So, without further ado, please sit back, relax, and enjoy a fascinating read.   I know I did. 

• Terry Liebman

Welcome to this week’s Steak House Index update.

If you are new to my blog, or you need a refresher on the SHI10, or its objective and methodology, I suggest you open and read the original BLOG: https://www.steakhouseindex.com/move-over-big-mac-index-here-comes-the-steak-house-index/

Why You Should Care:   The US economy and US dollar are the bedrock of the world’s economy.  

But is the US economy expanding or contracting?

Before COVID-19, the world’s annual GDP was collectively about $85 trillion.  Then it shrank … then bounced back!   We can thank global fiscal and monetary policy for the bounce.   According the the Q3, 2020 ‘preliminary’ numbers, annual US GDP is back UP to about $21.1 trillion.   And still, together, the U.S., the EU and China continue to generate about 70% of the global economic output.  

The objective of this blog is singular.

It attempts to predict the direction of our GDP ahead of official economic releases. Historically, ‘personal consumption expenditures,’ or PCE, has been the largest component of US GDP growth — typically about 2/3 of all GDP growth.  In fact, the majority of all GDP increases (or declines) usually results from (increases or decreases in) consumer spending.  Consumer spending is clearly a critical financial metric.  In all likelihood, the most important financial metric. The Steak House Index focuses right here … on the “consumer spending” metric.  I intend the SHI10 is to be predictive, anticipating where the economy is going – not where it’s been.

Taking action:  Keep up with this weekly BLOG update.  Not only will we cover the SHI and SHI10, but we’ll explore related items of economic importance.

If the SHI10 index moves appreciably -– either showing massive improvement or significant declines –- indicating growing economic strength or a potential recession, we’ll discuss possible actions at that time.

The Blog:

Here we go …..

Terry and I crossed paths at a presentation I gave a few years back, found a synergy in our world views, and I’ve become quite a fan of the “Steak House Index” and, it’s rather sizzling insights.

A bit of background:  Formally trained in evolutionary biology and psychology, I’ve spent the last twenty-nine years in what would be classically referred to as a “think tank” at the behest of a triumvirate of hedge funds.  Our “collective” is tasked with analyzing research regarding the interconnectivity of various scientific disciplines, hoping to extrapolate possible influencers on short and long-term economic models.  Fifteen years ago, we began to focus on “geomagnetic fields and the bicameral mind” or simply stated:  How the Earth’s magnetic energy impacts cognitive function in the two hemispheres of the human brain.

Archeologists have known for decades that early civilizations (Anasazi, Incan, Mesopotamian etc.) arranged both religious and sleeping quarters in a north-south orientation but failed to reach any plausible consensus regarding the phenomena, while simultaneous research into animal behavior revealed a shocking similarity in the sleeping and foraging arrangement of many mammals (a most recent and rather hilarious study form the Czech University of Life Sciences also found that canines use the Earth’s magnetic fields to align their bowel and bladder movements and prefer to relieve themselves along a north-south axis.)

Then…in 2002, a paper from two cognitive scientists at the University of Otago in New Zealand came across our radar.  It suggested that cognitive tests for analytical thinking and spatial reasoning (a traditional IQ test) given to students produced significantly differing scores based on the orientation of their desks during the test. Incredibly, with variables removed, students repeatedly scored on average, 13.4% higher when seated in a north-south axis, resulting in a significant ‘level-up’ in cognitive performance.

What did these archeological, zoological, and cognitive studies have in common?  Nothing according to academia, which cocoons itself in disciplines that refuse to lift their eyes in search of what esteemed biologist E.O. Wilson refers to as “Consilience” or unity in knowledge across differing disciplines.

That’s where our collective hit the ground running.  We were able to quickly fund research to corroborate the “Otago” study, did a deep dive on parallel research in magnetic fields as well as left-right brain hemisphere functions and after six arduous months presented our premise:

There is a “tuning-fork” optimization of cognitive function between the left and right hemispheres when in proper north-south alignment, which we likely understood intuitively thousands of years ago.  The significance of this effect could have broad applications in academic and workplace environments for human creativity and productivity.

How did this premise translate into the economic leverage our sponsors were seeking?  First, and most obviously, we reorganized all work-stations in our firm into north-south orientation.  If there is a potential double-digit jump in innovation and strategy, we surmised this journey should start at home.  Secondly, we analyzed publicly traded firms, primarily in the tech and science sectors, pulling public records for all building and tenant improvements to view work-station orientation.

The results of our analysis were startling: The firms that had the highest north-south oriented workspaces repeatedly out preformed those with the highest east-west configuration in innovation and productivity.  Much of what came after as a strategy for our financial partners in confidential, but the returns over a twelve-year period have been substantial.  These insights proved invaluable in picking winners emerging from the ‘08 recession.

What’s next?  Much of our research has been recently leaked (primarily by firms in which the hedge funds took more than a passive role, and influenced physical changes in the workstation orientation of firms they heavily invested in.)  Even with the leaks, it will likely be a decade before industry understands the human potential leverage of our research and perhaps far longer before academia catches up.

I will leave you with this:  In 2017, Apple Park opened to 2,000 employees in Cupertino, California, with its circular Neo-futurism architecture.  This campus replaced the original headquarters at 1 Infinite Loop, which opened in 1993.  The original campus, most certainly serendipitously, had 73.4% of its workstations oriented in a north-south configuration, whereas the new campus has only 12.5% in that configuration.  I’m sure you can guess as to whether we are “bullish” or “bearish” on Apple’s innovation future at this campus …

• Steven Gluckstein,  Director — Trinity Econometrics

My closing comments:

I’m sure you agree this is a truly unique perspective … a completely surprising and unexpected juxtaposition of biology and economics.   Actionable?  Absolutely.  Clearly, every organization interested in maximizing productivity and profitability should give serious consideration to re-arranging their “open space” work configuration into a north-south matrix.   In fact, in light of these very compelling findings, you might want to do the same at home.

I can’t thank my good friend Dr. Gluckstein enough for his topical insight and his willingness to share it with us today.  What a pleasure. 

More so, I take even greater pleasure in sharing the fact that Dr. Gluckstein’s entire blog is hooey.  100% BS.   Completely fabricated.   Woven from thin air, the good doctor’s findings are simply the musings of a febrile mind.  Yes, my friends, that’s right:  This whole thing is fake.  The only thing I can add is:

APRIL FOOLS!

Well, actually, one piece of the blog may have some truth to it.  Maybe … after all, we found it on the internet. 🙂

Yes, believe it or not, dogs do “prefer to excrete” along a north-south axis:  I am not making this up.  (Right click, ‘open in a new tab.’)

https://frontiersinzoology.biomedcentral.com/track/pdf/10.1186/1742-9994-10-80.pdf

After a year of Covid-inspired lockdowns, I hope you’ll forgive me for this little April 1 prank.  Sure, today is actually the 31^st – but look again and you’ll see today’s blog date is 4.1.20.  🙂

Nothing written above is true.   There is no Dr. Gluckstein … no studies … and no known or discernible benefit of a north-south orientation except to minimize direct sunlight into your home.   Or, perhaps, for your dog. 

Dr. Gluckstein is actually the nom de plume for my good friend, Bill Baldwin.  Bill:  Thank you for time and imagination!   Fun stuff!

“Voltswagen?”   Yeah, sure, thanks Volkswagen — that was a good one.  But Bill’s prank is better.  I think.  I hope you enjoyed his creative yarn as much as I did … and we both thank you for taking this April Fools journey with us today.  Good luck out there … and be on the look-out for pranks! 

Tomorrow is the day!   🙂

• Terry Liebman