Confusing Weekly Data with Long Term Predictions

Today's email from Jas Jain is critical of ECRI ( The Economic Cycle Research Institute), a New York-based independent forecasting group. Jas seems to have trouble distinguishing between comments on weekly changes and long term forecasts.

-------- Original Message --------
Subject: ECRI’s Unrelenting Mantra of “stronger housing activity” During 07/06/07-11/16/07
Date: Fri, 28 Dec 2007
From: Jas Jain

ECRI’s Unrelenting Mantra of “stronger housing activity” During 07/06/07-11/16/07

Nov 16, 2007: “The effect of higher rates and jobless claims was partially offset by stronger housing activity and higher stock prices, said Lakshman Achuthan, managing director at ECRI.”

"NEW YORK, Sept 14 (Reuters) - A weekly gauge of future U.S. economic growth edged up due to higher stock prices, lower interest rates and stronger housing activity..."

"NEW YORK, Aug 10 (Reuters)...The fall in the index was partly offset by stronger housing activity, Achuthan said."

“NEW YORK, July 13 (Reuters) - A gauge of future U.S. economic growth rose in the latest week due to measures of stronger housing activity, lower jobless claims and higher stock prices…”

“NEW YORK, July 6 (Reuters) - A gauge of future U.S. economic growth edged up in the latest week due to lower interest rates and stronger housing activity…”

Talk about clueless economists, or dismal scientists. Where they blind to the reality or were they purposely misleading the public?

Jas

It is clear to me ECRI was commenting on what changed over the prior week that caused the weekly index to go up or down. Sadly, this seems completely lost on Jas Jain who has been wrong predicting a depression for the last decade while ECRI has been correct with its predictions on recessions for nearly 20 years that I have data for.

ECRI WLI Growth Rate Falls to Negative 5.2%

Today Jas Jain once again rings the recession bell while being critical of ECRI for saying a recession is still not inevitable.

-------- Original Message --------
Subject: ECRI’s WLI Growth Rate, -5.2%, Falls In the ECRI’s Recession Range of –5% to –6%
Date: Fri, 28 Dec 2007
From: Jas Jain

December 28, 2007 : ECRI’s WLI Growth Rate, -5.2%, Falls In the ECRI’s Recession Range of –5% to –6%

December 24, 2007 press release from ECRI: “The ECRI leading U.S. index's growth rate has hit a 5-year low of -4.8%. Typically a -5% to -6% reading is needed for a recession.”

Latest Data (December 28, 2007):

Weekly Leading Index 135.2 -5.2

So, “the ECRI leading U.S. index's growth rate” has fallen below 5%. One wonders why the ECRI econ-meisters are not issuing the recession forecast now that the data is screaming recession. My analysis of the long-term behavior of the WLI confirms a recession that will end up in depression.

Jas

Jas, obviously there is more to their forecast than the raw numbers. Here is the ECRI press release from today.

Weekly Leading Index Falls (but no recession call)

NEW YORK, Dec 28 (Reuters) - A weekly gauge of future U.S. economic growth fell due to higher jobless claims and lower stock prices, as its annualized growth rate hit a five-year low, a research group said on Friday.

The Economic Cycle Research Institute, a New York-based independent forecasting group, said its Weekly Leading Index fell to 135.2 in the week of Dec. 21 from 136.2 in the prior week.

The negative effect of higher claims for unemployment benefits and weaker equities was partially offset by lower interest rates, said Lakshman Achuthan, managing director at ECRI.

WLI annualized growth rate fell to minus 5.2 percent from minus 4.8 percent. It was last that low on Nov. 1, 2002, according to ECRI data.

"With Weekly Leading Index growth fast approaching its worst reading since the 2001 recession, the U.S. growth outlook continues to deteriorate. Nevertheless, it is still premature to predict a recession," Achuthan said.

Jas, you should join our facebook ECRI forum so you can ask questions of Lakshman directly. You have to admit ECRI has been accurate while you have not with your constant calls for a depression.

Request Invitation to FREE facebook discussion group "Investing for the Long Term."

ECRI Further Confirms My recession Call; Shilling and Gross Join

Jas Claims Bill Gross and Gary Shilling now join him in a recession call.

-------- Original Message --------
Subject: ECRI Further Confirms My recession Call; Shilling and Gross Join
Date: Fri, 21 Dec 2007 08:27:03 -0800
From: Jas Jain

December 21, 2007

ECRI Further Confirms My recession Call; (Gary) Shilling and (Bill) Gross Join

ECRI’s Weekly Leading Indicator (WLI):

Date Index WLI
. Level Growth

23-Apr-04 136.0 +9.4
8-Jun-07 143.7 +6.7
14-Dec-07 136.1 -4.8

Please note that WLI is a growing series, over time, like the real GDP. For the index to be at the same level as 3.6 years ago is extremely negative, almost forecasting a depression rather than a recession. Also, note the two growth rates when index was at the same levels. Please don’t expect the econ-meisters at ECRI to forecast a recession until several months into the recession. Their evasive and vague language is the best proof of their motive. They have never heard of the term probability (have never used it in connection with recession).

Bill Gross and Gary Shilling also say that the economy is in recession. In recessions forecasting there are few leaders and lots of followers among the economists. Economists suffer from the herd mentality more than most professionals. They feel secure in the herd!

Jas--

Morgan Stanley David Dorsch Says Q1 and Q2 to Have Negative GDP Growth

-------- Original Message --------
Subject: Morgan Stanley Chief Strategist Says Q1 and Q2 to Have Negative GDP Growth & More
Date: Mon, 17 Dec 2007 04:34:41 -0800
From: Jas Jain

December 17, 2007

Morgan Stanley Chief Strategist Says Q1 and Q2 to Have Negative GDP Growth

David Dorsch (sp?) appeared on Boob-berg early this morning. He said that we would have a recession during the first half of 2008. I am assuming that he is reflecting the conclusion of MS Chief Economist. If one of the top Wall Street firm sees recession to begin in 2008Q1 we can be fairly confident that the recession has already begun during 2007Q4. Also, David Rosenberg of Merrill Lynch more or less says that the recession is here. Another Wall Streeter appeared on Boob-berg who said that his firm is not calling for a recession but he sees one.

ECRI weekly data (and not the ECRI econ-meisters) also confirm my recession call (thanks, Bruce):

Weekly Leading Index 138.0 -3.8 7 Dec 2007

Confirmations for recession just keep on coming, even from Wall Street.

Jas--

Abby Joseph Coen's New S&P Earnings Estimate

Jas Jain sent this email comment about Abby Joseph Coen's S&P500 earnings estimate for 2008.

Original Message --------
Subject: Wealth Street’s Unholy Cow Cuts Earnings Estimates and Moves SPX Targets
Date: Tue, 4 Dec 2007 06:33:59
From: Jas Jain

December 04, 2007

Wealth Street’s Unholy Cow Cuts Earnings Estimates and Moves SPX Targets

Abby Joseph Cow, unholy cow employed by the un-holiest of firms, Goldchain Silverknife, cut her earnings estimates on S&P 500. Only 3-4 months ago she had raised her S&P500 target for 2007 from 1,600 to 1,650. Now, she has raised S&P500 target to 1,675 but for “next year.” Recently, her firm cut Freddie Mac from $71 (the Scam peaked just below $70!) to $24 and within days raised to $27.

Still doubt that these people are “raised in a culture of fraud?” Deception and manipulation is their primary game plan with occasional fraud.

Her goal is to keep people into Scams all the time by promising 10-15 gains in a year. Thank God that she is a barren (unproductive) cow. She wouldn’t be raising fraudsters.

Jas

Someday Jas will learn to communicate without the name calling.

There Is a Bubble Forming In the [US Treasury] Bond Market!

Jas Jain writes:

Subject: “There Is a Bubble Forming In the [US Treasury] Bond Market”!
Date: Tue, 4 Dec 2007 06:52:07
From: Jas Jain
--

“There Is a Bubble Forming In the [US Treasury] Bond Market”!

That is the opinion of a boob on Boob-berg. These boobs can’t identify bubbles in Scams, or housing, but they can identify bubble in the bond market? Amazing.

Scam Lovers must get their daily dose of bull poop.

Jas

Jas doesn't hold back.

Predicts NASDAQ to Fall 50% (to 1319)

Subject: Alan Sinai: “We Will See Cutbacks In Technology... As Soon As Q4 and In 2008”
Date: Mon, 3 Dec 2007
From: Jas Jain

December 03, 2007

Alan Sinai: “We Will See Cutbacks In Technology & Computers “Without a Doubt” as Soon As Q4 and In 2008”

He appeared on Boob-berg. He was emphatic about companies cutting back on computers, etc., “without a doubt” in the face of weakening economy.

The economy is in recession already and NASTYQ! will go down more than 50% within a year.

Jas

Today the NASDAQ closed at 2,637.13

Jas Jain on Housing Market

Date: Wed, 28 Nov 2007 12:53:42 -0800
From: Jas Jain

CA SFH Median Price, for the Past 6M, Dropping at 30.8% Annual rate; Down 16.8% From Peak In Apr’07



Jas

Jas Jain on Goldman Sachs

Date: Tue, 27 Nov 2007 16:27:28 -0800
From: Jas Jain

11/27/07

“Goldman has definitely turned significantly more bearish on housing and the economy.”

Goldman Sachs on Housing:

http://calculatedrisk.blogspot.com/

Leaders in forecasting are early and followers are late. Then there are what-me-worry clueless who fail to notice that US economy is a disaster that has been waiting to happen for a while. Now, the ball has started to role. We are already in a recession, to be followed by deflation and depression next year.


Commodities bust may already be in the early stage. When the Credit Bubble starts to burst the party is over.

Jas

Jas Jain on Bubbles And Idiots

Date: Tue, 27 Nov 2007 08:11:21 -0800
From: Jas Jain

Bubbles And Idiots (Among Speculators or “Investors”)

Human behavior is highly predictable.

The Bubble phase of any asset class lasts for 1.5-3 years. Smart people get into an asset class way before the bubble phase begins. Idiots get really enthused and interested after the asset class has entered the bubble phase.

Here is identification of idiots among speculators:

• Heavily into and bullish on Tech Scams during 1998-2000
• Heavily into and bullish on Residential RE during 2004-06
• Heavily into and bullish on Commodities during 2006-07

The super idiots are the ones who moved from one bubble (Tech Scams) to the next (RE) to the next (Commodities) over the past ten years.

With the benefit of hindsight, I was way ahead in identifying bubbles and idiots who speculated in Tech Scam and RE. Let us see if I prove to be correct in the case of commodities, because I know idiots who got really interested in commodities and have been heavily speculating in them.

Idiots are great at finding justifications for why the bubble is not a bubble and the price rise is based on fundamentals.


Jas

Jas Jain says "Economists ARE Blind to the Reality"

Date: Mon, 26 Nov 2007 12:22:06 -0800
From: Jas Jain

Markets ARE Screaming Recession, But Economists ARE Blind to the Reality

There was a melt-up in US Treasuries today and the Scam Market not only couldn’t hold the gains but it is tanking.

Vast majority of economists, who have access to the public, get paid to mislead the public. That is what the free market in information is all about.

Jas

Earnings – Very Bad News for Scam Lovers

Earnings – Very Bad News for Scam Lovers

Glossary: Scam Lover = stock market bull (stock markets exist to allow scamming of the public)

David Rosenberg, Merrill Lynch; 11/23/07:

“Financials now represent 30% of the total profit pie -- There is considerable temptation to strip financial-related earnings out of the pie to show how wonderful it is in the other parts of the market (though consumer discretionary isn't faring that much better). But the reality is that financial-related earnings now represent about 30% of the total profit pie versus 25% just three years ago — so stripping out financials is like stripping out California, Florida, New York and Texas from GDP…

“What has been more shocking is reported earnings -- Against this backdrop, what has been more shocking so far in the third quarter earnings season has been the "reported" numbers, which unlike the operating earnings do not strip out the charge-offs incurred. Here the results were even more abysmal as reported EPS plunged 28% YoY, which was the worst print since the fourth quarter of 2002… And, the folks at S&P tell us that the worst is not yet behind us. This is key because in the final analysis, it's nice to talk about "operating" earnings, but it is "reported" earnings that investors pay for. For one, it is hardly clear that these current charge-offs are going to be "non-recurring" — Freddie Mac's writedown is a sign that nothing has really been "kitchen sinked". 3Q goes down as the fifth worst third quarter since 1945…

“When doing the valuation analysis on reported earnings, under the proviso that we see a typical recession/write-down scenario, then the historical record suggests that investors are looking at forward P/E multiple closer to 25x… Moreover, the current $15.29 estimate for reported EPS is the lowest level of earnings since the fourth quarter of 2004. And where was the S&P 500 trading at that time? Answer: It veraged 1,162 that quarter — just in case you were thinking of buying this dip.”

2008 is shaping up to be the year of “Slaughter of America Pigs, China Bulls, and India Goats” to begin in earnest. Are Scam Lovers sacrificial lambs? That question would be fully, and unambiguously, answered by 2010 in the depth of depression.

Jas (Date: Sun, 25 Nov 2007 09:57AM PST)

Recession has been here for a couple of months.

November 24, 2007

“In a piece he [David Rosenberg] put out Friday, he says unequivocally that if you're looking for the earnings recession, you need look no more -- it's here. And with rather a vengeance.”

“Hence, he's ineluctably forced to the conclusion that a recession in the economy "is either here or no more than two quarters away."

http://online.barrons.com/article/SB119586356074702600.html?mod=9_0031_b_this_weeks_magazine_columns

Recession has been here for a couple of months. Scam Market is likely to take additional 20-30% hit from here within the next 12 months. And that wouldn’t be the end of it. Plan and speculate accordingly.

Jas

---

As of 11/24/2007
Symbol Last
DJIA 12,980.88
NASDAQ 2,596.60
S&P500 1,440.70

Update -- Market TOP Watch

If you recall, I made a call for the stock market top on 10/11/07 within minutes of the top based on a sudden sharp reversal on an innocuous piece of news. These were the highs for Dec futures before the reversal:

NDX: 2214.0; SPX: 1586.5; and Dow: 14270.

I also said that when two or more of the above highs are breached my call would be proven wrong. Until then it would stand. As of Friday抯 close here are the changes in the three indexes from the highs on 10/11/07:

NDX -172
SPX -132
Dow -1223

As a matter of fact, the NDX futures did cross above the 2214 level for 2-3 days, but SPX and Dow never even came close. Most likely, the stock market is finally taking the recession threat seriously. I have already declared that the US economy IS already in a recession. Please remember the following sequence:

Recession --> Commodities Bust --> Deflation --> Depression.

Some time in this sequence we will have China bulls and India bulls, or India goats, to be more precise, slaughtered. India goats have been fattened for the slaughter and for the crooks to feast on.

Jas (November 10, 2007 )

PS: Monday could be ugly.

Brazilian bombshell Giselle: 1 GOOG = 1 Oz. Gold?

GOOG is the greatest American story never told. Brazilian bombshell Giselle, who has refused to accept payment in US$ has agreed to accept GOOGs. A girl who knows the full value of her body surely knows what is precious and what is not. Even Iran and Russia are considering selling oil for GOOGs.

Sell you gold and buy GOOGs. More importantly, sell your home, a depreciating asset, and buy GOOGs that are appreciating faster than gold, crude oil, or any other hard asset. Gold can be mined and GOOGs can抰.

Buy GOOGs and keep America great!

Jas (via email 8:29 AM 11/06/07)

• GOOG is the ticker symbol for Google
  Click to view larger chart

Jas Jain says "US banks now hiding toxic paper"

Again, Jas Jain predicts a depression. The same prediction he made when I met him in 1998. He has been wrong about the stock markets but, to his credit, he was correct about the monkey business at Silicon Valley companies using stock options such as back-dating of options.

> From: Bruce
> To: "Jas Jain"
> Subject: Re: CountryFried Financial: "Toxic waste, finger lickin' good
> Date: Thu, 1 Nov 2007 09:08:22 -0700
>
> US banks now hiding toxic paper and related losses as the Japanese did in the '90s.
>
>
> http://ap.google.com/article/ALeqM5ihXHMrpUHdtown-KAdgh7Lvu040wD8SKPTT01
>
> This is a SIGNIFICANT development, Jas. China's central planners have lost control of a runaway economy and stock market bubble, fueled increasingly by US firms' massive investment, as well as speculative inflows in the past 12-18 mths.
>
> 10-11% real GDP growth is not only unsustainable but suicidal at this point with growing constraints, rising inflation, and social unrest: a runaway train at terminal velocity headed for a cliff.
>
> A hard landing in China-Asia, global recession, Asian Crisis II, and firming or rising US$ ahead.
>

Thanks, Bruce.

Can you spell G-R-E-A-T-E-R D-E-P-R-E-S-S-I-O-N?

I will keep my promise and deliver one! Pregnancy lasted longer than the usual, but it is going to be 15-pounder. A whopper.

Only the born-and-bred American dupes couldn't figure out, all these years, simple scams that banksters were running in the debt business, mortgages being just the extreme cases, with the help of the Fed, agents of the banksters. We have people 搑aised in the culture of fraud� in control of our financial system and the outcome was never be in doubt. First, Scam Options and now the Toxic Mortgages. Why regulate the free market. The crooks have pushed things to the extreme, as one would expect them to.

How to screw an American? In the name of freedom! Put crooks in-charge of loaning other people抯 money in the name of free market? I can抰 wait to see how this turns out.

Jas

PS: Sold all the remaining Jan puts on C (toxic financial waste site) and still holding tons of Jan puts on Fraudentials and some recent tech high-fliers.

Jas Jain says "The Market TOP Is In!"

via email from Jas Jain:

Subject: The Market TOP Is In!
Date: Sat, 20 Oct 2007 10:36:01 -0700
From: Jas Jain

October 20, 2007

The Market TOP Is In!

Please see the attached "Why I am Still Bullish” by my friend George Ure, a long-time permabear, that confirms my call of the TOP in real-time on 10/11/07 (also attached).

Thank you, George! BTW, where is that bottle of wine?

Jas

-x-x-x-x-x-x-x-x-x-x-

Updated:
Saturday October 20, 2007 07:55 CDT

Why I am Still Bullish

We need to have us a little chat about the markets here. While one headline this morning modestly claims that "Wall Street Remains Bullish Despite Data", I'd remind you that I've been one of those bulls for nearly a month now. Several readers have sent me emails like this one in the wake of yesterday little sell off in the markets:

"A favor please? Could you stay bullish a couple more weeks please, it is really helping my puts :)"

No problem! As I explained before, I am a steadfast Bull until the first of November. From there, I expect to be changing my tune 180 degrees. So, while I will outline the bigger picture - and my specific target number this weekend for Peoplenomics subscribers (Hint: It's under 10,000), I'll just say in passing that "You ain't seen nothing yet" and tell you that by the end of next week, that's when we should get our solid bounce and that's where I stop being bullish. That bounce, I think, will be the one to be sold into - aggressively.

http://www.urbansurvival.com/week.htm

-x-x-x-x-x-x-x-x-

October 13, 2007

Market TOP Watch

2007-10-11 12:07:01 -- Jas: “NASTYQ! down 32 points and counting. Today could have been the top.”

2007-10-11 12:28:07 -- Comment by Rally Mitigation Team Member Bob: “The lonely and oft-repeated cry of the permabear.”

2007-10-11 12:38:28 -- Comment by NYCityBoy: “That is true. One side screams, “the bottom is in” and the other side screams back, “this is the top”.”

http://thehousingbubbleblog.com/?p=3554#comments

Only time will tell, but my call might hold. The sudden reversal had an eerie feeling to it and my comment was a real-time reaction to it. BTW, these were the highs for Dec Futures before my comment:

NDX: 2214.0
SPX: 1586.5
Dow: 14270

When two or more are breached I will post then and my call would be proven wrong. Until then it would stand.

Jas

-x-x-x-x-x-x-x-x-x-x-

October 20, 2007

Update -- Market TOP Watch

2007-10-11 12:07:01 -- Jas: “NASTYQ!
down 32 points and counting. Today could have been the top.”
Index
Future Change From TOP on 10/11/07

NDX -64
SPX -81
Dow -710

So far the TOP was not violated. This top, if it holds for another 9 weeks (Dec. expiration) would prove to be THE TOP for years and we are looking at a minimum of 50% down during or before 2009.

Jas

As of 10/19/07 Close:

Symbol Last Change
.DJI $13,522.02 -366.94
.IXIC $2,725.16 -74.15
.SPX $1,500.63 -39.45

Scam Market Bullies At a Record

via email from Jas Jain:

Scam Market Bullies At a Record

October 17, 2007

Bulls above 60% (62%) and bears below 20% (19.3%) has triggered many a bear markets. We will see how this one turns out.

Date Bulls Bears

17-Oct 62 19.3
10-Oct 60.2 21.5
3-Oct 56.5 25
26-Sep 55.6 25.6
19-Sep 53.9 27
12-Sep 48.3 31
5-Sep 42.9 37.4
29-Aug 41.7 37.4
22-Aug 40.6 37.4
15-Aug 43.8 32.6

http://www.schaeffersresearch.com/streetools/market_tools/inv_intel.aspx

Graph attached.

Jas