Weekend Reading #155

Photo by Debby Hudson on Unsplash

This is the hundred-and-fiftieth-fifth weekly edition of our newsletter, Weekend Reading, sent out on Saturday 12th February 2022.

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What we're thinking.

The frustration that many participants in the market feel about the signalling from the Fed is real: while the governors of each of the branches of the central bank were traditionally looked upon as oracles who subtly dropped hints about the gradually developing direction of monetary policy, this week it is starting to look like their stance is one of “if you can’t convince, confuse”. To what end, who knows?  Is this what happens when we are in policy mistake territory? 

This week’s important data point was US CPI, which came in hotter than expected. Ahead of the CPI print, we were getting a feed of dovish comments from various Fed governors. Were they really dovish? Or hawkish? Not entirely – one could almost say they were intentionally ambiguous which left a little too much to the imagination of the market. Ultimately, when the CPI print landed hotter than expected, many were left perplexed as to the reason for the various pronouncements from the Fed.  

Aside from the natural conclusion hereon that Fed commentary, especially “unofficial” ones, are probably informationally negative (i.e. maybe better not to have received that information), it does raise the question of how much the Fed governors know of the data prior to release (could they have NOT known? Or are they really poor forecasters?), and if they did know and chose to insinuate the opposite, is that “managing expectations” or something a bit more nefarious? 

Ultimately, the goings-on in the upper echelons of government and policymaking are beyond us. But the frustrations that they cause are not. The fact that every couple of months, on a specific wednesday evening here in London, we have to repeatedly hit F5 to refresh the FOMC events page, download the statement, run a compare function in Microsoft Word to spot the differences and subsequently spend an entire hour scouring every single word of Chair Powell’s press conference feels a little bit nonsensical if we think about it. Not to mention the subsequent scramble to scour the minutes of the meeting 3 weeks after the event. 

The fact that there were algos written attempting to read Chair Powell’s facial expressions felt ludicrous years ago. That it is actually being seen as a necessity now just underscores how far this Fed watching exercise has been taken.  

Can the Fed really control inflation by micro-managing a short-term overnight reference rate? Sure, in an economy that’s levered to the hilt, where every economic actor (including all of us) optimises in real-time for spending, saving and borrowing decisions, maybe.  

But chances are that life is much more complicated than that, and for all the posturing between hawkishness and dovishness, that magic policy lever of overnight interest rate adjustments might not work as well as everyone hopes. 
 

What we're reading. 

I know very little about Russia, other than the news stories I read in The Times every morning and on Twitter as I scroll, fairly mindlessly, throughout the day. As a consequence, I know even less about Siberia. So, The Lost Pianos of Siberia, a book, as the title might suggest, about pianos and Siberia, was a random recommendation from a friend and a surprisingly fantastic read. The book, by travel writer and journalist, Sophy Roberts, is a journey into one of the remotest parts of the world and an exploration of the obsession that Russians have with music and musical instruments, and the importance these instruments have held throughout Russian history. Covering an eleventh of the world’s landmass, Siberia is also home to a lake that holds a fifth of the world’s freshwater, the largest forest on earth, the world’s longest railroad, and is home to the coldest inhabited city on Earth. It was also the location for some of the Soviet’s worst Gulags and work camps. Siberia may be a vast, hostile landscape with a bloody past, but you may be surprised to hear that scattered through this expanse are extraordinary pianos. They were brought by governors, exiles and adventurers before the roads and railways opened up Siberia at the turn of the 20th Century. After the 1917 Revolution, pianos were again distributed all over Siberia, benefitting Russians who had never had access to a musical education. Piano culture continued to thrive after the Second World War and pianos have been flung far and wide as a result. Often all that is left of a piano's backstory can be gleaned from the serial number hidden inside an instrument and that individual instrument’s story can reach back through more than 200 years of Russian history. Roberts tells the story of these pianos, sketching an accessible history of Russia (for those, like me, who know little) and weaving a musical narrative through the book that reminds us how even in the bleakest of environments, music still brings comfort, hope and joy. I highly recommend this book, especially as it sparks an urge to travel once again, something that is within touching distance now that COVID seems to be moving into the rear-view mirror. EJP

I have a great interest in trying to understand better the nature of consciousness but to be honest it it still something we know very little about.  Every now and then I come across a book that really helps.  The User Illusion by Tor Norretranders was published over 20 years ago but I picked up a recommendation for it on a podcast I listened to sometime early last year.  This was quite a difficult book to read as it is not exactly a thriller but after plugging away intermittently for nearly 4 months (I like to leave books around the house and every now and then I feel like reading something from one of them I pick up and read!) I finally found some rhythm and finished the last bit.  There are some staggering things in this book for me – most notably the difference between what Norretranders calls the “I” and the “me” or rather the ongoing conflict between our inner self (the “me”) and our consciousness (the voice in our head or the “I”).  The most amazing experiment brought to the reader’s attention is the work of neuroscientist, Benjamin Libet, who in the 80s, through simple experiment highlighted that our brain actually make a decision before our conscious mind concludes that we do and that the delay is quite consistent at anywhere from 0.2-0.5 seconds between the two. It goes deep in philosophy too and the question of free will.  After all if we (being the rational consciousness) doesn’t actually make a decision and is only being fooled into thinking it is making one, do we have free will?  This and many more fundamental questions are asked and I can only say that at the end of it all I have a far deeper understanding of how my own brain works. DC 

What we're watching.

When a new series of a Netflix favourite rolls off the production line, it's time for a quiet week of evenings on the sofa, and this week, my wife and I greatly enjoyed the first few mysterious, dark episodes of Series 4 of The Sinner. It's a great show that focuses on Detective Harry Ambrose, a cop with a limp, cut from the same stone as another TV detective favourite of ours, Julien Baptiste, who unpicks complicated crimes. Series 1, 2 and 3 were all excellent (Series 3 the softest thus far) but the show seems to be bang back on form given what I've seen of Series 4, as Harry, retired for a year (obviously), is trying to take life easy (obviously), before he's dragged back in (obviously), to try to solve one more dark and mysterious disappearance and/or murder (obviously!). The tried and tested formula for these types of shows is popular because they're tried and tested, and The Sinner looks like it's going to deliver once again. EJP 

This week saw the release of “The Tinder Swindler”. It immediately raced to the topmost watched list on Netflix. In 2019, Norwegian newspaper VG published an article titled “The Tinder Swindler,” which sent shockwaves through the general public. The article follows a man named Shimon Hayut who spent years of his life posing as Simon Leviev, the heir to a behemoth Israeli diamond fortune. He adopted this persona to court women on Tinder and, once he has earned their trust, to trick them into loaning him hundreds of thousands of dollars—money he would then use to woo his next victim. The Tinder Swindler has its finger on the pulse of what viewers want in a true crime documentary. At just under two hours, it doesn’t drag on longer than it needs to. It is short, snappy and succinct. DK 

What we're listening to.

Tim Ferriss + Cal Newport = a near perfect combination for me of host and guest, and I greatly enjoyed the recent episode of Ferriss’ show with Newport, everyone’s (or, mine, at least) favourite productivity expert talking about the pursuit of deep work and craftsmanship, slow productivity, and Newport’s challenge to take up 30 days of digital minimalism. All worthy topics. All topics to get the brain juices flowing. If you’re a fan of Newport, and I’ve read Digital Minimalism and Deep Work, I can highly recommend the depth to which he goes in this pod, adding to what you already know about him and his work with lots more practical, everyday solutions to the problems that technology might have wrought upon your world. Worth a listen. EJP 

For anyone who wants to understand the nuances of 5G, especially in the context of the Helium network, this podcast with Russell From is worth a listen. (Yes, that’s his surname, From. Not a typo.) He gives the perspective of an industry insider, having had professional experience as an engineer at the large American telcos, lending credence to the technical challenges which Helium solves for an existing telco. Interestingly, it was the FCC’s stance of encouraging competition which provided for the availability of CBRS spectrum, on which Helium’s 5G product is built – regulation isn’t always bad! Perhaps most interesting was how Russell and Arman, who hosts the podcast, found each other: chatting on Twitter spaces. Just another day in another community-driven project where technical proficiency just seems to magically appear – such are the benefits of breaking the silos and letting the expertise out. EL