You are about to enter another dimension…
A dimension not only of sight and sound, but of mind.
A journey into the wondrous land of imaginary data sets and made-up statistics.
Next stop, the Twilight Zone of Economic Data…
We are now nearly two full months into 2026 — but the stock market has little to show for it.
As I write, the Dow is still teetering on the edge of 50,000, and the broader S&P 500 index is nearly flat on the year, up just over half a percent.
It’s a far cry from the runaway stock success of the last two years, and that’s due in large part to the economic data investors are currently working with.
We’ve got jobless claims data that’s all over the place, we’ve got diverging expectations from a wide variety of experts, and we’ve got desperately little forward-looking data on what we can really expect in the year ahead.
The good news?
We will be out of this Economic Data Twilight Zone by April, and those who are ready to cash in on fast-moving opportunities stand to make a fortune.
Click below to find out why:
Video transcript:
I’m Andrew Zatlin, Welcome to Moneyball Economics, and today we’re going to take a look at the crisis in economic data.
Believe it or not, this is the single biggest factor affecting the stock and bond markets, and it’s not going to get resolved anytime soon, and as a result, we are likely to see a lot of choppiness in these markets.
I mean, put yourself in the shoes of a portfolio manager…
You’re looking at stocks that are fairly richly valued. But if the economy takes off, maybe that valuation makes sense. Or you’re dealing with the bond market and you’re trying to figure out whether or not the Federal Reserve is going to cut rates again, depending on what’s going on in the economy.
Wherever you go, all roads lead back to what is going on in the economy, and that’s the problem because we’ve got a lot of data out there sending a lot of conflicting signals, and as it turns out, not all of this data’s very reliable.
I want to talk about some of what’s going on, give you some insight because until this data finally resolves itself, this data reliability and consistency, we’re going to have problems in the markets. I believe it’s going to get resolved sometime in about April and May. It all goes back to October 1st when the government shut down. That meant economic data was not flowing, and so a lot of investors and the Fed were flying blind.
Where’s the economy going?
What should we be doing with our investments?
That was an open-ended question. And that question still hasn’t been resolved because now that economic data is finally flowing, it’s still kind of “legacy.” It’s still looking at what happened in December, and we are in a whole new economy, and that’s part two.
As we transition from the down cycling of the COVID economy to the upcycling of a Trump economy, well, the data inherently is going to be conflicting depending on where you’re sitting and what you’re looking at.
Some data is more forward looking, some is more backward looking. So we’ve got two problems. One is we’re flying blind because there is no economic data flowing. The second is we’re also transitioning. Transitioning both calendar year, winding down naturally in the calendar year to turning up and then also transitioning between cycles.
There’s a lot of stuff going on and portfolio managers are trying to make sense of it because they care less about where we’ve been and care more about where we’re going.
As you know, I’m incredibly bullish about 2026, and it looks like most of my peers are begrudgingly joining me, but they’re not there yet because the data doesn’t support that view, and when I say the data doesn’t support that view, I mean conventional data doesn’t.
But again, let’s go back to what happened October 1st when economic data flow stopped.
At that point, everyone’s flying blind, and so they started looking at what’s called alternative data.
An example would be ADP.
ADP looks at does payroll management for about 20% of all payrolls out there in the country, and so they’ve always tried to position themselves as a decent barometer for the labor market. And for a couple months it looked really good. They looked really reliable. They were nailing this low level of payrolls. Until the most recent month where they basically predicted zero job growth and payrolls came out at 170,000 a blisteringly hot level.
So again, you’re a portfolio manager, you’re willing to consider other data signals than the conventional stuff. The government gets out … and then you rely on one and it fails with a major belly flop. This has been going on and on and on.
Bloomberg, for example, had a number out there that was, we were going to see payroll’s negative. Instead in January, Payrolls came out super-hot. And so again, portfolio managers don’t know what to trust, and so they’re not able to derive a solid signal.
I believe the signals are going to get more solid starting in about April and here’s why, and I’m going to tell you what to expect in the meantime and how you should position for it…
Most data is still being released. Looking at December, we want data that’s looking at January and even better at February. February is like a groundhog day for the economy. People are out and about. This year we had storms, so again, we’re going to get some choppiness in the data.
That means it’s going to be march when weather’s no longer a factor when the tariffs are no longer a real factor. For example, notice how the markets last year were just totally blindsided by the Trump tariffs.
Now he’s out there talking tariffs. The markets just don’t care.
All these things that hit last year, they’re not a factor this year, and so the real economy’s going to be taking off, and I mean taking off.
But again, economic data is late to the game. It’s always backwards looking, and so all this positive bullish activity that I’m talking about that’s going to really be evident in March. It’s not going to get reported on until we get to April.
But by then we should start to see a consistent signal of growth. We’re standing here in February. That’s why I’m saying you want to get into the markets right now, especially when they’re so low and choppy because by April and May especially, all this data’s going to look super positive.
We talked about alternative data and how there was this desperation. There was lining up some alternative data series that then seemed to have failed.
Unfortunately, so has conventional data, and that’s the crisis I talk about when both conventional and alternative data are unreliable. Any data point that gets released, the markets are going to be looking at it with a fine tooth comb and they’re going to get agitated.
When I say conventional data is unreliable, I want to talk about two data points.
One is retail sales and the other is payrolls. Retail sales came out, they were super weak. I’ve talked about this before. The reason they were super weak is for whatever reason, warehouse retail sales were not really included. You had Costco, Sam’s Club, BJ’s, all reporting a massive surge year over year in sales during the holiday season. It wasn’t reflected in the data.
For whatever reason, the government is blind to what’s going on in the warehouse club action, and yet this is 15%, one five, 15% of all retail activity. Costco alone reported $2.7 billion year over year incremental business in December, but if you look at the data from the government, there was no change.
So we’ve got a problem in reliability, and then it just came out in the most recent payrolls. Payrolls surged 170,000 … except folks, they didn’t…
When you look at this data, and this is why the market yawned when it came out because everybody out there saw this data point and realized it was a bogus number.
You’re talking about the government, the establishment releasing data and everybody looking at it and going, “you’re wrong. It just doesn’t make sense.”
It didn’t pass a sniff test because everyone looked at it and said, we went from 0, 0, 0 to suddenly 170,000 overnight? You don’t have to worry about how that’s an outlier. You need to worry about why it was 172,000.
See, when you pull back the curtains, all of this job growth last month came down to healthcare. And folks, the problem with that is that healthcare is a business. You have people going on vacation over the holidays. They’re not going to get whatever medical treatments they may or may not want to get.
Doctors are going on vacation, whatever the case, hospitals and clinics, well, they kind of shut down. A lot of nurses who are contractors are let go. Cafeteria workers are let go temporarily. It’s like school season, it’s winter holidays and you let go of some of the support staff, and if you go back in time 25 years, that’s exactly what you’re going to see.
January payrolls, we’re talking the raw and non-seasonally adjusted data for healthcare goes down. It collapses about 80,000 except this year for the first time ever, we didn’t see that, and that’s a problem because we know people went on vacation, doctors we know clinics were closed.
And so we look at this data point, 170,000 did not happen. It’s probably going to get revised down.
But when you’re facing unreliable data, whether it’s the official data or alternative data, you’re on edge again, especially because you can sense things are turning, but you’re not sure whether it’s going to be a lot or a little.
That’s where the economic data can come in and inform you, and you can make your bets accordingly.
When you’ve got bad alternative and government data, you honestly don’t know what to expect and neither does the Fed. You’re flying blind, and when you’re flying blind, you’re on edge. So as a result, I believe you can, again, like I shared with you, you can expect continued choppiness in the markets through April.
And then all of a sudden all this economic data is going to get homogenous and it’s going to signal growth. And I’m telling you right now, expect a lot of growth when it comes to payrolls, which is next week, which is one data point that’s going to come out that again, the markets are going to be hyper-focused on. Well, that 170,000 has a payback.
If you declare that for the first time ever in the healthcare space that drove up payrolls, that you didn’t fire anybody, well, that creates a problem for February because traditionally February is when you hire ’em back, so you got some payback.
If you didn’t fire them in January, well then you’re not going to hire them in February.
So we’ve got a big number in January. We’re going to have a much lower number in February.
Choppiness, is it strong? Is it cool? Choppiness on choppiness, so position accordingly, and in the meantime, because of this uncertainty, I guess gold is a good place to go. I don’t know. In the meantime, we are in it to win it folks.
Zatlin out.
Andrew Zatlin
Editor, Moneyball Economics