Attack the Week (ATW)
Sunday Thoughts
I like listening to non-financial podcasts to hear and learn about everything else but the things that occupy most of my professional brain. Just before the weekend, I listened to Huberman Lab’s episode with David Goggins.
They talked a lot about building resilience and overall mental toughness. The most interesting aspect was Huberman’s description of the brain. The anterior mid-cingulate cortex (aMCC) is the “muscle” that is likely related to longevity and can be trained by doing hard things, especially tasks that you absolutely hate doing.
The aMCC plays a pivotal role in tenacity and persistence in overcoming challenges by serving as a structural and functional hub in the brain. It integrates diverse signals from various brain systems, facilitating essential functions like attention, memory encoding, and physical movement, which are crucial for goal attainment.
Functional MRI studies highlight its involvement in a broad spectrum of tasks, from motor functions to emotion regulation, underscoring its role in effort regulation and resource management. This understanding of the aMCC's functions has significant implications in various life aspects, including educational achievement, ageing, health, and illness. It suggests that its structure and function can predict life and health outcomes.
It shouldn’t come as a surprise that any muscle needs training and that it gets stronger the more we use and stress it. The interesting aspect of the above case, however, is that it can only get stronger by not doing pleasurable tasks.
Is there a lesson for us investors and our brains? What do you hate doing? I don’t really like digging into the weeds of economic data, as I fear losing myself and missing the big picture. Maybe there is an untapped element to being a better investor by precisely pursuing some of the areas we are trying to avoid. Food for thought.
Another thing I really dislike is finding a narrative for an observed price action. The somewhat surprising US short-end rally certainly got my attention as it impacted every other asset class in the process. “Something feels off” was my tweet on Friday, as I can’t seem to grasp the change in the market beat. Maybe it’s the effects of Dry January, and yes, I have now passed the second weekend with flying colours.
The surprising post-CPI rally in the US front end continued on Friday after a softer PPI, suggesting a weak core PCE on January 26.
The momentum model is guiding us as always and is now back in buying mode (ZT, US 2s) after it took a profit on January 2nd (Blue Cross). We broke to new highs on Friday.
Actual Fed pricing isn’t as extreme as people think when compared to previous easing cycles. See the chart below. I guess this is still something for the bond bulls to be excited about.
Let’s now have a run through the week and see what else is in store in terms of events for us to consider as we sail through the coming days. As always, I am accompanying this with a pack of charts that we should also take note of.
Let’s attack.