Is The Bottom Almost Here?

[TwoCitiesCapital]

15 minutes ago, Spekulatius said:

I posted this elsewhere, but deposits moving to MM is also a concern. Could be that savers are sleeping at the wheel and the whole debacle have woken them up and now they start to move funds.

https://finance.yahoo.com/news/deposits-started-moving-money-market-145355809.html

 

Deposita have been exiting the banking system for months. I'm sure it's a combination of things, but it's not like we're waiting for it to happen - it's happening 

[changegonnacome]

38 minutes ago, TwoCitiesCapital said:

Deposita have been exiting the banking system for months. I'm sure it's a combination of things, but it's not like we're waiting for it to happen - it's happening 

 

This debacle has planted the idea of money movement in peoples minds.......you can both make your money 'safer' and earn a higher yield elsewhere. Its a motivating combination & clearly its started an avalanche of moves

 

Make no mistake about it - the aim of the Fed is to combat inflation via tightening financial conditions...........deposits leaving the banking system, higher interest rates being paid on deposits, inverted yield curve, impacting NIM's and banks desire & pricing on loans.......is part of the 'plan'.

 

Credit (outside of jobs/wages) is the only other source of consumer SPEND in the economy (barring stimi's :)) .

 

You whack credit, you hit the marginal dollar of spend. The marginal dollar of spend employs/supports the marginal employee. The marginal employ losses his/her job....precipitating further lowering of aggregate spend.....and the negative feedback loop continues. Its why a 1% move in up in unemployment is usually followed quickly by another 1% move.

[Gregmal]

Rumor now per CNBC that the Fed will look at this weeks market action to decide 25 or 0 and a pause….guess it’s gonna be a really rough week lol. Does any, like I mean anyone at all, focus on anything beyond the next few days or weeks anymore? 

[changegonnacome]

15 hours ago, Gregmal said:

focus on anything beyond the next few days or weeks anymore? 

 

No they don't!

 

I try my best....on that subject.........I've been messing around with Chat-GPT4 today properly for the first time....the latest iteration of the LLM that is 'hot' right now. I've thrown at it various iterations of 'work' done by functions from orgs I worked in, in the past.

 

Well as someone who was a proponent of the theory du jour......that the next 40yrs had inflationary forces that would see interest rates rise, asset prices fall and permanent departure from ZIRP in some big 40yr cycle in the opposite direction in the West.......well I'm not so sure now.....the human is a damn innovative ape.....GPT4 and the few tasks I threw at it kinda of blew me away and I'm skeptical of these hot things.....we've got a productivity problem in the USA and we are running out of people in the West due to demographics......GPT4 or AI more broadly looks to me like the way out of the productivity trap.....a protector of margins for incumbent companies with strong brands.....not quite yet......its come a little too late for what we need to do get through this little inflationary bout........ but my oh my it looks hugely disinflationary to me longer term. 

 

Edited March 19, 2023 by changegonnacome

[Gregmal]

There will be a benevolent excuse to automate a lot of “the process”. It’s inevitable. We did it with high level Indians and Eastern Europeans to an extent, however the robots will be easy. 

[changegonnacome]

2 hours ago, Gregmal said:

There will be a benevolent excuse to automate a lot of “the process”. It’s inevitable. We did it with high level Indians and Eastern Europeans to an extent, however the robots will be easy. 

 

The terrible problem to be solved if/when this stuff starts ripping through the low level office process jobs first but then up into lets call them 'college grad jobs'..........is that the return to 'IQ' for that tiny sliver of workers is really going to go through the roof.....already has in the internet age, to a certain extent........but AI could really accelerate that trend.......if ever there was thesis for LVMH and beachfront property.......fewer and fewer people responsible (& getting paid) for producing all our 'stuff' ...........GPT4 could be it.

[Castanza]

8 hours ago, changegonnacome said:

 

The terrible problem to be solved if/when this stuff starts ripping through the low level office process jobs first but then up into lets call them 'college grad jobs'..........is that the return to 'IQ' for that tiny sliver of workers is really going to go through the roof.....already has in the internet age, to a certain extent........but AI could really accelerate that trend.......if ever there was thesis for LVMH and beachfront property.......fewer and fewer people responsible (& getting paid) for producing all our 'stuff' ...........GPT4 could be it.

The trades future has never looked so bright. 

[Red Lion]

2 hours ago, Castanza said:

The trades future has never looked so bright. 

I was thinking the exact same thing. Almost zero competition either because even though this is such an obvious phenomenon, high school kids are going in huge percentages to take on student loan debt to get into dead end careers. 

[changegonnacome]

That's a great point - you need to think about what activity is 'un-AI'able'.....jobs that take place in the 'real world' not the digital one are likely safe for longer........trades is a great one, nursing is another one

[Spekulatius]

3 minutes ago, changegonnacome said:

That's a great point - you need to think about what activity is 'un-AI'able'.....jobs that take place in the 'real world' not the digital one are likely safe for longer........trades is a great one, nursing is another one

It seems to me that finance will be one of the worst hit sectors, since everything is already digitized or at least digitizable.

[Gregmal]

9 minutes ago, changegonnacome said:

That's a great point - you need to think about what activity is 'un-AI'able'.....jobs that take place in the 'real world' not the digital one are likely safe for longer........trades is a great one, nursing is another one

I love nursing and my wife’s entire side of the family does it, but is it really that impenetrable? Get a robot like Stop n Shop has monitoring the isles with a GPT program and just ask the basic questions that get relayed to the higher ups. Even stuff like surgery is highly prone to machines.

 

An electrician or plumber though? That’s untouchable.

[Gregmal]

7 minutes ago, Spekulatius said:

It seems to me that finance will be one of the worst hit sectors, since everything is already digitized or at least digitizable.

Most of finance is a total joke and easily replaceable. 

[Castanza]

1 minute ago, Spekulatius said:

It seems to me that finance will be one of the worst hit sectors, since everything is already digitized or at least digitizable.

I think any white collar job is in scope the further you look out. I can think of a bunch of jobs my co workers do while collecting 100k plus a year that could be automated now. The only thing preventing that for the most part is appetite to throw resources at that problem. If AI brings to market pre packaged solutions companies can implement seamlessly (or as they stand up the business) you’ll see a wave of change.   
 

It’s an ironic situation that just 10-15 years ago it was “go to college and learn to code”. Then some of those very same coders spent the next 10-15 years potentially coding themselves  and others in tech out of a job. 
 

A lot of noise out there though. But the solutions seem more real than those promised from blockchain

 

31 minutes ago, RedLion said:

I was thinking the exact same thing. Almost zero competition either because even though this is such an obvious phenomenon, high school kids are going in huge percentages to take on student loan debt to get into dead end careers. 

 Yup, there is already a large shortage and an aging workforce in the trades. 

[Castanza]

3 minutes ago, Gregmal said:

I love nursing and my wife’s entire side of the family does it, but is it really that impenetrable? Get a robot like Stop n Shop has monitoring the isles with a GPT program and just ask the basic questions that get relayed to the higher ups. Even stuff like surgery is highly prone to machines.

 

An electrician or plumber though? That’s untouchable.

Depends on the specialization. My wife is NICU and at least in her field it has gotten highly technical. 

[changegonnacome]

5 minutes ago, Gregmal said:

I love nursing and my wife’s entire side of the family does it, but is it really that impenetrable?

 

Me too....its the noblest of professions IMO...as anybody finds out when a loved one is sick in hospital.

 

As it pertains to nursing or medical in general....the risk-reward is skewed making it likely the last thing to get AI'd I think......even when technically it could via AI & robotics......the medical malpractice bar is so high....that a system needs to really show 2x 5x the level of proficiency of a human before it would be let sub for nurses etc.

 

In fact AI/robotics would hopefully augment what nurses do best and I'm sure would love to do more of if time allowed & paperwork/menial tasks shrank....which is the social/caring aspect of their jobs....making the sick/elderly feel comfortable, putting them at ease etc......

[Castanza]

5 minutes ago, changegonnacome said:

 

Me too....its the noblest of professions IMO...as anybody finds out when a loved one is sick in hospital.

 

As it pertains to nursing or medical in general....the risk-reward is skewed making it likely the last thing to get AI'd I think......even when technically it could via AI & robotics......the medical malpractice bar is so high....that a system needs to really show 2x 5x the level of proficiency of a human before it would be let sub for nurses etc.

 

In fact AI/robotics would hopefully augment what nurses do best and I'm sure would love to do more of if time allowed & paperwork/menial tasks shrank....which is the social/caring aspect of their jobs....making the sick/elderly feel comfortable, putting them at ease etc......

I think you’d see doctors replaced by AI before you see nurses. At the end of the day Nurses are the “blue collar” workforce in the healthcare industry. 
 

Where doctors and morels pharmacists answer questions and diagnose, nurses carry out the procedures, deal with the people etc. 

 

I don’t really think either will be replaced, but I can see some diagnosis chart reading, etc being handed over to the machines. A buddy of mine is a pharmacist and he said all he does is answer questions on the phone all day. 
 

The litmus test for “AI-able jobs” will be do they require knowledge AND physical skill to carry out. A lot of white collar jobs are just knowledge and nothing else. 

[changegonnacome]

Globalization might be responsible for the 40yr dis-inflationary trend we've experienced.......and we've got all the talk of it unwinding........but I think we've definitely got another candidate for dis-inflation now in AI based on what I've seen.....its completely turned upside down my view on where we go now......GPT4 is that good......in so many respects it solves the 'blank page' issue in various avenues of the working world......think of the email it takes 30 minutes to write or an outline/proposal/committee document so many of us spend time writing in their jobs or getting others to draft up for us.....GPT4 is not going to do it completely....but to me it looks like it can do perhaps 80% of the structural heavy lifting & whereby a human then would come in and add/edit deeper insights & thoughts outside of the mundane ones GPT4 drafts up.......it strikers me in the various roles I've had thats its akin to what you might ask a junior member of staff to draft up on your behalf having giving them a previous doc template they follow....... knowing full well that you will be required to take that draft & add deeper interlinked insights, context, internal org strategy/poltics...industry trends etc........

 

The games of cat and mouse in offices around this will be fun to watch.......as older staff members assume X task would take Y number of days to complete....and junior analysts use GPT to do it 15 minutes   Oh the fun  

[changegonnacome]

4 minutes ago, Castanza said:

The litmus test for “AI-able jobs” will be do they require knowledge AND physical skill to carry out. A lot of white collar jobs are just knowledge and nothing else. 

 

Yeah thats a good way to think about - knowledge/insights + the application of that knowledge in the 'real world' via physical application of that knowledge is the perfect 'un-AI-able' combo

[Gregmal]

Off topic…

 

https://www.cnbc.com/2023/03/19/elizabeth-warren-jerome-powell-has-failed-as-federal-reserve-chair-.html

 

I don’t totally agree with everything she’s saying, but the totality of the circumstance, ranging from Powell being Trump appointed, to the optics of everything, down to it being the banks he is responsible for regulating ultimately being the casualties of his reckless rate hike crusade, I think this guys days are numbered. He s a total failure. He fell for it. And after bragging about the health of the banking system…bringing it down because he couldn’t be patient with things he himself admitted required patience due to their lagging effects…this guy is a disaster and will be viewed as the clown he is by those that write the books.

[spartansaver]

13 minutes ago, changegonnacome said:

Globalization might be responsible for the 40yr dis-inflationary trend we've experienced.......and we've got all the talk of it unwinding........but I think we've definitely got another candidate for dis-inflation now in AI based on what I've seen.....its completely turned upside down my view on where we go now......GPT4 is that good......in so many respects it solves the 'blank page' issue in various avenues of the working world......think of the email it takes 30 minutes to write or an outline/proposal/committee document so many of us spend time writing in their jobs or getting others to draft up for us.....GPT4 is not going to do it completely....but to me it looks like it can do perhaps 80% of the structural heavy lifting & whereby a human then would come in and add/edit deeper insights & thoughts outside of the mundane ones GPT4 drafts up.......it strikers me in the various roles I've had thats its akin to what you might ask a junior member of staff to draft up on your behalf having giving them a previous doc template they follow....... knowing full well that you will be required to take that draft & add deeper interlinked insights, context, internal org strategy/poltics...industry trends etc........

 

The games of cat and mouse in offices around this will be fun to watch.......as older staff members assume X task would take Y number of days to complete....and junior analysts use GPT to do it 15 minutes   Oh the fun  

I’m not a tech person and usually can’t use most of that stuff, but I’ve been playing around with gpt4 since Friday. It’s one of the most amazing things I’ve ever seen. It just hits me over the head. I’m usually skeptical of tech stuff being revolutionary, but if I had to wager it seems like the odds are good. The speed is also wild. We are on gpt4, what does gpt10 look like?

[changegonnacome]

9 minutes ago, Gregmal said:

Off topic…

 

https://www.cnbc.com/2023/03/19/elizabeth-warren-jerome-powell-has-failed-as-federal-reserve-chair-.html

 

I don’t totally agree with everything she’s saying, but the totality of the circumstance, ranging from Powell being Trump appointed, to the optics of everything, down to it being the banks he is responsible for regulating ultimately being the casualties of his reckless rate hike crusade, I think this guys days are numbered. He s a total failure. He fell for it. And after bragging about the health of the banking system…bringing it down because he couldn’t be patient with things he himself admitted required patience due to their lagging effects…this guy is a disaster and will be viewed as the clown he is by those that write the books.

And don’t forget the original sin……he like so many pretended COVID was still a thing when it was clear that via vaccination we’d turned it into the flu…….yet Powell’s Fed was still buying MBS’s in early 2022 like the world was going to end and only the Fed could save it with QE and 0% rates.

[Gregmal]

Yup. I think his transitory call will almost certainly now be proven correct, just 18 months early…which again is simple. Jerry…in order for inflation to slow they gotta stop giving away monthly checks and they gotta put the masks down in NY and CA….they were still doing that shit 12 months into “transitory”…it fully stopped about a year ago.. I wonder what inflation looks like in July/August…

[changegonnacome]

3 minutes ago, spartansaver said:

It’s one of the most amazing things I’ve ever seen. It just hits me over the head. I’m usually skeptical of tech stuff being revolutionary

Im with you…I’m usually at the table with tech evangelists saying ok “blockchain” so how does it change the world really over databases and trusted third parties etc….it’s cool some extra/speed efficiency but you ain’t knocking me over or turning the world upside down …..….maybe it’s my career experience to date inside orgs that has me a little skewed……but I play with GPT4 and see literally thousands of hours of colleagues ‘work’ getting torched by this thing…..and not like in 10yrs…..I think it could torch easily 50% of some folks current time spent right now if you let me loose on a GPT4 time and motion efficiency project.

[Gregmal]

Yea, I’m feeling pretty good about my investment in Cerebras Systems. Might buy me an island one day or something. Meanwhile folks are buying Microsoft for GPT exposure lol. 

[james22]

1 hour ago, Castanza said:

It’s an ironic situation that just 10-15 years ago it was “go to college and learn to code”. Then some of those very same coders spent the next 10-15 years potentially coding themselves  and others in tech out of a job.

 

For decades, traditional manufacturing jobs were gobbled up by automation and offshoring.  This led Robert Reich to postulate a hierarchy of work in which the “symbolic analysts” – essentially, people who worked with information as opposed to actual stuff – were at the top, while people who worked with actual things were at the bottom.  With a remarkable lack of sympathy, journalists and politicians told coal miners and auto workers that they should “learn to code” as their jobs vanished.

 

But it turns out that the people whose jobs are at the most risk from AI are, well, the coders. 

 

https://instapundit.substack.com/p/the-coming-symbolic-analyst-meltdown