You can expect them to be wrong more often than not for one thing.
I love Bloomers for some of the wacky things they come up with and here’s another couple of gems.
Bloomberg have a Economics surprise monitor which gauges hits or misses to economic data expectations. It gives the percentage difference of the mean consensus to the actual figure and the graph reaction in a comparable market like the S&P.
Here’s a brief rundown of the recent figures.
Hit or miss?
Here’s how they do as a snapshot.
2 out of 6 is rubbish
From a prediction point of view you would hope that there is no variance as that would mean that people are bang on predicting data. The snapshot above shows that fortune tellers have only been accurate in 2 sectors, Labour and retail.
Citigroup have also got their own surprise indicator which shows the differences in consensus to data over regions. Close to zero shows they’ve been accurate.
Citigroup economic surprise monitor
Barring Japan, Australia and the Asian Pacific consensus calls have been out by a country mile.
So what’s the take from all this? Aside from the fact it seems that most data predictions are like playing “Pin the tail on the donkey”, trading data releases is still fun as it’s the variations from expectations that define the moves. From a longer term fundamental picture you need to ignore the economists calls and concentrate on the overall picture. A miss on a data point could still paint a positive economic picture and trend.
While the immediate data is important, whether you trade short, medium or long term you should always be watching the underlying story. It was something I was constantly banging on about with the UK recovery.
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