Honey, I Created A Bubble

We have been told for months that the next interest rate move by the Federal Reserve is dependent upon what the data tells us prior to each meeting. If the data tells us that inflation is too high and/or the economy too strong, the Fed will continue in its pause mode or maybe even hike rates. If inflation comes down and the economy begins to soften, the next interest rate moves will be down.

But that begs the questions, "How reliable is the data?" and "How does one interpret the data?" This week we start with a look at a remarkably candid speech by Richard Fisher, the president of the Dallas Federal Reserve. We then look at what the data tells us about inflation, the relationship between housing construction and GDP, and the disconnect between the bond and stock market.

The more I learn of Richard Fisher, the more I like. He is refreshingly clear, as well as candid, in his presentations. He will tell you he is not a trained economist, but rather a Harvard MBA with a focus on decision making under conditions of uncertainty. In a speech this week to the New York Association for Business Economics, he talked about the need for more and better data to help in the decision-making process.

Honey, I Created a Bubble

"I hardly need to explain," he said, "the importance of good data to any of you. We all know the consequences of data being wrong or arriving too late. Our reputations rest on the data we use. The better the data, the less our uncertainty. And the less our uncertainty, the better our ability to make sound decisions.

"... To begin with, most economic data…