Simultaneous inflation and deflation pressures in China
China simultaneously experiences imported deflation and inflation.
Drop in global demand for exports causes credit to unwind within the manufacturing sector.
Swine flu and depleting foreign reserves causes price pig to increase.
This will be a useful case study to observe the monetary and fiscal policy China implements to deal with simultaneous inflationary and deflationary pressures.
China Factory Deflation Worsens as Pork Drives Consumer Prices https://www.bloomberg.com/news/articles/2019-10-15/china-factory-deflation-worsens-as-pork-drives-consumer-prices
Federal Chairman Jerome Powell on 0.25% interest rate cuts
- Outlook for the US economy is favorable but
- core inflation is only at 1.6% instead of 2%
- cutting interest rate by 0.25% from 2.5% to 2.25%
- insurance against downside risk
- global growth is slowing
- trade policy tension is a new stimulus to the equation and it is a concern
- key objectives
- strong job economy
- 2% inflation rate
- adopt an iterative approach by observing how economy reacts to policy changes
Key areas of concern
global growth slow down
- US core inflation rate is at 1.6% – excludes food and energy inflation which are cyclical
- US GDP sustained
- US manufacturing declined in 2019Q1 and 2019Q2
- US business fixed investment slowed in 2019Q1 and fell in 2019Q2
- companies uncertain about investment spending
- not seeing additional demand for products
- June US job growth slowed in 2019Q2
- disinflation rates observed in other countries
- manufacturing in rural China and the EU are slowing
highly leverage business sector within the US
- Business borrowings are excessive
- loans have moved off balance sheet of banks to market based vehicles
Positive signals of sustained US economy
- rising household income drives confidence
- no booming sectors observed hence no concerns for busts
Federal Reserves framework for monitoring risks
- Excessive leverage in the Financial sector
- Excessive asset valuations
- Excessive debt loads in households and business
- Funding risks that could result in sudden shortfall of liquidity
Structure of the US economy
- US capital requirements within banks are at 2X of what is required to tide through tough times
- 70% consumer
- 30% investments and manufacturing
- not growing
- remains healthy
Mushroom growing documentation
The mushroom at the end of the world
- staying alive for every species requires livable collaboration
- scalability is not an ordinary feature of nature and requires a lot of work
- expect interactions between scalable and non-scalable projects
- The bulk of the work is threading through the non-scalable to reach the scalable
On the middle man
- a necessary consummate translator within the supply chain
- he maintains a mental map of who needs what
- helps efficiently route the inventory to the most suitable individual
- it is the concept of not having to be a cog in the machine.
- it does not necessarily lead to great economic outcome for the pursuing individual
- it allows the individual the ability to freely allocate the use of his time
The matsutake mushroom
- along most parts of supply chain it symbolizes a social exchange which strengthens social ties
- it is only during the sorting when the mushroom is looked at purely as a commodity
Man and nature
- The satoyama revitalization
- man is part of nature
- man’s disturbance to nature is part of nature
- unintentional design is the interplay of man and nature
- animal/human activities/disturbance
- pine tree growth
- matsutake mushroom colonization and growth
Book summary: The Fate of Rome
Climate is both an enabler and disruptor of human endeavors. Nature balances the population it supports. Technology enables increased rate of energy extraction from environment to further human purposes.
Conducive climate results in bountiful yield and has allowed Rome to rise. Land is cleared and trade networks flourish during the rise of the empire. Clearance of wild lands unlocked microbes into the human civilization.
Microbes evolve to utilize humans and other mammals as vectors of infection. Dense population and connected trading network serve as a multiplier. The worst pandemic is the white pestilence (Black Death). This wiped out more than half of human population.
Trading network collapse as a result of the decimated population. Military rank diminishes both as a result of population decimation. Problem is further compounded by collapse of financial system which makes it difficult to sustain an army.
Grounds are fertile for spread of monotheistic dooms day religion like Christianity. Emperor Justinian converts to Christianity. Classical Greek school of thoughts gets displaced.
Climate change for the worse force nomads with superior military power to migrate westwards into Roman territory.
Roman Empire with decimated population gets further crippled.
Insights from the week
From Connie (Edmodo)
- the key to consulting is to organize data into high level mutually exclusive buckets to allow easy defeating by decision makers
From Tim (Edmodo)
- Kano model
From Val (Totango)
- Company is concerned with increasing revenue and profitability. This will drive higher valuation during further exit
From Yip (ATT)
- Analytics from Facebook page comments and twitter hashtag
- need to balance customer support demand and cost of running department:
- customer support hotline
- Direct comments from influencers which trigger negative sentiment to support staff
- Business analyst reads comments manually to get qualitative needs and understands business needs
- Data scientist explores data might not know the business needs
- business analyst have problems working with data scientist
- tools to help business analyst get directly at the insight instead of via data scientist
- build model to predict call support volume by category
- build model to quantify feature demand level needs
- correlation of weather and commodity prices
Insights from visit to far west fungi farm
Get woods chips from petco
Alder or ashpen shavings
6 inch to a foot at the bottom
Every few months 2 inch on the top
use Sundew, a carnivores plants to get rid of insects
Go to blue bottle cafe for burlap sacks
Don’t soak more spawns for more than 12 hours each time
If too dry soak, then keep in air for a day or two
- Drop some clay in water to detect chlorine in water used for soaking wood and spawn
Oakland. Wednesday night
- LibGen.IO – site where free books can be downloaded
- sci-hub.tw – site where free research papers can be downloaded
- www.bloodhorse.com/horse-racing – site for horse racing statistics
- Far West Fungi Farm
Reflections on organizational observations
On the benefits of being under resourced
An organization that is under-resourced is similar to an individual who regularly practices intermittent fasting.
In the case of the individual, weaker cells are cannibalized by the body to produce new cells. Studies has shown decreased probability of developing cancer and Alzheimer, coupled in some cases with increased longevity.
In the case of the organization, operations are forced to be focused and only opportunities backed by stronger market signals prioritized and pursued. Wastage and distractions are structurally curtailed. ROI improves as a by product.
On organic growth
An organization that is organically grown tends to be happen-chance and exhibit somewhat illegible and opaque structure.
In contrast, an organization that is deliberately designed tends to exhibit a legible and transparent structure.
Counter intuitively, it is the former that exhibits more resilience in times of environmental stress. The observed illegibility and opaqueness is attributed to the process of organic adaption to its environment. Chief historical examples are:
- Military of Carthage
- Genghis Khan’s Mongolian horde
Symbiotic relationships between man and other species
Somewhere along in time, Man formed semi-symbiotic relationships with selected species of plants and animals. Thereafter this cohabiting social structure was scaled up the world over.
As the process ran its course, other species were inevitably marginalized due to habitat loss, some driven almost to the brink of extinction.
It is interesting to note, the larger the physical size of an unincorporated specie and the closer it’s distance to the brink of extinction.
The long term trend tends towards mono-cultures and minification of species.
Man does not share the position at the top of the food chain well with others.