How to Forecast the Future

Tracy Alloway (0:07)

Hello, Odd Lots listeners, it's Tracy Alloway. As you may know, Odd Lots is hosting its first ever live event on Thursday, September 19th in New York City. Join me and Joe Weisenthal as we host an evening of great conversation and live music. The Odd Lots variety show will feature some new and old Odd Lots guests, including the economist Stephanie Kelton. Sam Antar, the former crazy Eddie CFO and convicted felon will give us some of his best stories. Meanwhile, Lee Bukhite, once dubbed the philosopher king of sovereign debt lawyers is coming out of retirement for us. Zoltan Pozar of Credit Suisse and formerly of the US Treasury will be on stage with Brad Setzer, senior fellow at the Council for Foreign Relations, talking all things bonds and trade. We'll also have some markets theme music courtesy of Merle Hazard, the most important country singer in economics and an early Odd Lots guest. And even Joe has promised us a song or two.

You can stick around after the show for some drinks and a chance to chat with us and our guests in person. So keep listening to Odd Lots to learn how to sign up to see us live on Thursday, September 19th. We hope to see you there.

Hello, and welcome to another episode of the Odd Lots Podcast. I'm Tracy Alloway.

Joe Weisenthal (1:42)

And I'm Joe Weisenthal.

Tracy Alloway (1:45)

So Joe, I feel, and I think we've discussed this before, but it feels like the world is sort of at an inflection point right now.

Joe Weisenthal (1:53)

I mean, you think so?

Yeah. Isn't it always kind of an inflection point?

Tracy Alloway (1:59)

Yeah, I guess that's true. But at least in markets, it feels like, you know, warnings that we're late in the cycle, that we could get a recession at the end of this year or in 2020, those definitely seem to be heating up.

Joe Weisenthal (2:13)

I think what I would say, and where maybe we would most likely agree, is not that the world is at an inflection point per se, but that what comes and goes is periods when suddenly people feel the turn is about to come. And we've had a series of these over the last 10 years, whether it was Q4 of last year, early 2016 with the economy going down, the euro crisis. From time to time, it's like there's this global collective anxiety that rises, and whether it's any more real or not is up for debate.

But I would absolutely agree, right now you're getting a lot of recession calls, bear market calls, start of the easing cycle calls, things like that.

Tracy Alloway (2:55)

A wave of global anxiety, that's a good way to put it. And this isn't really, as you mentioned the first time that we've seen this, and I'm not just talking about markets, we've seen sort of inflection points happen in politics recently, right? So Brexit springs to mind, the election of Donald Trump as well.

Joe Weisenthal (3:14)

Yeah, and I think the fact that we have another election coming up in the US.,

again, it's one of these points where people want to call some sort of meaningful turn in something. There's no doubt we're hearing a lot of that these days.

Tracy Alloway (3:30)

Right, so all of this is around about a way of saying that we're getting a lot of forecasts and a lot of predictions, a lot of people trying to call or see into the future. And so I thought it would probably be a good idea to do an episode on forecasting.

Joe Weisenthal (3:46)

I love this idea. I mean, one thing that I've always wanted to do and never done is, you know, obviously on TV, I talk to people all the time and they make forecasts like, oh, we're in this stock or interested in this sector, or we're telling clients to do this.

And I've never like gone back and it would just be too much work for me and like actually made a database of all their calls. But I've always thought that's like a fascinating project or that, you know, that, cause who knows? Everybody, you know, people just make these calls and how often do they ever get revisited to see if the person was actually right or useful in some way.

Tracy Alloway (4:22)

Totally. And I have a feeling that our guest for this episode is gonna have something to say on that particular topic. So without further ado, why don't I go ahead and bring him in?

Our guest is Phil Tetlock. He is Annenberg University Professor at the University of Pennsylvania. He's also the author of numerous books and papers on forecasting. So Phil, welcome to the show.