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Observations Lab

Non-Linear Views on Financial Markets and the Economy, based on Friedrich Hayek's decentralized knowledge paper, "The Use of Knowledge in Society".

Editorial Staff
Fisher Investments MarketMinder, March 31 2020
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Stephen Springham
Knight Frank, The Doomsday of All Scenarios? COVID-19 Market Update, 30/03/2020
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Dr. Brian Taylor, Chief Economist
Global Financial Data, February 27 2020
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Tony Coniaris, Portfolio Manager
Harris Associates, September 5, 2019
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By Daisuke Ikeda, Toan Phan, and Tim Sablik
Federal Reserve Bank of Richmond, Economic Brief, No. 20-01, January 2020
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Latest Observations
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Japanese Companies Are Flush With Cash

Cash and liquid assets as percentage of total corporate assets

Archibald Ciganer, Positive Signs for Japan’s Post‐Coronavirus Outlook
T. Rowe Price Insights, June 2020

Equities in a Society of Control, Part I

What was the difference between pre-Napoleonic and post-Napoleonic European societies? The French philosopher Michel Foucault once described the former as ‘Sovereign’ and the latter as ‘Disciplinary’.

Didier Darcet
Gavekal Intelligence Software, The Quant Corner, July 3, 2020

Stocks and the Matthew effect

“The rich get richer and the poor get poorer.” This famous adage has its roots in a biblical verse in the Gospel according to Matthew 25:29: “For to everyone who has will more be given, and he will have abundance; but from him who has not, even what he has will be taken away .”

Steef Bergakker, Senior Portfolio Manager
Robeco, Insights, Graph of the Week, 03 July 2020

Summer Rec

While spending on services is still stuck in the grip of COVID-19, goods-related spending is fast-approaching full recovery. Recreation-related spending is more than 10% above its pre-recession peak.

Tim Quinlan, Senior Economist; Shannon Seery, Economist
Wells Fargo Securities, Economics Group, July 01, 2020

Memo to the (Virtual) Investment Committee II: Fear and the Psychology of Bear Markets

While it is, of course, a cliché to say that markets are driven by fear and greed, like many clichés this one contains a strong element of truth. The bad news for us humans is that within our brains, emotion appears to have primacy over cognitive function.

James Montier
GMO White Paper, March 25, 2020

Google search terms frequency (worldwide)

January 2020 - May 2020

Laurence Monnier
Aviva Investors, "COVID-19 and data infrastructure: Will demand translate into profit?", 18 June 2020

The Magic of Moss and What It Teaches Us About the Art of Attentiveness to Life at All Scales

“Life [exists] only because of a myriad of synchronicities that bring us to this particular place at this particular moment. In return for such a gift, the only sane response is to glitter in reply.”

Maria Popova
Brain Pickings

"...the work of destruction is quick, easy and exhilarating; the work of creation slow, laborious and dull."

Sir Roger Scruton
Remarks - Europe at a Crossroads: The Virtue of Nationalism Conference, May 13, 2019

U.S. Personal Saving Rate

As of April 2020.

U.S. Bureau of Economic Analysis
retrieved from FRED, Federal Reserve Bank of St. Louis, June 3, 2020.

''Preventing a Depression''

"The environment today is not entirely dissimilar from the early 1930s, the last time a demand shock of a similar magnitude occurred."

Brian L. Giuliano, "We’re Fighting Deflation, Not Causing Inflation… Yet"
Brandywine Global, Around the Curve, Haver Analytics, June 1 2020

We’re Fighting Deflation, Not Causing Inflation… Yet

"While sweeping policy response is probably better considering the scope of the current crisis, it’s fair to wonder about the longer-term implications of these extreme and unconventional measures."

Brian L. Giuliano, CFA, Vice President, Portfolio Management
Brandywine Global, Around the Curve, June 1 2020

Walks a bit like a ‘v’, talks a bit like a ‘v’ but this is not a ‘v’.

Germany’s most prominent leading indicator just staged a strong comeback but the route to normalcy remains long.

Carsten Brzeski, Chief Economist, Eurozone and Global Head of Macro
ING, Snap, Germany: This is not a ‘v’, 25 May 2020

The quantity theory of wealth, continued

Simon Ward, Economic Adviser
Janus Henderson Investors, May 2020

The quantity theory of wealth

G7 annual broad money growth is the highest since the 1970s. The consensus argues that this will not be reflected in strong nominal GDP growth and / or rising asset prices because of a faster fall in the velocity of circulation, which has been in trend decline for 50+ years.

Simon Ward, Economic Adviser
Janus Henderson Investors, May 2020

What next for global real estate?

Excerpt

Michael Gobitschek, Portfolio Manager
Skagen Funds, 12 May 2020

Global Trade Volumes Reflect the Pause in Globalization

"Moreover, in the years since the global financial crisis, international trade has been a less powerful engine of economic growth."

Nathan Sheets, PhD Chief Economist, Head of Global Macroeconomic Research
PGIM Fixed Income, Globalization 2.0—A New Synthesis, Haver Analytics, May 2020

The Use of Knowledge in Society

"The Use of Knowledge in Society" is an academic paper written by economist Friedrich Hayek, that was first published in 1945. At that time a clear counterargument to a planned and centralized economy, it is more actual than ever!

Friedrich A. Hayek
The American Economic Review, September 1945

Now, Zoom is worth more than the top seven airlines combined.

Iman Gosh
Visual Capitalist, May 15, 2020

''The technocracy is as much a social class as a governing body.''

Excerpt

George Friedman, The Storm Before the Calm: America's Discord, the Coming Crisis of the 2020s, and the Triumph Beyond.
Doubleday, February 2020
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