Muted start to day
After the fireworks last week, nothing seems to be stirring. Gilt yields are up a bit, the FTSE ($Z) is up 1.5% currently, with average volume. $ESTX50 too. Soybean futures are up. Precious metals seem to be down. Oil is down. The dollar is up a tiny bit. This info is probably purely noise, given that the US markets are closed today. Generally, daily moves are mainly noise, of course.
Crumbs
Replacing the Taylor Rule. Nominal GDP Level targeting has always seemed a better bet, but the “Semi-Wicksell Rule” is not far from this. I find it frankly baffling that when CB’s talk about using an autonomous regime for interest rates, the formula includes totally unobservable numbers, such as r* (the “neutral real interest rate”). Years ago, there was a lot of focus on the NAIRU — the “Non-accelerating inflation rate of unemployment.” I guess this is because the idea that technocrats would actually have a say on something so politically important is a fantasy.
Close
Well, nothing much happened today, as expected. I read a few chapters of “Fooled by Randomness” by N N Taleb. It’s a real pity that the guy has such an obnoxious personality, because actually some of the stuff he writes makes a lot of sense. If only he did not write as if his understanding of all this stuff was two standard deviations above the rest of the planet. It’s not exactly an original thought that a distribution can have an average which is very different from the most probable value. When I was about 14 my maths teacher asked the class what the average number of legs you could expect of the world’s population of humans. It didn’t take us long to arrive at the conclusion that it was slightly below two, even though no human actually had 1.9999… legs.
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