In the Flow – Chef’s Knives

It's easy to get waaaay too precious when it comes to professional kitchens, whether we're talking about restaurants or a trading desk.

But credit default swaps are like chef knives. They're not an affectation, but a necessary tool for so many tasks. Even if you don’t cook or trade a portfolio professionally, you’ll want to own a good knife and you’ll want to know the mechanics and the rationale of a CDS trade . . .

 

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In the Flow – You Are Here, May 2019

Each month we update our five narrative Monitors and summarize the main findings from each.

The big reveal for May? There’s a tremendous amount of narrative complacency out there, particularly on Trade and Tariffs, which means this market has a long way down if the narrative focuses on negotiation failure. It’s not focusing there yet, but that’s what you want to watch for . . .

 

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In the Flow – It’s Toasted

When Donald Trump tells you that there’s no inflation, that up is down and black is white, that monetary policy … It’s toasted! … you’ve gotta believe him, right? Right?

Actually, for investment purposes, you do. When everyone knows that everyone knows that inflation is dead, that IS the common knowledge. And the common knowledge must be respected . . .

 

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In the Flow – Risk Management with ET Pro

Whether you’re a trader or a portfolio manager or a financial advisor or an allocator, ET Pro can help you identify both the inflection points and the trajectory of the market Zeitgeist – particularly the question that any long-term portfolio owner MUST get roughly right in order to succeed: are we in an inflationary or deflationary world, and how quickly (if at all) and in what ways is that world changing . . .

 

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In the Flow – The Silver Age of Central Bankers

You can make a lot of money collecting Golden Age comics. The Silver Age, though? Meh. The story arcs and narratives are a joke. The art is so-so at best. The publishers are just squeezing the installed base, and the creators are just mailing it in. They're old, but so what?

Same with the Silver Age of Central Bankers. It's hard to make money, particularly in Emerging Markets, when it's every man for himself among DM central banks . . .

 

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In the Flow – You Are Here (March 2019)

Where are we in March, 2019? We're seeing a resurgence in the narrative and policies associated with a good old fashioned beggar-thy-neighbor currency competition.

Also, here's our summary of where we think we are in each of the five evergreen macro issues of markets - inflation, central banks, trade and tariffs, US fiscal policy, and the credit cycle . . .

 

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In the Flow – Hey, Chester!

For every historical narrative there is a counter-narrative, and every time history repeats itself, the main narrative gets weaker and the counter-narrative gets stronger.

That's a problem for Jay Powell, as the counter-narrative of Central Banker Lapdog is getting stronger . . .

 

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In the Flow – One Down, Two to Go

More than ever I can hear the approaching hoofbeats of the Fourth Horseman – a regime change in inflation expectations. The hooves are still distant, and you’ll have more bites at the portfolio-preparation apple as global growth concerns in China and Europe persist. But prepare you should . . .

 

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In the Flow – LOL

In the big picture, we’re still in the middle of a technically uncertain game of Chicken between the U.S. and China. But Powell’s VERY public about-face on Friday, coupled with the VERY strong jobs report, creates a VERY different investment backdrop for the US-China trade impasse . . .

 

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In the Flow – Sometimes the Answer to a Prayer is “No”

All of the heartfelt prayers to the Fed gods went unanswered last week. Or rather, the answer was "No." And without a Fed backstop to US-China negotiations (where the narrative continues to worsen), we are immersed in technical uncertainty . . .

 

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