Danish Food-Safety Expertise for the Win


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Danish food-safety expert Peter Ben Embarek, speaking on behalf of the WHO delegation

The World Health Organization just concluded its 4-week investigation (two of which were spent in quarantine) of the original Covid outbreak in Wuhan, China. If you enjoy throwing up in your mouth a little bit, you can read the entire Wall Street Journal article on the press conference here. If you’re not so inclined, here’s what the WHO team of 17 scientists, flanked by 17 Chinese scientists, announced:

1) The SARS-CoV-2 virus most likely originated in an animal and jumped to humans, probably outside of China.

2) It is highly unlikely that the SARS-CoV-2 virus originated at the local Level 4 biolab doing gain-of-function research on coronaviruses.

3) It is entirely possible, though, that the SARS-CoV-2 virus was originally brought into China on packages of frozen food. American pork, maybe? Perhaps Brazilian beef? Russian squid? Saudi Arabian shrimp? China says that it has detected the virus on all of these.

In concluding remarks delivered by Peter Ben Embarek, “a Danish food-safety expert who spoke on behalf of the WHO delegation”, we learned that “the virus could have taken a long and convoluted path involving movements across borders before arriving in the Huanan Market”, and that the fact that “frozen farm products were sold in the market” means that “further studies on the source of animal products in the market as well as research on similar products still being sold elsewhere” are the clear next steps for the investigation.

Or as Peter Daszak, another member of the WHO team said, “I think our focus needs to shift to those supply chains to the market, supply chains from outside China, even.”

As for that local Level 4 biolab doing gain-of-function research on coronaviruses, the WHO team “was reassured by hearing of the high biosafety protocols adhered to in the city’s major labs, including the Wuhan Institute of Virology”, during their guided tour of the facilities, which took “several hours”.

In reaching its conclusions, the WHO team literally spent more time “visiting a museum celebrating China’s success in controlling the virus in Wuhan and a frozen food storage facility at a local wholesale market” than at the Wuhan Institute of Virology.

I wrote this article about the original failings of the World Health Organization almost exactly one year ago. Nothing has changed.

The Industrially Necessary Dr. Tedros

The World Health Organization is a political organization, bought and paid for by its sponsor countries, with a single, dominant mandate: maintain the party line.

The World Health Organization continues to place the political interests of patron states above all else.

The World Health Organization is a necessary part of the Chinese narrative machine.

It’s more than a disgrace. It’s more than a humiliation of the thousands of researchers and clinicians who do good and important work through WHO funding.

It’s a betrayal of the entire world.


Hammers and Nails


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

From the original video to 9 To 5 by Dolly Parton

By Rusty Guinn

We humans are not very good at thinking about non-linearity.

When a process interacts with another process – or itself – our usually deep capacity for pattern recognition and estimation goes out the window. I could be referring to viral spread, or why we have concerns about B.1.1.7 becoming dominant in the US. I could be referring to the effects of leverage, concentration and liquidity in investment portfolios.

But not today. Today, I am thinking about the effects of a vastly larger world population and the effects of always-on social media that is deeply embedded in our lives. I am thinking about how these two things interact. I am thinking about how in our lifetimes it has become significantly harder to trust the quality and balance of information we receive and incorporate into our decision-making.

And no, I don’t mean garden variety media bias on some political dimension, like the left-wing bias of MSNBC or the right-wing bias of Newsmax. I mean bias – a measurable tendency toward a particular framing, presentation or interpretation of information – as an endemic feature of media. The systematic presence of Fiat News on a million different dimensions.

To that end, I’d like you to read this opinion piece on NBC News. It rose to the top of our Zeitgeist for unsurprising reasons. Super Bowl commercial coverage always does.

It is going to make you angry.

Dolly Parton’s 2021 Super Bowl commercial is playing a rich man’s game [NBC News]

If you did read the piece, I am sorry. If you elected to skip over it, allow me to give you the highlights: an NBC News opinion contributor watched the Squarespace Super Bowl commercial in which Dolly Parton switches her classic tune to “5-to-9” as part of celebrating how website-building technology can help people surviving office drudgery express themselves or start their own business or passion outside the office. The contributor then calls this “The Gig Economy” and spends a few hundred words tut-tutting Dolly for playing a role in it. After all, she should have known better given the obviously subversive intent of her original song and all the good work she’s done, but apparently she’s just about that “filthy lucre.”

Ignore that a hit piece being about Dolly Parton is prima facie evidence that your argument is wrong. Ignore that it’s a damn commercial. Asserting that Big Tech promotes memes of financial independence! around the actual gig economy is NOT preposterous. Asserting that businesses have long promoted memes of workism and “family” in manipulative ways is NOT preposterous. Yet the fulcrum on which the entire article rests – that dreaming and working and making your LIFE about anything other than your job is The Gig Economy! and all of the memetic badness that represents – is absolutely preposterous.

Towards the end of this NBC News piece, you see where it is going:

I’d bet my bottom dollar that the true horrors of the gig economy and of America’s broken economic system never came up.

The premise, if you will, is that someone contributing a song to a 30-second commercial spot for a website hosting company should have leavened their participation with the consideration of whether celebrating after-work passions appropriately accounts for the often poor treatment of labor in America. It is “but why didn’t you talk about…” with the volume cranked to 11.

I think you could dismiss this as part of the hot take economy that has infected all traditional media. You wouldn’t be wrong. I also think you’d miss something if you did. The world of 2021 is big enough, prosperous enough and connected enough to support literally any beat. There is no shtick so salacious, no conspiracy theory so cockamamie, no narrative so niche that it cannot attract an adequate community to sustain it. If there is a cancel-culture beat, a cancel-culture-isn’t-real beat, and a there-isn’t-a-cancel-culture-isn’t-real-beat beat, you’d better believe there is an everything-is-about-corporatism-manipulating-labor beat.

One way or another, a piece about the intersection of the Super Bowl and labor was going to be written. After all, to a hammer, everything looks like a nail.

Friends, make no mistake: we are a hammer, too. We are able to exist because of these forces. We see narrative and missionary behavior everywhere. We see the widening gyre of a polarized America everywhere, too. These are our hammers and a lot of things look like nails to us. We are happy if you read what we publish. We are even happier if you subscribe.

We also really hope we aren’t even close to the only thing you read.

I described this as a force of non-linearity because I think it is a change in kind more than it is a change in magnitude. That is, it isn’t just that news is becoming more biased on some continuous scale. It is that the average piece of information you consume today is far more likely to have been produced by someone wielding a very specific hammer.

It is easy for us to take a look at the outlets, social networks, lists, substacks, authors and podcasts we consume and judge whether we think we’re getting a good mix of various biases on common dimensions like politics or opinions about how markets work. It is much harder to think about whether our sources are sufficiently large to insulate us from persistent idiosyncratic frames.

In the past, we have counseled that fellow consumers of mass information ask often the question, “Why am I reading this now?” I’d suggest one more regular query:

What are their hammers and what are their nails?


For Leon Black is an Honorable Man


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

You can read the full report filed by Dechert LLP on behalf of the Board of Directors of Apollo Global Management here.

We are told by the lawyers hired by the Board of Directors of Apollo Global Management to investigate the Chairman of that same Board of Directors that the $158 MILLION Leon Black transferred to his personal friend and convicted child sex trafficker Jeffrey Epstein was for “legitimate advice on trust and estate planning, tax issues, issues relating to artwork, Black’s airplane, Black’s yacht, and other similar matters”.

We are told that the bulk of the funds were transferred “on an ad hoc basis based on Black’s perceived value of Epstein’s work”, with no agreements signed or unsigned. We are told that the bulk of the funds were paid for tax advice that would only realize potential gains well in the future, advice that was later determined to originate not with Epstein but with Black’s regular tax lawyers.

Payments of this magnitude and in this manner seem unlike the behavior of any enormously wealthy person in the history of the world, particularly a man whose enormous wealth has been notoriously built on precisely the opposite behavior, but Leon Black says this is the truth.

And Leon Black is an honorable man.

We are told by the lawyers hired by the Board of Directors of Apollo Global Management to investigate the Chairman of that same Board of Directors that they have “seen no evidence that Black or any employee of the Family Office or Apollo was involved in any way with Epstein’s criminal activities at any time”.

We are also told that Black’s friendship with Epstein goes back to the mid-1990s, and that before and after Epstein’s 2008 conviction for solicitation and procuring of minors for prostitution, Black “regularly visited” Epstein at his New York townhouse for afternoon “social visits”, as well as Epstein’s Paris apartment, his Palm Beach home, his Santa Fe ranch, and his private Caribbean island.

Yet Leon Black says that he merely saw Epstein as “a confirmed bachelor with eclectic tastes, who often employed attractive women”, a man whose criminal offenses were “limited to a single instance of soliciting a 17 year old prostitute” who “had shown Epstein false identification suggesting that she was not underage”. Yes, Leon Black believes “in giving people second chances”.

And Leon Black is an honorable man.

They’re all honorable men. Men of stature. Lions of Wall Street.

Leon Black. Les Wexner. Jes Staley. Glenn Dubin. Larry Summers.

I speak not to disprove what Leon Black spoke,
But here I am to speak what I do know.

I know that the evil of Jeffrey Epstein would not have been possible without the actions of these honorable men, regardless of what remorse might be in their words today.

O judgment! thou art fled to brutish beasts,
And men have lost their reason. Bear with me;
My heart is in the coffin there with the American dream that once was,
And I must pause till it come back to me.


A Different Game


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

The Zeitgeist on the day after a presidential inauguration is unlikely to catch anyone by surprise. It was the only topic of any significance in political news. It was the only topic of any significance in market news. The language used to describe this inauguration was central to nearly every topic over the last three days. Even sports.

The quantity of that coverage which would fit squarely into what we call Fiat News – news which is designed not to inform but to instruct the reader how to think about an event or topic – would also be unsurprising, I think. We could not shock you with an argument that the editorial side of nearly every national news outlet has been drawn into one end or another of our polarized politics. You would not gasp, I suspect, to learn that this often bleeds into the newsroom.

So I don’t expect you to do more than shrug that this was the inauguration coverage angle chosen by the New York Times, promoted on social media with the following, um, austere copy:

“Whether or not related to the former president’s absence, a bipartisan lightness seemed to prevail across the stage at President Joe Biden’s inauguration. Snow flurries gave way to sun.”

Washington Breathes an Uneasy Sigh of Relief [New York Times]

The piece is part of a feature series on the inauguration, but it is clearly being positioned as news, or at least news-adjacent. It’s got Washington in the dateline. It’s not marked as an editorial or opinion content in any way. And yet it contains descriptions of events which “evoked a mood”, which were “the most striking”, which “felt like a friendly gathering”, which “conjured a sense of respite”, and of “lightness which seemed to prevail across the stage.” In a helpful definition of Fiat News, the author offers a literal translation he’d like you to use for Biden’s speech: “Phew.” As it happens, I happen to agree with the author, yet I enjoy the peculiar benefit of realizing that this is an opinion and not a fact.

The usual suspects on the other side of the political spectrum are in the same business, of course, just in a smaller form factor. This brief Fox News article manages to jam in a lot Fiat News language. In only a couple hundred words, the reader gets multiple scare quotes, an “appears to be”, a subjectless “perceived” and multiple references to the loaded expression “pushing a progressive agenda.”

So if you were hoping that Trump’s departure would herald the triumphant return of the national media to its historical role as an agent for the people rather than a principal acting on its own account, your watch is not yet ended. Sorry.

All the same, I’d like to pose a brief question. If you were asked, “Was national media coverage of the inauguration of President Joe Biden more or less positive and friendly than it was for the 2017 inauguration of President Donald Trump,” what would you say?

Again, I think I can hazard a guess.

But by one objective – and woefully incomplete – lens, they were almost exactly the same.

I am talking about the lens of calculated sentiment, by far the most common method by which those commenting on markets, scraping news and scraping social media evaluate the nature of opinion language.

Using the standard sentiment scoring library from our friends at Quid, we estimate that the mean sentiment of 2017 coverage of the Donald Trump inauguration by national US media outlets from the day before to the day after the event itself was actually 15% MORE positive than the 2021 coverage of the Joe Biden inauguration.

What are the possible reasons this could be the case?

1 – Maybe media actually were more positive in 2017 coverage than they were in 2021;

2 – Maybe the sentiment library isn’t well-suited for this kind of analysis;

3 – Maybe the coloration from the connected Trump-related and COVID-related news made 2021’s coverage more negative than it would otherwise have been;

4 – Maybe affect creeps in not so much through explicitly positive or negative language, but primarily through framing, editorial coverage decisions, non-affected language of meaning and the decisions to include or exclude certain information from a news article;

5 – Maybe most news outlets and publishers have long since realized that the metagame – the strategy which survives repeated play – that permits shaping how people think about the news without them being acutely aware of it requires outlets to shy away from explicitly “positive” or “negative” biases in their language in favor of these techniques.

I won’t tell you what to think, but I’ll tell you what I think. I absolutely don’t think #1 is the case. That flurries-gave-way-to-sun nonsense wasn’t a New York Times exclusive, y’all. I think #2 and #3 probably are true – at least a little bit. But #4 and #5? I think they are the real story here. That story isn’t new. And I think that story has two lessons for us:

First, don’t expect the creep of editorial bias into news to hit you over the head with big, opinionated-sounding language like the articles referenced here. Framing and the willful or subconscious inclusion/exclusion of facts are the tools with which news is shaped into explanatory news without looking like it.

Second, if someone is selling you on natural language processing-based research about markets, politics or anything else that is built on the shifting sands of a calculated sentiment and nothing else, it is unlikely that what you are getting is useful.

A game in which the players know the rules against which they have been measured is a different game.


“Suicide Bomber” vs suicide bomber


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

That’s a still from the police camera on 2nd Avenue in Nashville, Tennessee on Christmas morning, capturing the detonation of a large bomb. The bomber was killed, eight people were injured, and massive damage was done to an entire downtown city block, including the destruction of an AT&T telecom hub. Here are some photos of the damage, from a local news twitter feed:

While far less heinous than the 1995 Oklahoma City attack, where 168 Americans (including 15 children) were killed, the Nashville attack was the largest domestic terrorist bomb detonation in 25 years.

It is striking to me how silent the White House has been about this terrorist attack.

It is striking to me how national media has used the language of crime and police procedure in their coverage of the Nashville bombing, rather than the language of terrorism and political response.

The Nashville attack was carried out by a suicide bomber terrorist.

But because the bomber’s terrorist goals, whatever they were, do not fit neatly into a useful political narrative like “Antifa!” or “Law and Order!”, Trump says NOTHING about the attack, not even to recognize that it occurred or to thank first responders.

At least Biden did that. Even with Biden, though, the bomber’s terrorist goals do not fit neatly into a useful political narrative like “Proud Boys!”, so we get bromides like “the need for vigilance”. And that’s that.

So, yes, the Nashville attack was carried out by a suicide bomber terrorist. But not by a “Suicide Bomber”. Not by a “Terrorist”.

And without a politically charged cartoon to grab eyeballs and attention, national media organizations and national political organizations have next to zero interest in this story. Not completely zero. Maybe some MAGA or Q connection will turn up here, and then they’ll get interested again. But as things stand now, there will be essentially zero national news coverage of this event by this time next week.

Here, I’ll show you what all this looks like in the Narrative Machine.

Source: Epsilon Theory, Quid

This is a visualization of all unique major US media news stories over the four day period Dec. 25 through Dec. 28, utilizing the Natural Language Processing (NLP) and clustering/visualization software of our friends at Quid (now Netbase Quid, to be precise).

If you were to zoom into this graphic, you’d see that it’s composed pointillism-style of thousands of individual dots, each of which represent one of those unique major US media news stories. The individual dots are connected and colored and clustered by their linguistic similarity. I like to think of it like a star map, where the “gravity” of similar words and grammatical structures arranges these individual articles into clusters of similar meaning. Up and down and left and right have no importance in reading this “map”. What’s important is the centrality of the clusters (the more central you are to the overall map, the more connected you are and the more narrative gravity you’re exerting on everything else) and the structure of the clusters relative to each other.

[For more on how to read and apply these narrative maps, see The Epsilon Strategy]

So what we’re looking for in terms of narrative importance, roughly speaking, is a combination of size and centrality and connectedness. Just because you’re a big cluster doesn’t necessarily mean you’re an important cluster for the narrative … for example, Market News, that light blue cluster off by itself on the right, is the largest single cluster in the map, but it’s almost completely disconnected from the overarching narrative structure. Ditto for clusters on sports or movies or celebrity news.

Now I’ll zoom into the “center of gravity” for the map so we can see these narrative-crucial clusters:

Both the long yellow cluster and the long aqua cluster running vertically through this zoomed-in view of the US media structure over this four day period are general Covid-related clusters. You’ve got a third Covid-related cluster at the top of this zoomed-in view that’s solely focused on California cases and policies … as you’d expect, Covid exerts more “gravitational pull” on this narrative structure than anything else.

Trump’s claims of election fraud are that purple cluster, connected closely to the Georgia Senate runoff election cluster in green. Also as you’d expect. In a technical structural analysis, the Trump Election Fraud cluster is THE center of gravity of this entire map.

The small, central clusters – like the death of star Utah running back Ty Jordan – are always interesting to me. There weren’t many stories written about Jordan, but there was something about these stories that “clicked” with the narrative Zeitgeist. Weird, right? But I remember seeing this story when it first came out the day after Christmas, and I immediately clicked on it and read it. I bet a lot of you had the same experience.

The two clusters I want to focus on, however, are the Nashville Bomb cluster in orange and what I’m calling the Narrative-aware Crime cluster in pink.

The Nashville Bomb cluster is very straightforward. There’s a sub-cluster on the right composed of articles about the actual event … the explosion, the emergency response, etc. … and a sub-cluster on the left composed of articles about the subsequent investigation. It’s all very just-the-facts material, and without a more politically-charged hook for the material, you can see in the timeline of story clusters-within-the-cluster how the coverage transforms and diminishes over time. Today it’s pretty much an area-man-commits-a-terrible-crime-and-neighbors-are-puzzled story. Yes, he was a suicide bomber and a terrorist. No, he was not a “Suicide Bomber”. No, he was not a “Terrorist”.

Now here’s the Narrative-aware Crime cluster, by which I mean stories about crimes that are typically not as “big” as the Nashville bomb attack, but which plug neatly into a powerful social or political narrative.

THIS is where you find the Hunter Biden stories. THIS is where you find the Trump Pardon stories. THIS is where you find the Law and Order stories. THIS is where you find the Bad Parent / Urban Violence / Terrorist stories.

THESE are the stories at the heart of today’s American Zeitgeist.

God help us.


Russian Nesting Deals


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

It isn’t very often that coverage of something as niche as SPACs (special-purpose acquisition companies) would make our list of the most linguistically connected financial news. Then again, thanks to 2020, I suppose we can’t really call SPACs niche news any more. Even if they were still consigned to the “weird stuff that seems very obviously designed to disproportionately benefit sponsors and allow management to do stuff they wouldn’t be allowed to do in other ways” bin, articles about the deal that triggered the Zeitgeist today probably would have risen anyway. Use language usually applied to each of private equity, private credit, asset managers and M&A in a single article and you’re at the intersection of a lot of newsflow. But the presence of other similar deals (like whatever in God’s name THIS is supposed to be) with similar language in the vicinity helps.

Dyal Capital Is in Talks to Merge With Owl Rock Through SPAC [Bloomberg]

Dyal and Owl Rock plan merger in one of largest Spac deals [Financial Times]

Dyal is a unit of Neuberger Berman. They raise funds from big asset owners to take minority stakes in asset managers, and have developed a bit of a specialty for doing those deals with private equity companies. It’s a notoriously complicated business, mostly because the reason the opportunity to make compelling investments exists (i.e. finding liquidity for stakes in asset managers without completely disrupting their business is hard) also makes it tough to get out of the investments they make. Dyal’s recent success doing so by effectively securitizing management fee streams from one of their funds was particularly clever.

So now they’ve turned a bit of that cleverness to their own capital structure.

The TLDR is this: one of Dyal’s funds bought a minority stake in one of the biggest private credit shops in 2018. Their funds bought a minority stake in a big direct lending / BDC sponsor firm earlier this year. The latter (HPS) formed the sponsor to a SPAC (Altimar) that has made a proposal that would merge the former (Owl Rock) with Dyal (the GP), its minority private equity investor.

Got all that straight?

It is hard to know much of what may be going on behind the scenes in this case. Neuberger is famously independent and employee-owned. In my experience (and opinion) it is run by one of the best CEOs in asset management, George Walker. It has a great culture in the authentic and non-B-school nonsense sense of the word. But as lovely as all that is, none of it really helps if you’re running a business unit like Dyal and desire operational independence or additional scale in your area of the market. Or a liquidity event.

It isn’t weird for a 100% employee-owned company or some subset of its employees to want a chunk of liquidity, if that’s part of what’s happening here.

It isn’t weird for a rapidly growing, somewhat off-core unit of a 100% employee-owned company to want a bit more independence, if that’s what’s happening here.

It isn’t weird for a private equity GP that dominates its niche to want to have a wider range of product to sell to its big clients.

It isn’t weird for a private lender, especially one with a meaningful leveraged loans business, to see some appeal in another source of good deal flow (although if I were an LP I’m not sure how much asset management sub debt I’d really like stuffed into my portfolio).

It isn’t weird for two alternative asset managers to believe that our environment is one which always favors more scale.

On the other hand, it IS pretty weird for a private equity GP to merge with a portfolio company through a SPAC sponsored by another portfolio company. Not weird enough to completely freak out. But weird enough, if I were a Dyal LP, to ask a few pretty pointed questions on our next call. Beyond the usual questions about any kind of disruptive M&A transaction, what would I ask?

  • If I were a compliance officer reading emails or the team’s Slack/Teams channel, how likely do you think that it is I would find discussion of a potential such transaction during diligence for the Owl Rock deal? How about during HPS? Any time since, especially before the SPAC filing?
  • Yes, I read that bit in the SPAC’s prospectus about that never happening with HPS. Got it. But seriously.
  • There’s quite a lot of thought in the SPAC prospectus devoted to carveouts for affiliates. Am I going to get all the details on the flow of funds and ownership here?
  • LPs are not going to be paying the carry on those two deals, correct?

Sometimes complicated is just complicated. And if there is any really big, traditional asset management company I’d still be willing to give the benefit of the doubt on something like this, it’s Neuberger (OK, maybe Wellington, too).

But this nesting doll of a deal IS weird and worthy of more than usual scrutiny, especially if you are an LP in one of these funds.

For the rest of us, maybe it’s not this structure that does it. And maybe it’s not the PWP SPAC merger rumored last week that does it. But SPAC world, especially when it comes to financial services and fintech companies, really seems to be careening toward Too Clever By Half territory.


Ten Times Faster Than The Sun’s Beams


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Love’s heralds should be thoughts,
Which ten times faster glide than the sun’s beams,
Driving back shadows over louring hills:
Therefore do nimble-pinion’d doves draw love,
And therefore hath the wind-swift Cupid wings.

Romeo and Juliet, Act 2 Scene 5

That’s how Shakespeare described the speed of thought – ten times faster than the speed of light.

He was talking about thoughts of love, of course.

Thoughts of a stock market rally move even faster than that.

The word selection here in this Wall Street Journal headline is a masterclass in narrative creation.








“offering hope”

“long waited”



Even the obligatory counter-bullet beneath the headline is conditioned as merely a “pause”.

None of these words are accidental. They are all intentionally chosen to promote the idea of stock market rally that YOU need to participate in.

They are all intentionally chosen to appeal with particular urgency to the largest single demographic of Wall Street Journal readers – the value investor.

And it’s not just the Daily Diary of the American Dream ™. Here are today’s market headlines as compiled by RealClearMarkets.com on the left, and RCM’s complete list of today’s relevant “Entrepreneurs & The Economy” articles on the right.

I love that top market headline – “We Have Data To Prove That Best Is Yet To Come” – by ((checks notes)) Arthur Laffer. Yes, Art Laffer. On November 25 in the year 2020, Art freakin’ Laffer is the leading market voice of the day.

All of these article headlines have a market-positive theme and word selection, although my personal fave is “Janet Yellen Could Turn Out to Be a Great Treasury Sec’y”. Sure. Why not?

And as for ALL the articles you really need to read today on Entrepreneurs & The Economy … well, let’s just say that Ken Fisher’s “editorial staff” is …

No. You know what? I just can’t do it. I can’t make some sort of jolly joke about this. Four out of four articles placed by the marketing machine of Ken Fisher as a supposed “news aggregation” is just sheer mendacity. Stop it.

But that’s the point.

ALL of this is marketing. ALL of this is advertising. Whether it’s as obvious as the placement of Ken Fisher “editorial content” or as non-obvious as a WSJ headline … it’s ALL advertising.

This is the business model of the entire Wall Street ecosystem.

Will it work? Of course it will work. Advertising works! I’m not saying that this “Buy Cyclicals!” and “Buy Value! At Long Last! Buy Value! And Small Caps, Too, While You’re At It!” rally isn’t real. I’m not saying that it doesn’t exist or that it won’t continue. On the contrary, in fact.

I’m saying that you should reconsider what “real” means.


You Can’t Handle The Lie


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

I have a confession.

I still don’t have much interest in writing much about the election. I certainly don’t have much interest in rewriting much of what we have already written on these pages.

So if you’re looking for a discussion of why the political right appears to have outperformed at the polls in a turnout-based election, I will instead direct you to what we wrote before the election.

And if you’re looking for a breakdown of the meta-game failures loudly decried in a well-publicized rant by Democratic Virginia Congresswoman Abigail Spanberger, I will instead direct you to what we wrote before the election.

If you need a fix on the months of narrative work on mail-in ballot and fraud narratives that laid the groundwork for the unsurprising political excitement of the past couple days, I’d first ask you, “My God, why?” Then I’d direct you to what we already wrote.

And if what you’re really interested in is how we start building something that looks as different as possible from what we saw this week, well, we will have a lot more to say about that. But for the time being, maybe now is the time to dig into what we think is the easiest, best first salvo in our long war against two-party hegemony and the Widening Gyre.

But two things happened last night that are, I think, worthy of mention. First, President Trump made an…um…historic speech. It included a wide range of claims consistent with the fraud narratives that have been built up over the last several months. For the most part, they are the same ones we discussed in the note mentioned above, so there isn’t much else to be said. For what it’s worth, I think occasional fraud is a near certainty in every election, that mail-in ballots at a vastly larger scale than historical levels almost certainly increases that risk by some degree, that electoral fraud at the scale being asserted is hilariously difficult to achieve and would be nearly certain to leave obvious evidence, and that nothing remotely approaching the evidence necessary to make the kinds of declarations made in that speech has yet been produced.

You’re free to think what you want. But I would place last night’s speech somewhere on the spectrum between nuts and completely unhinged.

But something else happened, too.

Within a minute after the president started speaking, MSNBC cut away. Shortly thereafter, so did ABC, CBS and NBC.

Now, I’m not the arbiter of newsworthiness. I happen to think an official speech from the President of the United States during the vote-counting period of a very close election is pretty close to the top of the scale, but that’s just my opinion. It doesn’t matter. The networks themselves told us exactly why they cut away, and it had nothing to do with newsworthiness.

It was because they didn’t trust you to witness a live news event, process it and make up your mind.

“We have to interrupt here, because the president made a number of false statements, including the notion that there has been fraudulent voting,” said Lester Holt, the “NBC Nightly News” anchor. He added, “There has been no evidence of that.”

Lester Holt, as quoted in Major Networks Cut Away From Trump’s Baseless Fraud Claims [New York Times]

This is the core idea behind what we call Fiat News, news which replaces facts with attempts to tell you how to think about those facts. Usually that is a more figurative expression. In this case, it was literal. You had facts (i.e. not what Trump was saying, obviously, but the fact that he was saying those things) explicitly taken away from you, and explicitly replaced with attempts to shape how you, the viewer would process the facts you were no longer being allowed to access.

This Fiat News impulse reached its extreme at USA Today, whose Editor-in-Chief pulled the livestream, deleted any posted versions of the videos and followed it up immediately with a link to a fact-checking article.

These outlets believe that you should only be provided access to information about this event in an approved package that would prevent you from having Wrong Thoughts. It is the truth that President Trump gave an important speech last night. It is the truth that he said the things he did. Like me, you may think those words are completely disconnected from reality, harmful to the country, damaging to important institutions and, in some cases, demonstrably false. You know. Lies.

But know this: any media outlet that thinks you can’t handle hearing a lie doesn’t work for you.


We are all MMTers (Still)


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

I don’t think it would be especially insightful for us to point out that everybody knows everybody knows stimulus talks are what market participants are paying attention to. At this point, I think the idea that this is common knowledge is, well, common knowledge.

We did, however, think that it would be interesting to see how different patterns of language were more or less common among stimulus-related news reports. In other words, we thought it would be fascinating to see which Fiat News expression of “what the stimulus is really about” was the most connected and which was the least.

The network graphs below – produced using software from our friends at Quid – show articles referencing “stimulus” language since October 1. A dot is an article. A “cluster” designated by color and proximity indicates highly similar language, as does a line between two dots. North/south and east/west have no meaning other than proximity. The most connected dots and clusters are those which demonstrate the most similar and connected language. For each graph below, the bold-faced lines and dots reflect those which also reference the language of a range of secondary topics (e.g. families, the unemployed, markets, etc.) as highlighted in the graph’s title.

Fiscal Stimulus is About American Families

Source: Quid, Epsilon Theory

Fiscal Stimulus is About Small Businesses

Source: Quid, Epsilon Theory

Fiscal Stimulus is About Financial Markets

Source: Quid, Epsilon Theory

Fiscal Stimulus is About the Unemployed

Source: Quid, Epsilon Theory

If I were to ask you, “In which of those graphs does it feel like the bold-faced dots and lines are the most connected to the overall structure of the graph”, I suspect I could account for most of the answers with one of the following:

1) They all seem pretty close; or

2) Maybe the “About the unemployed” map by a little bit.

And that’s correct. Qualitatively, which is to say intuitively, and quantitatively, based on our measures of narrative attention. In short, there are a LOT of missionaries out there trying to tell you what prospective stimulus is about and what other parties are trying to make it about. It hasn’t coalesced into a single narrative structure, so far as we can tell.

But what is fiscal stimulus absolutely, positively not about? If you answered any of “the deficit”, “the debt”, “small government” or “the budget”, you are today’s big winner.

Fiscal Stimulus is About the Deficit

Source: Quid, Epsilon Theory

When (or, y’know, if) the election concludes peacefully and the turn of the calendar arrives, you will read a lot of predictions about what from this insane dumpster fire of a year will become an essentially permanent feature of our world. Want a sure bet?

It’s this.

It’s budgets-don’t-matter-anymore-for-countries-who-can-print-currency narratives.

It’s MMT from either party and both at once, from capitalists and anti-capitalists alike.


How It Started. How It’s Going.


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

If there’s a single common thread in everything we write about politics here at Epsilon Theory, it’s that we believe our domestic political games have been transformed from coordination games, where positive-sum gameplay is at least possible, into pure competition games, where only zero-sum gameplay exists. We believe that has happened without any change in the “rules” of our domestic political games, but through the actions of political entrepreneurs who “defected” from the way the game was traditionally played. Once one political entrepreneur enjoyed success from this defection, ALL politicians were forced to follow suit, permanently changing the nature of the game.

The exact same thing happened in the NBA.

The NBA has had a 3-point line since 1979. This is not a new rule. It’s been tinkered with over the past 40 years, almost always to make the 3-point shot more difficult, but there is absolutely nothing new about this RULE. And yet, over the past 13 seasons (the elimination of midrange 2-point shots begins in earnest in the 2007-08 NBA season), the way that the NBA game is played has been totally transformed.

There are no more 2-point shots that aren’t lay-ups or put-backs from near the basket. For all practical purposes, they do not exist. There are lay-ups and there are free throws and there are 3-point shots. That’s it.

How did this happen? Were NBA coaches in the 28 year period from 1979 to 2007 just not as smart as NBA coaches today? Could they just not figure out that this was the way to win games? Were NBA players in the 28 year period from 1979 to 2007 just not as talented as NBA players today? Could they just not hit a 3-point shot?

Nope, Daryl Morey happened. I mean, there were others with similar ideas, but I’m going to give credit to (my friend) Daryl Morey, the just recently departed GM of the Houston Rockets. Daryl Morey is an entrepreneur in the truest sense of the word – he had a new idea and the guts to stake his career on that idea. When he was promoted to the GM role by Rockets owner Les Alexander in 2007, he didn’t change the rules of professional basketball, he changed the idea of how basketball should be played within those rules. He constructed a team and found coaches who would play basketball to maximize the impact of the 3-point shot, and the Rockets enjoyed quite a bit of success over the next 13 years. In fact, the Houston Rockets had the second best won-lost record in the entire NBA over Morey’s tenure as GM.

But the Rockets never won a championship. Why not? Because equilibrium. Because any idea that gives any sort of marginal advantage in the individual competitions that make up the overall game of professional basketball will be immediately copied by other GMs and coaches. Because as brilliant as Daryl Morey is and as talented as James Harden is, there are enough equally brilliant and equally talented people in the NBA to wash out the fleeting advantage of a good idea.

Once Daryl Morey’s new idea became the common knowledge of the NBA – once everyone knew that everyone knew that the way to win NBA games is to maximize 3-point shots and lay-ups – then it became a permanent feature of the way professional basketball is played. It became an equilibrium.

And you can’t undo an equilibrium.

So today, any player who attempts a midrange 2-point shot will be benched, any coach who institutes a strategy for anything other than 3-point offense and defense will lose, and any GM who constructs a team that doesn’t emphasize 3-point shooting will be fired.

“Yay, 3-point shooting and lay-ups! Yay, free throws!”

Some people think this new NBA game is a good game. Certainly it’s working out just fine for basketball entrepreneurs. I think it’s a much worse game that we will never recover from without fundamental changes in the rules of the game. I think it’s not working out well at all for us NBA fans.

It’s exactly the same with politics.

Some people think this new political game is a good game. Certainly it’s working out just fine for political entrepreneurs. I think it’s a much worse game that we will never recover from without fundamental changes in the rules of the game. I think it’s not working out well at all for us citizens.



The Frustrated Money Manager


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Ex-cardinal and frustrated money manager Giovanni Angelo Becciu

Vatican used charity funds to bet on Hertz credit derivatives (FT)

Three years earlier [2015], part of a €528m Vatican portfolio “derived from donations” bought structured notes containing CDS as part of a bet that Hertz would not default on its debts by April 2020, the documents show. The company filed for bankruptcy the following month, giving the Holy See a narrow escape on the investment, which paid out in full.

Other investments made by managers for the Secretariat appointed by Cardinal Becciu include financing the 2019 film Rocketman — a biopic of the musician Elton John — according to fund documents seen by the FT.

The Secretariat also bought multiple luxury residential properties in London’s Knightsbridge, and securitisations partly comprising invoices owed by the Italian state to Vatican-controlled hospitals. 

The Secretariat’s investment in the London building known as 60 Sloane Avenue was made through a fund in Luxembourg in 2014 in a deal personally authorised by Cardinal Becciu. In June the Vatican’s state news service reported that Holy See prosecutors believe the investment caused “huge losses”.

It looks easy, doesn’t it? Managing a portfolio. Managing a football team.

We all think we could do it, which is why “frustrated money manager” is the core psycho-demographic that supports pretty much all financial media business models. Just like there’s a frustrated GM in all of us, which is why ESPN and sports talk radio exist.

The frustrated money manager is a very different animal than Davey Day Trader Portnoy, who – as best as I can tell – is a showman and impresario (compliments in my book) who uses trading and portfolio “management” to support his brand/media company and tout his direct investments (Penn National Gaming). Same with Jim Cramer.

No, the frustrated money manager is rarely public with his compulsion (or her compulsion, but honestly I think this is almost entirely a y-chromosome thing), unless he’s enjoyed a hot streak and starts bragging to his email buds. Which happens not infrequently in a bull market.

The frustrated money manager is almost always a smart, accomplished professional in his own field who believes VERY much in the existence of The Smart Money ™.

The frustrated money manager is almost always a liiiittttle bit on the make.

Like a Vatican cardinal.

It took me a long time to recognize the frustrated money manager within me, including when I WAS a money manager, and a non-frustrated one at that. And to be clear, I said “recognize”, not “eliminate” or something silly like that. No, we are ALL frustrated money managers. The only question is whether we let that dimension of our psychological makeup ruin our lives, like it did Cardinal Becciu and so many others.

Here’s the knowledge that helps me keep it under control in myself. You ready?

There is no Smart Money.

That’s the big secret. That’s the most important thing I have to say to my fellow DGs and frustrated money managers. Especially if you ARE a money manager. You can’t eliminate the DG and frustrated money manager in you, but you can control it. Internalize this little nugget and you won’t get taken for a ride to the point where you ruin your life. Please.


Scapegoating the Zeitgeist


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Shale Companies Had Lousy Returns. Their CEOs Got Paid Anyway. (Wall Street Journal)

It’s been a bad few years for investors in shale companies, but a pretty good few years for shale company CEOs.

The leaders of U.S. shale companies received some of the largest executive pay increases in corporate America, even as their shareholders lost billions of dollars, a Wall Street Journal analysis has found.

There’s something about Wall Street Journal headshots that make you look guilty.

Maybe it’s the black-and-white, maybe it’s the uncanny valley stippling, but whatever it is, I have no doubt that this is why the Wall Street Journal editors used this two-by-two composite of headshots as the social media image for their broadside against shale company CEO compensation .

Similarly when you dig into the article, the words are just filler for the four individual headshots, together with their cash comp and stock price performance data for the five year period 2015 – 2019.

I mean, you don’t even need to read the article to get your blood pressure up. Tens of millions of dollars every year to each of these guys. Hey, I could do their job for a fraction of that money! Clearly these guys are guilty of … something. But guilty of what?

In the eyes of the Wall Street Journal, the mortal sin committed by these CEOs – all of whom are professional managers, not founders or entrepreneurs – is NOT that their professional managerial compensation is ridiculous and extreme. No, the mortal sin is that it’s off-narrative, that there’s no pleasant veneer of positive “total shareholder return” to justify their professional managerial compensation. We are told that these four CEOs are over-compensated because the stock price is down, not that they are over-compensated, period.

These CEOs violated the “Yay, shareholder alignment!” narrative, and THAT is why they are singled out and hung out to dry by the Wall Street Journal.

These four CEOs are presented as “bad apples” in an otherwise perfectly healthy system of professional management behavior. They are presented as scapegoats for a SYSTEM of massive wealth transfer from shareholders to the professional managerial class.

This article is not an attack on that system. It is a defense. It is telling you that the system is fine … we just need to do something about these bad apple CEOs who do not properly “align” their compensation with shareholders.

One day we will recognize the defining Zeitgeist of the post-GFC Obama/Trump years for what it is: an unparalleled transfer of wealth to the managerial class.

Not founders. Not entrepreneurs. Not visionaries.

Nope … professional managers.

Just don’t expect to find that recognition in the pages of the Wall Street Journal.


Why Am I Reading This Now?


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

GOP Senators Send Letter to Netflix Challenging Plans to Adapt Chinese Sci-Fi Novel ‘The Three Body Problem’ (Hollywood Reporter)

‘Game of Thrones’ creators David Benioff and D.B. Weiss are set to adapt the hit book trilogy for Netflix. The Senators’ accuse the streamer of “normalizing” China’s extra-judicial detention of over one million Muslims in Xinjiang, referencing past comments from the books’ author Liu Cixin supporting the program.

Fact #1: The Three Body Problem book trilogy by Liu Cixin is a fantastic work of art.

IMO it’s the most important work of science fiction since Asimov’s Foundation trilogy back in the 1950s, and I’m thrilled that Netflix is adapting it into a television/movie series (less thrilled that Benioff and Weiss are the guys in charge).

Fact #2: Liu Cixin is not outspoken on politics, but when he does speak, he is a non-apologetic apologist for the Chinese government’s brutal treatment of its Uyghur minority population.

Here’s the quote that everyone focuses on, from a June, 2019 feature article in the New Yorker:

When I brought up the mass internment of Muslim Uighurs—around a million are now in re-education camps in the northwestern province of Xinjiang—he trotted out the familiar arguments of government-controlled media: “Would you rather that they be hacking away at bodies at train stations and schools in terrorist attacks? If anything, the government is helping their economy and trying to lift them out of poverty.” The answer duplicated government propaganda so exactly that I couldn’t help asking Liu if he ever thought he might have been brainwashed. “I know what you are thinking,” he told me with weary clarity. “What about individual liberty and freedom of governance?” He sighed, as if exhausted by a debate going on in his head. “But that’s not what Chinese people care about. For ordinary folks, it’s the cost of health care, real-estate prices, their children’s education. Not democracy.”

Fact #3: Yesterday, five GOP Senators sent a letter to Netflix, saying that any adaptation of Liu Cixin’s work amounted to “normalization” of China’s actions against the Uyghurs, and that “Netflix’s decision to do business with an individual who is parroting dangerous CCP propaganda” amounts to “complicity” with the CCP.

You can download a PDF copy of the letter here.

The surface issue around these facts, of course, is whether artists are separable from their art.

Does the recognition and promotion of good art made by artists with abhorrent political opinions serve also to recognize and promote those abhorrent political opinions?

My answer is yes … if you’re a rhinoceros.

But if you’re still a human being … if you’re still able to hold two independent thoughts in your head at the same time … if you’re still able to believe that yes, China’s treatment of the Uyghurs is a grotesque evil deserving of implacable sanction and resistance AND yes, The Three Body Problem is an important work of art … then my answer is no.

To be sure, there is a spectrum of association between artist and abhorrent regime that plays a crucial role in how I’m answering this question. I mean, no one needs to be doing a Leni Riefenstahl retrospective in 1938. That said, I don’t think that any reasonable person could say that Liu Cixin is an unofficial spokesperson for the Chinese government like Riefenstahl was for Germany, and I definitely don’t think that any reasonable person could say that The Three Body Problem is a glorification of the grotesque Chinese state like Triumph of the Will was a glorification of the grotesque German state.

It is, of course, possible for well-meaning people to disagree on this question.

But I don’t think that the five GOP Senators who sent this letter to Netflix are well-meaning.

I don’t think these Senators care very much about this book adaptation and the indirect-at-best “normalization” of abhorrent political views held by the author of the source material. I don’t think that this letter was written out of a deep and abiding concern with the horrific treatment of the Uyghurs, because if that were true a letter to Mary Barra at General Motors might be just a wee bit more relevant and impactful.

No, I think this letter was written out of a deep and abiding concern with Netflix.

I think this letter was written to generate a “Whatabout?” talking point regarding Netflix in particular and Hollywood in general, so that any criticism of these GOP Senators and Dear Leader on the China political dimension can be blunted, and any attacks on the political opponents of these GOP Senators and Dear Leader on the China political dimension can be buttressed.

I think that’s why this letter was written NOW.

Which leads me to the best advice I’ve got for maintaining a critical distance from the barrage of Fiat News that seeks to weld our minds shut, to the best advice I’ve got for maintaining some resistance to our hard-wired tendency to fall into Gell-Mann Amnesia.

Whenever you read something in the news, always ask yourself:

Why am I reading this now?

Clear eyes. Full hearts. Can’t lose.


The UNITED States of America


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

My RBG story.

In March 1993, two months before she was nominated to the Supreme Court, Ruth Bader Ginsburg delivered the Madison Lecture at the NYU law school. I was a baby prof in the Poli Sci department at the time, and a buddy of mine was clerking for RBG, so I went over to the law school to hear the speech out of some combination of professional obligation and wanting to hang out with a friend after we got the speech out of the way. Honestly, I had never heard of Ginsburg other than through my friend’s clerkship, and I had no intrinsic interest in hearing her talk, which I figured would be something about women’s rights, blah blah blah.

27 years later, and I still remember that speech – “Speaking in a Judicial Voice” – like it was yesterday.

RBG wasn’t about “women’s rights”.

RBG was all about EQUAL RIGHTS for ALL citizens. RBG was all about EQUAL TREATMENT UNDER LAW for ALL citizens.

That’s it. It’s really as simple (and as difficult) as that.

In particular, I remember that RBG had zero use for theoretical or symbolic notions of equal rights, what today we’d call virtue signaling. She was all about the real world. To RBG, the core issue of equal rights in the real world was WORK. Are you doing the work? Then dammit, you should get paid for doing the work!

Again, it’s as simple (and as difficult) as that.

Equal rights and equal protection under the law for ALL citizens. An honest day’s pay for an honest day’s work for ALL citizens. Liberty and justice for ALL.

Imagine that.

If you want to know what RBG was all about …

If you want to know why RBG’s death is such a loss for the UNITED States of America …

Please read her speech – “Speaking in a Judicial Voice” – which you can download as a PDF here.


Many People Say


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

“To many, Beethoven’s most famous work is a symbol of exclusion and elitism in classical music.”

How Beethoven’s 5th Symphony put the classism in classical music” (Vox)

TRUMP: There are a lot of people think that masks are not good.

STEPHANOPOULOS: Who are those people?

TRUMP: I’ll tell you who those people are … waiters. They come over and they serve you, and they have a mask. They’re playing with the mask, so the mask is over, and they’re touching it, and then they’re touching the plate. That can’t be good.

The concept of a mask is good, but it also does … you’re constantly touching it, you’re touching your face, you’re touching plates. There are people that don’t think masks are good.

“Trump’s ABC News town hall: Full transcript”

If you ever want a textbook example of what “begging the question” really means (because it doesn’t mean what you think it does), here you go:

We ask how Beethoven’s symphony was transformed from a symbol of triumph and freedom into a symbol of exclusion, elitism, and gatekeeping — everything we love to hate about classical music today. How did the meaning of this symphony get so twisted?

How Beethoven’s 5th Symphony put the classism in classical music” (Vox)

“Begging the question” is the most commonly misused rhetorical phrase in the English-speaking world. It does NOT mean asking for an underlying question, and anytime I hear someone say, “Well that begs the question, why does blah blah blah?”, I die a little inside.

Begging the question is the assertion of a made-up premise that validates the “question” you then proceed to ask and answer.

So when Vox writes an insane article answering the question “How did the meaning of this symphony get so twisted?”, they first claim by assertion that, in fact, the meaning of Beethoven’s Fifth has been twisted. THAT is begging the question.

The go-to move by sophist demagogues like Vox and Trump to support a made-up premise is to claim that “many people” are asserting this made-up premise.

Why do they do this? Because it works.

Why does it work? Because common knowledge game. Because of the power of the crowd watching the crowd.

Claiming that “many people” believe that Beethoven’s Fifth is a symbol of exclusion is the verbal equivalent of a sitcom laugh track. In both cases, it’s the creation of an artificial audience for the real-life audience to observe, an artificial audience that cues the real-life audience to accept the made-up assertion. In the case of a sitcom, the made-up assertion might be that Joey and Chandler’s hijinks with Monica and Rachel are funny. In the case of modern politics, the made-up assertion might be that wearing masks is bad for you. The process to get you to laugh/believe is exactly the same.

Seriously, try to watch Friends without a laugh track (do a quick Google search, there are a lot of these, like here). What you thought was a funny show becomes … definitely NOT funny and more than a little frightening.

Now try to read a Trump tweet or a Vox article and substitute “I think” for “many people are saying”. What you thought was a somewhat-questionable-but-okay-I guess statement becomes … definitely NOT okay and more than a little frightening.

If there’s one thing you get from Epsilon Theory, it’s this: we human beings are biologically hard-wired to respond positively to a positively-responding crowd, and every high-functioning sociopath in Washington and Wall Street and Hollywood and Silicon Valley and every other concentration of political or economic power both knows our biological weakness and uses this biological weakness against us.

Once you start looking for these artificial audiences with their artificial cues, you will see them everywhere.

This is Fiat World, where the self-serving opinions and made-up assertions of the powerful are presented to us as fact, where “many people say” that we must vote for ridiculous candidates to be a good Republican or a good Democrat, where “many people say” that we must buy ridiculous securities to be a good investor, where “many people say” that we must borrow ridiculous sums to be a good parent or a good spouse or a good American.

How do we escape Fiat World? We can’t. Sorry.

How do we survive Fiat World? Clear eyes to see their sophistry. Full hearts to reject it.

Clear eyes. Full hearts. Can’t lose.

PS. Facebook delenda est.


The Game of Tesla


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

There’s an old saying in poker: don’t just play the cards, play the players.

It’s the same thing in markets. You can’t just focus on the cards you’re dealt, i.e., the fundamentals of this stock or that stock. You also have to focus on the other players who are playing these same cards, and that means understanding the behavior of a crowd of buyers and sellers in the stock market.

Just like in poker, sometimes the cards/fundamentals don’t matter at all. Sometimes poker players will think they have an edge in understanding the other players sitting around the table, and before you know it, there’s a huge pot in the middle of the table regardless of what cards have been dealt.

That’s exactly what has happened with Tesla stock over the past few months. There’s a huge pot of money in the middle of the table in the form of an enormous market cap for Tesla as the stock keeps getting bid up, and none of it has anything to do with the fundamentals of the company.

And, despite what I know you’ve heard, almost none of it has anything to do with people buying the stock because it’s “cheaper” since the stock split. Oh sure, we’ve all heard stories of the idiot friend of a friend who either thinks they’re getting four brand new shares of Tesla with the 5:1 split or believes it’s more “affordable” now that it’s been split. But the truth is that fractional share purchases have been a standard feature of every retail Davey Day Trader’s online stock trading platform for months and months. If you wanted to buy $100 worth of Tesla stock, you didn’t need a stock split to make that happen (and the stock split didn’t lower the price per share to that level anyway). The truth is that these stories about the idiot friend of a friend are just that – stories – not entirely apocryphal, maybe, but nowhere near even a rounding error in the average daily trading volume (more than 70 million shares per day) of Tesla stock.

The feeding frenzy on Tesla has nothing to do with that handful of rubes buying the stock because it’s more “affordable” after the split. It has something to do with traders buying the stock because they believe the story that there will be rubes buying the stock because it’s more “affordable” after the split. And it has everything to do with traders buying the stock because they believe that other traders believe the story that there will be rubes buying the stock because it’s more “affordable” after the split.

This is the Common Knowledge Game in action. It is the power of the crowd watching the crowd. It is the power of – not what you think is true, and not what you think the crowd thinks is true – but of what the crowd thinks the crowd thinks is true.

Today, the crowd thinks the crowd thinks that there are newbs and rubes buying the stock because it’s cheaper post-split. And that is what’s driving the feeding frenzy in Tesla shares. Apple, too.

It’s an old idea in investing, dating back at least to John Maynard Keynes in the 1930s, who called it the Newspaper Beauty Contest to use as market analogy the social media of his day. Maybe we should call it the Robinhood Effect.

But in both the 1930s and the 2020s, the idea is the same: in markets like these, the fundamentals don’t matter. You can play any hand you’re dealt! What matters is the story around a company or a stock, and what matters even more is whether it’s a story that everyone believes that everyone else believes.

How does the game end? When you stop reading stories about the idiot friend of a friend buying “cheap” Tesla shares for the first time. Not because there were ever enough of these newbs and rubes to actually make a difference in Tesla price action, but because the story that these newbs and rubes are out there will be broken. You’ve seen exactly that happen in the past few days. Now that the stock split is over and there are no new online articles shouting “idiots who don’t understand stock splits will be buying Tesla hand over fist!”, the Common Knowledge Game breaks the other way.

But you know who understands this game really well? Elon Musk. Tim Cook, too. That’s why Tesla is selling up to $5 billion worth of fresh stock while the price is so high. Think of it as the house taking their rake from the over-inflated pot of money now sitting in the middle of the poker table.

So don’t worry about Elon and Tim. They’ll find another story to drive another round of the Common Knowledge Game.

They always do.


The Cartoon Put


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Source: The Dungeonmaster (1984)

Mestema: In a future reality I shall destroy you!

Paul: I reject your reality and substitute my own!

The Dungeonmaster (1984)

We write a lot about how governments and businesses desperately want Official Numbers to be treated as synonymous with the real-world feature they are used to describe. You might say it’s kind of our thing here at Epsilon Theory. We even have a word we use for it: cartoons.

We have written about COVID-19 cartoons being promoted by the Chinese Communist Party.

And pension obligation cartoons.

And top-line revenue cartoons.

And labor statistic cartoons.

And daily stock price attribution cartoons.

And risk-model cartoons.

And user / subscriber count cartoons.

The air of legitimacy offered by facts and figures makes them impossibly seductive for leaders in need of a friendly way to frame what is going on in the world. The problem, of course, is that numbers are not always a true reflection of the thing they are being said they are or what they represent. That may be because of how they are measured. It may be because of simplifying assumptions, abstractions and priors in their calculation. It may be because they are based on a model. It may be because they are biased or otherwise influenced in ways that confound the relationship. It may be because they represent only a dimension of the thing and not the thing itself. It may be because of mistakes. It may be because of outright fraud.

It isn’t hard to understand why sensitivity to cartoons around COVID-19 is high. Some of those reasons are good, and some are bad. All the same, it should not be surprising that the article below both topped our Zeitgeist of the most linguistically influential articles AND was by far the most shared article about COVID-19 over the last two days. It certainly helps when the President retweets it, and even more when the self-appointed truth arbiters at Twitter decide to censor it.

New CDC report shows 94% of COVID-19 deaths in US had underlying medical conditions [Various Fox Affiliates]

I have my own views on whether the popularity of this article was driven more by serious, well-informed questions about medical coding methodologies or pre-existing political conditions. That’s my diplomatic way of saying that I suspect the number of people capable of having a reasoned discussion on the implications of reported comorbidities falls somewhat short of the number of shares this article got on Facebook.

Still, confirmation biased click-bait or not, the common knowledge implied by this article sitting at the top of the Zeitgeist is that COVID data is cartoonified. So what’s the verdict? Should citizens be worried that strident representations about what COVID case and mortality data mean might be cartoonified?


I mean, of course they should. And considering that we have multiple official statements from the White House indicating an explicit preference for the reported data to look a certain way, I think most of that evidence points to cartoonification in the direction of underreporting of most statistics. Beyond that, however, there are significant methodological differences between and among states, agencies and individual institutions. There are fog of war issues in hospitals and clinics. There are testing abnormalities. There are high-risk financial incentives for reporting non-COVID pneumonia treatments as COVID-related, and low-risk political incentives for minimizing the number of cases, hospitalizations and deaths under various local and regional political leaders’ watches.

Major media outlets, likewise, have so thoroughly erased whatever line existed between their editorial and news practices that the number of stories they can concoct by simply cherry-picking start and end dates, taking advantage of reporting irregularities, discussing ratios or rates of changes is limitless. If you want to create a COVID-19 cartoon that will suit your political sensibilities, you will have no difficulty doing so. If you are not on cartoon-watch each and every time you see anyone quoting COVID statistics of any kind, you are nuts.

But y’all. Seriously?

The existence of cartoons does not give us a put option on thinking.

The point of being aware of numbers that are prone to manipulation is not to permit us to turn off our brains and pretend that there is no underlying real world feature being measured. The point of being aware of cartoons is not to permit us to write off entire issues as being clouded by the complication of measurements or the attempts by political powers to manipulate their relationship to features of the real world. When you find Wittgenstein’s Ruler, you don’t throw your hands up and say, “Oh well!” The fact that the world of narrative is powerful and messy and fraught with emotional pulls and unknown intentions doesn’t give us carte blanche to reject reality and substitute our own.

The impulse should be the complete opposite.

When we see cartoons, it is a warning that our focus must be on seeking out facts and measurements that are less vulnerable to abstraction. Things like models for excess deaths that predate COVID-19 that can shed light on the aggregate marginal effect of the pandemic on deaths in America. Things like actual nationwide ICU and hospital utilization rates. Things like the actual, demonstrable activities of medical professionals at hundreds of medical facilities. Things like historical data on comorbidities and conditions contributing to death for comparable diseases.

[Editor’s note … I’m sorry, Rusty is trying to be nice here. I won’t.]

If you actually read the actual CDC report and you still think that it is at all damning to the seriousness of this pandemic that deaths from a novel coronavirus that definitionally manifests in cardiopulmonary distress are being coded alongside pneumonia (42%), respiratory failure (34%), ARDS (14%), other types of respiratory failure (9-14%), cardiac arrest and arrhythmia (13-36%), and renal failure/sepsis most frequently reported to be primarily related to direct viral damage rather than co-infection with bacteria (8-17%), then you are wrong [Ed. Note: You are a fool].

If you actually read the actual CDC report and you still think it is at all damning to the level of concern that “normal” Americans should have about COVID-19 that 22% of deaths were coded alongside a condition experienced by roughly half of the adult population (hypertension), or that 16% of deaths were coded alongside a condition experienced by about a third (diabetes and pre-diabetes), or that 11% to 15% of deaths were coded alongside one or more conditions experienced by as many as half of American adults above the age of 85 (i.e. dementia and Alzheimer’s), then perhaps it is worth considering whether how the Widening Gyre is influencing your humanity [Ed. Note: You are a sociopath].

If you think that the rate of comorbidities and conditions contributing to death associated with COVID-19 somehow makes its numbers less “real” than other diseases, like, say, the actual flu (which similarly often has a coded comorbidity in more than 90% of deaths, consisting of the same laundry list of cardiopulmonary and sepsis/infection-related conditions contributing to death) or the dozens of other viral infections that make you die in specific ways for which an ICD-10 code exists, then it may be worth spending more time trying to understand the feature of the world the data represents and less time letting people tell you what it means [Ed. Note: You are sociopathic fool].

The point of being aware of cartoons and other abstractions isn’t to reject someone else’s reality and substitute it with our own.

It is to reject someone else’s reality and substitute it with…reality.


Sacrifice for Thee, Vast Wealth for Me


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Doug Parker, American Airlines CEO and Chairman, flashing his winning smile

American Airlines to Cut 19,000 Jobs by Oct. 1 When Federal Stimulus Ends (WSJ)

American Airlines Group Inc. said it would shed 19,000 workers by Oct. 1 as the carrier prepares to downsize to cope with the coronavirus pandemic’s blow to travel demand, which isn’t expected to rebound for years.

The reductions include 17,500 furloughs of pilots, flight attendants, mechanics and others, as well as 1,500 cuts from management and administrative ranks.

Airlines received $25 billion in federal aid to pay workers through the end of September to avoid mass layoffs.

Unions and airline officials have advocated for another round of funds to keep employees on the job through March 2021.

Doug Parker, American Airlines CEO and Chairman of the Board, wrote a letter to his employees today that pretty much defines high-functioning sociopathy.

I’m going to reprint excerpts from that letter – which is couched in the saccharine vocabulary of modern team-speak, but is in truth a shakedown letter to employees and a ransom note to the US government – and then I’m going to tell you a few things about Doug.

Dear fellow team members,

We respect and greatly appreciate the sacrifice these team members have made, and continue to make, for American and their fellow team members.

Even with those sacrifices, approximately 19,000 of our team members will be involuntarily furloughed or separated from the company on Oct. 1.

The one possibility of avoiding these involuntary reductions on Oct. 1 is a clean extension of the PSP.

If you haven’t already done so, you can let your elected officials know just how important a PSP extension is to you, your families and our economic recovery.

The American Airlines team is no stranger to adversity, and in adversity, we always come through.

We will come out on the other side of this crisis. Until then, take heart that we will get through this together.

The professionalism and care this team has shown over the past six months has been nothing short of extraordinary. We are all American Airlines, and we will survive, and one day, thrive again. Thank you for all you are doing now, and tomorrow, to carry us through.

Know who’s not sweating the October 1 firing line? Know who’s surviving and thriving just fine, thank you very much?

Doug Parker, that’s who.

Here are some fun facts about Doug Parker and his “leadership” of American Airlines since he became Chairman and CEO of the company in 2013, after its merger with US Airways. All of this (and more) can be found in a long note I wrote on the airline bailout back in March.

Do The Right Thing

I’m angry that I have to write this note about the airline industry and how to structure the bail-out of United, Delta, American and Southwest. But I must, because the raccoons and the high-functioning sociopaths are looking to get their private losses socialized and their private gains locked in. Bailout the airlines and their rank-and-file employees? You bet. Bailout the CEOs and Warren Buffett? Not a chance. Read more …

From 2014 through 2019, Doug Parker pocketed more than $150 million in cash through his sale of 3.6 million shares in American Airlines. That’s in addition to the $50 million in stock he still owns (and net of the pittance that Doug has paid for all of these shares). That’s in addition to the $100+ million in cash salary and cash bonuses and deferred comp and stock options and incredible perks that Doug has received. Nope, cash comp and deferred comp are for suckers. Just ask Jamie Dimon.

These stock sales were particularly egregious in 2015 – 2016, where for a twelve month period Doug pocketed between $4 million and $11 million in stock sales per month, and again in 2018, when for a brief shining moment American Airline’s stock price went above $50. Wouldn’t you know it, Doug just happened to choose that moment to sell 437,000 shares of stock, more than twice as much stock as he had ever sold before and almost 5x the usual size of his stock sales.

But surely, compensation like this is well earned. Surely, American Airlines has outperformed its competition, built a solid franchise, and delivered nice returns to its investors.

LOL. Don’t call me Shirley.

From 2014 – 2019, the same years that CEO and Chairman Doug pocketed $200 million in real money stock-based comp, American Airlines had *negative* free cash flow of $3.2 billion.

And took on an additional $14 billion in debt.

And bought back $13 billion of its stock.

How did all this work out for American Airlines shareholders from 2014 – 2019?

That’s American Airlines in white, Delta in yellow, United in purple, and Southwest in Green.

Over this six year period, AAL stock was up 13%. Not 13% per year, but 13% over SIX YEARS of the best bull market in history.


Doug Parker is not an entrepreneur. Doug Parker is not a founder. Doug Parker has never built a goddam thing in his life. Doug Parker is not on your “team”.

Doug Parker is a financial analyst. Doug Parker is a manager. Doug Parker is a risk taker with other people’s money and other people’s lives.

And for that, Doug Parker is a centimillionaire many times over.

One day we will recognize the defining Zeitgeist of the Obama/Trump years for what it is: an unparalleled transfer of wealth to the managerial class.

It’s the triumph of the manager over the steward. The triumph of the manager over the entrepreneur. The triumph of the manager over the founder. The triumph of the manager over ALL.

Welcome to the Long Now.



Carny Barkers


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Jim Cramer calls on 10 companies, including Amazon and Alphabet, to issue stock splits (CNBC)

“I think the idea of getting newer, younger people involved into the stock market who aren’t just brainwashed to put money into index funds is terrific.” 

“If you want the market to keep climbing, these ten companies — and many more — need to start taking their cue from Tim Cook and Elon Musk,” Cramer said. “Remember, the size of the price tag matters with this crowd.”

Sometimes you have to work hard to divine the Zeitgeist of the modern age.

And other times the Zeitgeist just walks right up and smacks you with a 2 x 4.

Or a sack of oranges.

I understand from my exhaustive research (i.e., Wikipedia) that in actual carny lingo, there was no such word as “barker”, that instead the hustlers and grifters who talked you into paying two bits for a glimpse of Zeena the Mind Reader and Molly the Electric Woman were called “talkers”.

Fair enough. To-may-to, to-mah-to. I’m fine with referring to Jim Cramer as a carny talker if you like that better, but there’s a punch to “barker” that really fits the bill here.

Yes, that’s heart throb Tyrone Power in “Nightmare Alley” (1947). Doesn’t end well for him.

Of course this has always been CNBC’s business model and Cramer’s shtick, to be nine parts entertainment for one part financial news/advice, but now we’ve traded the rolled-up shirt sleeves (gotta work hard and do your research!) for a carny barker’s striped suit and cane (hey now, step right up to see the egress!).

I mean … “brainwashed to put money into index funds”? AYFKM?

They’re. Not. Even. Pretending. Anymore.

Or as Rusty put it yesterday, the grift is now the thing. In the age of capital markets as carny show, we are told by barkers like Cramer that this is what a smart investor or management team does … they should look to the grift du jour for their edge.

For years, we’ve been writing that capital markets have been transformed into a political utility, but now it looks like that was just a waypoint in the metamorphic lifecycle. Kinda like the cocoon stage for a moth.

Or, I suppose, the chest-bursting stage for an Alien xenomorph.

Certainly that’s been the experience for value investors.

No, it wasn’t enough for these high-functioning sociopaths to turn capital markets into a political utility.

Today, capital markets are being transformed into a carny show.



Get Me Tools and a Beer!


To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You’ll get two or three of these emails every week, and your email will not be shared with anyone. Ever.

Homer: That’s it. They have awoken a sleeping giant!

Marge: Homey, what are you going to do?

Bart: <chanting under his breath> Crazy scheme, crazy scheme, crazy scheme…

Homer: Get me tools and a beer!

The Simpsons, Season 13, Episode 15 “Blame it on Lisa”

The crazy Kodak scheme we wrote about a week and a half ago is still an influential part of the Zeitgeist.

It sits atop the Zeitgeist this week for two reasons. First, there has been another event in this absurd saga, and coverage of it has been significant. To wit, on Friday, the U.S. International Development Finance Corporation announced that it was putting the announced loan on hold because “allegations of wrongdoing” raised “serious concerns.”

This is good news.

The announcement from the DFC also spawned a lot of articles with shared language, including this one from CNBC that ranked near the top of our list of financial articles with the most structurally similar language over the weekend.

Kodak pharma deal held up over reported questions about stock move [CNBC]

There is a second reason for the high degree of connection around this topic, however. It is being forcefully attached by political and media missionaries to the rapidly emerging narrative of deglobalization and reshoring of critical American manufacturing. This narrative will be an old friend to most Epsilon Theory readers, who read about its emergence in March in a note we published called Lack of Imagination.

Since we spotted those early missionary drum beats in early-mid March, the narrative exploded in coverage volume across financial media, reaching its peak this summer.

Source: Epsilon Theory

To be fair, there is a very good case to be made that COVID-19 laid bare how the globalization of pharmaceuticals supply chains and manufacturing created unacceptable fragility and vulnerability in exchange for an extended period of higher margins and capital efficiency. Depending on your political proclivities, there is a very good case to be made that government policy will necessarily play a role in reversing, or at least patching, those vulnerabilities. There is room for disagreement, but there is nothing crazy about believing that it is strategically important that America have a strong, complete domestic pharmaceuticals manufacturing industry.

But the gap is WIDE between that belief and the belief that the only way to achieve this is by demanding your tools and a beer so that you can come up with a crazy scheme like tagging the International Developement Finance Corporation to facilitate that transition through a no-strings-attached loan to a government official-linked company that hasn’t had competitive expertise at scale in chemicals, pharmaceuticals or really anything else since it shuttered or sold such businesses over the last few decades.

This topic sits at the top of the Zeitgeist in part because narrative missionaries are aggressively trying to tell each of us how to think about the gap between those beliefs. They are telling us that the gap doesn’t exist. They are telling us to think that extending no-strings-attached financing to Kodak is inextricably related to – no, synonymous with – “doing something about reshoring pharmaceuticals manufacture.”

We are told that they are the same because the narrative missionaries want to be able to produce an unassailable, physically compelling response in us if we or anyone else express doubts. If we say, “Wait, why Kodak?”, they want to be able to respond, “Why don’t you care about restoring American pharmaceuticals manufacturing?” It is the oldest trick in the memetics playbook – the abstraction of A into B, where B is a thing that everybody knows everybody knows is unassailably important. In this case: The Kodak deal is the restoration of American pharmaceutical manufacturing.

In other words, Yay, reshoring!

Here’s what it looks like when a political missionary promotes this narrative with a “Yay, reshoring!” meme attached.

Here’s what it looks like when a media missionary promotes this narrative with a “Yay, reshoring!” meme attached.

And here’s how the echoes of those missionary statements begin to reproduce in the mouths of others. Like the original missionary statements, they ignore the criticisms of the Kodak grift and reframe them as assertions about the need for pharmaceuticals reshoring.

The trick to seeing through these forced abstractions is always the same: we remember that two things can be true at the same time. In this case, it is true that restoring domestic manufacturing capacity in certain critical industries is a legitimate policy aim. AND it is true that the Kodak grift is exactly the crazy scheme it appears to be on the surface.

Anyone who implies that these two assertions are in opposition is selling you on an intentionally constructed narrative.