Have you heard of DIKW? It is an acronym for a pyramid of the theory of knowledge. You start with data as a building block, then you make inferences from the data so that it has some meaning - we call this information, then we place the information into a context where it can be understood - we call this knowledge. At the top of the pyramid is wisdom, or broadly exercising sound judgment and acting accordingly. I think about this pyramid from time to time when I listen to financial news, political talk, and the like, you know things like listening to Fed testimony, and I ask myself whether there is anything beyond “data” (and perhaps not even quality data) in what is said. If the goal is to increase the confidence in your investment or business decision making, does much of what we consume move the needle?
When it came to his testimony, Powell said the Fed is in no rush to lower rates. In other Fed news, Cleveland Fed’s Beth Hammack highlighted the risks to higher inflation that could be the result of government policies. While Hammack doesn’t believe rate hikes are necessary, she did express the need for further evidence that inflation is sustainably heading back to 2%. NY Fed Williams offered up his view that we should get back to 2%, but for uncertainty around everything in the economy (labor, capital, trade, regulation, etc.). Fed officials - helpful as usual.
The S&P 500 finished up on the day at 6,068. The 2Y treasury remained near 4.30% and the 10Y moved up to 4.53%.
Kind of away from politics, but perhaps closer to politics and having a more direct impact on the economy than anything else, Elon Musk changed his X handle to Harry Bolz. I don’t know if this increases the chances he can buy OpenAI or find trillions of dollars of corruption, but what do I know?
Maybe Elon’s DOGE is on to something and foreigners know it, I mean they seemed to show up to the 3Y Treasury auction yesterday. The 3Y auction had a strong bid-to-cover, printed through where when-issued was trading, and had strong indirects bidders. Strong demand for treasuries didn’t stop this headline: “A $RETARDIO whale just bought $4.03K of $DOGSHIT2 at $3.83M MC” whatever that says about the state of the economy.
On the day ahead it’s CPI and Powell in focus.
XTOD: Powell: The neutral rate was "clearly very low before the pandemic" and it is likely that after all of this, "the neutral rate will have risen meaningfully." "I think it has moved up. And many of my colleagues on the FOMC" also do.
XTOD: Accenture had $1.2 billion in new bookings related to GenAI, and it has 69,000 people working in data and AI. 69,000 people who don't know anything about AI are helping the largest US companies with navigating the fast changing AI world. One of the biggest grifts in the world. https://pbs.twimg.com/media/GjdckNHXAAIGm5P?format=jpg&name=900x900
XTOD (it’s really long so if you want to read the whole thing find the link below): Two insightful articles on how AI is making general knowledge worthless, and private, proprietary data infinitely more valuable: 1. @benthompson : "It is suddenly clear to me how much future economic value is wrapped up in information not being public… Secrecy is its own form of friction, the purposeful imposition of scarcity on valuable knowledge. It speaks to what will be valuable in an AI-denominated future: yes, the real world and human-denominated industries will rise in economic value, but so will the tools and infrastructure that both drive original research and discoveries, and the mechanisms to price it." 2. @anecdotal : "in the AGI era, the only defensible reason for universities to remain in operation is to offer students an opportunity to learn from faculty whose expertise surpasses current AI. Nothing else makes sense...Universities will retain faculty in three categories: those advancing original research beyond AGI capabilities, those who teach the use of advanced equipment and sophisticated physical skills, and those handling previously undiscovered source materials or developing novel interpretations that outstrip AGI’s analysis.
XTOD: Thomas Merton, read it twice https://pbs.twimg.com/media/Gjhl79aXYAAoOm5?format=png&name=900x900
https://x.com/NickTimiraos/status/1889351386162155838
https://x.com/rohitdotmittal/status/1889080825318141963
https://x.com/buccocapital/status/1889020292686553329
https://x.com/DylanoA4/status/1889372509000143259
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