Numbers can play such
an important role in rendering meaning to certain things. Doctors use numbers to calculate dosages for
prescriptions; governments use numbers to determine population
metrics...amongst other things; Wall Street uses numbers to quantify the range
of earnings and price potential for corporations. Even my proprietary database analytics, ArlingtonEconometrics, creates
algorithmic equations to produce statistical probability integers regarding
trend analysis and market forecasting.
But numbers alone do
not tell the whole story. While medical
data might help to determine an ideal drug dosage, let us not forget that there
is a person behind that diagnosis....someone with feelings, anxieties, and
expectations about their medical affliction and its treatment.
Government statistics
can also be misleading because ranges of numbers only speak to the phenomenon,
not the people (and their individual circumstance) that those figures
reflect. Too often we look only at the upper range of those data to extract "best
outcome" probabilities, while ignoring the bottom half of the averages and
the lives sometimes negatively impacted by social experience.
Wall Street, too,
oftentimes becomes consumed by consensus integers and statistics that yield a conclusion
which supports a preconceived point of view.
Markets going up? Of course.....one
can always find justification to ignore any contrary analysis.
By definition, numbers
should be agnostic. After all, they are
simply integers written on a page, ten otherwise nondescript ciphers which when
compiled in a certain order, by a certain methodology, produce yet another
cipher!
Which is why when we
look at a dashboard of information it becomes the lens through which we perceive those numbers and the meanings that we wish to
identify. Too fast, too slow, too much,
not enough. Today's financial palate is
replete with nuance, exaggeration, and innuendo.
We can use these
integers to identify trends, over periods
of time, if one only has the patience and experience to examine them.
Sometimes, deviations
in the trend alert us to changes in the norm.
It is also incumbent upon the analyst in this case to take into account
not just the upper range of the data, but the lower hanging fruit as well. After all, in order to obtain an
"average" one needs both halves of the data to arrive at a
statistical mean. I fear that a rush to
judgment is creating a hybrid science which fails to do proper long-term due
diligence.
People
In our current economic
analysis, while emboldened by enormous progress being made both in financial
data and portfolio aggrandizement, we are distressed by a deeper meaning of the
"lower half" of the data....the multitude of those persons disaffected or not
positively affected by the stream of
corporate earnings reports, labor statistics, or inflation news. Who speaks for them or to them? Is progress, by definition, all-inclusive or
only for a select few?
Long seen as a
bellwether for domestic economic growth, the US Federal Reserve is walking a
fine line between holding fast to a policy of "easy money" begun
in response to the credit crash in 2008,
and pulling back on accommodation, running the risk of choking-off demand
before it begins in earnest. To be
clear, consumer demand is improving, as demonstrated by earnings reports, and
is serving as a welcome self-fulfilling prophesy. My concern is that the average citizen pays
little attention to the Fed, if truth be told, and if asked would probably
concede that even the Fed Governors might not have their "kitchen
table" best interests uppermost in their minds.
Think about how
financial data supports a conspiracy of silence against any negative
connotations. Do you buy food? Do you frequent the theatre or movies? Do you
purchase cell phones or other technology?
Do you cross bridges or take trains as part of your daily commute? Have you purchased a new vehicle
recently? Bought gasoline? How much does that new prescription drug
cost? Yet, it is widely believed that
inflation is in check. While most of us don’t
give second thought (or, primary thought) to the "little things" and
how they might affect our everyday behaviors, some of these anecdotal figures
mean the difference between being comfortable or surviving until the next
paycheck.
You get the picture....
The bottom line is that
information, data, statistics, etc. has the ability to create objective
distinctions for the observer, but their usefulness is only relevant if we stop
to consider the lives and hopes and expectations of those whom the data purport
to represent.
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