Daily Economic Update: August 12, 2024

The most important CPI print of your lifetime is Wednesday, are you ready?  Why does it seem like every week we are told that some data point is going to be the secret to the future.  Can you find the signal from the noise?  Here's a quote to think about as you digest PPI Tuesday, CPI Wednesday and Retail Sales Thursday and UofM inflation expectations on Friday (these things do happen every month...):  blinded by noise

Markets will certainly react to the data (the Fed has conditioned them to with "data dependent"), but isn't Action better than Reaction?  Action from clarity of perception and accuracy of response. That's deep.

Today there is No data, so talk about the Jobs report and Sahm Rule...after all there was a Hurricane and some temporary layoffs, and Claudia says this rule is just an early warning system.  When you're done, figure out "R-Star".  Now that's a great start to the week.  Option 2, there is no data, take the day off and prepare for the inevitable CPI discussions.  After all your reward for absolutely killing yourself with an impossible client last week will be to get to do it all over again this week.

XTOD: No matter how efficient or inefficient markets may be, the returns earned by investors as a group must fall short of the market returns by precisely the amount of the aggregate costs they incur. It is the central fact of #investing.  - Jack Bogle

XTOD: “Hard work, honesty, if you keep at it, will get you almost anything.” — Charlie Munger

XTOD: Steve Kerr said, "You gain more respect as a leader when you admit you don’t know everything."   "When you let somebody else make a decision it makes you more powerful." 

It takes humility to lead.   It means valuing others' insights.

XTOD (Question) :  A brief, satisfying explanation for why the multiplication of two negative numbers yields a positive number?

XTOD (Answer): t is the simplest way to keep the pattern going. For example,

-1 x 3 = -3

-1 x 2 = -2

-1 x 1 =  -1

-1 x 0 =  0

Notice the numbers on the right side of the equal sign keep increasing by 1. 

So to keep the pattern going, we define 

-1 x -1 = 1

XTOD (Answer Continued):  Official answer: this definition uniquely allows us to extend the distributive law to negative numbers. Consider 

-1 x (1 + -1). 

This is -1×0, which should = 0. 

If the distributive law holds, then this 0 = 

 (-1 x 1) + (-1 x -1)=  -1 + (-1 x -1), which requires  -1 x -1 = 1

https://x.com/bogleheads/status/1822332161048944741

https://x.com/InvestingCanons/status/1822419555416727789

https://x.com/coachajkings/status/1822391473402429923

https://x.com/stevenstrogatz/status/1822657206329758073