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Why buying Bitcoin is like stepping into the Wild West

Aug 12, 2014
If you're going to invest in virtual currency, you'd better cowboy up.
Posted In: bitcoin, CFPB, whiteboard

Why you shouldn't get all stirred up about today's GDP number

Does that GDP number look good to you? Are you feeling all warm and excited about the state of the economy?

Well, you can stop that right now.

Why? 'Cause that number can't be trusted, as Jeffrey Cleveland, Chief Economist at Payden & Rygel expained to Mark Garrison on the Marketplace Morning Report today:

Mark Garrison: So the morning’s numbers show strong 4 percent growth in the second quarter. Also, the previous quarter wasn’t as bad as originally thought. What’s your key takeaway from this report?

Jeffrey Cleveland: I think you should maybe take an average of the first half of the year, and then you see growth as maybe about 1 percent, 2 percent, somewhere in that range.  I think that’s the real, underlying trend of U.S. growth. I don’t think investors should get too excited by any one particular quarterly number.

Garrison: And when these numbers come out, we try to remind people that this is an estimate right now, this 4 percent growth number, just the first crack really. What’s the danger of reading too much into this?

Cleveland: Yeah, the data is always a tradeoff between the timeliness and the accuracy. About half or a little more than half of the data is subject to heavy revisions, Mark. We don’t have complete data for inventories, for trade, for some of the spending on services that consumers put out there, so this could change by a large degree. If you remember back to Q1, the initial reading that we received was just marginally positive growth rate, and that was subsequently revised away and now we’re down 2 percent for the first quarter.

That's it. The number we got today is an estimate. The people who crunch the GDP number only have about half of the data they need to judge the growth rate of the economy. The number will be revised, and then revised AGAIN! The difference between the first estimate and the final figure could be as much as 2 PERCENT!

Pinch o' salt, people. Pinch o' salt!

 

 

 

 


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Jul 30, 2014

Why dark pools became a bad dream for European banks

Jul 14, 2014
Regulators are going after the private exchange operations of European banks.
Posted In: european, Credit Suisse, whiteboard

Inversion – ain’t nothing but a tax dodge, baby

Jul 8, 2014
Companies buy overseas rivals with one aim in mind: Reduce their tax burdens.
Posted In: corporate inversion, outsourcing, international, whiteboard

Need protection? Consider a collar!

Jul 1, 2014
A collar is a trading strategy that protects your investment, but limits your upside.
Posted In: collar, explainer, whiteboard

Why bank loans are getting riskier

Jun 26, 2014
Banks are relaxing the terms in their loans. And that makes them riskier.
Posted In: covenants, cov-lite loans, OOC, whiteboard

Explaining the stock split: Some financial gymnastics

Jun 24, 2014
In the end, stock splits are all about making shares more appealing to investors.
Posted In: stock split, apple, whiteboard

The difference between debt and deficit: An explainer

Jun 10, 2014
A lot of people confuse the words debt and deficit. They're not quite the same.
Posted In: debt, deficit, U.S. debt, whiteboard

Singapore's got some big retirement issues

Jun 3, 2014
Social security fears in one of the world's most rigorously-controlled economies.
Posted In: singapore, Social Security, whiteboard

What the heck does ETF stand for? An explainer

May 27, 2014
Why investing in ETFs can be like playing with fire.
Posted In: ETFs, explainer, whiteboard

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About this collection

Financial mysteries explained by Paddy Hirsch's Whiteboard series.