Central Bank Omnipotence Monitor – 10.31.2019


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.

  • As we noted last month, the cohesiveness around a “Fed must continue to act” narrative remains at moderate levels.
  • We also think the common knowledge of excessively slow rate cuts by the Fed – again, not the personal intellectual belief in the mistake, but a belief that the market believes that the market believes it – continues to exist:
    • We think the sharp drop in sentiment attached to this coverage is partially reflective of the language expressing this view.
    • We also think from the language of some articles that it reflects a growing common knowledge of the limited real-world impact of this stimulus.
  • Importantly, however, the level of attention on central bank narratives has faded rapidly:
    • Common knowledge has emerged that other investors are more focused on trade, IPO market/growth issues and election politics.
    • We think this means that any negative surprise on continued easing expectations could have a more dramatic impact than investors / markets have discounted.

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 Longer-Term Lessons of the Repo Turmoil [Bloomberg]

Morgan Stanley Tells Stock Bulls Not to Kid Themselves on Trade [Bloomberg]

Pension Obligation Bonds May Soon Have Their Moment [Bloomberg]

Wage inequality is surging in California – and not just on the coast. Here’s why [LA Times]

Markets now see a 90% chance Fed will cut rates this month after weak services data [CNBC]


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