Stocks advanced while yields were mixed with the 10Y crossing 4.15%. Pakistan and Iran tensions add to the mix of uncertainties in the Middle East. Over in Asia there are increasing concerns around the Chinese economy. But in continued good news in the U.S., you still can't get fired as jobless claims printed +187K well below the 200K consensus and remaining near historic lows. Bostic, a dove, was somewhat dovish, but conceded: “I’m staying vigilant because, though inflation has been on a path toward the 2 percent target for some time, there are risks that could throw it off course.”
Of course Central Banks need to be attuned to risks (and uncertainties), I wrote about this in my
Fed report card.
It's worth considering:
“The world of calculable and controllable risk liberates — perhaps even helped by its triumphal claim of calculability — the moment of surprise.” - Urlich Beck
There was a series of articles by Thomas Meyer on the topic of "Radical Uncertainty" (the title of a book by John Kay and Mervyn King). I had found and saved the above quote from Meyer's article some years back. "Radical Uncertainty" being a nod to Frank Knight's description of a situation where there is no scientific basis for calculating a probability. As Meyer writes, the quote above encapsulates a theme that "Kay and King describe how modern society has succumbed to the illusion that uncertainty can be transformed into calculable risks."
Benjamin Graham opined on what to do when faced with uncertainty as follows:
"In the old legend the wise men finally boiled down the history mortal affairs into a single phrase, "This too will pass". Confronted with a challenge to distill the secret of sound investment into three words, we venture the motto, MARGIN OF SAFETY"
Author Peter Bernstein provided further advice:
“In making decisions under conditions of uncertainty, the consequences must dominate the probabilities"
XTOD: If someone told you only a few weeks ago that Iran would be at war, you would have guessed Israel, the US, or perhaps Saudi Arabia; not Pakistan.
It is very, very hard to keep in mind that we're not good at predicting & even harder to incorporate it into a general policy.
XTOD: "The western world is in danger . . . because those who are supposed to defend the values of the west have been co-opted by a vision of the world that inexorably leads to socialism, and therefore to poverty.” Try to hear the whole of @JMilei 's speech at the @wef yesterday, a magnificent defense of individual liberty and the free market economy. https://youtube.com/watch?v=Pfcd0gWNIog
XTOD: Zero rate world: producers of the actual goods and services watched speculators of property and stock markets & influencers get so rich - to the point that the current economy rewards people doing certain behaviors that produce nothing - ie: above examples. Being productive is rarely rewarded under the current economic system.
XTOD: people are gonna keep finding frying pan charts and i think that’s beautiful
XTOD: Lex Fridman finally did a podcast I found interesting. He spent 6 hours interviewing a con-artist (many of his guest are con-artists, and he may be too) who explained the ins and outs of identity theft and mortgage fraud in detail I had not heard before.
https://x.com/nfergus/status/1747874360721801517?s=20
https://x.com/DonMiami3/status/1747664339174056382?s=20
https://x.com/vebaccount/status/1747779419714855387?s=20
https://x.com/FischerKing64/status/1747841314216202543?s=20
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