Review

One’s track record is key. It is in fact all you own in this business.

If we cherry pick, slide away from past predictions we then become simply one of the crowd, holding hands, shouting out together in the dark. One of these was the economist Paul Samuelson who said that, “.. to be published is to be found out.” We’re not interested in joining that club.

Most of what we predicted Q4 for the US economy is now reality, much of it priced in. However, it is useful to visit those sectors where we could have done better. One of these is manufacturing. That sector has flattened estimates. Our job is to detect major flaws in consensus but we missed that one. Next, although the consumer cooperated Q4, he slowed his pace a tad, so far Q1. But we predicted an acceleration for Q1.

Aside from these we are fairly pleased with results, which includes of course jobs. Private sector growth is expected to increase 200M for Feb, that release tomorrow morning. If so that will fit our anchor quite nicely. But even if tomorrow’s report is for some reason weaker than expected, we can look for much stronger reads ahead. That will be the trend for this key sector.

Finally, to the Mid East: The pursuit there of consensual gov’t will only increase by the way of breadth and intensity. That movement will be adorned with major upheaval and no doubt more violence along the way. Thus the clear risk of higher crude prices remains. So for example an abrupt and peaceful ending to the crisis in Libya would cheer markets, tanking crude. We would then advise our clients to take advantage of this price movement because there is more to the Mid East than Libya. This week’s arrest of a Saudi cleric for calling for democratic reform and a constitutional monarchy simply reinforces this view.



Robert Craven