESTORS LOOK AT THE RESULTS OF THEIR OWN  ACTIONS — USE THE TERM  “YIELD CURVE INVERSION”  AS IF THE DATA WERE INDEPENDENT OF THEIR OWN ACTIONS.     THEY CLAIM SUCH A CURVE  “PREDICTS A RECESSION”.     OTHERS  WOULD CALL SUCH A PREDICTION CIRCULAR REASONING.

 “YEILD INVERSION” CAUSES PANIC. THE MARKET RESPONDS WITH AN 800 PT DROP

The sale of stocks and bonds generates a great deal complex charts and graphs, but much of it is based on skimpy data.  The little data analysts  do have is a bit over worked—particularly since the advent of powerful computers. The results themselves are then re-analysed—into meta data—often pushed through the computers over and over again as if they were new, independent data points.  The results can too often be characterized as gobbledygook.

We don’t need to internalize the complicated  curves on a computer screen to know that the US economy in the real world is booming every where one looks.

But could we be experiencing something else?  Perhaps we are experiencing attempts at economic sabotage ?

Some would have us sink into a recession for political purposes.

Bill Maher, the late night TV host and comedian, infected with and a vector of the Trump Derangement Syndrome virus, makes his living saying politically incorrect things, and  is presently the  host  of Real Time and Politically Incorrect late night shows.  On Real Time just recently, Maher, quipped that:  “the only way that President Trump could be defeated in 2020 is if  the nations suffers a recession.”  In a less politically fraught and tense national environment—this would mean little and have no impact.

Only a day after Maher’s off the cuff comment, the so called “scary” yield curve on the long term bond yield vs short term bonds got splashy front page attention on our nation’s news sheets.  The graphs exhibits the “dreaded” inverted trend lines.  Panic broke out among the stock/bond owning classes who seem to act like lemmings on their way to the nearest cliff or a skittish herd of cows during a thunderstorm.  Wealthy traders who have seen their investments grow enormously by a least one-third since 2016 reacted  to the yield curve scare by charging en masse  to the nearest telephones and stock floor, in the process scuffing up their shiny “seven Benji” Nordstrom “Donnie Bit”  oxblood loafers, and staining their 10 Benji Saint Laurent, “pique plastron” poplin, dress shirts with anxiety generated body fluids, stains which their  dry cleaners will have a tough time removing.

When the USA has the hottest economy in the world, and people and money are flooding here to find a safe harbor.  When interest rates are near zero, inflation is low, employment is the highest its been in half a century and our working people are seeing real growth in paychecks and full of optimism the chattering classes  are bent on staring at “inverted yield curves” based on circular reasoning.

But can some of this be the result of  intrusion of politics into the world of economic analysis and prediction?




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