Contrarian Musings: Finally another source calling Joe LaVorgna out. Last week on CNBC he called for 10% earning growth in the second half of 2013. I found my shaking my head in disbelief.
The “predictive capabilities” of Deutsche Bank’s amusing permabull strategist Joe LaVorgna are well known to Zero Hedge readers. Just recall that when it comes to forecasting the future, even one Groundhog Phil has a success rate of 71%, or over a standard deviation more accurate compared to Joe “Coin Toss” LaVorgna’s 51%.
But perhaps there is a way to harness this horrendous track record of being correct about the future precisely half the time. Indeed, as the following analysis conducted by John Lohman proves, predicting NFP payrolls based on simply extrapolating the previous month’s number, or for all intents and purposes, “randomly” one month into the future and comparing it to the original actual NFP print, would have led to a smaller absolute median and average error rate than listening to LaVorgna (46 error vs Joe’s 56 median error).
So what does this mean for tomorrow’s NFP number? Since LaVorgna’s most recent forecast is 140K, and assuming statistics holds, it is a safe bet to assume that we know what the actual reported NFP will not be: it will not be a number in the range of 84K to 196K, which is simply his forecast and applying the 56K abs median variance. around it Of course, since this is purely statistical, LaVorgna just may pull the short straw this time, although again based on statistics, if we were to bet, we would assume a number closer to the 88K print tomorrow, which is what last month’s number was, than any numbered clustered around 140K.
Either that, or we would listen to Groundhog Phil first.