Thoughts about the markets, automated trading algorithms, artificial intelligence, and lots of other stuff

  • This Post Will Help You Predict the Future of Our Economy

    Have you ever seen a funny photo that was captured just before a "something bad" happens? The tag-line is usually something like … This isn't going to end well.

    Well, after the news came out about President Obama seeking a $3.8 Trillion budget.  I remembered seeing this chart; and it isn't so funny.

    Federal Spending Is Growing Faster Than Federal Revenue.

    Since 1965, federal tax revenues and spending have soared. Revenues have increased by more than $1.5 trillion, and spending is up by $3.3 trillion. In 2009, federal revenue will drop, while federal spending is expected to increase by nearly $1 trillion.

    100207 Federal Spending Exceeds Revenue

    To give you some context for this issue, here is an interactive U.S. Debt Clock.

    100207 Click to see US Debt Clock

    Click the picture and you'll see a version that updates in real-time.

  • One Small Step for the Saints, One Giant Leap for New Orleans

    Mardi Gras does not officially start for another week … but the party has already started.

    http://cagle.com/politicalcartoons/PCcartoons/PCbest7.asp

    Watching with my son, I was amazed how many times he would tell me he wanted Doritos … right after seeing their ad.

    Here is a link to watch all the 2010 Super Bowl Ads in one place.

  • One Small Step for the Saints, One Giant Leap for New Orleans

    Mardi Gras does not officially start for another week … but the party has already started.

    http://cagle.com/politicalcartoons/PCcartoons/PCbest7.asp

    Watching with my son, I was amazed how many times he would tell me he wanted Doritos … right after seeing their ad.

    Here is a link to watch all the 2010 Super Bowl Ads in one place.

  • An Even-Tempered Apology, SNL Skit

    100207 SNL Skit Even Tempered Apology Andy Samberg channels White House Chief of Staff, Rahm Emmanuel, in this bleep-ridden skit.

    The premise is that the White House Chief of Staff offers his apologies for some recent comments. 

    It made me laugh out loud and wonder what politics would be like if people actually said what they were thinking.

    Here is a link if you want to read a transcript.

  • An Even-Tempered Apology, SNL Skit

    100207 SNL Skit Even Tempered Apology Andy Samberg channels White House Chief of Staff, Rahm Emmanuel, in this bleep-ridden skit.

    The premise is that the White House Chief of Staff offers his apologies for some recent comments. 

    It made me laugh out loud and wonder what politics would be like if people actually said what they were thinking.

    Here is a link if you want to read a transcript.

  • Why You Might Want an iPad

    Here is Apple's launch video.  They do know how to innovate and market, don't they?

    Yes, it is stuff that does the stuff their other stuff does.  Yet, somehow it is generating great Buzz.

    Are you planning to buy one?  I'm planning to resist … for now.

  • Why You Might Want an iPad

    Here is Apple's launch video.  They do know how to innovate and market, don't they?

    Yes, it is stuff that does the stuff their other stuff does.  Yet, somehow it is generating great Buzz.

    Are you planning to buy one?  I'm planning to resist … for now.

  • Ted Talk About the Building Blocks of Business Success: Autonomy, Mastery & Purpose

    This video provides a peek into the science of human motivation.

    There is a mismatch between what science knows and what business
    does.

    And what's alarming here is that our business operating system —
    think of the set of assumptions and protocols beneath our businesses,
    how we motivate people, how we apply our human resources — it's built
    entirely around these extrinsic motivators, around carrots and sticks.
    That's actually fine for many kinds of 20th century tasks. But for 21st
    century tasks, that mechanistic, reward-and-punishment approach doesn't
    work, often doesn't work, and often does harm    .

    Here is the direct link to the video on Ted's site.

    Here is an excerpt from the talk.

    Too many organizations are making their decisions, their policies about talent and people, based on assumptions that are outdated, unexamined, and rooted more in folklore than in science. And if we really want to get out of this economic mess, and if we really want high performance on those definitional tasks of the 21st century, the solution is not to do more of the wrong things. To entice people with a sweeter carrot, or threaten them with a sharper stick. We need a whole new approach.

    And the good news about all of this is that the scientists who've been studying motivation have given us this new approach. It's an approach built much more around intrinsic motivation. Around the desire to do things because they matter, because we like it, because they're interesting, because they are part of something important. And to my mind, that new operating system for our businesses revolves around three elements: autonomy, mastery and purpose.

    • Autonomy, the urge to direct our own lives.
    • Mastery, the desire to get better and better at something that matters.
    • Purpose, the yearning to do what we do in the service of something larger than ourselves.

    These are the building blocks of an entirely new operating system for our businesses.

  • Ted Talk About the Building Blocks of Business Success: Autonomy, Mastery & Purpose

    This video provides a peek into the science of human motivation.

    There is a mismatch between what science knows and what business
    does.

    And what's alarming here is that our business operating system —
    think of the set of assumptions and protocols beneath our businesses,
    how we motivate people, how we apply our human resources — it's built
    entirely around these extrinsic motivators, around carrots and sticks.
    That's actually fine for many kinds of 20th century tasks. But for 21st
    century tasks, that mechanistic, reward-and-punishment approach doesn't
    work, often doesn't work, and often does harm    .

    Here is the direct link to the video on Ted's site.

    Here is an excerpt from the talk.

    Too many organizations are making their decisions, their policies about talent and people, based on assumptions that are outdated, unexamined, and rooted more in folklore than in science. And if we really want to get out of this economic mess, and if we really want high performance on those definitional tasks of the 21st century, the solution is not to do more of the wrong things. To entice people with a sweeter carrot, or threaten them with a sharper stick. We need a whole new approach.

    And the good news about all of this is that the scientists who've been studying motivation have given us this new approach. It's an approach built much more around intrinsic motivation. Around the desire to do things because they matter, because we like it, because they're interesting, because they are part of something important. And to my mind, that new operating system for our businesses revolves around three elements: autonomy, mastery and purpose.

    • Autonomy, the urge to direct our own lives.
    • Mastery, the desire to get better and better at something that matters.
    • Purpose, the yearning to do what we do in the service of something larger than ourselves.

    These are the building blocks of an entirely new operating system for our businesses.

  • Capitalogix Commentary 01/31/10

    We Do Live In Interesting Times.

    The markets pulled-back a little last week.  To be fair, the correction was small in comparison to the size of the rally since last March.  In many cases where the recent trend has been bullish for so long, people use this type of weakness to add to positions.  So, an oversold-rally would make sense here.

    However, some traders have doubts about the health of the market. 

    There is a fear that things may not be what they seem.  For example, the GDP number came in higher than expected, but still resulted in selling.  OK, GDP didn't tell us useful things (this time) because the better than expected number was the result of accounting and statistics, rather than real economic growth.  Traders saw through that, and also see that there are still troubling data points coming in … like that Durable Goods Orders and Weekly Unemployment Claims were both weaker than
    expected; and Consumer Spending continues to decline.  Still, the Markets sold "good news" again last week.  And even
    though the moves weren't violent or extended, I take that as a bearish
    indicator.

    Is It Possible That the Market is Still in a Down-Trend?

    Right now, the issue is whether price can get back above the down-trend line (marked by the red arrow) that started in October of 2007. 

    100131 SP500 Down-Trend Line

    Is that down-trend line really valid?  It will be if price fails to rally here.

    What's Causing the Market to Wobble?

    As you examine the markets, it is easy to become near-sighted.  By that I mean that it is easy to look at the ups and the downs, and to assign a cause based on what's happening in America (for example, the crisis of faith in Bernanke, Geithner, or even a jobless recovery).  However, it is harder to believe that any of those issues is the real cause after you look at the next chart (or collection of charts).

    How Can The Economies Of This
    Many Countries React the Same?

    A quick glance around the globe shows remarkably similar performance in many markets.

    It brings up two questions:

    1. Are each of these countries really doing the same things right and wrong?
    2. Are world-wide expectations and responses really this similar?
    100131 World Markets Strangely Synched

    To get a closer look for yourself, here is a link to the charts.  That brings up a third question: What's really causing the markets to behave so similarly?

    HBR Shows that Countries Did Deal With the Crisis Differently.

    The economic crisis will influence business long into recovery.  This Harvard Business Review visualization puts various bailout and stimulus programs in perspective. Calculating these interventions as percentages of GDP helps identify which economies will be stressed and which will have the resources to bounce back.

    HBR Map to Healthy and Ailing Markets

    Is This Time Different?

    Lots of people are reading Reinhart & Rogoff's book, This Time is Different. It examines the trend towards public debt that balloons in
    response to financial crises. Here is an excerpt from PIMCO's summary of the book:

    1. The true legacy of banking crises is greater public indebtedness, far beyond
      the direct headline costs of bailout packages. On average a country’s
      outstanding debt nearly doubles within three years following the crisis.

    2. The aftermath of banking crises is associated with an average increase of
      seven percentage points in the unemployment rate, which remains elevated for
      five years.

    3. Once a country’s public debt exceeds 90% of GDP, its economic growth rate
      slows by 1%.

    These examples tend to confirm that banking crises are
    followed by a de-leveraging of the private sector accompanied by a substitution
    and escalation of government debt, which in turn slows economic growth and
    (perhaps) lowers returns on investment and financial assets.

    Business Posts Moving the Markets that I Found Interesting This Week:

    • The Ups & Downs of Obama's 1st Year. How Did He Do? (CNN)
    • Did the State of the Union Address Actually Change Anyone's Mind? (Slate)
    • IMF Sharply Raises Global Economic Growth Forecast in Developing Countries. (Reuters)
    • Is the Worst Yet to Come in VC? The Strong Will Survive. (WSJ)
    • AT&T Reports 2.7MM New Wireless Users & is iPad's Sole US Data Carrier. (Forbes)
    • More Posts Moving the Markets.

    Lighter Ideas and Fun Links that I Found Interesting This Week

    • The Pope and Social Media: Give Us This Day Thy Daily Post. (NPR)
    • How Technology Enhances Collaboration. (Forbes)
    • How the U.S. Enabled the Chinese Hacking of Google. (CNN)
    • U.S. Says Free Access to Internet is a Foreign-Policy Priority. (ZDNet)
    • Will There be iLust for the Apple's New iPad? (Forbes)
    • More Posts with Lighter Ideas and Fun Links.