Lao Tsu

The Oct Payroll figure fell more than expected (240k vs 200k consensus), unemp printed 6.5% vs expectations of 6.3%. Losses were widespread across most categories. Much of these losses (aggravated by the Boeing strike, -27k, which is now settled) are due to the collateral effects of the credit crunch, now slowly being repaired. So far in ‘08 1.18 million jobs have been lost, half those in the last 3 months.

As we predicted Nov/3, by today, the view for a full blown recession will be set in stone. It is. Our readers have known we are in a recession for a few weeks now. That is not news any more.


The Tao

Following yesterday’s loss in the US equity mkt, one news service declared, "Dow drops 443 in reaction to retail sales report." This is utter nonsense. World markets move for a whole range of reasons, too complex and complicated for any one mortal or organization to understand. After work, home and enjoying a cocktail, TV is on and the commentator assures you that this is why the mkt did this today. Fine. You go to bed secure, that must be it. This has nothing to do with insight but with selling advertising.

Lao Tsu said, "Those who know, do not speak; those who speak, do not know." Certainly Lao Tsu was not thinking of TV anchors; there were few around in his day. Instead, he was focused on core knowledge or wisdom; however, we have taken license to apply his wisdom to the mkt and why not? It works.

Whether through the medium of TV or radio or newsprint, no matter - analysts all talk to each other, and, the same sources. They all look at the same statistics and they all reach similar conclusions. Forecasters (mostly economists, ill equipped for the task) gather together for security in times of maximum price violence. The greater the uncertainty, the greater the similarity of predictions as the experts shout together in the dark. And in turn, the greater will be the collective surprise when their estimates miss the mark.

As Alan Watts noted, there is indeed a wisdom to insecurity. This is esp true in the financial world. There should be a fail safe - when we feel absolutely certain about being right there should be a gremlin assigned to the task to say, "OK, it is highly likely that you are wrong." Or, when the herd is supremely confident in one direction, it is time to take the other.

Robert Craven