A collection of 26 posts
Bitcoin - Perhaps Not too Late to Be Early
As of this writing, Bitcoin prices in USD are about >250% year-to-date. I was wrong on my bearish view [https://complexityeverywhere.com/bitcoin-thanksgiving/], last November. That post was full of well thought out underlying weaknesses in Bitcoin and a Random Forest model predicting a year-end 2020 price of around $9,
The Prepared Are Planning for Victory
Many are regretting not preparing for the disruptions they are now facing. What should you prepare for next? How about beating this thing. Some predictions: * One or more of the dozens of antibody tests in development works * Private supply chains distribute these tests across the globe * Western democracies adopt reasonable,
There's Reason to be Optimistic About the COVID-19 War
As much as I believe in an immediate national shutdown for 30-45 days with a complete economic backstop, that appears unlikely for now. America is not an autocracy, it is a federal republic [https://en.wikipedia.org/wiki/Federal_republic]. We have the most robust state and local government bureaucracy
2019 Year in Review
Entering 2019, I wrote here [https://complexityeverywhere.com/2019-outlook-event-risk-everywhere/] about three themes impacting markets, politics, and society. Each has materialized, in some form, and with varying impact. * Tangible Government Regulation of Big Tech Platforms * Dramatic and Rapid Breakdown Of Post-WW2 Multilateral Structures * Military Conflict Between India and Pakistan and Between
Stocks and Bonds are Now Both Right - No Recession in Sight
Expect Stocks to Make New Highs as the Economy Firms Up Recession fears are everywhere. The US-China trade war, Middle East violence, impeachment in DC, protests in Hong Kong, and Brexit have all weighed on the economy. These fears are likely overblown. Consumer economic data remains robust and the Fed
Odds Increase That the Fed Doesn't Cut Rates This Week
Another FOMC decision is upon us. Expectations are for a 25 bps cut. Equity markets are near all-time highs and US economic data continues to be resilient. A communications embargo has limited public FOMC communications. NLP analysis of available FOMC communications suggests a much lower likelihood of a rate cut
Optimism is on the Menu; A Recession is Not
The yield curve has inverted, the trade war [https://complexityeverywhere.com/believe-me-when-i-say-to-you-i-hope-you-love-a-trade-war-too/] seems to be in early innings, and economic data is being revised [https://www.marketwatch.com/story/us-created-500000-fewer-jobs-since-2018-than-previously-reported-new-figures-show-2019-08-21] downward. Forecasters are warning of a recession and even financial panic. CNBC has been replete with talk of markets in
Believe Me When I Say To You, I Hope You Love a Trade War Too!
NLP Analysis of the President’s Tweets on Trade (With Some Inspiration From Russians by Sting) In Europe and America, There’s a growing feeling of hysteria. Markets are catching up to the staying power of the trade war. As I wrote on May 23rd here [https://complexityeverywhere.com/when-saying-and-doing-are-the-same-thing-in-a-trade-war/
A Data-Driven Fed Wouldn't Cut Rates
TL;DR on Fed Rate Cuts The Federal Reserve Open Market Committee (FOMC) announces its rate decision on Wednesday. A robust review of economic data does not support a rate cut; I built both a neural network and random forest model trained on 72 economic indicators (monthly data going back
Can Neural Networks Learn to FedSpeak?
Deciphering FedSpeak1, the words and intentions of the Federal Reserve, has become a full-time job in financial markets and media. And markets have placed their bets leading up to the July 31 Federal Open Market Committee (FOMC) decision. As of today, the widely watched CME FedWatch Tool [https://www.cmegroup.
"Often Wrong, Never in Doubt"
Stan Druckenmiller’s Economic Club Speech – Part 1 The statement “often wrong, never in doubt” from famed investor Stanley Druckenmiller got a good laugh from the audience at The Economic Club of New York, where Druckenmiller spoke [https://www.facebook.com/econclubny/videos/2248264695265915] on June 3, 2019. It was
Summer of Our Discontent in Markets - Part 3
This is the third in a three-part series on the growing likelihood of a major transition in major markets.Part 1 [https://complexityeverywhere.com/summer-of-our-discontent-in-markets-part-1/] focused on Macro Event Risk and Cycles. Part 2 [https://complexityeverywhere.com/summer-of-our-discontent-in-markets-part-2/] discussed the application of popular complex systems Early Warning Signals (EWS) to
Summer of our Discontent In Markets - Part 2
This is the second in a three-part series on the growing likelihood of a transition in major markets. Part 1 [https://complexityeverywhere.com/summer-of-our-discontent-in-markets-part-1/] focused on Macro Event Risk and Cycles. This post discusses the application of popular complex systems Early Warning Signals (EWS) to assess a possible transition in
Summer of our Discontent In Markets - Part 1
Major equity and commodity markets are transitioning to risk-off. Many market observers rush to paint any downturn as the precursor to a 2008-style crisis. That does not appear to be in the cards. However, the odds of double-digit percentage downturns has risen. I am taking this view based on the
Another Bitcoin Bubble?
Bitcoin and other cryptocurrencies are back in the news this month as prices have doubled. Regular people should be wary of another Bitcoin bubble. Bitcoin is Not Digital Gold Many in the crypto community have latched onto the Bitcoin is a Digital Store of Value argument, something I first heard
Trade War Latest: Comparable Powers, Incomparable Ideologies
Today’s market drop shows that investors are starting to realize that we are not just in a trade war, but a new era of geopolitical competition between the United States and China. As I wrote in January here [https://complexityeverywhere.com/2019-outlook-event-risk-everywhere/], a dramatic and rapid breakdown of post-WW2
Is the Fed Really Data-Driven?
Markets are 65% certain of a rate-cut by year-end. Are they right? This morning, the Bureau of Economic Analysis in the U.S. Commerce Department released [https://www.bea.gov/data/personal-consumption-expenditures-price-index] its Personal Consumption Expenditures Price Index. This index, otherwise known as the PCE Deflator, is the Fed’s