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The political flurry in the US over the virtues of parenthood and a high birth rate is part of a much larger cultural moment in which the debate on the significance of falling global fertility is pitting two increasingly militant and unyielding sides against each other. We have trade wars , cu
Some thoughts on the recent elections in France and the UK, referencing ideas from Antón Barba-Kay about the political center featured in the Hedgehog Review. I also discuss the piece by Ben Hunt at Epsilon Theory about the struggles of Joe Biden's presidency after the debate with Donald Trump. I fi
A blog post with a worked example of portfolio optimization with US large cap equity sectors. The example includes the estimation and calculation of simple efficient frontier portfolios, and an augmented version with a more robust covariance matrix and a forward-looking return vector.
I’ve recently come back from a week on Ibiza—the smaller and cooler of the main Spanish Mediterranean isles—enjoying what has to be one of the most fantastic climates on earth. I come back to the realisation that I could have been more spendthrift in the pool bar despite its grotesquely overpriced d
I use three indicators in my work and analysis on the blog to describe the global business cycle ; a weighted average of growth in global industrial production and trade, compiled by CPB, the global composite PMI, and a diffusion index of OECD’s leading indicators. Strictly speaking, the CPB data i
Why are central banks targeting 2% inflation, and should they? This question seems to be on a lot of people’s minds at the moment , as it should given the likely difficulty in an achieving a perfect landing in inflation at 2%. Bloomberg’s Marcus Ashworth even asks the question that I suspect many
I recently said that markets were cruising for a bruising . For now, they’re just cruising, mirroring the path set by Corporal Ferro as she guides her drop ship to a perfect landing on LV-426 in James Cameron’s Aliens. There is still little stopping risk assets, short vol is paying steady premiums
I had the opportunity earlier this week to sit down with the IIEA and Dan O’Brien to discuss the decline in global birth rates, population ageing and what it all means. Thanks to the IIEA for hosting me.
I have a few things on my mind this week. We have to talk about Japan and the BOJ. Last week’s decision by the BOJ to raise its deposit rate above zero for the first time in 17 years cements Japan and its central bank as a counter cyclical indicator, of sorts. While major central banks have spent
This is the final chapter in the first part of my long-running demographics project . In the previous chapter I described the quantum effect of fertility, which hypothesises a negative relationship between fertility and rising incomes as parents substitute quantity for quality in their reproductive
Financial market pundits are a bit like dogs chasing cars; they wouldn’t know what to do if they caught one. And so it is that after trying to figure out whether the economy and markets would achieve a soft landing in the wake of the post-Covid tightening cycle, no one quite knows what to think now
The BIS has a Bulletin out on the usefulness of AI and large language models . They’re not terribly impressed. When posed with a logical puzzle that demands reasoning about the knowledge of others and about counterfactuals, large language models (LLMs) display a distinctive and revealing pattern o
This is my third use case for how to do quantitative analysis with Chat GPT 4. The two others, on Eurozone inflation and times series regression with macro data, can be found here and here . I started in the industry as Head of Research for Variant Perception , a research shop that specialises,
The following chart is one of hundreds that I use in my day-job as Chief Eurozone Economist at Pantheon Macroeconomics. It plots a normalised Z-score index of surveyed new manufacturing orders in Germany alongside year-over-year growth in factory orders, ex-major orders. It’s worthwhile spelling out
I want to thank everyone for bearing with me in my AI advent calendar project this year. I know it probably isn’t to everyone’s taste. But it was a fun project, and it helped me get better acquainted with AI, which will becoming an increasingly inevitable force to be reckoned with in 2024, for all
This year’s advent calendar project was primarily done on ChatGPT 3.5 and DALL E2. I only recently acquired access to GPT 4.0, which is infinitely more powerful, especially in its ability to respond to real-time events—it is trained on current data—to create more detailed and realistic pictures and
I am coming into 2024 in a decent position. My MinVar equity portfolio, designed to extract the best from both worlds in the perennial battle between growth and value, has done largely what it is supposed to do. It has offered positive, but below-beta, returns with below-beta volatility, the latter
The Sancerrois had defended their town valiantly. Artillery and bombs had been pounding the walls of the city early in the occupation, but to little effect. The enemy had suffered more so than the villagers during these attacks, despite the menacing presence of canons, explosives, slings and other w
Detective Isabella Ramirez leaned against the balustrade of her Santiago apartment, the city below twinkling like a sea of stars against the canvas of the Andean night. The rhythmic beat of salsa music drifted from distant clubs, a reminder of Santiago's vibrant pulse. Yet, tonight, a different melo
Dear Santa Claws, Greetings from the Monsterland! I hope this letter finds you in good cheer and surrounded by the warmth of your workshop. My name is Sunny Sprout, a little white and yellow monster; well I am actually not that little, but I am not big either, so… This year, I've been on my best b
Monetary policymakers have been scrambling in the past week to push back against the dramatic shift in market expectations for rate cuts next year. This is true for Fed officials —despite the clear dovish pivot in the December meeting—and particularly so for the ECB, where Ms. Lagarde and her coll
This is Captain Elara Rodriguez transmitting from the surface of Seraphia. We have moved the mission to the break-point between the permanent night and day zones to investigate the flora, fauna and animal life in the transition between these two parts of the planet. Our exploration has been proceedi
INT. CIMMERIAN CLOISTER - ENTRY HALL - NIGHT The air is thick with an eerie stillness, broken only by the distant howl of the wind. The massive wooden doors of the Cimmerian Cloister creek open, revealing a silhouette against the pale moonlight. AMELIA (30s), a daring researcher with an air of ske
Nestled deep within the heart of the desolate Raven's Peak Mountains, a decrepit edifice known as the Cimmerian Cloister looms ominously against the backdrop of the perpetually overcast sky. This abandoned monastery, shrouded in an eternal veil of mist, holds a sinister tale that sends shivers down
In the shadows of human ambition and scientific curiosity a spectral figure began to take form at the turn of the 20th century. By the middle of that century it had become fully fledged, and emerged in all its dark and sinister glory. Draped in a black hood, and acting from a menacing position of po
The walls of Sancerre were cold that morning, a bitter chill cutting through Pierre's armour. It felt nice pushing his chest against the stone wall, its fissures and cracks offering protection from the howling wind otherwise piercing his armour and clothes like arrows. He gazed out over the snow-cov
This is captain Elara Rodriguez transmitting from the southern hemisphere of Seraphia. Our mission has ventured to the vast and breathtaking savannahs that stretch across this region, venturing south from our original landing site in the north and permanently dark part of the planet. The vital envir
Beans and Books is a charming and cozy coffee shop nestled on a quiet corner of a cobblestone street, probably in a quiet and picturesque English village or town, but it could reasonably be found in an old European town as well. Bean and Books celebrates two of the most beautiful things in the world
Lima Nightshade is a strikingly beautiful human wizard, known for her enchanting charisma and cunning intellect. She hails from a noble family with a dark history of power struggles and deceit. Raised in an environment where ambition and ruthlessness were highly regarded, she grew to embrace the dar
According to U.S. Treasury Secretary Janet Yellen economists who predicted that a sustained period of high U.S. unemployment—and perhaps even recession—would be needed to bring down inflation are now “eating their words”. This follows earlier comments by Ms. Yellen last month that a soft landing
Harold Harmon's world was defined by two simple pleasures: surfing and strawberries. Born and raised in a coastal town, Harold had spent his entire life riding the waves and savoring the sweet, juicy goodness of ripe strawberries, which he cultivated in his garden, and which were abundant in-land fr
Once upon a time, high in the mountains, there lived a friendly green dragon named Dizzy. Dizzy was unlike any other dragon because he had two beautiful, sparkling white horns on top of his head. These horns glistened like freshly fallen snow, making Dizzy the most unique dragon in the mountains tha
Step into the enchanting world of Alessio Bianchi's A Mediterranean Serenity , an exquisite painting from the impressionist era, which transports you to the sun-drenched balcony of a charming European city by the sea. This radiant masterpiece captures the essence of a tranquil Mediterranean morning
This is captain Elara Rodriguez sending the first transmission from the surface of a remarkable world that we are calling Seraphia. The planet orbits Gliese 667 C, a member of the Gliese 667 triple-star system. Seraphia is a place of extraordinary scientific intrigue. Our initial scans indicate that
I hope you’re enjoying the 2023 Chat-GPT advent calendar even if it is quite a deviation from the content normally posted here. Fret not, I will pepper the flow of advent stories with some economics, and a lookahead to markets next year. I really enjoyed @EconTalker's conversation with @tyle
In the heart of the picturesque English countryside, nestled between rolling hills and lush green meadows, lay a quaint village named Redbrook. This idyllic village was known for its charming cottages, cobblestone streets, and a tranquility that was a balm for weary souls. Everything was as it had a