Baffling Landscape One: By the time Grosseteste died in 1253, Oxford had become the Aristotelian stronghold. Two Franciscans who followed him pushed knowledge to new intellectual heights that not even Thomas Aquinas could have imagined. The first was Roger Bacon who wrote works on astronomy, mathematics, geography, and the nature of language. Bacon’s work earned him a papal condemnation in 1277, the same year as the condemnation of Aquinas. The other was William Ockham. In 1324, Avignon became William Ockham’s home. He was summoned to teach philosophy there. By 1328, Ockham was on the run too, as his findings revealed that the real heretic was the Pope who had no authority on matters outside his jurisdiction.
What’s wrong with people in power who think that they have authority over matters way over their heads and jurisdictions, whether these involve science, social issues, or matters of personal faith and choice? Can we find around us similar situations nowadays where non-experts pontificate over our lives, while jeopardizing lives and well-being?
Baffling Landscape Two: What do the following two graphs tell us?
It seems that in the midst of the lowest unemployment rate in the last 50+ years, economic confidence is declining. Is inflation the culprit? Is Putin’s war on Ukraine a root cause of anxiety? Is the market dropping (see next graph) because of lower expectations which, in turn, reserve the firepower of sales and earnings in an environment where the Fed is trying to catch a boat long gone by playing catch up on raising rates (something it should have done since last summer or at the latest last fall)? Could it be that high prices, higher rates, lower expectations, and lower wealth (due to declining portfolios) could combine forces that will ultimately lead to demand and profit declines, and which, in turn, could act like a self-corrective mechanism toward the next upswing?
Baffling Landscape Three: In the opening act of Verdi’s Don Carlos, the protagonists are “afraid of the unknown”, and what an unknown that is when, nowadays, a malevolent Putin threatens the world with WWIII if not a nuclear catastrophe. When Elizabeth realizes that she is supposed to be the war trophy not for Don Carlos but for his father Philip II, the world shatters for both of them. She concedes, in order for the war to end, and at that moment wispy possibilities reverse into implacable realities. Elizabeth and Don Carlos are uprooted because of a pathetic, egotistical, and paranoid king whose weak points were self-evident and who could have been taken down by decisive opposition (internal or external). Nowadays, we hear calls that we should mend fences with autocrats in order to save the western coalition and bring oil prices down. So much for principles and ethics! But back to Verdi: Resistance is the heart of the opera. The themes might be great (liberty, love, justice, peace, death, the divine, law) but the characters find themselves when they resist systems they cannot control or historical patterns they cannot navigate.
If markets sense deterioration of the economic landscape, why then do the credit spreads remain so tight? However, while credit spreads remain tight (something positive as it portrays absence of credit concerns), the trajectory of companies that acquired significant amounts of debt in the last few years presents a wall of worry, as shown below.
Could it be that as rates start climbing higher at a time when the war in Ukraine may be expanding – and despite expectations of lower inflation – that we will start seeing credit spreads rising which, in turn, may undermine financial stability?
Ockham taught us that the logical gymnastics inside our heads do not equate to the reality that takes place outside our minds. Getting rid of notions/objects/subjects who have no meaningful existence is not only liberating but also necessary. That’s where Ockham’s famous razor principle comes in handy. Anything meaningless should be cut off. Is your god so weak that you need two of them? Is the Pope so insecure that he is threatened by poor Franciscans and their rightful teachings? The moment that Boniface and John XXII (the Popes at the time of Ockham) had turned their offices into illegitimate enterprises, the congregation not only had the power but also the obligation to replace them. Of course, you run the risk of being excommunicated (like in the case of Ockham), being burned at the stake like Jan Hus, or being poisoned or assassinated by Putin.
Is the market sending us a signal that it has started adopting Ockham’s razor?
Verdi retains the most important embrace for the moment when Don Carlos meets with Posa. Why? Because Posa represents the beam of light through which the drama of history decisively turns a page and focuses us on the larger picture of what really matters. Posa has an unwavering mission; he earns the confidence of Philip II just as he prepares to become a murderer in the name of the cause he wants to protect. Posa knows how to compromise in order to reach the ultimate goal. Posa is the only character and scene that remains intact in the various alterations/versions of the opera.
Posa represents Ockham’s razor and the market’s fundamentals when we navigate these baffling landscapes.
Baffling Landscapes: Declining Markets, Ockham Razor’s, Putin, and Verdi’s Spy
Author : John E. Charalambakis
Date : April 26, 2022
Baffling Landscape One: By the time Grosseteste died in 1253, Oxford had become the Aristotelian stronghold. Two Franciscans who followed him pushed knowledge to new intellectual heights that not even Thomas Aquinas could have imagined. The first was Roger Bacon who wrote works on astronomy, mathematics, geography, and the nature of language. Bacon’s work earned him a papal condemnation in 1277, the same year as the condemnation of Aquinas. The other was William Ockham. In 1324, Avignon became William Ockham’s home. He was summoned to teach philosophy there. By 1328, Ockham was on the run too, as his findings revealed that the real heretic was the Pope who had no authority on matters outside his jurisdiction.
What’s wrong with people in power who think that they have authority over matters way over their heads and jurisdictions, whether these involve science, social issues, or matters of personal faith and choice? Can we find around us similar situations nowadays where non-experts pontificate over our lives, while jeopardizing lives and well-being?
Baffling Landscape Two: What do the following two graphs tell us?
It seems that in the midst of the lowest unemployment rate in the last 50+ years, economic confidence is declining. Is inflation the culprit? Is Putin’s war on Ukraine a root cause of anxiety? Is the market dropping (see next graph) because of lower expectations which, in turn, reserve the firepower of sales and earnings in an environment where the Fed is trying to catch a boat long gone by playing catch up on raising rates (something it should have done since last summer or at the latest last fall)? Could it be that high prices, higher rates, lower expectations, and lower wealth (due to declining portfolios) could combine forces that will ultimately lead to demand and profit declines, and which, in turn, could act like a self-corrective mechanism toward the next upswing?
Baffling Landscape Three: In the opening act of Verdi’s Don Carlos, the protagonists are “afraid of the unknown”, and what an unknown that is when, nowadays, a malevolent Putin threatens the world with WWIII if not a nuclear catastrophe. When Elizabeth realizes that she is supposed to be the war trophy not for Don Carlos but for his father Philip II, the world shatters for both of them. She concedes, in order for the war to end, and at that moment wispy possibilities reverse into implacable realities. Elizabeth and Don Carlos are uprooted because of a pathetic, egotistical, and paranoid king whose weak points were self-evident and who could have been taken down by decisive opposition (internal or external). Nowadays, we hear calls that we should mend fences with autocrats in order to save the western coalition and bring oil prices down. So much for principles and ethics! But back to Verdi: Resistance is the heart of the opera. The themes might be great (liberty, love, justice, peace, death, the divine, law) but the characters find themselves when they resist systems they cannot control or historical patterns they cannot navigate.
If markets sense deterioration of the economic landscape, why then do the credit spreads remain so tight? However, while credit spreads remain tight (something positive as it portrays absence of credit concerns), the trajectory of companies that acquired significant amounts of debt in the last few years presents a wall of worry, as shown below.
Could it be that as rates start climbing higher at a time when the war in Ukraine may be expanding – and despite expectations of lower inflation – that we will start seeing credit spreads rising which, in turn, may undermine financial stability?
Ockham taught us that the logical gymnastics inside our heads do not equate to the reality that takes place outside our minds. Getting rid of notions/objects/subjects who have no meaningful existence is not only liberating but also necessary. That’s where Ockham’s famous razor principle comes in handy. Anything meaningless should be cut off. Is your god so weak that you need two of them? Is the Pope so insecure that he is threatened by poor Franciscans and their rightful teachings? The moment that Boniface and John XXII (the Popes at the time of Ockham) had turned their offices into illegitimate enterprises, the congregation not only had the power but also the obligation to replace them. Of course, you run the risk of being excommunicated (like in the case of Ockham), being burned at the stake like Jan Hus, or being poisoned or assassinated by Putin.
Is the market sending us a signal that it has started adopting Ockham’s razor?
Verdi retains the most important embrace for the moment when Don Carlos meets with Posa. Why? Because Posa represents the beam of light through which the drama of history decisively turns a page and focuses us on the larger picture of what really matters. Posa has an unwavering mission; he earns the confidence of Philip II just as he prepares to become a murderer in the name of the cause he wants to protect. Posa knows how to compromise in order to reach the ultimate goal. Posa is the only character and scene that remains intact in the various alterations/versions of the opera.
Posa represents Ockham’s razor and the market’s fundamentals when we navigate these baffling landscapes.