Daily Economic Update: March 11, 2024

The Federal Reserve is in it's blackout period leading up to their March 20th rate decision.  The week ahead features an important (aren't they all important?) CPI data print on Tuesday,  followed by PPI and Retail Sales on Thursday and UofM consumer sentiment on Friday.

Like the Fed, every so often it's good to cut the noise out of your day, especially in financial markets news.  As Warren Buffet said in the latest Berkshire annual letter [referring to his sister): "She is sensible – very sensible – instinctively knowing that pundits should always be ignored. After all, if she could reliably predict tomorrow’s winners, would she freely share her valuable insights and thereby increase competitive buying? That would be like finding gold and then handing a map to the neighbors showing its location."

So like I did back in December 2023  for the remainder of the week, you'll get one quote/excerpt a day from whatever books, article, transcript, etc. I have laying around.

Speaking of NOISE, here are two quotes to consider to start your week:

"Noise, the grand dynamism, the audible expression of all that is exultant, ruthless and virile.... We will make the whole universe a noise in the end. We have already made great strides in this direction as regards the Earth.  The melodies and silences of Heaven will be shouted down in the end."

                            -C.S. Lewis, Screwtape Letter #22

"that’s the problem is our modern world, with all of its noise, produces a state of constant alert, and that is not optimal. And this would all matter less, but that amid that noise, there is also signal. In the realm of information theory, the term signal refers to the desired meaningful information. While noise is the unwanted interference, transposing this concept into our daily lives, the signal is the crucial work. It’s a heartfelt conversation. It’s the key insight. The noise is everything that distracts or detracts from that, and this constant exposure to noise makes it hard for our brains to filter out the essential from the non-essential. When bombarded by too many stimuli, too much noise, the brain struggles to identify and process the signal. You know the feeling. You’re trying to write a report, and your email notifications keep pinging, annoying emails interfere with the signal writing the report, affecting the quality of your decision-making and clarity, and all of this leads to mental fatigue or cognitive fatigue when the brain is overused. Similar to how our muscles tire after prolonged exertion, constant noise, and distractions demand the brain to switch tasks frequently.

You know what it’s called – context switching. Each switch uses up cognitive resources leading to rapid depletion of our mental energy. So this is why after not even a day but a few hours with constant interruptions, even if they’re minor, you can feel as exhausted as if you’ve done intense physical labor. The fatigue isn’t just about the mental effort of the main task but about the additional energy expended in managing and shifting between distractions, and the fatigue has a compounding effect. As you become more tired, your capacity to differentiate between noise and signal diminishes further, making you even more susceptible to distractions, which in turn increases fatigue. So there’s a vicious cycle that can severely impact mental wellbeing. "

 -Gregg Mckeown, podcast ep. 233 

Daily Economic Update: May 30, 2025

Matt Levine’s Titled His Column: Tariffs Are Illegal

As you already read, yesterday started with the news that Federal courts blocked Trump’s tariffs. By the afternoon the Trump Administration appealed and the tariffs were reinstated. It seems likely this will end up in front of the Supreme Court, but as some analysts have pointed out, there are other avenues the administration can use to impose tariffs, though each seem to have some limitations. In the meantime some reports continue to state that the trade negotiations between some countries and the U.S. continue.

To state the obvious, the future of tariffs is uncertain and if there’s one thing markets hate, it’s uncertainty.

But What If You Need Uncertainty?

I’m sure you know that Fisher Black is famous for his work on option pricing and the famous Black-Scholes (and later Merton) model.  And you might remember my post where I mentioned the DIKW theory of knowledge, where the “I” stands for “information”, or data made useful, where we can make useful inferences.  So what does this have to do with Fisher Black, well back in 1986 in a paper titled Noise he made the point that uncertainty is a necessary condition of financial markets. 

Black defined information in markets as data that allows us to estimate true value and everything else as noise, simply data that appears informative, but really adds nothing to our ability to estimate true value. 

He argues that absent this uncertainty, in the form of noise, is essential because without it “there will be very little trading” in individual assets. Further providing, “Noise trading is trading on noise as if it were information. People who trade on noise are willing to trade even though from an objective point of view they would be better off not trading. Perhaps they think the noise they are trading on is information. Or perhaps they just like to trade. With a lot of noise traders in the market, it now pays for those with information to trade. It even pays for people to seek out costly information which they will then trade on.”

So the next time you hear someone complain about how much uncertainty topic XYZ creates, just remember without that uncertainty there would be no liquidity and markets lose meaning.

“Differences in opinion make a market” or as Dune put it: “to know the future absolutely! All of it! What fortunes could be made — and lost on such absolute knowledge, eh?” but “what a hellish gift that’d be. What utter boredom! Every living instant he’d be replaying what he knew absolutely … Ignorance has its advantages.”

Perhaps The Real Uncertainty Is The Limit Of Central Power

What do tariffs and “the whiskey rebellion" have in common, almost everything or maybe nothing.

Tariffs today and the whiskey tax of the 1790s may seem worlds apart, but they share a common thread: a federal government, burdened by debt, reaching for revenue in pursuit of what it defines as national interest.  Today, that national interest is domestic manufacturing and national security, specifically strategic sectors like steel and semiconductors. In the 1790s, the interest was the westward expansion and asserting control over the Northwest Territory. Today, the tariff actions imposed by the executive branch, which supposedly will be paid for by exporting countries, but in reality are paid by the importer (though who bears the actual tax incidence is debatable), are the actions that are justified in supporting the national interest.  Back then it was a Congress enacted tax on whiskey distillers, part of a plan to fund the war debt and build federal legitimacy in the west.  Both tariffs and the whiskey tax appeared to unevenly economically squeeze some groups more than others: back then western PA whiskey distillers bear a heavier burden than eastern counterparts, today it’s small and medium sized businesses feeling the tariff brunt.  

The policies of today and of yester-year were viewed by some as being too top-down, and solutions that ignored economic realities. Thankfully today’s resistance is judicial and procedural, as contrasted by those of the 1790s were resisted with rifles. The overarching parallel is one as old as this republic, which is one of the limitations of central power.  Whether it has been frontier stills or modern ports and factories, American history is filled with moments where citizens have questioned the reach of central power.  The song remains the same, who decides, who pays, and who pushes back.

Speaking Of Pushing Back On Central Power

Trump invited Powell to the White House to tell him to lower rates.  Powell reiterated (at least through the Fed statement) that the Fed will “make decisions based solely on careful, objective, and non-political analysis.”   For all the media hype around Trump and Powell’s relationship, it’s really not a new political story.  Paul Volcker has written about pressure from politicians on himself during his tenure in his memoir.  Nevertheless, I’ve written about this tension a few times and perhaps my favorite lens to view this falls under the concept of “fiscal r-star” which you can read about in this post from back in January.

Maybe We Need Information - But All We Get Is Data
In data, we got a slight improvement in GDP in the second estimate with 1Q estimated to be -0.2% vs. the previous estimate of -0.3%, but consumption was revised down. With all the “noise” and speculation of whether there was tariff front-loading, etc. in 1Q, it’s hard to know what to make of these estimates.  Over in jobless claim land, claims remained low.

And the treasury was able to sell the 7Y note at 4.194%, printing 2.3bps through where WI was trading with again signs of strong foreign demand.

We ended the day with the S&P 500 up slightly to 5,912.  The 2Y yield moved down to 3.95% and the 10Y yield down to 4.42%.

PCE hits this morning. Let’s see what new uncertainty it can gift us.

XTODs:

XTOD: "I encourage you to continue pushing the boundaries of our knowledge, to ask the difficult questions, & to pursue the answers with rigor & dedication. Your efforts today will shape the policies of tomorrow, influencing the economic well-being of millions." https://federalreserve.gov/newsevents/speech/kugler20250529a.htm

XTOD: If $WFC Asset Cap gets lifted that’s huge capacity to absorb Treasuries & Agencies… already they have started to buy CLO AAAs…

XTOD: The stock market isn't where you get rich. You get rich developing skills & using those skills to provide goods & services to other people for income which allows you to save. 

The stock market is where you allocate some of that savings to help protect & plan for future spending.   Index funds are a wonderful stock market savings vehicle as they're low cost, diversified and will likely beat 80%+ of higher fee strategies.

XTOD: When there is a lack of clarity, people waste time and energy on the trivial many.  When they have sufficient levels of clarity, they are capable of greater breakthroughs and innovations – greater than people even realise they ought to have – in those areas that are truly vital.

XTOD: Investor Rick Buhrman on the kindness of mastering your craft:

INTERVIEWER: What is the kindest thing that anyone's ever done for you?​

BUHRMAN: ... our oldest son, Theo, who just turned seven, spent the first six months of his life in several NICUs. He was eventually helicoptered to Indianapolis at Riley Hospital for Children. And while we were living in that NICU for almost a half a year we saw a lot of kids who passed away. Most of those kids were not as sick as Theo was.

I don’t know exactly why Theo survived, but I know that a major part of how he survived was because for several decades leading up to that moment, numerous nurses, nurse practitioners, respiratory therapists, doctors, surgeons had committed themselves wholeheartedly to mastering their craft. I can give you tons and tons of examples of these people. And I know that in the moment, it wasn’t necessarily viewed as kindness.

But maybe in some sense, the kindest thing that all of us can do is to pursue something radically that in some way is in service to others, because you just don't know how it's going to change the trajectory of human life. And so for all of those medical practitioners, none of whom I'm sure are listening to this, I owe everything to, because they gave me the gift of being Theo's dad.

https://x.com/DavidKotokGIC/status/1928163547520880992

https://x.com/gamesblazer06/status/1928160833852281106

https://x.com/cullenroche/status/1928102254336168440

https://x.com/GregoryMcKeown/status/1928164457848655978

https://x.com/ericvishria/status/1928191518294299156

 

Daily Economic Update: May 21, 2025

Not 7

The S&P 500 index’s 6-day winning streak ended yesterday, with the index closing at 5,940.  The recent 6-day winning streak was better than any of the current winning streaks in the MLB (the Reds are currently at 5 at the time of this writing). There were no major catalysts on the day as investors await further tariff or tax news.  The latest news on the tax bill front was that there remain about a dozen GOP holdouts.

Playing Hard To Get With Key Levels

Bond yields remain largely range bound: with the 2Y Treasury yield flirting with 4%, the 10Y Treasury yield flirting with 4.50%, and the 30Y Treasury yield flirting with 5%. It’s like investors are dancing with levels, the 2Y loves 4% unless something comes along to have them reassess the Fed’s path.  The 10Y loves 4.5% unless they fear growth or inflation. And the 30Y loves 5% as they weigh the U.S. deficits and geopolitics.

There was Fedspeak yesterday, but I didn’t listen to it.  Though one central bank did act and that was the RBA which cut rates 25bps to 3.85%, one of the drivers of the cut was, you guessed it, trade uncertainty.

We’ll have another light data day today, with the 20Y Bond auction as the highlight.

On a light news day, I’m going to keep this short and try not to contribute to the noise. 

Speaking of Words

One thing I did find interesting was financial writer Kyla Scanlon, of “vibecession” fame, posted on X recently about how she was “Reading CS Lewis again and banging my head into the wall because of the continuous realization that it always the same problems just a different time in history.”  and posted an image with an excerpt from Lewis’ Screwtape Letters, referring to the following passage:

“Once they know that some changes were for the better and others were for the worse, and others again indifferent. We have largely removed this knowledge. For the description of ‘unchanged’ we have substituted the emotional adjective ‘stagnant’. We have trained them to think of the Future as a promised land which favored heroes attain - not as something which everyone reaches at the rate of sixty minutes an hour, whatever he does, whoever he is.”  - Screwtape

If you’re unfamiliar with the Screwtape Letters, google it, but it’s written as a series of letters from a senior devil to a junior devil regarding the best ways to keep humans from virtue.

In my opinion the central idea underlying Kyla’s X post was that human nature never changes.

But Here’s The Cool Thing

I smiled because I beat her to the punch last year, referencing Screwtape on the topic of noise.  .  In fact in March 2024, I referenced this from The Screwtape Letters and one of my favorite quotes on “noise”, also from The Screwtape Letters here (and as follows):

"Noise, the grand dynamism, the audible expression of all that is exultant, ruthless and virile.... We will make the whole universe a noise in the end. We have already made great strides in this direction as regards the Earth.  The melodies and silences of Heaven will be shouted down in the end."

But The Point Really Is This

The point really is that I read the “About” section on Kyla’s Substack and (1) I should probably switch to substack (2) I should probably write a book and (3) while..”The goal of my newsletter is for it to *always* be free - but there is work that goes into writing, of course! If you think the content is valuable or would like to buy me a coffee once a month :-) I would sincerely appreciate your support.”

Do you think I could charge you $10/mo.  for this blog?  If so, feel free to let me know in the comments or better yet Venmo me.

I’ll hold my breath.

XTOD’s:

XTOD: Google introduces real time translation for video calls

XTOD: The Google demos today are insane. Somewhat ironic given the origin of OpenAI being "we shouldn't let Google dominate AI", but right now, Google has the global lead in every price point and every latency for LLMs, and for image gen, and video. Plus they own the complements

XTOD: Every day for the next 10 days is a palindromic date (the same number backwards):

5/20/25   5/21/25  5/22/25   5/23/25  5/24/25 5/25/25 5/26/25 5/27/25 5/28/25 5/29/25

XTOD: Cash-strapped Harvard joins with Franklin Templeton, to sell its (troubled) Private Equity and Private Credit assets to retail investors..... Like we said.....

XTOD: "Like Warren, I had a considerable passion to get rich, not because I wanted Ferraris—I wanted the independence. I desperately wanted it."   — Charlie Munger

XTOD: 1. Find an activity you love to do. 2. Build a business around that. 3. Never stop.

https://x.com/0xgaut/status/1924895003593089457

https://x.com/todayyearsoldig/status/1924912266228728091

https://x.com/rcwhalen/status/1924794462141648969

https://x.com/InvestingCanons/status/1924624613641683366

https://x.com/FoundersPodcast/status/1924857378454851936

Daily Economic Update: January 6, 2025

What is the purpose of this blog?  Where can it add value? These are existential questions this writer would like to attempt to address.   

Well the plan for this blog was to write "the definitive guide to financial history”, note the lowercase, a deliberate choice used to de-emphasize the importance of everything written in this blog and to make a perhaps not so subtle jab at the often-inflated importance of financial news.  As I’ve lamented in the past "...the irony of maintaining a daily economic update blog while firmly believing it is best to ignore all of the noise and false stimuli is not lost on me. If you’re paying attention it’s the message of this blog that you can’t predict the future and it's a waste of time to focus on the noise or 'what the world looked like ten minutes ago’.” When it comes to forecasting, a December 31, 2024 post from the St. Louis Fed examines the historical performance of “blue chip forecasters” from the period of 1993 to 2024, finding that when it comes to forecasting GDP growth, employment, inflation and the 10Y Treasury Yield, finding that it’s essentially a coin flip as to whether economic variables will fall within the range of the average of the top 10 and bottom 10 forecast and there is a decently large mean forecast error around these variables.

If you’ve spent any time reading this blog you would notice a couple of prevailing themes that often arise, three of which are worth highlighting.  The first theme is one of uncertainty and unpredictability which is centered on an observation (dare I say belief) that economic forecasts are notoriously elusive, wrong, inaccurate and that unexpected events often overshadow carefully thought out plans. This theme of uncertainty calls for a certain level of humility and calls for the allowance for some degrees of freedom. The second theme is closely related to the first and that is a theme of the importance of risk management.  With respect to risk management you will likely find a reminder of the importance of identifying your goals as the first step towards good risk management, “taking a risk without having a specific goal in mind is like driving around aimlessly and hoping to end up somewhere good.”  The third prevailing theme often discussed in this blog is a discussion of the human condition, the seemingly universal human conditions of greed, fear, envy and other emotions and behaviors that appear repeatedly in history.

Reporting and analyzing economic data is clearly something done repeatedly across many financial news sites, podcast, YouTube channels, research notes, etc. (and in this author’s opinion is largely “noise”), so where might this blog add value? 

• Sharing market commentary, data releases, topical discussions on economic thinking, etc. but doing so in an accessible way that is grounded in the themes mentioned above and employs humor and satire, which hopefully makes for a short and enjoyable read that hopefully provides some basic, dare I say educational value steeped in the humility of the reality that “I don’t know” all of the answers.

• Occasionally try to provide additional context or differing perspectives related to prevailing topics, such as has been shared previously with writing on topics like “yield curve strategies”, “market monetarism”, and the “fiscal theory of the price level”.

• Consistently curate a collection of thought-provoking ideas.  It is no secret that the X Thoughts of the Day (XTOD) have consistently been a highlight of this blog. That section frequently features interesting quotes, pop culture references and provides a variety of “takes” on topics including investing, personal growth, societal trends, and even critiques of contemporary culture.  The goal of this section has always been threefold, to provide humor, spark reflection and foster critical thinking.

Hopefully you find this blog to be an intellectually humble source of timely diverse perspectives, thought-provoking content, that ultimately empowers you to become more informed and discerning investors and individuals.

As we enter the first full week of 2025, I thought it would be good to reflect on 2024 and try to set the stage for the year to come.

2024 was a year characterized by inflation persistence, a robust labor market, the rapid adoption of AI, geopolitical tensions with continued wars in Ukraine and the Middle East, the Presidential Election, continued unaffordability in housing and debates over “R-Star” and market valuations and perhaps above all else another year of cryptocurrencies and meme trading.

By now you’ve already read a dozen or more 2024 recaps, but I’m not sure you’ve read one as “honest” as this one.  Here are 10 of the more interesting “stories” you may not fully remember from 2024:

1. Bill Ackman’s “Name Destiny Theory” - I’m not sure if you ascribed to this at a personal level yourself, but sure, why not “Billionaire Activist Man”?

2. Remembering Cathie Wood sold NVIDIA right before the run up.

3. Trump selling Gold Shoes for $7,500

4. Discussing Reddit shares on Reddit?

5. Jensen Huang (CEO of NVIDIA) signing boobs back in June. It turned out to not signal a market top.

6. All things Hawk Tuah - so many memes of Hawk Tuah vs. Excel Grind 

7. The return of Roaring Kitty - I’m not sure what this meant for society, but I want to post random images that people read into and trade off of.

8. The emergence of the ultimate safe haven asset, Fartcoin

9. Anchored inflation expectations, wait you don’t see the humor in that?

10. While not really a story, a reminder that it’s ok to text co-workers about fake meetings and when in doubt to adhere to the immortal advice of South Park and “Blame Canada” for anything that goes wrong in 2025.

You can draw your own conclusions as to what, if any, meaning there is in some of these 2024 stories. 

Onto 2025, I think everyone is aware of the major themes: 

• The direction of fiscal policy under Trump. Remember the idea that this administration might provide “huge fiscal deficits, protectionism, and industrial policy," potentially "on steroids"

• Equity valuations, particularly in AI and tech sectors, continue to be a central theme with questions around overvaluation and “bubbles”

• The Federal Reserve’s policy path which will seemingly hinge on two key topics: (1) where is “R-star”? And (2) How will Trump’s policies impact the Fed’s outlook

• Cryptocurrencies, what happens next?  The blind capital, as we call it, of the country - is particularly large and craving; it seeks for someone to devour it, and there is a "plethora"; it finds someone, and there is "speculation"; it is devoured, and there is "panic."...maybe?

• China on two fronts.  First, what's going on with its domestic economy (have you seen Chinese yields?) and second, geopolitics and tariffs. 

Aside from these themes if you’re looking a refreshing read, I would recommend Cliff Asness of AQR’s piece: 2035: An Allocator Looks Back Over the Last 10 Years

That’s plenty for today.  We start the day with stocks having ended a 5 day losing streak and a 10Y at 4.60% and a 2Y at 4.30% (remember the yield curve inversion?).

On the week ahead: Mon: S&P PMI’s, Factory Orders, Durable Goods, Fed’s Cook and 3Y Note Tue: JOLTS, ISM Services, Fed Barkin, 10Y Note Wed: ADP, Fed Waller, FOMC Minutes, 30Y Note Thur: Jobless claims, inventories, Fedspeak Fri: Jobs Day in ‘merica, UofM sentiment XTOD: Starting 2025, the S&P 500 is at 5882, up 23.3% for 2024. With dividends+buybacks increasing 11.3% & earnings up 9.9%, the equity risk premium stands at 4.33%. Adding in the ten-year treasury rate of 4.58% yields an expected return of 8.91% for US stocks. http://Damodaran.com XTOD: Your occasional reminder that privates may or may not have alpha vs. indices, but they are not “alternatives” in any sense that the word used to and should mean (i.e., diversifying low correlation). That word is being ruined by volatility laundering. https://am.jpmorgan.com/us/en/asset-management/adv/insights/market-insights/guide-to-alternatives/ XTOD: Yields will now keep rising until the equity market collapses. The die is set. XTOD: This explains almost all modern politics: When you can't grow the size of the pie, you focus on how to divide the pie. When you're growing the pie, there is more for everyone. When you're dividing the pie, it's all about how big of a slice you can get. People who can grow the pie are heroes, not villains. XTOD: i started my career w the US shale boom in 2009, rural towns flooded with money and jobs data center boom is starting to look the same, rural regions flooded with money and jobs from one of the largest physical infrastructure builds of the century you know what’s next… https://x.com/AswathDamodaran/status/1875248175931592953 https://x.com/CliffordAsness/status/1874510344283980239 https://x.com/his_eminence_j/status/1872768699280896444 https://x.com/ShaneAParrish/status/1875645047841992787 https://x.com/Melt_Dem/status/1871950737531662633

Daily Economic Update: May 27, 2025

Ursula Gets A Reprieve From The Orange Mermaid

On Friday, Trump declared that tariff negotiations with the EU were going nowhere and he was slapping them with 50% tariffs effective June 1.  While Wikipedia describes Ursula (the villain in the Little Mermaid) as “a bargainer of the worst kind”, after a “very nice call” with her over the weekend, Trump decided to delay the 50% tariff threat until July 9th.  Your guess is as good as mine as to whether a deal will be reached by July 9th, but it’s not lost on anyone that Trump can largely act unilaterally in negotiating trade matters, while the EU will have to get backing from a majority of member states before they can agree to a deal.  

The Euro traded up to 1.14 against the dollar following the news of the delay and stock futures were excited.

With One Villain Getting A Reprieve (for now), The Other, Not So Lucky (yet?)

Unfortunately Apple is looking like the poisoned fruit in this trade war fairy tale (Snow White or Orange Trump?).  I mean look we all know that Apple was a notorious user of the so-called “double irish” scheme to lower taxes, but I’m pretty sure they’re still an American company, unfortunately not one that makes their devices entirely in the U.S.  As a result, they’ve been labeled poison as Trump threatens tariffs of at least 25% on iPhones not built in the U.S. 

Maybe Buffett knew what was coming when he started selling Apple even before Trump took office?  

I’m no tech stock analyst but for long-term Apple investors the tariff news will probably be a sideshow to whether or not the company is a winner in the longer term AI narrative.

Speaking Of AI

Everyone else in finance is using AI for their blogs, research and podcast, so I thought I’d ask AI what the key questions you should be asking as to whether or not a piece of financial media (of any kind) adds value, here are some key questions to consider:

1. Does it improve your understanding of how financial markets work—not just what is happening, but why it matters?

2. Does it distinguish between signal and noise, helping you filter out hype, sensationalism, or herd thinking?

3. Does it cite sources, use data responsibly, and acknowledge uncertainty rather than pretend to predict the future?

4. Does it challenge your thinking or offer perspective you wouldn’t easily find elsewhere?

5. Does it help you make better long-term decisions—or just tempt you to trade on headlines?

From there I loaded the 2025 post from this blog into Google’s Notebook LM and had it answer these questions.  Based on the responses I’d say this blog is doing a pretty good job at adding values. Don’t believe me, believe the AI (with some slight paraphrasing and condensing).

• While the blog covers market activity, it goes beyond mere reporting to discussing underlying ideas. For example it has touched on theories like MMT, R-Star, the Fiscal Theory of the Price Level and concepts of cycles (business, credit, etc.) and valuation topics like CAPE.

• The blog refers to much of the daily economic news and data as “noise” and provides strategies for dealing with it, such as focusing on timeless wisdom. The selection of XTODs often provides perspectives that challenge common narratives or focus on non-market specific ideas.

• While the blog doesn’t use formal citations it names economists, investors and authors and provides links to external articles, reports, and X-posts.

• The blog challenges thinking and seeks to be an intellectually humble source offering timely, diverse perspectives. This year we’ve covered perspectives ranging from the recent references to The Screwtape letters, to concepts like “enshittification” to examining geo-economics and to management ideas and even the concept of “amistics”. We even threw in references to Vatican encyclicals.  The mix of cultural, literary and philosophical references often creates analogies and juxtapositions that are insightful and original.

• The blog is all about the long-term perspective, advocating for patience rather than trading on headlines or short-term noise. It promotes focusing on timeless principles from the likes of Buffett and Munger about ignoring daily market fluctuations and discusses the importance of distinguishing investment from speculation. It encourages reflection, not reaction.

And for the overall assessment, here’s ChatGPT (I love it when AI blows smoke up your ass):

The Edward Quince blog absolutely adds value. It’s insightful, honest, funny, humble, and weirdly educational in all the right ways. It doesn’t tell you what to buy—but it might help you become the kind of person who can decide that for themselves.

Trade Talks Or Data On the Week Ahead

For the week ahead the focus in data will be on Friday’s PCE’s readings.

Today (Tue): Durable Goods, Home Prices, 2Y Auction, Fedspeak
Wed: FOMC Minutes, 5Y Auction

Thur: Q1 GDP (2nd), Jobless Claims, Home Sales, 7Y Auction

Fri: PCE

Let’s see if the FOMC minutes reveal anything other than what we already suspect: they’re just as confused as we are.

XTOD’s:

XTOD: Nothing is real anymore.Veo 3 is completely out of control...

10 crazy examples:  1. This is Plastic…

XTOD: Drawdown Duration and Recoveries By Max Drawdown

As expected, there is a close relationship between the magnitude of the maximum drawdown and how long it takes a stock price to go from peak to trough. Drawdowns of 95-100 percent take 6.7 years, on average, while those of 0-50 percent take only 1 year. For the stocks that get back to par, the further they fall the longer it takes to get back to the prior peak: 8.0 years, on average, for the 95-100 percent cohort versus just 1.5 years for the 0-50 percent cohort. 

The paper calls out a fascinating fact: A stock that peaks at $100 and draws down 97.5 percent (mid-range of the 95-100 percent bin) would go to $2.50. A bounce to 16 percent of par would be 6.4 times the low ($16 ÷ $2.50 = 6.4).  The issue? The unrealistic assumption is the ability to buy at the bottom.

XTOD: Author and investor @morganhousel  explains that real wealth is measured in autonomy, not accumulation.   "I want to wake up every morning and say I can do whatever the hell I want today."  "There's a big difference between your boss telling you to do it and doing it on your own terms."   "Every dollar that you don't spend is money that you are actually spending on independence."    "Maximizing for independence and autonomy and doing it on your own terms on your own calendar is absolutely vital in anything you're doing."

XTOD: Wall Street does not get this. They continually dismiss the threat of rising prices, focusing instead on weakening growth and potential rising unemployment, and they conclude/demand that the Fed must cut rates.  This is the point I made on BBTV yesterday.

XTOD: Rising 10-30 year yields  without changed Fed expectations tells you this is about deficits and eroding reserve status of $. The term premium (the statistical junkyard for stuff we can't explain) has shot up to 90 bp, from negative. My column: https://wsj.com/economy/central-banking/bond-market-yields-government-borrowing-4a78af80

XTOD: You can see something 10,000 times on your phone, but never understand it until you see it in person for the first time.  That’s the lesson from the park bench scene in Good Will Hunting. Matt Damon is the arrogant, book-smart intellectual who’s seen little but read everything. Robin Williams is the wise professor who rolls his eyes at Damon’s hubris. The stuff of life can only be fully absorbed through direct experience, he says.  This is one reason why school falls short. It conflates regurgitation for understanding.  Shakespeare’s plays have been reduced to bite-sized cramming on SparkNotes and exam questions the following day. Or, take entrepreneurship, where certain kinds of wisdom can only be gained in the trenches of a sales call or when you have to fire the executive you swore was going to save your company. 

Travel, too. Something about the Golden Gate Bridge can only be understood when you feel the Pacific Ocean wind and shiver under a blanket of fog. Something about the life of Moses can only be understood when you stand atop Mount Nebo (where he died) and look down at the Promised Land of Israel. Something about Italian food can only be understood when you slurp “siero” in a Parmesan cheese factory and meet the 4th-generation shop owner. 

Pixels on a screen aren’t enough. Go out and Do the Thing because certain kinds of knowledge can only be gained through tactile, first-hand experience.

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