WAIT AND SEE

 

Humorist Will Rogers once said: "I only know what I read in the newspapers."

That was a while ago, in the early stages of radio, long before television and the Internet.

Today with the information explosion discretion more so than ever might be the better part of what one reads. 

Now that QE has been tabled--a cynic might say, for now, the big bond buying spree was said to have to given a lift to emerging markets. 

So that raises another question: Will QE Japanese and European style do the same? Perhaps not having the royalties of the international currency of trade on your side, the short answer is most likely no. The Japanese economy has been in a funk for a generation, a stark reminder to all of what can go astray given the paucity of effective leadership in the world today.

The debate about whether QE actually did or didn't help will, like those Christian soldiers in the old hymn, march ever onwards. Our answer is a simple one. The only folks who claim to know for sure are not from this planet.

Yesterday, we got the big surprise, the economy grew 8.1% over two quarters--that's, 4.6% in the second quarter and 3.1% in the third for a average  of 4.05%, a number the extrapolating crowd will love. But as they say, the devil sometimes resides in the small print.

Though consumer confidence hit a seven year high, consumer spending, the nightly prayer the globe over of central bankers--believers and non-believers alike--grew at a paltry 1.8%, down from 2.5% in the second quarter. So that gives us 4.3% divided by two or 2.15% average. 

Man, this is getting fun. 

Faster overall GDP growth, we are told, was also down from the second quarter.  According to the Financial Times, "Structures, equipment and residential investment spending growth all slowed. What seemed to deliver the most growth--and offset a substantial drag  from inventories--was a reasonable export performance, coupled with a decline in imports and a big surge in the erratic defense component of government spending."

Not to be cute, but maybe all the seemingly global turmoil did after all have a positive effect on spending.

Given the ambiguity of these economic indicators, maybe it's best to split the difference. The concerns about deflation are right up there with when will the Fed hike rates, about as shopworn as anything gets.  

With few exceptions we have been buying not selling.

Just like using discretion in your reading, nobody worthy of the name claims these economic road signs are accurate. Next week's election, just like in Brazil, could hold a lot of promise. And just like in Brazil it could disappoint.

The best months to be in the market historically are from November to May, the extrapolating crowd's dream. For our humble money we're going to follow an investment theme popular in the policy of this administration: Wait and see.