The Fed's Funny Math

I know our math skills are poor in this nation, but the Fed would not try to blatantly pull the rug over our eyes while testing our elementary math skills would they? Let me get out my calculator and try this again, because my math skills must be failing me. So the Fed is saying then that 3.0% – 1.5% = 2.8%? Did they really just say that? Let’s move on to the lower end of the GDP growth forecast range for 2013. So then the money men are saying that 2.3% – 1.5% = 2.3%? What is this phantom math or quantum physics? Are there assumptions here that are beyond human comprehension? Is it just me, or do the numbers not add up? Fed Chairman Bernanke just reconfirmed in his press conference that there was a 1.5% drag to economic growth this year. So why didn’t that drag show up in the latest Fed forecasts? Did the Fed just lie to me?!?!

Our founder earned clients a 23% average annual return over five years as a stock analyst on Wall Street. "The Greek" has written for institutional newsletters, Businessweek, Real Money, Seeking Alpha and others, while also appearing across TV and radio. While writing for Wall Street Greek, Mr. Kaminis presciently warned of the financial crisis.

They say, “Fool me once, shame on you; fool me twice, shame on me.” I stopped getting fooled by Fed economic forecasts when they said the financial crisis would be contained within the real estate sector at the end of the last decade. Then some time passed and Ben started to grow on me I suppose. I even grew a beard like his. Before I knew it, I guess I can say in the words of Nicki Minaj, my new favorite American Idol judge, “I beez in the trap!” (Warning – the linked to video contains profanity) Actually, so does my ego right now. I mean, we just took the Fed for its word and authored this article, Fed Warning – Expect a Sharp Cut to the Economic Forecast. I suppose I should have continued, “but based on the new math…”

What bothered me most was that during his press conference, Bernanke reiterated that there would be a 1.5% drag to Real GDP growth this year. Okay then, so where did the 1.3% offsetting and quite suddenly arriving factor come from and what is it exactly? Because otherwise, this math just does not add up. I’m sitting here with a calculator, a sundial and the spirit of Nostradamus losing my mind over this thing. I may have to send Nosti to dig up Einstein or Steven Hawking, because this math may have dimensional aspects to it or fall under string theory. Unfortunately, I hear the genius mathematicians are busy battling. I would like to see an Epic Rap Battle between Bernanke and Greenspan.



Here’s the actual Fed forecast. The simplicity of the PDF should have tipped me off I suppose. The math is reminiscent of something actually. It reminds me of the adjustments some of my superiors used to make to their tear sheet stock reports without earnings models to support them. Is the room spinning for you too? This is phantastic. I just can’t make sense of it, so it really deserves nothing more than a cynical editorial really. What really peeves me about it is that real money is moving on this news, and nobody (I mean nobody!) is questioning it. The market gained on the day and rose into the close. On what?!

Security	Blind Direction
SPDR S&P 500 (NYSE: SPY)	+0.7%
SPDR Dow Jones (NYSE: DIA)	+0.4%
PowerShares QQQ (Nasdaq: QQQ)	+0.7%
iShares Russel 2000 (NYSE: IWM)	+0.9%
iShares Dow US Real Estate (NYSE: IYR)	+0.6%
Financial Select Sector SPDR (NYSE: XLF)	+0.7%
SPDR Gold Trust (NYSE: GLD)	-0.5%

All those reporters got up and asked questions and not one of them said, “Um, Mr. Bernanke, could you help me get the math here?” I think the Fed has some explaining to do. What say you?

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