ScratchPad: The Fed Should Target Nominal GDP Growth at 5.5%, & Freddie de Boer Gets Exercised About a Thing That Is Not, in Fact, a Thing: 2024-05-02 Th
A scratchpad…
A scratchpad…
Economics: Has the Fed moved to a 5.5% per year nominal GDP growth target—or whatever is necessary to push the short-term nominal Treasury interest rate to the level at which the Federal Reserve as 5%-points of monetary ammunition to fight a recession? We have thought so since at least 1992. I think the Fed might agree—but I do not think the Fed will act on this proposal until after we have a year of the annual lookback core PCE chain price index at or below 2% per year:
Matthew Klein: The 6% Solution: ’U.S. spending and incomes continue to grow a bit faster than before the pandemic. And that’s okay…. “A monetary framework… should be [one].. that contemplates enough room to respond to a recession… [with] nominal interest rates in the range of 5 percent in normal times.… If I had to choose one framework today, I would choose a nominal GDP target of 5 to 6 percent…”. Larry Summers…. One could be forgiven for thinking that [Summers’s] views have guided [Federal Reserve] actions…. The U.S. economy remains settled in the stable ~5.5–6% yearly nominal growth trend it has occupied since mid–2022… <https://theovershoot.co/p/the-6-solution>
Journamalism: Just planting a stake in the ground to say, as Freddie de Boer tries to launch yet another AI-culture war, that you should first check that what Freddie de Boer says is a thing is in fact a thing—and a robust, representative thing. In this case, it does not, in fact, appear to be a thing. My very first three tries:
Freddie de Boer: Why Doesn't AI Want to Show Me Jesus Washing the Feet of His Disciples? it's a conspiracy <freddiedeboer.substack.com/p/why-doesnt…>
Economics: FT Alphaville is making a lot of fun of Morgan Stanley autos unexpected AI companies analyst Adam Jonas:
Bryce Elder: Tesla soul-searching with Adam Jonas: ‘“The AI brain is searching for its robot ‘body.’ And the body is the vessel of the AI ‘soul’”, writes Adam Jonas in an actual note to clients. Morgan Stanley’s autos analyst has been moved to aphorise by Elon Musk’s surprise visit to Beijing. Less contemplative observers might think Tesla shares are being short-squeezed up ~10 per cent today after Bloomberg reported that the company has received tentative clearance to sell full-self-driving in China — a possibility Musk had flagged during last week’s results conference call. More important, says Jonas, is the signal that Musk still loves Tesla…. Titled “He’s Back”, the note reiterates Morgan Stanley’s (recently lowered) $310 share price target on Tesla, of which extant businesses contribute $67… <https://www.ft.com/content/067b0dce-f34a-4853-8bbe-0ce674e36d04>
Jamie Powell: The best of Morgan Stanley's Adam Jonas: ‘Jonas' change of heart comes as a surprise to Alphaville, as for many years he's been a vocal bull on Tesla — projecting it as a future leader in electric vehicles and autonomy. So to commemorate the mood swing, here are five of our favourite Adam Jonas quotes from Tesla's various quarterly conference calls over the years…. “we're thinking proprietary low earth orbit satellite network to enhance the connected autonomous car ecosystem. Just want to get your thoughts on that…”. “is there anything that SpaceX is doing that—or enabling that could be advantageous to Tesla's mission to accelerate sustainable transport?…” “Some argue that SpaceX could offer Tesla a resilient cybersecure pipe for this precious vehicle data and a potential competitive advantage…”. … <https://www.ft.com/content/c7f28e95-c6ca-3d24-b3cf-1f6e7ef57ce5>
Bryce Elder: Adam Jonas explains why Tesla will be better at being Nvidia than Nvidia: ‘A 66 page research report from Morgan Stanley analyst Adam Jonas and six of his colleagues…. Here’s the gist of the argument. Teslas “are sensor encrusted robots making life and death decisions in highly unpredictable environments and situations.” Their next-gen proprietary brain will be the Dojo chip, being developed in-house by Tesla for the specific purpose of ingesting lots of data. Whereas ordinary chipmakers have to think about whether their new silicon will still be able to run Apache Spark and FIFA 23, Tesla’s GPU team has had a Mr Miyagi-like focus on advanced driver assist systems…. Morgan Stanley presumes the Dojo chip will deliver performance six times better than the current-but-one generation of Nvidia A100 GPU boxes, at less than the current $200k-per-unit cost of a single Nvidia box… <https://www.ft.com/content/d7f139d3-aebb-4932-8c0e-034c92bce963>
It is really hard to know what to say, other than that FT Alphaville is right to say that the speed and magnitude of the pivot from “Tesla to the Moon because of variable X!”, where definitely variable X ≠ AI, to “Tesla to the Moon because of AI!” does deserve some sort of a prize.
Technology enthusiasts have tended to form attachments, fandoms, and religions around specific inventors, inventions, and companies since... well, I have read impassioned letters to the editor from engineering publications dated 1870ish, and I suspect it has been going on for thousands of years. But the intensity, pretzel logic, and just overall weirdness of those enamored of Elon Musk and whatever magic he is pushing this quarter is a different order of magnitude from ordinary tech fandom - and very hard to describe.