ECB cut their deposit rate by 25bps as expected to 3.50% while also cutting their growth forecast through 2026 and showing somewhat sticky inflation in their forecast, noting base effects. There were also 60bp cuts to the main refinancing rate and marginal lending rate in what was viewed as a technical change necessary to reduce the premium banks pay to borrow relative to what they earn on deposits at the ECB. Markets are pricing in a possible pause at their next meeting.
Stateside PPI showed higher core PPI than expected and inital claims were relatively benign. Yields rose a little more and stocks continued to rally. The 2Y is 3.66% and the 10Y is 3.69%
Also making the news was that Berkshire Hathaway's Vice Chair Ajit Jain sold half his stake in the company, which of course leads to a ton of speculation as to why?
As I probably remind readers every few weeks, following day to day data is largely a waste of time because the shelf life on this data is so short, it's immediately replaced by the next most important thing (like next week's retail sales) and we frequently fall for noise and completely miss the signal. We also fail to develop any good filters. What information do you actually need to better determine if your investment or decision will help reach your goals for it over the horizon. If you don't know what's important, the qualitative, you can get trapped in the noise.
I posted this back on January 17, 2023:
"providing you with a stream of data and opinion is a business, a business predicated on a demand by investors (including speculators) to be told by someone else what to do (credit to Ben Graham's writing for this phrase). The incentives are such that adding noise, complexity and a constant pressure to do something is part of the business.
Morgan Hounsel wrote about this in a blog post Trying Too Hard in which he tells the story of Jon Stewart interviewing CNBC's Jim Cramer: "Years ago Jon Stewart interviewed Jim Cramer. When pressed on CNBC content that ranged from contradictory to inane, Cramer said, “Look, we’ve got 17 hours of live TV a day to do.” Stewart responded, “Maybe you can cut down on that.” He’s right. But if you’re in the TV business, you can’t."
Anyway, enjoy your Friday and the UofM sentiment. Listen to Howard Mark's in XTOD below.
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