Optimize your tone, brother

💡 The Lightbulb
Optimize your tone, brother

Gaming the algos is about to get even harder…

We, the people, demanded to know how AI would ever be useful.

Just take a look at this gem from the FT:

Can already picture the scenes:

MICROSTRATEGY STOCK FALLS 10% POST MARKET - SAYLOR STUTTERED WHEN SAYING THERE IS NO SECOND BEST (Boomburg)

Audio analysis suggests that Saylor may believe there is a second best. When reached for comment, the effusive figurehead explained that he merely had a dry mouth and slightly numb gums due to a long-standing medical condition.

We ran the FT Audio AI, and have reasons to doubt the authenticity of this statement.

And then the AI goes rogue and makes claims that will get everyone into serious legal trouble.

I dunno. I totally see the idea behind it, but surely all it will lead to is even LESS transparency from companies.

As the report points out, executives are already gaming the earnings transcript AI’s by using positive language, crafting every statement for maximum effect.

Where’s the Alpha here? 

In natural situations, where people don’t KNOW they’re performing, this could be an amazingly useful tool. It’s based on NLP after all:

NATURAL Language Processing

Amazing how often there’s a clue in the name 🤷‍♂️

So, if it’s not natural (and everyone will copy), there’s no competitive advantage. Which makes it kind of… pointless.

And it takes resources and attention away from the stuff that actually does matter…

While you’re analysing microtremors in voices, competitors are buying the stock hand over fist and worrying about the details later…

Perfect conditions for an asset manager to mismanage (or micromanage) their way to the bottom of their client’s Christmas card list…

🧠 The Big Brain
It’s FINALLY time…

For China to re-inflate the housing bubble

Houses are for living in, not for speculation.

The words of Xi Jinping, said way back in 2017, that sent the Chinese economy into a spiral it’s yet to recover from.

The idea was to disinflate the property bubble and make housing more affordable…

Which sounds great in theory, but not so good in practice.

And especially not great when you’ve spent over two decades inflating that bubble in the first place.

Now that the consequences of those actions have become clear, China’s busily plugging the leaks in their sinking ship.

Opportunity may be knocking…

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⚡ The Spark
Higher Rates = Profit Hit

In theory or in reality?

Here’s the lead from BBG

Those debt costs got a lot cheaper today on the back of the cooler US CPI print…

Anyway, it all depends on the company.

BBG/Calcbench highlighted a few companies, including pipeline operator Kinder Morgan:

A casual reader might conclude…

OMG THEY’RE GOING TO COLLAPSE THEY HAVE NO MONEY

Luckily the Kinder Morgan CFO has access to loads of cash:

Obviously, that won’t be free, and there is a risk that higher interest costs will impact profitability, over time, at any of these firms.

Just look out for the doomers saying that this means the end for company XYZ.

It doesn’t.

This process is entirely normal.

Companies are constantly refinancing debt over different maturities.

Interest rates are supposed to vary over time.

It’s part of a healthy capitalist economy.

@fink.tok

Replying to @pistachio #bonds are boring… but they can make you money, especially if you reckon interest rates have peaked!