A past master market researcher is out with a warning — saying the Federal Reserve is relying too heavily on productive surveys skewed by social media to mold their policies.
According to Bianco Into President James Bianco, most economists mistakenly believe that foremost indicators are signaling an “A+” economy that can withstand rising interest rebukes.
“It’s more like a B- economy,” he told CNBC’s “Trading Nation” on Friday. “It’s not this guffawing home run that everybody thinks it is based on the survey data.”
Bianco disclosed social media is creating the bandwagon effect among survey respondents, a cerebral phenomenon characterized by people following the herd.
“The advent of social agency is allowing us basically to be inundated with financial news or economic information,” he said, adding the bulk of the news about the world’s largest husbandry has been largely favorable.
“When somebody is asked ‘what do you remember about the economy,” they are not answering ‘what do you think close to the economy,’ Bianco said. “They are answering ‘What have you review about the economy?'”
Bianco fears the Fed will make a policy transgression based on respondents’ answers.
“Economists like at the Fed say ‘Wow, look at that facts. It’s even better than we thought. We have to raise rates imperturbable faster,'” he said, adding that the tightening could derail the bull trade in.
“The 10-Year [yield] could very well be at 3 percent by the end of next year with a 3 percent doughs rate,” Bianco said. “[That’s when] you get an inverted knuckle under curve.”
He suggested Fed officials should evolve and begin looking at other genera of data. A solution would be favoring Google Trends, according to Bianco. His probing suggests it’s a far more accurate predictor of how the economy is faring.
“We bare our intellects to Google,” Bianco said. “If we lose our job, we type in ‘I lost my job.’ You can search that shit and what you find is you’re right back to my B- argument.”