Inflation Monitor – 9.30.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.


  • As we noted in the last two monthly updates, our measure of attention on inflation narratives faded after what we believe was a short-term “boost” from central bank and rates policy commentary in general.
  • Interestingly, we have noted the increasing centrality and influence of language relating to the usual areas of increasing costs – Health Care, Education and Housing.
  • Fiat News surrounding inflation remains high, largely in connection to these clusters where opinion and de facto opinion journalism being called news seeks to influence readers.
  • A low attention narrative structure with very high fiat news and historically negative sentiment strikes us as one with higher than average asymmetry – especially in context of the strong common knowledge around central bank omnipotence.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

Australia central bank seen easing policy in October, rates seen at 0.5% by early 2020: Reuters poll [Reuters]

Don’t expect oil shocks to move the Fed [Reuters]

No, No, No. Elizabeth Warren Is Not a Socialist [Bloomberg]

Mexico central bank has more reason to cut rates after low Aug inflation [Reuters]

Your Pension Might Be About to Get Riskier [Washington Post]

Inflation Monitor – 8.31.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.


  • We observed a curious combination for inflation narratives in August – a sharp drop in attention coupled with a sharp rise in cohesion
  • We believe that the drop in attention reflects an even further erosion in focus by investors on inflation.
  • We attribute this drop in large part to the rapid acceleration of attention to central bank policy narratives and continued peak levels of attention to trade and tariffs.
  • The increase in narrative cohesion reflects the increasingly universal discussion of inflation as being ‘non-existent’ or ‘a challenge’ to create.
  • Coupled with a rise in our fiat news measure, we believe that the equity market correction in August led to an increase in advocacy journalism – masquerading as news – arguing for stronger central bank action with ‘weak inflation’ as a justification.
  • This remains an active narrative.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

The Danger of Plunging Interest Rates and Delayed Buying [Bloomberg]

If Trump Causes a Recession, How Severe Will It Be? [Bloomberg]

MMT may be Democrats’ economic cure, but only Trump got the memo [Reuters]

Negative Mortgages Set Another Milestone in a No-Rate World [Bloomberg]

Argentinas Macri says inflation rising, central bank props up peso [Reuters]

Inflation Monitor – 7.31.2019

Editor’s Note (8.21.2019):

We received a couple comments from readers that they found the different presentations for the charts and for the raw signal data for Sentiment and Attention confusing. Thanks! And we agree. It’s confusing.

We’ve accordingly updated July monitors below so that (1) sentiment charts show the same rolling 3-month values we provide in the data spreadsheet rather than our spot calculations and (2) the attention charts show fixed historical values as per the data file, rather than a dynamically updated series to reflect the changing long-term average. No changes to the raw XLS data.

If you would still like to see the faster/dynamic presentations of the signal data, let us know. Otherwise, our plan will be to keep it as simple as possible.


Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.

  • Already paltry attention to inflation narratives eroded further in July, with almost no focus from major financial media or market participants.
  • Cohesion likewise remains at low levels. There is no single story being told and repeated about inflation.
  • To the contrary, there is tremendous topical and linguistic divergence in discussions of inflation.
    • There remains a powerful and persistent political narrative around localized costs of drugs, education and health care.
    • There is also a persistent narrative around the absence of wage inflation.
  • We would describe this as the current, complacent narrative structure: “There is no inflation, we expect no inflation, and it isn’t influencing markets.”

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

Bond yields are falling to record lows as investors pull back from risky assets [CNBC]

Jim Cramer gives 5 reasons why Wednesday’s rally wasn’t an ‘engineered’ bubble [CNBC]

Pakistani traders strike over IMF austerity measures [Reuters]

Earnings calls ‘painting a picture of an economy hampered by trade uncertainty’ [CNBC]

Powell says ‘uncertainties’ have increased chances of a rate cut [CNBC]

Inflation Monitor – 6.30.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.

  • We are seeing what we think is a divergence in economic and political narratives of inflation.
  • We observe the election and campaigning for the 2020 election rapidly expanding the use powerful inflation language to discuss health care and education costs. • • Meanwhile, we observe almost no coherent discussion about economic measures of inflation, or if anything, an emerging narrative being promoted that rates must be cut in order to spark such inflation.
  • There is, however, almost no cohesion across central banks on inflation language, and even very little among domestic missionaries. There is no meaningful short-run inflation narrative.
  • Because of the rise in political affect around specific issues, attention is rising. We would be mindful of portions of the market which may begin to behave as if there is an active inflation narrative on this basis.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

Donald Trump Unleashed Animal Spirits and Then He Crushed Them [Bloomberg]

If U.S. Economy Hits Trouble, It Won’t Be Like 2008 [Bloomberg]

U.S. Consumer Sentiment Eased in June From Eight-Month High [Bloomberg]

Why Worry So Much About Recessions? [Bloomberg]

A Little Stimulus Wouldn’t Hurt the Job Market [Bloomberg]

Inflation Monitor – 5.31.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.

  • Inflation attention rose somewhat in May, albeit in a less traditional way – price, wage and inflation language is making a return through 2020 election rhetoric.
  • The introduction of this language, mostly in relation to the health care, education cost and wage issues raised previously, has had some influence on financial media coverage, but remains very different from traditional inflation coverage. The result has been that cohesion of inflation narratives has fallen (i.e. there are multiple active weak narratives without any central influence).
  • The politically oriented inflation narratives are meaningfully more negative in tone than the usual macro / central bank coverage; the result has been a sharp drop from the already negative sentiment usually attached to this topic.
  • Our interpretation continues to be that there is not a meaningful short-term inflation narrative.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

There’s a swine flu spreading in China that Wall Street analysts fear could hit these stocks [CNBC]

Fed’s Williams Sees U.S. Inflation Hit From Escalating Trade War [Bloomberg]

Rosengren Says Fed Needs More Time to Weigh Trade War Impact [Bloomberg]

The Trade War’s Grip on Currency Markets Tightens [Bloomberg]

Can Bond Traders Snooze Through Trade-War Alarm? [Bloomberg]

Inflation Monitor – 4.30.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.

  • Inflation language remains at a low-to-moderate level, but outside of central bank policy discussions and discussions of health care and education (esp. student loans), attention – its influence on broader narratives – is limited.
  • Consistent with prior updates – and despite our belief in the long-term shift in Zeitgeist toward inflation – we do not think there is a coherent short-term inflation narrative at this time.
  • Inflation discussions persist with somewhat higher intensity than usual in the usual pockets in emerging markets. Latin America and Middle East have become more central to EM inflationary narratives.
  • We found it noteworthy in April that the language used in media to describe US inflation and central banking is most similar to language used to describe BOJ (relative to BOE/ECB/EM banks).

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention Map

Source: Quid, Epsilon Theory

Narrative Attention


Narrative Cohesion


Fiat News Index


Narrative Sentiment


Key Articles

Draghi Points to Persisting Risks in Justifying Massive Stimulus [The Business Times]

A Weak Euro Does What a Fractured ECB Can’t [Bloomberg]

Powell Adopts Whites-of-the-Eyes Inflation Stance Yellen Shunned [Bloomberg]

Europe Isn’t Japan in the 1990s. You Should Still Be Worried [Bloomberg]

China’s Belt and Road Is Getting a Reboot to Clean Up Its Image [Bloomberg]

Inflation Monitor – 3.31.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.

  • Despite the December pivot and move toward easing, inflation language continues to be present, with moderate internal consistency.
  • As in February, despite the increase in cohesion, and despite our belief in the long-term shift in Zeitgeist toward inflation, we don’t think there is a coherent short-term inflation narrative at this time.
  • Equity market stories also remain largely distant from specific inflation discussions.
  • We continue to see unusually persistent inflation stories in health care, and to a lesser extent, education and transportation. This month also saw a significant and cohesive introduction of Africa and Latam inflation stories.
  • We have seen some increase in Fiat News, which we believe is being driven by election period health care cost inflation discussions. This is the narrative catalyst we would be watching most closely.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention

Source: Quid, Epsilon Theory

Narrative Cohesion

Source: Quid, Epsilon Theory

Fiat News Index

Source: Quid, Epsilon Theory

Narrative Sentiment

Source: Quid, Epsilon Theory

Key Articles

Take Five: Take it easy, central banks – World markets themes for the week ahead

Visualizing U.S. Budget Gap That Scares Everyone Except Markets

Underlying Inflation Weakens as ECB Prepares for Crucial Meeting

MMT Has Been Around for Decades. Here’s Why It Just Caught Fire

Australia central bank calm as house prices skid, watching credit supply

Inflation Monitor – 2.28.2019

Access the Powerpoint slides of this month’s ET Pro monitors here.

Access the PDF version of the ET Pro monitor slides here.

Access the underlying Excel data here.

  • After a bit of a fade in late 2018, Inflation continues to show its presence in the background of more cohesive, higher attention narratives in early 2019.
  • Despite the increase in cohesion, and despite our belief in the long-term shift in Zeitgeist toward inflation, we don’t think there is a coherent short-term inflation narrative at this time.
  • What we DO see are persistent emerging concentrations of inflation stories – both consumer prices and wage pressure-driven, in a few key areas:
    • Health care and pharmaceuticals;
    • Education; and
    • Transportation.
  • We haven’t seen major changes in either sentiment or fiat news content to give us much concern about an inflection point for Inflation narratives at this time.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention

Source: Quid, Epsilon Theory

Narrative Cohesion

Source: Quid, Epsilon Theory

Fiat News Index

Source: Quid, Epsilon Theory

Narrative Sentiment

Source: Quid, Epsilon Theory

Key Articles

COLUMN-Investors are digging in for an age of anxiety: Kemp

Why We Can Forget About a Rate Cut in China

Companies are worried about retention, but 69% don’t plan to offer more than a 3% raise this year

A Fed pivot, born of volatility, missteps, and new economic reality

Drug Giants Can Save America Billions. But Will They?

Inflation Monitor – 1.31.2019

Access this month’s monitor slides in Powerpoint and in PDF.

Access the data in Excel.

  • Our attention measure for Inflation narratives rose somewhat in January, probably the result of responses to narrower price issues. Specifically, we observed significant missionary activity on prices for health care and pharmaceuticals, especially from the World Economic Forum.
  • We think the baseline level of inflation narratives is higher and will remain higher – a result of the changing Zeitgeist around the issue – but at present we don’t see a clear central narrative.
  • Narratives about consumer price inflation, wage inflation and producer prices all remain very mixed and inconsistent globally.
  • Fiat News measures continue to drift downward, reinforcing our view that there isn’t a strong central narrative at this time.
  • Elective price increases in technology, consumer and pharmaceuticals are near the center of these networks. While we typically think of increases in individual drugs and services like Netflix as idiosyncratic, we would be mindful of increased attention to these sources of inflation.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention

Source: Quid, Epsilon Theory

Fiat News Index

Source: Quid, Epsilon Theory

Narrative Sentiment

Source: Quid, Epsilon Theory

Key Articles

Gold steady as dollar gains on fears of economic slowdown

Powell Says Fed Ready to Adjust Policy If Needed, Can Be Patient

A key market sector is signaling that the Fed should stay on hold, says Jim Cramer

Global Economy Endures a Case of the Mondays, All Week Long

Investors remain on edge even after big January comeback – and that might be a good thing

Inflation Monitor – 12.31.2018

Access this month’s monitor slides in Powerpoint and in PDF.

Access the monitor values in Excel.

  • For yet another month, stock market declines refocused investor narratives – especially concerning monetary policy – on the pace of rate hikes and the ’Powell Put’, putting inflation very clearly on the back burner.
  • As a result, it appears that the inflation narrative has largely eroded. There is little connectivity between inflation stories and markets stories, and what connectivity exists appears to be the vestiges of a resurgent Central Bank Omnipotence narrative.
  • Fiat news measures have fallen as well, probably (this is our view, not a fact) because there isn’t an active narrative being promoted.
  • We do take note of an especially interesting cluster of stories (in red, middle right of the map). It is a highly connected cluster of stories that boil down to inequality stories, from student debt feature pieces to pharmacy benefits to stories about Oklahoma billionaires to French yellow vests. These are powerful memes that are worth keeping an eye on in context of future inflation narratives.

Narrative Map

Source: Epsilon Theory, Quid

Narrative Attention

Source: Epsilon Theory, Quid

Fiat News Index

Source; Epsilon Theory, Quid

Narrative Sentiment

Source: Epsilon Theory, Quid

Key Articles

Oklahoma’s Future Rests in the Hands of Two Very Different Oil Billionaires

Millennials spend less than previous generations because they literally have less money, Fed says

ECB to Lower 2019 Inflation Forecast as Bond-Buying Ends

Four experts weigh in on key market factors for 2019. Here’s what you need to know

In Silicon Valley wages are down for everyone but the top 10 percent

Inflation Monitor – 11.30.2018

Access this month’s monitor slides in Powerpoint and in PDF.

Access the monitor values in Excel.

  • Attention to inflation narratives continued to wane in November as drumbeats for a slowing in the pace of Federal Reserve hikes became louder than discussion of continued wage inflation and price movements in emerging markets. 
  • In our view, the core inflation narrative has effectively shifted to, “Input prices may be rising, but Fed won’t let asset prices fall like this.”
  • Of some interest, the largest single cluster – and a new one – is now a cluster focused on protests and shortages. These may not be familiar to all US readers, but are increasingly an issue in other regions. 
  • This cluster and others seem to be telling stories of non-monetary causes for local inflation, especially issues like Brexit, tariffs, taxes and trade rules.
  • We observed no major changes in the usually negative sentiment around inflation, or in the fiat news / advocacy journalism language present in articles. 

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention

Source: Quid, Epsilon Theory

Fiat News Index

Source: Quid, Epsilon Theory

Narrative Sentiment

Source: Quid, Epsilon Theory

Key Articles

Brexit ‘Queues at Dover’ Can’t Be Solved by Bank of England

BOE Warns Disorderly Brexit Could Unleash a Savage Recession

The Fed’s Likely to Take a Rate-Hike Breather in 2019

No turning back for ECB on end to bond purchases

Fed doesn’t seem in as much of a rush to raise interest rates as stocks plunge

Inflation Monitor – 10.31.2018

  • After several months of increasing cohesiveness around an inflation-is-coming narrative, attention to the topic has been tapering in early Q4
  • Right now we think this has more to do with the distraction created by declining equity markets, but this could change
  • Employment and unemployment discussions have been increasingly tied to inflation news in Q4, but otherwise the mix of topics has remained fairly consistent
  • Inflation-related topics are being linked much more strongly to financial markets (or at least in more volume) in the US than anywhere else in the world at this time
  • Sentiment is almost always negative for topics like inflation, but we think that the early 2018 “inflation and rate hikes are coming” narratives flipped most of the financial markets-focused media into more consistently negative language. See also Central Bank Omnipotence.

Narrative Map

Source: Quid, Epsilon Theory

Narrative Attention

Source: Quid, Epsilon Theory

Fiat News Index

Source: Quid, Epsilon Theory

Sentiment Index

Source: Quid, Epsilon Theory

Key Articles

Bank of Korea’s Tricky Interest Rates Decision Gets Trickier

ETF Investors Are Rewriting the Rules for Interest Rate Hedging

ECB keeps policy unchanged even as growth wanes

Powell Says Fed to Keep Hiking at Gradual Pace Amid Solid Growth

Turkish economy normalizing after ‘attacks’ from abroad: Finance Minster/CNN Turk

U.S. spending rises; income posts smallest gain in over a year