Central Bank Omnipotence Monitor – 10.31.2019

0

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]

0

The Latest From Epsilon Theory

Kitchen Sink It

By Rusty Guinn | February 20, 2020

Thanksgiving

By Rusty Guinn | February 19, 2020

ET Live! – 2.18.2020

By Rusty Guinn | February 18, 2020

Love in the Time of COVID-19

By Ben Hunt | February 17, 2020

The Industrially Necessary Doctor Tedros

By Ben Hunt | February 16, 2020

Options

By Rusty Guinn | February 12, 2020

Body Count

By Ben Hunt | February 10, 2020

We Hanged Our Harps Upon the Willows

By Rusty Guinn | February 10, 2020

Credit and Debt Monitor – 1.31.2020

By Rusty Guinn | February 7, 2020

The Promised Land!

By Ben Hunt | February 5, 2020
DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.