JS Global Macro Notes

Quote from darkhorse:


Friendly advice: If you are early in your market journey, don't overfocus on the complicated nuances of macro. This is like looking for muscle definition in the gym before the basic foundation of fitness and strength is built.

Focus on the basic movements, and trading opportunities born of flexibility and awareness, rather than trying to suss out the complicated stuff. If your goal is to be a trader and make money, that is.
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You are a master of metaphor, darkhorse ! Great advise there, too.

On the way, kjones, check out and understand the meaning of elasticity of demand, too. It will help sort out some of the puzzle pieces for you; one little but important piece of econ 101 (micro)

Kjones, You picked a good pursuit. It will serve you well even if you don't get past econ 101.

I went kickin' and draggin' my heals into it, but it turned out to be the most useful course I had, looking retrospectively. And I liked it, too ! Maybe I would have majored in it had I not taken it near the end of my education. The closest I came to that was taking a second course (the first was micro, the second was macro).

Hint ! Check out Thomas Sowell's Basic Economics: A Common Sense Guide to the Economy. It will be a wonderful primer and prep school education before you do anything more formal, or read any more books. Also, response will be rich if you google his name, including videos of him instructing.

Consider this: Is it our leaders over the decades that are responsible for driving us into our current status ? Probably, but I would rather go the original source. The headwaters. Those that elected them into office. My pet peeve has been those few citizens who bother to vote don't understand enough about American history, rudiments of economics, nor rudiments (basic, basic, basic) political science. Current events is critical, but pre-empted by t.v. and Hollywood. If I can pick one, economics would stand out with the biggest priority to have citizens understand first. The odds of it happening are less now than ever before (that's another story). My thrust now, is no longer concern oneself with the dumbed down masses, educating them to be better voters. It is have yourself aware so you can become more educated about perils that lay ahead and to allow you to make wise choices to preserve yourself and family. Now if that isn't motivation enough, I don't have anything more to say. And for those that don't vote ? Their fate is sealed; the explanation on them can be understood with basic Darwin.
 
Elasricity like an inelastic product being food vs. An elastic product being expensive clothing ergo Fossil and Coach earnings are in the shitter?
 
I don't appreciate the dripping sarcasm of "if you even get past econ 101".

I'm uneducated, not yet learned. Not stupid, there's a difference.
 
Quote from kjones5159:

I don't appreciate the dripping sarcasm of "if you even get past econ 101".

I'm uneducated, not yet learned. Not stupid, there's a difference.
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Pull your sensitivity antenna in !

Read more carefully.

Use your common sense.

No one can expect to go past 101 unless majoring in it.

101 is all you need to be ahead of 90% of your fellow citizens and probably about the same among non-professional traders.

Geesh !
 
Sorry. I haven't been able to go to school for a variety of reasons, and I'm a little bitter about it. I didn't know that 101 can only be taken if that's your major.
 
Quote from kjones5159:

Sorry. I haven't been able to go to school for a variety of reasons, and I'm a little bitter about it. I didn't know that 101 can only be taken if that's your major.
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Apology gladly welcomed.

101 is great to start with and stop with.

To go beyond would generally be for majors or those minoring in it as perhaps a supplement to their major.

Anything more on a personal subject would be more suitable to PM each other to allow this thread to remain on theme. Thanks for that.
 
Quote from kjones5159:

Lower consumer prices, the robotic assembly lines and things like that increase profit margins because the savings are not passed down, which would be if anything more nominally inflationary, would it not?
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Historical data on corporate profit margins tells exactly the opposite story: they are strongly cyclical and mean-reverting. This is a result of market competition. It's not generally possible to earn extraordinary profits indefinitely (there are of course exceptions e.g. MSFT's quasi-monopoly on computer operating systems).

There are basically two forces responsible for the phenomena you seem to be concerned with (erosion of the middle class, etc). The first were the massive relative changes in the global supply-demand situation for labor induced by globalization. Billions of low-skilled workers were dumped essentially all at once into the global market, and unsurprisingly the result has been a relative reduction in the price (wages) for such labor. At the same time, the highest-skilled in many fields now enjoy much greater competition for their services, with the freedom to seek opportunities globally rather than in just one country or region. All things being equal it's a foregone conclusion that this trend is going to slow and eventually reverse: demographics mean that global labor markets will soon be visibly tightening (you can already see this in e.g. massive Chinese wage increases).

The second driver consists of the monetary inflation and credit-expansion policies pursued for many decades by essentially all world governments. Credit expansion via fractional-reserve lending and similar processes does not enable any new real wealth to be created, but rather transfers wealth to those with first access to new money (banks, rich corporations and individuals, and financial or asset-price speculators) at the expense of the poor and wage-earners generally. It also squanders real wealth by encouraging speculative bubbles and malinvestments; labor and resources are poured into ventures which later prove to have been wasteful, and do not ultimately contribute to anyone's material well-being. This problem may unfortunately be with us for the foreseeable future.
 
Quote from Specterx:

All things being equal it's a foregone conclusion that this trend is going to slow and eventually reverse: demographics mean that global labor markets will soon be visibly tightening (you can already see this in e.g. massive Chinese wage increases).
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I wouldn't consider this a lock. Global slowdown is a countervailing force to demographics that works on a faster time scale; and in the longer term, developing world labor demand could be curtailed, or at least stalled at the margins, by machines. Wage pressures would only speed up this process, e.g. the more expensive it is to employ five human factory workers, the more sense it makes to spend X on a machine to replace them all and amortize the cost. Meanwhile, the more that wage pressures proliferate, at any level, the more incentive is created to scale up the production of machines, which lowers their cost, making them yet more economically competitive with humans etc.
 
Keeping it Light

Mon Aug 27th - Barring an unexpected macro surprise, this looks to be a light volume trading week with an extra strong portion of meaningless price action as algos push the indices around in the absence of real conviction...

Read full notes here
 
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