Bullish or bearish?

I can absolutely recommend you the book of Nassim Nicholas Taleb - Fooled by Randomness. The author who got know with his so called black swan.

I have to reformulate the citation of Galbraith. There is a possibility how economic forecasts can be used in trading. 

Probability is not enough to decide

Have you ever been asked by someone if you are bullish or bearish? Well let's assume that you suggest the market to go up in the next week more likely than it goes down? Are you now bullish? Actually you are, but does it means that you are buying calls or puts? Well, you can do both!!! The magic word is the expected payoff of your investment.

• 1. scenario: Market moves up: 70% probability
• 2. scenario: Market goes down: 30% probability

Normally you should buy calls now, but not if you look at the individual payoffs. 

• 1. scenario: Outcome: 3% rise in stock prices
• 2. scenario: Outcome: 10% decline in stock prices and higher volatility

Whereas the expectd payoff in scenario 1 is 70% * 3% = 2.1%, it is 30% * 10% = 3% in scenario 2 with a higher volatility which leads automatically to an even higher payoff of your investment. 

To conclude

Every economic forecast, which don't show some alternative scenarios is useless. An exact forecast in this adaptiv dynamic system isn't possible. With possibiliteis of developments and possible outcomes or payoffs you can build a trading strategy on economic forecasting.  Last i would like to remind myself and you as a reader to make the different between market direction and investment direction and to not answer a simple bullish / bearish question.