3/18/23 - The Itinerant Weekly - #37

recession

TL; DR - You’re in for a longer, richer edition of The Itinerant this week – with a particular emphasis on the current state of the economy. I implore you to read these carefully and take them seriously. I also touch on how the role of work and on-the-job education continue to evolve, including some tips for what it means for you; some publicly traded alternative asset managers write down unrealized returns by ~30% - this is just the beginning; lots of exciting new things are happening in healthcare, from Google’s ‘Open Health Stack’ for developers, to advances in in-vitro biological neural networks. AI remains on the top of everyone’s mind – with OpenAI releasing its GPT-4, and the FTC warning businesses about how they’re advertising AI. Lastly, some theoretical physicists think the future could impact the past; and simple guide for understanding how art has evolved throughout history and a framework for making good decisions.

The Itinerant Weekly is available on Diamond, Mirror.xyz, Medium and now Paragraph.xyz, and at www.theitinerant.io.

Entrepreneur – [Article] – How Web3 Is Making Now the Best Time to Be a Creator

  • With Web 2.0, we saw the birth of social media and higher degrees of social interaction both across countries and across continents. This unprecedented level of communication had substantial macro-behavioral and cultural consequences, giving us almost instant snapshots of events around the world. However, with Web3, we are now moving beyond only communication.

  • This is a paradigm shift from competition to collaboration and from social media to a true "social marketplace."

  • An increasing number of authors, however, are choosing to forgo the traditional route and instead are self-publishing, supported to best-seller status through swathes of their army of YouTube followers buying their book. This can be seen as evidence that a cultural and socio-economic shift is already well underway.

  • What the internet has done for information and data, NFTs will do for transactions and contracts, making us still in the visionary stage of the adoption curve of this new technology.


WSJ – [Article] – More Students Are Turning Away From College and Toward Apprenticeships

  • Some white-collar training programs have become as selective as Ivy League universities

  • Last spring Dina Sosa Cruz sat with her parents and sister in the family’s living room and reviewed her options: a full academic ride to the University of the District of Columbia, or an apprenticeship in the insurance industry. 

  • The college route meant at the end of four years the 22-year-old would have a degree, a little debt and no work experience. The apprenticeship would leave her with a two-year degree, money in the bank and training in a profession that appealed to her. 


Lyn Alden – [Article] –  How the Fed "Went Broke"  

  • The U.S. Federal Reserve is now operating at a financial loss, and is months away from having negative tangible equity for the first time in modern history.


Benziga [Article]A 2008 Redux Can't Happen, Economist Raoul Pal Says: 'The Fed Needs To Print Money'

  • The Fed needs to print and collateral prices will rise. If the collateral is worth more, then the debt is not called at a system-wide level unlike in 2008, Pal said.

  • QE is not inflationary whereas fiscal policy is, and it is short-lived, the economist said, pointing to Japan, which has been through this many times.


The Guardian –  [Article] – Cash-strapped banks have borrowed $300bn from the Fed this past week | Federal Reserve

  • The central bank has lent about half as much as it provided during the 2008 crisis as banks rush to shore up their financials

  • Nearly half the money – $143bn – went to holding companies for two major banks that failed over the past week, Silicon Valley Bank and Signature Bank, triggering widespread alarm in financial markets.

  • An additional $153bn in borrowing from the Fed over the past week came through a longstanding program called the “discount window”; it amounted to a record level for that program. Banks can borrow from the discount window for up to 90 days. Typically in a given week, only about $4bn to $5bn is borrowed through this program.

  • The Fed has lent an additional $11.9bn from a new lending facility it announced on Sunday. The new program enables banks to raise cash and pay any depositors who withdraw money.

  • For its new lending facility, the Fed said it has received $15.9bn in collateral, more than the $11.9bn it has lent. Banks sometimes provide the Fed collateral before borrowing. That suggests that additional lending is under way.


The European Conservative – [Article] – Silicon Valley Bank: Fed Starts Printing Money Again

  • The Fed’s intervention to save SVB and other banks copies a money-printing program from the European Central Bank. The practice, also known as ‘quantitative easing’ or QE, was used by the Fed under President Bush and for part of Obama’s presidency.

  • Currently, the Fed is engaged in a high-interest war on inflation (rightly so), the credibility of which would implode faster than SVB did, should the Fed’s plans for a policy shift become widely recognized. 

  • This drop in interest rates tells us that on the very same day that the Silicon Valley Bank dumped its $21 billion portfolio of government debt securities, the prices of those securities increased sharply. This market reaction is so uncharacteristic that it can only mean one thing: someone with very large resources was ready to step into the market and absorb the SVB’s portfolio.  

  • It looks like the Fed is quietly opening a path away from high interest rates and tight money supply, back to low interest rates and expansionary monetary policy.

  • Under the new BTFP program, the Federal Reserve is creating irresistible incentives for commercial banks to expand their holdings of U.S. debt. Since they are the ones buying the debt, officially it does not look like the Federal Reserve is simply printing money to monetize the U.S. government’s unending budget deficits. Yet just like with the ECB’s Term Refinancing Operations 14 years ago, that is exactly what the BTFP is going to do.


Finimize – [Article] – Morgan Stanley’s Cycle Indicator Changes to ‘Downturn’

  • Well, after 19 months of pointing toward “expansion”, Morgan Stanley’s cycle indicator just switched to “downturn”.

  • This phase is characterized by economic data that’s generally still strong, but deteriorating or stalling. That’s exactly what we’re seeing now: consumer loans and the housing sector have been slowing, M&A activity and bond issuance have been weak, and manufacturing activity has been collapsing. And while some sectors, like the labor market, remain relatively robust, there are signs of a slowdown there too.


CNBC – [Article] - Wall Street rides to the rescue as 11 banks pledge First Republic $30 billion in deposits

  • A group of financial institutions has agreed to deposit $30 billion in First Republic in what’s meant to be a sign of confidence in the banking system, the banks announced Thursday afternoon.


CNBC – [Article] –- Moody's cuts outlook on U.S. banking system to negative

  • Moody’s Investors Service cut its view on the entire banking system to negative from stable.

  • The big three rating firm cited a ”‘rapidly deteriorating operating environment” despite regulators’ efforts to shore up the industry.


Business Insider – [Article] – Brace for 'Crash Landing' As US Economy Heads for Recession

  • David Rosenberg has warned the US economy is headed for a "crash landing" or major downturn.

  • The veteran economist cited the Philly Fed's manufacturing survey, a proven recession indicator.

  • Rosenberg told Insider in February that the S&P 500 could plunge 25% from its current level.

  • Don't hold out hope for a mild downturn, as the US economy looks set to suffer a severe recession.

  • Referring to the Philly Fed's monthly survey of manufacturers, which recorded its seventh consecutive negative reading in March. More than 34% of the firms surveyed reported declines in activity, and both new orders and shipments hit their lowest levels since May 2020.

  • The metric has unfailingly plunged during each of the past eight recessions.


WSJ – [Article] – Tiger Global Writes Down Venture Funds’ Bets by 33% in 2022

  • The markdowns erased $23 billion in value from its portfolio of startups.

  • The internal rate of return for Tiger's PIP 12 fund declined from 12% in mid-2022 to 9% by year-end.  In the same time frame, the IRR for PIP 11 dropped from 23% to 13%, while PIP 10 fund's returns slumped from 39% to 35%. 

  • The returns from the VC division fared better compared to its hedge fund and long-only division, which lost 56% and 67% of their value, respectively


Google – [Product] – Open Health Stack 

  • Open Health Stack provides building blocks for creating next-gen healthcare apps. These open source components save time and make it easier to adopt modern healthcare standards (HL7® FHIR®), leading to secure, offline-capable, data-driven solutions for healthcare workers in low-resource settings.


Broad Institute – [Article] – CRISPR Timeline

  • The discovery of the CRISPR-Cas microbial adaptive immune system and its ongoing development into a genome editing tool represents the work of many scientists from around the world. This timeline presents a concise history of the seminal contributions and the scientists who pushed this field forward, from the initial discovery to the first demonstrations of CRISPR-mediated genome editing


TechExplore – [Article] – An overview of in vitro biological neural networks for robot intelligence

  • Our human brain is a complex biological neural network (BNN) composed of billions of neurons, which gives rise to our consciousness and intelligence. However, studying the brain as a whole is extremely challenging due to its intricate nature. By culturing a part of the neurons from the brain in a Petri dish, simpler BNNs, such as mini-brains, can be formed, allowing for easier observation and investigation of the network. These mini-brains may provide valuable insights into the enigmatic origins of consciousness and intelligence


FTC – [Article] – Keep your AI claims in check

  • FTC cautions businesses to be accurate in their claims of using AI


GPT-4 – [Product] – GPT-4 (openai.com)

  • While less capable than humans in many real-world scenarios, exhibits human-level performance on various professional and academic benchmarks.

  • For example, it passes a simulated bar exam with a score around the top 10% of test takers; in contrast, GPT-3.5’s score was around the bottom 10%.

  • Over the past two years, we rebuilt our entire deep learning stack and, together with Azure, co-designed a supercomputer from the ground up for our workload. A year ago, we trained GPT-3.5 as a first “test run” of the system. 

  • In a casual conversation, the distinction between GPT-3.5 and GPT-4 can be subtle. The difference comes out when the complexity of the task reaches a sufficient threshold—GPT-4 is more reliable, creative, and able to handle much more nuanced instructions than GPT-3.5


The Conversation – [Article] – Quantum mechanics: how the future might influence the past

  • Quantum entanglement flouts a lot of our assumptions about the universe, prompting scientists to wonder which of our treasured darlings in physics must be killed to account for it. For some, it’s the idea of “locality,” which essentially means that objects should not be able to interact at great distances without some kind of physical mediator. Other researchers think that “realism”—the idea that there is some kind of objective bedrock to our existence—should be sacrificed at the altar of entanglement. 

  • Wharton and Price, among many others, are embracing a third option: Retrocausality. In addition to potentially rescuing concepts like locality and realism, retrocausal models also open avenues of exploring a “time-symmetric” view of our universe, in which the laws of physics are the same regardless of whether time runs forward or backward. 

  • This idea seems so unintuitive because we imagine time as a river, an arrow, or an arrangement of sequential boxes on a calendar. At their core, these paradigms envision cause in the past and effect in the future as a forward flow, but retrocausality raises the prospect that these elements could be reversed. It may seem eerie to our brains, which process events sequentially, but the history of science is also littered with examples of human biases leading to bad conclusions, such as the Earth-centric model of the solar system.


IdentifyArt – [Article] – Timeline of Art History - Art Movements and Styles

  • A simple timeline of art movements throughout history. The beginning of art movements goes back to the dawn of humanity and is still an evolving story.


Dry Creek Wrangler School – [video] –  Making Good Decisions

  • The world will tell you ‘follow your heart’ – first thing I’ll tell you is don’t follow your heart’.

  • Most of what we can ‘following our heart’ is not actually. Its our emotions. Your heart is the core of who you are – its your reality.

  • Emotions are reactions to an outside action. By saying ‘I’m going to follow my heart’ you’re going through life reactionary to outside influences.


Entrepreneur – [Article] – Focus, Leadership and Productivity: How the Stoics Got It Right

  • Stoic philosophy is having a resurgence in popularity, and for good reason. The famous Stoic "dichotomy of control" and focusing your time and energies on what you can control is an incredibly important principle in business and life.

  • It's self-evident really — getting caught up in the noise of what you can't control is a distraction away from time and energy on what you can. Though there will be many adversities in life that we have limited control over, our responses are always up to us.

  • Ask yourself: Is this essential?

Loading...
highlight
Collect this post to permanently own it.
The Itinerant logo
Subscribe to The Itinerant and never miss a post.
#recession#crispr#apprenticeships#openhealth