Headline inflation is the raw Consumer price index (CPI) reported monthly by the Bureau of labour statistics (BLS). CPI measures inflation by calculating the cost of a fixed basket of goods. The CPI uses a base year to index the current year's prices.

Explaining Inflation

As it includes all aspects of an economy that experience inflation, headline inflation is not adjusted to remove volatile figures. Headline inflation is often linked to cost-of-living changes, which is useful for consumers.

The headline figure doesn't account for seasonality or volatile food and energy prices, which are removed from the core CPI. Headline inflation is usually annualized, so a monthly headline figure of 4% inflation would equal 4% inflation for the year if repeated for 12 months. Top-line inflation is compared year-over-year.

Inflation's downsides

Inflation erodes future dollar values, can stifle economic growth, and can raise interest rates. Core inflation is often considered a better metric than headline inflation. Investors and economists use headline and core results to set growth forecasts and monetary policy.

Core Inflation

Core inflation removes volatile CPI components that can distort the headline number. Food and energy costs are commonly removed. Environmental shifts that affect crop growth can affect food prices outside of the economy. Political dissent can affect energy costs, such as oil production.

From 1957 to 2018, the U.S. averaged 3.64 percent core inflation. In June 1980, the rate reached 13.60%. May 1957 had 0% inflation. The Fed's core inflation target for 2022 is 3%.
 

Central bank:

A central bank has privileged control over a nation's or group's money and credit. Modern central banks are responsible for monetary policy and bank regulation. Central banks are anti-competitive and non-market-based. Many central banks are not government agencies and are therefore considered politically independent. Even if a central bank isn't government-owned, its privileges are protected by law. A central bank's legal monopoly status gives it the right to issue banknotes and cash. Private commercial banks can only issue demand deposits.

What are living costs?

The cost of living is the amount needed to cover housing, food, taxes, and healthcare in a certain place and time. Cost of living is used to compare the cost of living between cities and is tied to wages. If expenses are higher in a city like New York, salaries must be higher so people can live there.

What's U.S. bureau of labor statistics?

BLS collects and distributes economic and labor market data about the U.S. Its reports include the CPI and PPI, both important inflation measures.

https://www.bls.gov/cpi/

DATA MINING WITH SUPERALGORES

Old pots produce the best soup.

Science has always inspired indicator design. From physics to signal processing, many indicators use concepts from mechanical engineering, electronics, and probability. In Superalgos' Data Mining section, we've explored using thermodynamics and information theory to construct indicators and using statistical and probabilistic techniques like reduced normal law to take advantage of low probability events.

An asset's price is like a mechanical object revolving around its moving average. Using this approach, we could design an indicator using the oscillator's Total Energy. An oscillator's energy is finite and constant. Since we don't expect the price to follow the harmonic oscillator, this energy should deviate from the perfect situation, and the maximum of divergence may provide us valuable information on the price's moving average.

Definition of the Harmonic Oscillator in Few Words

Sinusoidal function describes a harmonic oscillator. The time-constant energy equation for a harmonic oscillator is:

With

Time saves energy.

In a mechanical harmonic oscillator, total energy equals kinetic energy plus potential energy. The formula for energy is the same for every kind of harmonic oscillator; only the terms of total energy must be adapted to fit the relevant units. Each oscillator has a velocity component (kinetic energy) and a position to equilibrium component (potential energy).

The Price Oscillator and the Energy Formula

Considering the harmonic oscillator definition, we must specify kinetic and potential components for our price oscillator. We define oscillator velocity as the rate of change and equilibrium position as the price's distance from its moving average.

Price kinetic energy:

It's like:

With

and

L is the number of periods for the rate of change calculation and P for the close price EMA calculation.

Total price oscillator energy =

Given that an asset's price can theoretically vary at a limitless speed and be endlessly far from its moving average, we don't expect this formula's outcome to be constrained. We'll normalize it using Z-Score for convenience of usage and readability, which also allows probabilistic interpretation.

Over 20 periods, we'll calculate E's moving average and standard deviation.

We calculated Z on BTC/USDT with L = 10 and P = 21 using Knime Analytics.

The graph is detrended. We added two horizontal lines at +/- 1.6 to construct a 94.5% probability zone based on reduced normal law tables. Price cycles to its moving average oscillate clearly. Red and green arrows illustrate where the oscillator crosses the top and lower limits, corresponding to the maximum/minimum price oscillation. Since the results seem noisy, we may apply a non-lagging low-pass or multipole filter like Butterworth or Laguerre filters and employ dynamic bands at a multiple of Z's standard deviation instead of fixed levels.

Kinetic Detrender Implementation in Superalgos

The Superalgos Kinetic detrender features fixed upper and lower levels and dynamic volatility bands.

The code is pretty basic and does not require a huge amount of code lines.

It starts with the standard definitions of the candle pointer and the constant declaration :

let candle = record.current
let len = 10
let P = 21
let T = 20
let up = 1.6
let low = 1.6

Upper and lower dynamic volatility band constants are up and low.

We proceed to the initialization of the previous value for EMA :

if (variable.prevEMA === undefined) {
    variable.prevEMA = candle.close
}

And the calculation of EMA with a function (it is worth noticing the function is declared at the end of the code snippet in Superalgos) :

variable.ema = calculateEMA(P, candle.close, variable.prevEMA)
//EMA calculation
function calculateEMA(periods, price, previousEMA) {
    let k = 2 / (periods + 1)
    return price * k + previousEMA * (1 - k)
}

The rate of change is calculated by first storing the right amount of close price values and proceeding to the calculation by dividing the current close price by the first member of the close price array:

variable.allClose.push(candle.close)
if (variable.allClose.length > len) {
    variable.allClose.splice(0, 1)
}
if (variable.allClose.length === len) {
    variable.roc = candle.close / variable.allClose[0]
} else {
    variable.roc = 1
}

Finally, we get energy with a single line:

variable.E = 1 / 2 * len * variable.roc + 1 / 2 * P * candle.close / variable.ema

The Z calculation reuses code from Z-Normalization-based indicators:

variable.allE.push(variable.E)
if (variable.allE.length > T) {
    variable.allE.splice(0, 1)
}
variable.sum = 0
variable.SQ = 0
if (variable.allE.length === T) {
    for (var i = 0; i < T; i++) {
        variable.sum += variable.allE[i]
    }
    variable.MA = variable.sum / T
for (var i = 0; i < T; i++) {
        variable.SQ += Math.pow(variable.allE[i] - variable.MA, 2)
    }
    variable.sigma = Math.sqrt(variable.SQ / T)
variable.Z = (variable.E - variable.MA) / variable.sigma
} else {
    variable.Z = 0
}
variable.allZ.push(variable.Z)
if (variable.allZ.length > T) {
    variable.allZ.splice(0, 1)
}
variable.sum = 0
variable.SQ = 0
if (variable.allZ.length === T) {
    for (var i = 0; i < T; i++) {
        variable.sum += variable.allZ[i]
    }
    variable.MAZ = variable.sum / T
for (var i = 0; i < T; i++) {
        variable.SQ += Math.pow(variable.allZ[i] - variable.MAZ, 2)
    }
    variable.sigZ = Math.sqrt(variable.SQ / T)
} else {
    variable.MAZ = variable.Z
    variable.sigZ = variable.MAZ * 0.02
}
variable.upper = variable.MAZ + up * variable.sigZ
variable.lower = variable.MAZ - low * variable.sigZ

We also update the EMA value.

variable.prevEMA = variable.EMA

Conclusion

We showed how to build a detrended oscillator using simple harmonic oscillator theory. Kinetic detrender's main line oscillates between 2 fixed levels framing 95% of the values and 2 dynamic levels, leading to auto-adaptive mean reversion zones.

Superalgos' Normalized Momentum data mine has the Kinetic detrender indication.

All the material here can be reused and integrated freely by linking to this article and Superalgos.

This post is informative and not financial advice. Seek expert counsel before trading. Risk using this material.

There’s a funny part of ‘Steve Jobs’ by Walter Isaacson where Jobs says that Bill Gates was more a copier than an innovator:

“Bill is basically unimaginative and has never invented anything, which is why I think he’s more comfortable now in philanthropy than technology. He just shamelessly ripped off other people’s ideas….He’d be a broader guy if he had dropped acid once or gone off to an ashram when he was younger.”

Gates lacked flavor. Nobody ever got excited about a Microsoft launch, despite their good products. Jobs had the world's best product taste. Apple vs. Microsoft.

A CEO's core job functions are all driven by taste: recruiting, vision, and company culture all require good taste. Depending on the type of company you want to build, know where you stand between Microsoft and Apple.

How can you improve your product judgment? How to acquire taste?

Test and refine

Product development follows two parallel paths: the ‘customer obsession’ path and the ‘taste and iterate’ path.

The customer obsession path involves solving customer problems. Lean Startup frameworks show you what to build at each step.

Taste-and-iterate doesn't involve the customer. You iterate internally and rely on product leaders' taste and judgment.

Creative Selection by Ken Kocienda explains this method. In Creative Selection, demos are iterated and presented to product leaders. Your boss presents to their boss, and so on up to Steve Jobs. If you have good product taste, you can be a panelist.

The iPhone follows this path. Before seeing an iPhone, consumers couldn't want one. Customer obsession wouldn't have gotten you far because iPhone buyers didn't know they wanted one.

In The Hard Thing About Hard Things, Ben Horowitz writes:

“It turns out that is exactly what product strategy is all about — figuring out the right product is the innovator’s job, not the customer’s job. The customer only knows what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but often must go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage.“

One path solves a problem the customer knows they have, and the other doesn't. Instead of asking a person what they want, observe them and give them something they didn't know they needed.

It's much harder. Apple is the world's most valuable company because it's more valuable. It changes industries permanently.

If you want to build superior products, use the iPhone of your industry.

How to Improve Your Taste

I. Work for a company that has taste.

People with the best taste in products, markets, and people are rewarded for building great companies. Tasteful people know quality even when they can't describe it. Taste isn't writable. It's feel-based.

Moving into a community that's already doing what you want to do may be the best way to develop entrepreneurial taste. Most company-building knowledge is tacit.

Joining a company you want to emulate allows you to learn its inner workings. It reveals internal patterns intuitively. Many successful founders come from successful companies.

Consumption determines taste. Excellence will refine you. This is why restauranteurs visit the world's best restaurants and serious painters visit Paris or New York. Joining a company with good taste is beneficial.

2. Possess a wide range of interests

“Edwin Land of Polaroid talked about the intersection of the humanities and science. I like that intersection. There’s something magical about that place… The reason Apple resonates with people is that there’s a deep current of humanity in our innovation. I think great artists and great engineers are similar, in that they both have a desire to express themselves.” — Steve Jobs

I recently discovered Edwin Land. Jobs modeled much of his career after Land's. It makes sense that Apple was inspired by Land.

A Triumph of Genius: Edwin Land, Polaroid, and the Kodak Patent War notes:

“Land was introverted in person, but supremely confident when he came to his ideas… Alongside his scientific passions, lay knowledge of art, music, and literature. He was a cultured person growing even more so as he got older, and his interests filtered into the ethos of Polaroid.”

Founders' philosophies shape companies. Jobs and Land were invested. It showed in the products their companies made. Different. His obsession was spreading Microsoft software worldwide. Microsoft's success is why their products are bland and boring.

Experience is important. It's probably why startups are built by generalists and scaled by specialists.

Jobs combined design, typography, storytelling, and product taste at Apple. Some of the best original Mac developers were poets and musicians. Edwin Land liked broad-minded people, according to his biography. Physicist-musicians or physicist-photographers.

Da Vinci was a master of art, engineering, architecture, anatomy, and more. He wrote and drew at the same desk. His genius is remembered centuries after his death. Da Vinci's statue would stand at the intersection of humanities and science.

We find incredibly creative people here. Superhumans. Designers, creators, and world-improvers. These are the people we need to navigate technology and lead world-changing companies. Generalists lead.

40 years pass. After 14 years of retirement, you die. Am I the only one who sees the problem?

I’m the Jedi master of escaping the rat race.

Not to impress. I know this works since I've tried it. Quitting a job to make money online is worse than Kim Kardashian's internet-burning advice.

Let me help you rethink the move from a career to online income to f*ck you money.

To understand why a job is a joke, do some life math.

Without a solid why, nothing makes sense.

The retirement age is 65. Our processed food consumption could shorten our 79-year average lifespan.

You spend 40 years working.

After 14 years of retirement, you die.

Am I alone in seeing the problem?

Life is too short to work a job forever, especially since most people hate theirs. After-hours skills are vital.

Money equals unrestricted power, f*ck you.

F*ck you money is the answer.

Jack Raines said it first. He says we can do anything with the money. Jack, a young rebel straight out of college, can travel and try new foods.

F*ck you money signifies not checking your bank account before buying.

F*ck you” money is pure, unadulterated freedom with no strings attached.

Jack claims you're rich when you rarely think about money.

Avoid confusion.

This doesn't imply you can buy a Lamborghini. It indicates your costs, income, lifestyle, and bank account are balanced.

Jack established an online portfolio while working for UPS in Atlanta, Georgia. So he gained boundless power.

The portion that many erroneously believe

Yes, you need internet abilities to make money, but they're not different from 9-5 talents.

Sahil Lavingia, Gumroad's creator, explains.

A job is a way to get paid to learn.

Mistreat your boss 9-5. Drain his skills. Defuse him. Love and leave him (eventually).

Find another employment if yours is hazardous. Pick an easy job. Make sure nothing sneaks into your 6-12 time slot.

The dumb game that makes you a sheep

A 9-5 job requires many job interviews throughout life.

You email your résumé to employers and apply for jobs through advertisements. This game makes you a sheep.

You're competing globally. Work-from-home makes the competition tougher. If you're not the cheapest, employers won't hire you.

After-hours online talents (say, 6 pm-12 pm) change the game. This graphic explains it better:

Online talents boost after-hours opportunities.

You go from wanting to be picked to picking yourself. More chances equal more money. Your f*ck you fund gets the extra cash.

A novel method of learning is essential.

College costs six figures and takes a lifetime to repay.

Informal learning is distinct. 6-12pm:

• Observe the carefully controlled Twitter newsfeed.

• Make use of Teachable and Gumroad's online courses.

• Watch instructional YouTube videos

• Look through the top Substack newsletters.

Informal learning is more effective because it's not obvious. It's fun to follow your curiosity and hobbies.

The majority of people lack one attitude. It's simple to learn.

One big impediment stands in the way of f*ck you money and time independence. So often.

Too many people plan after 6-12 hours. Dreaming. Big-thinkers. Strategically. They fill their calendar with meetings.

This is after-hours masturb*tion.

Sahil Bloom reminded me that a bias towards action will determine if this approach works for you.

The key isn't knowing what to do from 6-12 a.m. Trust yourself and develop abilities as you go. It's for building the parachute after you jump.

Sounds risky. We've eliminated the risk by finishing this process after hours while you work 9-5.

With no risk, you can have an I-don't-care attitude and still be successful.

When you choose to move forward, this occurs.

Once you try 9-5/6-12, you'll tell someone.

It's bad.

Few of us hang out with problem-solvers.

It's how much of society operates. So they make reasons so they can feel better about not giving you money.

Matthew Kobach told me chasing f*ck you money is easier with like-minded folks.

Without f*ck you money friends, loneliness will take over and you'll think you've messed up when you just need to keep going.

Steal this easy guideline

Let's act. No more fluffing and caressing.

1. Learn

If you detest your 9-5 talents or don't think they'll work online, get new ones. If you're skilled enough, continue.

Easlo recommends these skills:

• Designer for Figma

• Designer Canva

• bubble creators

• editor in Photoshop

• Automation consultant for Zapier

• Designer of Webflow

• video editor Adobe

• Ghostwriter for Twitter

• Idea consultant

• Artist in Blender Studio

2. Develop the ability

Every night from 6-12, apply the skill.

Practicing ghostwriting? Write someone's tweets for free. Do someone's website copy to learn copywriting. Get a website to the top of Google for a keyword to understand SEO.

Free practice is crucial. Your 9-5 pays the money, so work for free.

3. Take off stealthily like a badass

Another mistake. Sell to few. Don't be the best. Don't claim expertise.

Sell your new expertise to others behind you.

Two ways:

• Using a digital good

• By providing a service,

Point 1 also includes digital service examples. Digital products include eBooks, communities, courses, ad-supported podcasts, and templates. It's easy. Your 9-5 job involves one of these.

Take ideas from work.

Why? They'll steal your time for profit.

4. Iterate while feeling awful

First-time launches always fail. You'll feel terrible. Okay. Remember your 9-5?

Find improvements. Ask free and paying consumers what worked.

Multiple relaunches, each 1% better.

5. Discover more

Never stop learning. Improve your skill. Add a relevant skill. Learn copywriting if you write online.

After-hours students earn the most.

6. Continue

Repetition is key.

7. Make this one small change.

Consistently. The 6-12 momentum won't make you rich in 30 days; that's success p*rn.

Consistency helps wage slaves become f*ck you money. Most people can't switch between the two.

Putting everything together

It's easy. You're probably already doing some.

This formula explains why, how, and what to do. It's a 5th-grade-friendly blueprint. Good.

Reduce financial risk with your 9-to-5. Replace Netflix with 6-12 money-making talents.

Life is short; do whatever you want. Today.

He kept it under wraps for years until he legally couldn’t.

His shirt is incomplete. I can’t stop thinking about this…

Actually, ignore the article. Look at it. JUST LOOK at it… It’s quite disturbing, isn’t it?

Ughh…

Me: “Hey, what up?” Friend: “All good, watching lord of the rings on amazon prime video.” Me: “Oh, do you know how Amazon grew and became famous?” Friend: “Geek alert…Can I just watch in peace?” Me: “But… Bezos?” Friend: “Let it go, just let it go…”

I can question you, the reader, and start answering instantly without his consent. This far.

Reader, how did Amazon succeed? You'll say, Of course, it was an internet bookstore, then it sold everything.

Mistaken. They moved from zero to one because of this. How did they get from one to thousand? AWS-some. Understand? It's geeky and lame. If not, I'll explain my geekiness.

Over an extended period of time, Amazon was not profitable.

Business basics. You want customers if you own a bakery, right?

Well, 100 clients per day order $5 cheesecakes (because cheesecakes are awesome.)

$5 x 100 consumers x 30 days Equals $15,000 monthly revenue. You proudly work here.

Now you have to pay the barista (unless ChatGPT is doing it haha? Nope..)

• The barista is requesting $5000 a month.

• Each cheesecake costs the cheesecake maker $2.5 ($2.5 × 100 x 30 = $7500).

• The monthly cost of running your bakery, including power, is about $5000.

Assume no extra charges. Your operating costs are $17,500.

Just $15,000? You have income but no profit. You might make money selling coffee with your cheesecake next month.

Is losing money bad? You're broke. Losing money. It's bad for financial statements.

It's almost a business ultimatum. Most startups fail. Amazon took nine years.

I'm reading Amazon Unbound: Jeff Bezos and the Creation of a Global Empire to comprehend how a company has a $1 trillion market cap.

Many things made Amazon big. The book claims that Bezos and Amazon kept a specific product secret for a long period.

Clouds above the bald head.

In 2006, Bezos started a cloud computing initiative. They believed many firms like Snapchat would pay for reliable servers.

In 2006, cloud computing was not what it is today. I'll simplify. 2006 had no iPhone.

Bezos invested in Amazon Web Services (AWS) without disclosing its revenue. That's permitted till a certain degree.

Google and Microsoft would realize Amazon is heavily investing in this market and worry.

Bezos anticipated high demand for this product. Microsoft built its cloud in 2010, and Google in 2008.

If you managed Google or Microsoft, you wouldn't know how much Amazon makes from their cloud computing service. It's enough. Yet, Amazon is an internet store, so they'll focus on that.

All but Bezos were wrong.

Time to come clean now.

They revealed AWS revenue in 2015. Two things were apparent:

1. Bezos made the proper decision to bet on the cloud and keep it a secret.

2. In this race, Amazon is in the lead.

They continued. Let me list some AWS users today.

• Netflix

• Airbnb

• Twitch

More. Amazon was unprofitable for nine years, remember? This article's main graph.

AWS accounted for 74% of Amazon's profit in 2021. This 74% might not exist if they hadn't invested in AWS.

Bring this with you home.

Amazon predated AWS. Yet, it helped the giant reach $1 trillion. Bezos' secrecy? Perhaps, until a time machine is invented (they might host the time machine software on AWS, though.)

Without AWS, Amazon would have been profitable but unimpressive. They may have invested in anything else that would have returned more (like crypto? No? Ok.)

Bezos has business flaws. His success. His failures include:

• introducing the Fire Phone and suffering a $170 million loss.

• Amazon's failure in China In 2011, Amazon had a about 15% market share in China. 2019 saw a decrease of about 1%.

• not offering a higher price to persuade the creator of Netflix to sell the company to him. He offered a rather reasonable $15 million in his proposal. But what if he had offered $30 million instead (Amazon had over $100 million in revenue at the time)? He might have owned Netflix, which has a $156 billion market valuation (and saved billions rather than invest in Amazon Prime Video).

Some he could control. Some were uncontrollable. Nonetheless, every action he made in the foregoing circumstances led him to invest in AWS.