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The Zeitgeist
This is the second installment of Epsilon Theory’s new monthly feature – the ET Election Index. Our aim with the feature is to lay as bare as possible the popular narratives governing the US elections in 2020. That includes narratives concerning policy proposals and candidates found in the news, opinion and feature content produced by national, local and smaller outlets.
ET In Full
A Song of Ice and Fire
We are the human animal.
We are non-linear.
We ARE a song of ice and fire.
It’s a song that has built cathedrals and fed billions and taken us to the moon. It’s a song that can do all of that and more … far, far more … if only we remember the tune.
The Pack remembers.
Wage Growth, Groucho Marx Edition
Wage stagnation in 2016 was actually much worse than you were told. Did this make a difference in the Midwestern states that swung the election, in that actual labor conditions were worse than everyone thought they were? I think yes.
Wage growth in 2018 was actually much better than you were told. Did this make a difference in the current Fed/Wall Street/White House narrative that inflation is dead and the easy money punchbowl can be maintained without consequence? I think yes.
For a few days, we’re making this ET Professional note available to everyone to review. We think the ET Pro service is something that every portfolio allocation, wealth management and active investment team can find useful, particularly for risk management.
In the Trenches: Less Is More
At some point, all Fed Chairs learn that their primary function is just to wave their hands. Jay Powell has learned this sooner than most.
ET contributor Pete Cecchini goes way off the Wall Street reservation with this: the bullish narrative for U.S. equity risk makes sense only if one accepts a narrative that the Fed will proactively move to prevent a U.S. slowdown before it happens.
Don’t believe it.
Starry Eyes and Starry Skies
The student loan crisis is a Big Deal. And it is only a part of a Bigger Deal: the Myth of College.
This issue will be front-and-center in the upcoming elections. We will all be handed our very own ‘Yay, College’ signs to raise high. More often than not, we will be asked to raise them in service of market-distorting policies which will make our problems worse.
You don’t hate education, innovation, progress, equality and merit-based reward systems…do you?
Notes from the Diamond #7: Hittin ‘Em Where They Ain’t (Part 2)
ET contributor David Salem is back with five core tenets for achieving 5+% real returns over the next few decades.
It’s all a must-read, but I’m gonna highlight #4: “Favor equity investments in companies employing or serving primarily people with abundance as distinct from scarcity mindsets.”
This is the foundation for behavioral economics on a macro scale.
This is Water
Time to add a fourth shift in the Zeitgeist: capitalist productivity, now 200+ years old, is becoming capitalist financialization.
Wall Street gets something to sell, management gets stock-based comp, the Fed gets a (very) grateful Wall Street, and the White House gets re-election.
What do YOU get out of financialization? You get to hold up a card that says “Yay, capitalism!”.
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ET Live!
ET Live! – 6.4.2019
Ben and Rusty update subscribers on the shift from cooperative to competitive games and our narrative research program, with a focus on the China Trade War and US electoral politics.
ET Live! – 5.14.2019
Ben and Rusty discuss games of chicken and multi-level games, and where we think the previously complacent trade and tariffs narrative has gone in early May.
ET Live! – 4.24.2019
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ET Live! – 4.2.2019
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ET In Brief
Bernie Sanders isn’t leading in the polls. He may also be the most polarizing candidate – again. But don’t tell the political media, whose Sanders content thus far in the primary process has the strongest, most positive narrative of any candidate. And it’s not close.
There’s a point in any human activity – investing, politics, religion, or business – where a thing we do together becomes a thing in-itself. It’s a point that changes our thinking and the moral questions we are forced to answer. Knowing where this point lies is in all our activities is important.
Some few months into primary season, Joe Biden is the Democratic front-runner. But his narrative isn’t – it remains distinct from the issues that appear to be defining the written and spoken dialogue about the election. Above all, it remains distinctly negative. Will the left-pivot gambit pay off?
Great Truths can be important engines for social unity and shared identity. In the hands of some, however, they can become tools for obscuring actual truth – facts – in service of cynical use of the emotional memes attached to those Truths.
We spend a lot of time on our trade ideas, and do a lot of hand-waving at what we believe that everyone else believes. It’s a core problem for investors, and one that can’t be avoided.
If Memorial Day is anything, it is a day for telling and re-telling stories about Full Hearts. Let me tell and re-tell you the story of Milton Lee Olive III.
Today we introduce the Epsilon Theory Election Index, a service intended to help you spot when you are being told how to think about the upcoming election, and to help you make up your own damn mind about it.
In this edition we introduce the key terms of our analysis and show you how the early days of the Democratic primary season are playing out.
In short? Whatever polls are saying, the narrative from the media appears to be that progressive is in, and Biden ain’t it.
I like to think that we do a good job responding to our readers’ questions. If we have a weak spot, however, I know where it is. It is the unerring target of the question we receive most often: “What books would you recommend?” It is a completely fair question to ask. Our work references …
New from ET contributor Demonetized … how do you handle a counterparty that has engineered a Heads I Win, Tails You Lose investment?
You must be able to hurt your counterparty for realz. No matter what the docs say.
Or in the immortal words of Steve Zissou, “What about my dynamite?”
Hyper-awareness of narrative, memes and cartoons can become paralyzing. Once we see them, we see them everywhere. But much of that paralysis comes because the demands of Clear Eyes are less than the demands of Full Hearts. And it’s the latter – identity – that truly matters.