Global Macro Watch

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Random Chart Action

Services v Goods Inflation

U.S. Savings Rate

China Home Prices

Tech Stock Weighting In S&P500 Falling

Relative Performance: S&P500 v. Equal Weighted S&P500

The Aussie Dollar Carry Trade Cometh

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In Honor Of Veteran’s Day: The Butterfly Effect

Here is a repost of a repost of a repost of a post.

The Butterfly Effect post is by far the most popular post ever on the GMM.  Many universities and high schools have linked it in their class syllabi.

Thank you, Vets.  You are my heroes.

In Honor Of Veteran’s Day: The Butterfly Effect

To honor Veterans’s Day,  we are reposting our June 2017 butterfly piece, which illustrates how sleepwalking can lead the world into a war that nobody wants.

French President, Emmanuel Macron, warned today about sleepwalking into another great conflict.

“I know there are old demons which are coming back to the surface. They are ready to wreak chaos and death. History sometimes threatens to take its sinister course once again.  – President Macron

Vets

History’s Biggest “Butterfly Effect” Occurred On This Day

The butterfly effect is the concept that small causes can have large effects. Initially, it was used with weather prediction but later the term became a metaphor used in and out of science.

In chaos theory, the butterfly effect is the sensitive dependence on initial conditions in which a small change in one state of a deterministic nonlinear system can result in large differences in a later state. The name, coined by Edward Lorenz for the effect which had been known long before, is derived from the metaphorical example of the details of a tornado (exact time of formation, exact path taken) being influenced by minor perturbations such as the flapping of the wings of a distant butterfly several weeks earlier. Lorenz discovered the effect when he observed that runs of his weather model with initial condition data that was rounded in a seemingly inconsequential manner would fail to reproduce the results of runs with the unrounded initial condition data. A very small change in initial conditions had created a significantly different outcome.  — Wikipedia

On this day in history, June 28, 1914, the driver for Archduke Franz Ferdinand,  nephew of Emperor Franz Josef and heir to the Austro-Hungarian Empire,  made a wrong turn onto Franzjosefstrasse in Sarajevo.

Just hours earlier, Franz Ferdinand narrowly escaped assassination as a bomb bounced off  his car as he and his wife,  Sophie,  traveled from the local train station to the city’s civic city.   Rather than making the wrong turn onto Franz Josef  Street, the car was supposed to travel on the river expressway allowing for a higher speed ensuring the Archduke’s safety.

Yet, somehow, the driver made a fatal mistake and tuned onto Franz Josef Street.

The 19-year-old anarchist and Serbian nationalist, Gavrilo Princip, who was part of a small group who had traveled to Sarajevo to kill the Archduke,  and a cohort of the earlier bomb thrower, was on his way home thinking the plot had failed.   He stopped for a sandwich on Franz Josef Street.

Seeing the driver of the Archduke’s car trying to back up onto the river expressway, Princi seized the opportunity and fired into the car, shooting Franz Ferdinand and Sophie at point-blank range,  killing both.

That small wrong turn,  a minor perturbation to the initial conditions, or deviation from the original plan,  set off the chain events that led to World War I.

Archduke_Jan27

Stumbling Into The Great War
Fearing Russian support of Serbia, Franz Josef would not retaliate by invading Serbia unless he was assured he had the backing of Germany.   It is uncertain as to whether the Kaiser gave Franz Josef Germany’s unequivocal support.   Russia, fearing Germany would intervene, mobilized its troops forcing Germany’s hand.

The great European powers thus stumbled into a war they didn’t want through complicated entanglements and alliances, and miscalculation.  Russia backing Serbia;  France aligned with Russia,  Germany backing the Austro-Hungarian Empire;  and Britian, who really didn’t have a dog in the fight except her economic interests, aligned with France and Russia.

Later the U.S. would enter the war due to Germany’s unrestricted submarine warfare threatening American merchant ships and the Kaiser floating the idea of an alliance with Mexico in the famous Zimmerman Telegram, which was intercepted by the British.

Of course, some will argue that Great War in Europe was inevitable

The great Prussian statesman Otto von Bismarck, the man most responsible for the unification of Germany in 1871, was quoted as saying at the end of his life that “One day the great European War will come out of some damned foolish thing in the Balkans.” It went as he predicted.  – History.com

Nevertheless,  maybe the course of history would have been different if not for that wrong turn on June 28, 1914, which created the humongous butterfly effect, which we still experience the consequences this very day.

The botched Treaty of Versailles  sowed the seeds the for World II.  The War contributed to the Russian revolution and Cold War.  The redrawing of borders in the Middle East after the War created the conditions for the instability and breakdown to tribalism the region experiences today.

A map marked with crude chinagraph-pencil in the second decade of the 20th Century shows the ambition – and folly – of the 100-year old British-French plan that helped create the modern-day Middle East.

Straight lines make uncomplicated borders. Most probably that was the reason why most of the lines that Mark Sykes, representing the British government, and Francois Georges-Picot, from the French government, agreed upon in 1916 were straight ones.  — BBC News

If Franz Ferdinand had not been murdered on this day in history,  that conflict between the Serbs and the Austro-Hungarian Empire may have been contained to just the Balkans.   Maybe.

The butterfly effect.  Think how many small events, decisions, mistakes, one small turn, or “minor perturbations” in plans have had enormous consequences in your own personal life.

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Nonlinear Thinking: The Home Of The Future

Geez, talk about an increase in labor productivity, one person building a dozen homes!  Go to 1:15 minutes into the video. 

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Contributions To Inflation

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Debunking Success Myths

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Global Macro Watch – Octoberfest

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Saint Bono

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Global Macro Watch

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The Fall Classic: Mr. October And Me

We are reposting a piece as the Fall Classic begins tonight.  Go Houston.  I love Astro manager, Dusty Baker, who was more than a big brother to me as a young teen.  I believe this is his year!

Mr. October And Me

Ahh, the Fall Classic!

We’re not talking about October stock market corrections but the World Series!   The Boston Red Sox and Los Angeles Dodgers square off tonight to begin the 114th October Classic.

Reggie_3

The last time the two teams met was in 1916 when the Dodgers were test driving a new nickname, the “Robins.”   The Red Sox beat Brooklyn four games to one.  Casey Stengel starred for the Robins, and Babe Ruth pitched thirteen shutout innings after giving up a run in the first inning to win the fourteen-inning game two.  The winning players share (World Series bonus) was $3,910 ($87,500 in 2018 dollars) versus the last year’s Astros’ player share of  $438,901.

Mr. October

No baseball player is more synonymous with the World Series than Mr. October himself, Reggie Jackson.

Reggie_2

Jackson earned the nickname “Mr. October” with his performance in Game 6 of the 1977 World Series against the Los Angeles Dodgers. Down 3-2 in the fourth inning, the Yankees outfielder hit a two-run home run and did the exact same thing in the fifth inning. Then in the eighth, he hit another home run to put the Yankees up 8-3. His performance secured the win and the series for New York.
Athlon Sports

Reggie and Me

I have truly lived a Walter Mitty life.

The first twenty-five years of my life was baseball, 24/7, an obsession that almost compares to today’s techno-addicted youth.

My baseball career ended due to an injury, but also mainly the lack of emotional maturity and the ability to pull out of an ugly hitting slump.  Nothing worse for your confidence than cruising along during the season hitting .350, then to fall into a 2-for-50 tailspin.  Then comes the vicious circle thinking you will never get another hit.  Ironically, baseball players can fail 70 percent of the time, and still hit .300, making  it to the Hall of Fame.

It’s very similar to what happens to your psyche and P&L, trying to trade crude oil and natural gas against the ‘bots.  You gotta shake off the bad ones and move on.   I could’ve been somebody, damn it!

I did have a headstart in baseball as a young teen working with the Los Angeles Dodgers, first as a batboy, then batting practice pitcher, and adjunct bullpen catcher.  Later, I would spend some time with the Atlanta Braves and Oakland A’s.

I caught Tommy John (TJ) — the real one, who had the surgery named for him – for almost the entire season he was out before his remarkable comeback.  He could barely extend his hand after the surgery but refused to give up.  I would try to hide in the outfield before games but would soon hear Red Adams, the Dodgers pitching coach, calling me to come to the bullpen.

TJ was very wild when he first started on the comeback trail, bouncing curveballs in the dirt, which too often ended up smacking me in the family jewels.  It was a painful year, and it’s  amazing that I could still have children. Tommy John is one of the greatest human beings ever.

Reggie

One winter or spring during the off-season, can’t recall,  I get a call from my boss to come to Dodger Stadium for a few days as Reggie Jackson was going to film a television commercial.  He said the production company might need a pitcher or catcher and I should be around to help Reggie around the clubhouse and stadium.

I wasn’t in the union so being in the commercial was out.

Over the next three days,  Reggie and I became very close.  He treated me like I was his little brother.  Reggie had this larger than life image, with a reputation for a larger than life ego.

…it all flows from me. I’m the straw that stirs the drink – Reggie Jackson,  Sports Illustrated, May 1977

He took a lot of heat for that quote, and still denies it,  and I certainly didn’t see the Reggie ego the media often portrayed.   He was super kind, friendly, down to earth, always made time for you, and was just a great guy to hang out with.  He made you feel comfortable and not conscious you were in the presence of one of baseball’s greatest stars.  It was very much like a good day hanging with your big brother.

Self-centered egomaniacs don’t treat the little people like that.

One thing that really stood out over our three days together was how Reggie spoke.  He sounded like an university professor, very intelligent,    Later I found out he has an IQ of 160, the same as Steven Hawking!   That is genius zip code.

Pumas  

What really sealed the deal was when Reggie finished filming and was about to leave.  He handed me a piece of paper with an address and phone number:

22 Yankee Hill
Oakland, Ca
(415) xxx-xxxx

He said when I was in the Bay Area; I would never stay in a hotel but with him.   I believe that house burnt down in the 1991 Oakland Hills fire.

He then asked for my shoe size and address.  We shook hands and parted ways.

About a week later five boxes of Puma tennis shoes came in the mail.  Thank you,  Reggie!

Baltimore Orioles

The next season,  the A’s traded Reggie to the Baltimore Orioles as a rental.  He was playing out his option and Charles Finley, the A’s owner, would never pay Reggie’s new market rate.

Reggie

My little brother idolized Reggie, so when the O’s were in town, I took him to a game.  After the game,  I went down to the dugout to say hi as Reggie trotted in from the outfield.  He invited me into the clubhouse.  I asked Reg if my little brother could accompany me.  He said absolutely.

I had told Reggie about my brother, and when we get into the clubhouse, he points to his locker and says,  “Geoff, anything, take anything you want. My uniform, glove, anything.”   Big egos and the self-absorbed don’t treat little people like this.

I love Reggie Jackson.

Pete Rose

Pete Rose was the same way, by the way.  Always thinking and caring about the little guy.

The commish of baseball,  Bart Giamatti, my favorite actor’s father,  died just eight days after banishing Charlie Hustle from baseball.   Just sayin’.

Let’s play ball.   Dodgers in six.

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