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Don’t Forget The Data
Don't forget the data.
It's a big week for monetary policy, with the Fed set to deliver the first cut of the cycle, the Bank of Japan still grappling with the global ramifications of an overdue exit from accommodation and the Bank of England tasked with sorting out a bit of bothersome QT math.
But market participants who trade or track the world's largest economy will also need to parse a few notable macro releases, including an update on retail sales.
29 and a half hours before the Fed tells
I admit I’m staring into a rabbit hole … is data in and of itself meaningful any more? … seems to me, reactions (machines) and responses (humans) are where the rubber now hits the road, and those are all set up with pre-data bias and pre-conceived notions (predictions) – either in code or mental models. Outliers and surprises distort, right? So we don’t trade the data, we trade responses to it.
Great observation Michael. Models are just that.
I’m certain that the best minds and machines are also looking for ways to front run the other machines and humans.
Data only comes from yesterday. Once you have it, the question, of course, how to react to it. However, because the economic/financial outcomes of all individuals, companies, governments, and social groups to which they are linked are always mediated by the outcomes of the actions and relationships of those linked groups and stakeholders to which they are connected. So the the real chore is to understand the expected responses of those connections first, before deciding one’s own actions. Since none of us really understands what the machines, especially, will do, that makes the choice of more personal choices more a matter of luck than skill, IMO. However, to have any chance of making good choices we really need to have some sense of the web of relationships in which we are tangled and.dare I say it, at least a basic model of how the web functions.
I taught this to my strategy students for decades but they really didn’t want to bother with it. It suddenly occurs to me that the complexity of our decision environments may be a major driver causing a rise in the degree which we are becoming self-centered reality deniers.
This is an outstanding explanation of a real world, day-to-day application of “game theory” – especially as I think about this as it applies to my “web” of family members/relationships.
With respect to my analysis on how my investments will do under KH vs. DT, I am indifferent. I have thought this through and will modify my actions (but only slightly) after I see not only the outcome of the elections, but also the actions taken by those elected to office.