We all know that some key economic reads for January and February have come in on the side of weakness. This surprise has been attributed to weather. Some prints for this time frame, such as new home sales and some manufacturing reads did ok but Jan Retail Sales, Jan NFP (hiring & wage gains) and Feb services were in the tank. But what is important for our purposes is that these reads were far below expectations, below street consensus.
If one is interested in capturing price change it is not the absolute result that counts; we don’t spend a lot to time worrying about that; it is only the result vs consensus view. Duh. It is easier to isolate the flaw common to street estimates than it is to work in reverse. We’d rather spend that time in the garden.
So, were recent weather patterns a secret to the analytical crowd? Doubt it. Let’s just go way out on a limb and venture that unless these guys live under a rock, then the impact of ice and snow was woven into their estimates - they’re not anxious to miss on purpose. But still there was a significant miss for jobs and spending.
This means that relative weakness in the US economy – something analysts have yet to pick up - has been camouflaged by the weather. And this reality, this far along in the “recovery” is perfectly consistent with our long-held view that the US will under-perform this cycle; it will under-perform vs that which is at this moment priced in.
Robert Craven
If one is interested in capturing price change it is not the absolute result that counts; we don’t spend a lot to time worrying about that; it is only the result vs consensus view. Duh. It is easier to isolate the flaw common to street estimates than it is to work in reverse. We’d rather spend that time in the garden.
So, were recent weather patterns a secret to the analytical crowd? Doubt it. Let’s just go way out on a limb and venture that unless these guys live under a rock, then the impact of ice and snow was woven into their estimates - they’re not anxious to miss on purpose. But still there was a significant miss for jobs and spending.
This means that relative weakness in the US economy – something analysts have yet to pick up - has been camouflaged by the weather. And this reality, this far along in the “recovery” is perfectly consistent with our long-held view that the US will under-perform this cycle; it will under-perform vs that which is at this moment priced in.
Robert Craven
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