Information overload

“All of humanity’s problems stem from man’s inability to sit quietly in a room alone.” – Blaise Pascal

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The economist and political scientist Herbert Simon maintained that individuals do not seek to maximise their benefit from a particular course of action because they cannot assimilate and digest all of the information that would be needed:

“In an information-rich world, the wealth of information means a dearth of something else: a scarcity of whatever it is that information consumes. What information consumes is rather obvious: it consumes the attention of its recipients.”

Less attention means we are more likely to notice the sensational and irrelevant, but miss the mundane but life changing. The lower our attention capacity the more likely we are to become desensitised to narratives. According to Pippa Malmgren and Chris Lewis (authors of The Leadership Lab), information overload has profound effects on our ability to think and ask questions:

“It is not easy to do this when faced with the cacophony of the overload…The torrent of new information washes around our knowledge structures and many report the phenomenon of having learnt one thing only to have forgotten another. Our understanding of the world is limited if we try to make sense of it day by day.”

Withdrawing from all of the noise helps achieve a greater understanding of it by contextualising. When we look away from the daily barrage of information, stories and notifications our minds can, according to Leonard Mlodinow (author of Elastic: Flexible Thinking in a Constantly Changing World), “rummage around the huge database of knowledge and memories and feelings that is stored in the brain, combining concepts that we normally would not recognize.” Your teacher at school may have told you off for daydreaming, but making time for it as well as other quiet activities can be powerful ways to assimilate information and generate new ways of thinking about the world.

Whatever a person’s baseline skill level at critical thinking, it is not stable. Lack of focus, context, distraction and most importantly intense emotion can all affect critical thinking capacity.

People never function in a steady state. As important as it is to learn to think critically—identifying markers of fake news, seeking information from the most reliable sources—it is equally important to know that one’s emotional state is variable and can subvert your best efforts to think clearly.

Your emotion can also result in you missing vital pieces of information. In a famous experiment conducted in the late 1990’s two groups of people – some dressed in white, some in black – are passing basketballs back and forth. The study subjects were asked to watch a video of the action and count the passes among those dressed in white while ignoring the passes of those in black.

Many of those who viewed the video failed to notice when a person dressed in a gorilla suit sauntered into view, faced the camera, pounded on its chest and then left the basketball court. The gorilla was on screen for nearly nine seconds, yet half of those who watched the video didn’t see it.

Our obsession with consuming more and more information is rooted in our fear of missing out (FOMO). The news media and the Internet specifically perpetuate this fear, partly through our own misunderstanding. There is always another news story being published, an opinion piece being shared among friends, and a video of an extreme event happening somewhere.

Immersed in bubbles
Photo by In Memoriam: VernsPics on Foter.com / CC BY-NC-ND

Even when we do consume news media in moderation – looking to it to bring clarity, understanding and calm to our world – the news will more often make us feel more anxious, not less. News stories rarely tell us that all is well in the world, you don’t need to worry and that it’ll all be fine. Instead news stories fuel our anxieties. According to Rolf Dobelli, author of The Art of Thinking Clearly: Better Thinking, Better Decisions the news constantly triggers the limbic system. Panicky stories spur the release of cascades of cortisol.

These stress hormones deregulates your immune system and inhibits the release of growth hormones. In other words, your body finds itself in a state of chronic stress. High cortisol levels cause impaired digestion, lack of growth, nervousness and susceptibility to infections. The other potential side-effects include aggression, tunnel-vision, fear and desensitisation. Makes you want to curl up into a ball doesn’t it.

It even has a name – ‘headline stress disorder’. Although not an unofficial diagnosis, the term was first coined by psychologist Dr. Steven Stosny in a 2016 op-ed written for the Washington Post, following the US Presidential election. “For many people, continual alerts from news sources, blogs, social media and alternative facts feel like missile explosions in a siege without end,” Stosny explained, emphasizing that in many ways news can leave us feeling helpless to create change.

As psychologist Dr. Jana Scrivani explains, the 24 hour news cycle means “headline stress disorder” feels all too common: “Being tuned into the twenty-four hour news cycle may fuel a lot of negative feelings like anxiety, sadness and hopelessness. Subjecting ourselves to an endless barrage of tragedies and trauma can foster a real sense of being out of control.”

Scientists used to think that the dense connections within our brains were largely fixed by the time we reached adulthood. Today we know that this is not the case. Nerve cells routinely break old connections and form new ones. The more news we consume, the more we exercise the neural circuits devoted to multitasking and poor attention, while ignoring those used for focus and deep thinking.

How you can combat information overload

– Stop trying to anticipate the news: Take a deep breath and recognise that almost all of what we worry about in the news will reveal itself in short order. Constantly reacting to noise will fuel your anxiety and get you no further forward. Recall the words of Blaise Pascal, “All of humanity’s problems stem from man’s inability to sit quietly in a room alone.”

– Guard your time: Because of the way information affects our ability to concentrate on tasks, set aside a certain portion of your day to consume the media. It might feel like you’re missing out, but don’t worry. As Nassim Nicholas Taleb describes in his book, Fooled by Randomness, “It takes a huge investment in introspection to learn that the thirty or more hours spent “studying” the news last month neither had any predictive ability during your activities of that month nor did it impact your current knowledge of the world.” In this age of information overload you need that time to assimilate, draw connections and discard that which is of little use.

– Focus on long form content: Consume more books, podcasts, long form articles, documentaries, etc. One benefit is that you will understand a piece of news in much greater detail than your peers, you will be able to set it in a broader context, and you will know what it really means. The second benefit is that it will improve your attention span, stretching your ability to focus.

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Ensure that access to the best resources (books, magazines or online media) lay in plain sight. Carry your Kindle in your work or school bag, load up an audio-book to listen to on the way back home, leave a book on your desk or coffee table. In order to develop a smarter media habit you need to be able to incorporate it into your daily routine.

Connect with people and share ideas: Tune into webinars, attend conferences or sit down with an old friend in a coffee shop. Discussing ideas in real time is one of the best ways to attach meaning to the insights you uncover. I can guarantee you that you will recall these conversations much easier in years to come than one interesting tweet amongst the daily torrent.

Share the most interesting and insightful media resources with your friends, family and colleagues. Make notes, highlight important passages and compare and contrast what each of you picks up. It’s often the case that each person identifies something different, which in itself is a rich source of conversation.

– Your state of mind affects how you perceive the world around you: Always be mindful of how you are on an emotional level. Too tired, too irritable and lacking time to think makes for a serious headwind to thinking critically. Is your mind buzzing with stories and things to do? If so, only digest the media when you have the necessary bandwidth to cope.

Focus on the self: The news is designed to fuel our anxiety. Taking time out to practice gratitude for the tailwinds in your life is a useful antidote to the mirage of turbulence that is perpetuated in the media.

My new book, Pay Attention: 101 Ways To Tame The Narrative Machine, Be A Smarter Media Consumer And Stop Outsourcing Your Thinking is published on Friday 13th March. It’s available to order right now!

Deciphering Chinese economic activity post-COVID-19

Li Keqiang – now Chinese premier, but previously known as the head of Liaoning province’s communist party – admitted over dinner with the US ambassador to China in 2007 that the country’s GDP figures were “man-made” and therefore unreliable. Mr Li went on to say that instead he concentrated on just three data points – electricity consumption, rail cargo volume and bank lending – when evaluating his province’s economic progress.

Relying on too narrow an indicator can be misleading, however. During 2007, the economy of the Liaoning province was largely driven by heavy industry, and so it was very reasonable for Li Keqiang to look at these data. The structure of the Chinese economy has changed dramatically since 2007, with services now accounting for a much larger share of the economy than manufacturing.

In the wake of the coronavirus outbreak and the subsequent lock down by the Chinese authorities, analysts and investors have been poring over real time data for clues to the speed at which commodity demand and economic growth more broadly will pick up. Despite China’s transition towards a more service based economy over the past 10-15 years analysts remain focused on the same old economy measures – coal consumption, its transport and pollution. The theory being that more coal consumption = more electricity generation = more economic activity = commodity demand growth.

China coal consumption now 66%

Encouragingly (at least from an economic growth perspective) they are all pointing up, albeit slowly. But just as Mr Li lamented the fictional nature of the country’s GDP figures, data indicating activity a rebound in electricity demand may also be man-made’ too. According to a a recent investigation by Chinese newspaper Caixin, local companies and officials are fraudulently boosting electricity consumption and other metrics in order to meet tough new back-to-work targets:

As new coronavirus cases in China slowed in recent weeks, local governments in less-affected regions pushed companies and factories to return to work, typically by assigning concrete targets to district officials. Company insiders and local civil servants told Caixin that, under pressure to fulfill quotas they could not otherwise meet, they deftly cooked the books.

Leaving lights and air conditioners on all day long in empty offices, turning on manufacturing equipment, faking staff rosters and even coaching factory workers to lie to inspectors are just some of the ways they helped manufacture flashy statistics on the resumption of business for local governments to report up the chain.

Electricity consumption data has regularly been used as a proxy for the business resumption rate when reporting to Beijing, and to the public.

The East China province of Zhejiang has been lauded as a prime example of the nation’s industrial recovery from the coronavirus outbreak by China’s top economic planner, which reported on Feb. 24 that its work resumption rate was more than 90%.

Nevertheless, a civil servant in one district of the provincial capital, Hangzhou, told Caixin that from Saturday plants were instructed to leave their industrial equipment idling for the whole day, while offices were told to keep computers and air-conditioners running, when Beijing began checking the resumption rate by examining power consumption figures….

…The district official pointed out China is further subsidizing electricity costs as a way to incentivize businesses to resume, and said many companies would rather waste a small amount of money on power than irritate local officials.

Instead of old economy indicators many have turned to real time traffic data from TomTom as a signal. This could, so goes the theory signal that workers are returning to work and consumers are taking to the shops.

Here’s the chart for Beijing showing congestion levels for the past 7 days compared with the same period last year. Traffic is picking up but still much lower than 2019.

And here’s Wuhan. Much, much lower than 2019.

Traffic data still needs to be taken with a hefty pinch of salt. First, congestion might have increased just because employees are incentivised to go to work, even if no work actually occurs. Second, the presence of checkpoints and roadblocks in many points in the city are likely to create the appearance of greater congestion.

Leaving a jacket on your chair, walking around the office purposefully with a notebook and sending out emails at odd hours are three of the best-known tricks for an employee to appear busy. In the same way leaving the lights on and the machines humming may trick the local civil servant. After a while all of this collective self-delusion gives the pretense of actual work, deceiving the analyst on the other side of the planet.

Palladium auto-catalyst demand continues to grow

In earlier posts I’ve highlighted the role that North Macedonia could play in signalling the beginning of a platinum price surge.

Related article: A precious catalyst: A country with a population of just two million offers insights into the market for palladium and platinum

Recall that in 2010 refiner Johnson Matthey opened a diesel auto-catalyst plant in North Macedonia. Unlike other countries that manufacture catalysts we know that North Macedonia only imports platinum group metals (PGMs) for use in that sector. The UK, China and the US are large manufacturers of catalysts but they also have other uses for the metals, i.e trading, industrial, jewellery, etc.

As palladium prices have surged to around $2,600 per oz in recent months, the price of platinum languishes below $1000 per oz. Evidence of a substitution effect away from palladium and towards platinum should be picked up in North Macedonia’s import data.

The latest trade data (December 2019) shows a surge in palladium imports to the highest level since October 2018. Importantly though, the trend towards higher palladium imports (both absolute tonnages and as a proportion of total PGM imports) remains intact.

Chart: North Macedonia PGM imports (kg)

Source: UN Comtrade

This data is probably the best there is showing the relative demand for each metal from the auto-catalyst sector. It’s got a couple downsides though. First, trade data is typically a couple months delayed so this chart is firmly looking in the rear view mirror. Second, we don’t know the degree to which the build-up in palladium imports was an attempt to front-run even higher palladium prices. For example, the manufacturer may want to build up stocks now, even at recent high prices.

Anyone looking to this data to confirm a platinum boom is round the corner needs to bear in mind that auto-catalyst demand represents around 40% of overall platinum demand. Signs of a pickup in platinum demand may be picked up in these other sectors much earlier than in a heavily regulated sector like automobiles.

CPM suggests a reversal of fortunes between platinum on the one hand and palladium and rhodium on the other could be on the cards:

“Platinum has been mired at relatively low prices since 2015, while palladium and rhodium have risen to record levels. Fabrication and investment demand are behind this diversion. They will be behind what could be a reversal here. Palladium prices may plateau around record levels over the next few years, and are at risk should investors who hold large metal inventories decide to sell … someday. Platinum prices may remain weak initially but ultimately are projected to rise sharply, probably making new nominal record highs over the coming decade.”

It’s worth highlighting the role that speculation is playing too. Palladium is seen as an important metal in reducing emissions. In a world where ESG investment has become the prevailing theme, palladium fits that bill perfectly. Edward Meir, an analyst at ED&F Man Capital Markets, said in an interview with Bloomberg that palladium is like:

“the Tesla stock of commodities.” 

Platinum is certainly one to keep a watching brief. But for now at least there is little fundamental evidence that a boom is imminent.

Related article:Platinum boom on the horizon? Not so fast!