#62 S2N: Who likes uncertainty?

S2N Spotlight

It is a beautiful Friday in Sydney, Australia. I am fully caffeinated and keen to continue my Friday tradition of learning something new. Yesterday, the Citi Economic Surprise Index was released with a pretty downbeat report. I was trying to find a free API to the data source but stumbled across this daily index published from the St. Louis Fed’s database instead. I couldn’t find any meaningful methodology behind the index construction other than: The index is typically constructed using a combination of financial market indicators, such as stock price volatility, trading volumes, and other relevant metrics that reflect uncertainty in the stock market.

The first thing I had to do with the data was apply a 5-day moving average, as the daily data was so noisy that my ears are still ringing. I have created 2 charts, one with all its data and the second with a shorter time frame to get a clearer look if there is an interesting signal to be drawn from the data. In the spirit of uncertainty, I am going to leave you hanging.

S2N Observations

I cannot stop thinking of the irony that Sam Bankman-Fried, the so-called genius, is going to jail for an eternity for a Ponzi scheme that paid out all its investors their capital in full, plus interest. He was so clever that he didn’t even realise how clever he was.

Speaking of geniuses, Elon Musk’s Tesla has a new problem on its hands. Where to park all the unsold cars they are finally making at scale. In the first three months of 2024, Tesla produced 46,561 more vehicles than it delivered. Recent drone footage from its Fremont, California, factory shows new cars continuing to fill up its vast parking lots, and Tesla is now being forced to find extra space to cope with the overflow. Tesla is renting shopping centres and airport car parks, as the Jalopnik site notes. 

The Dow Jones Industrial Index briefly crested 40,000 for the first time yesterday. I very rarely quote this index, as it has a highly flawed construction methodology. The WSJ today is calling for the index to be retired as it is no longer useful.

Finally, I found it quite worrying to see Vladimir Putin in China, buddying up with President Xi Jinping. Make no mistake, this relationship is nothing more than one of convenience. Putin needs whatever help he can get, and Xi needs cheap oil and natural resources. What they don’t project, despite what they say, is world peace.

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