Statsweeper Sounds an Alert?

by Dave Forest
September 14, 2010

Some of you joining the letter lately may be wondering about the Pierce Points charts.

A good deal of the data discussed in these pages is sourced from www.statsweeper.com. My associates and I created this website to monitor global financial and economic data.

The idea is most economic happenings (be they manias or crashes) have warning signals. Changes in particular data sets which foretell the coming events.

The challenge is knowing which data to watch. Investors could spend every waking hour poring over economic data, and only view a hundredth of a percent of all the information available on the internet.

That's where Statsweeper comes in. The site automatically monitors thousands of data sets. It then collects this information and makes it available in chart form.

More importantly, Statsweeper analyzes the data and picks out any emerging trends. When an unusual jump or fall happens in bond yields, commodities open interest or freight rates, the site posts an alert (the latest of which can be seen on the homepage). Signaling investors that important economic events may be ahead.

Yesterday, the site generated an alert that could be critical.

On September 10, something odd happened in US commercial paper yields. The yield on 30-day asset backed paper suddenly spiked. Jumping 33%, from 0.3% to 0.4%.

This could be a warning. Back in April, rising commercial paper yields led the onset of the Greek debt crisis by a few weeks. Investors were getting nervous and selling out of higher-risk commercial paper, driving prices down and yields up.

Since July, buying has returned to the comm paper markets and yields have once again fallen. Could Friday's jump be a signal that investors are once again getting jittery? And if so, what are they seeing coming down the economic pipe?

Of course, commercial paper yields sometimes show strong one-day spikes, which correct themselves immediately. Keep watching the data to see if this is a temporary blip or something more serious.

Here's to forewarning and forearming,

Dave Forest