All Epsilon Theory Content

Everything we have published at Epsilon Theory including our long-form content, a library of hundreds of pieces written by Ben, Rusty and others over the course of the last 5+ years. Plus, short-form pieces for those without the time (or attention span) for classic Epsilon Theory notes.

The Dude Abides: China in the Golden Age of Central Bankers

By Ben Hunt | July 1, 2014 | 1 Comment

Today, however, the Chinese State faces two existential threats, each stemming from or accelerated by the Great Recession and Western policy responses to that crisis of market confidence.

First, QE and other “emergency” Western monetary policies of the past five years threaten the grand political unification of Deng Xiaoping from without. 

Second, massive wealth inequality and concentration driven largely by those same monetary policies threaten it from within.

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Long Term Parking

By Ben Hunt | June 16, 2014 | 0 Comments

Anthony ‘Tony’ Soprano: And I don’t want to hear about the freaking economy, either! Sil, break it down for ’em. What two businesses have traditionally been recession-proof since time immemorial? Silvio Dante: Certain aspects of show business … and our thing. – The Sopranos, “For All Debts Public and Private” (Season 4, Episode 1, 2002) There’s …

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Risk Analysis in the Golden Age of Central Bankers

By Ben Hunt | June 9, 2014 | 0 Comments

When I was a little kid we had a sand box. It was a quicksand box. I was an only child … eventually. – Steven Wright A brief note today on what might be an arcane subject for some but is a great example of the most basic question in risk management – are you …

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The Minsky Moment Meme

By Ben Hunt | June 8, 2014 | 0 Comments

That’s not how it works. That’s not how any of this works. – Esurance “Beatrice” commercial There’s a wonderful commercial in heavy rotation on American television, where three women of a certain age are discussing one of the friend’s use of Facebook concepts such as “posting to a wall” or “status updates”. The protagonist of the …

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When Does the Story Break?

By Ben Hunt | May 25, 2014 | 0 Comments

Until an hour before the Devil fell, God thought him beautiful in Heaven. – Arthur Miller, “The Crucible” It’s always about timing. If it’s too soon, no one understands. If it’s too late, everyone’s forgotten. – Anna Wintour Saint Laurent has excellent taste. The more he copies me, the better taste he displays.  – Coco …

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Equity Volatility-of-Volatility Falls to All-Time Low

By Ben Hunt | May 12, 2014 | 0 Comments

1M implied volatility on the VIX fell to an all-time low last week. Generally speaking, this means that options on short-term market volatility increasing have never been cheaper. How is this possible, you ask, with outright war simmering in Eastern Ukraine and China flexing its muscles in the South China Sea? Because Mario Draghi is …

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All that Glitters

By Ben Hunt | May 9, 2014 | 0 Comments

I’ve received a lot of questions over the past few weeks about Russia and the Ukraine, and why I don’t include this flashpoint in my list of greatest market risks. Sorry, but I just don’t think it’s that big of a deal from a markets perspective. Russia is going to control Sevastapol, and everyone – …

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The Risk Trilogy

By Ben Hunt | May 4, 2014 | 0 Comments

A trilogy is a pretty abstract notion. You can apply it to almost any three things.  – Jonathan Demme Mozart: So then you like it? You really like it, Your Majesty? Emperor Joseph II: Of course I do. It’s very good. Of course now and then – just now and then – it gets a …

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Core Curriculum

By Ben Hunt | April 28, 2014 | 0 Comments

I distributed this Epsilon Theory reading list last summer, but it never made it to the website. Given the volume of requests I receive for this and seeing as how the direct subscriber list is about 10x what it was last summer I figured it was high time to reprint. I haven’t any right to …

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The Business of Epsilon Theory

By Ben Hunt | April 23, 2014 | 0 Comments

I started the Epsilon Theory project nine months ago with the publication of a “Manifesto” and an email to a few hundred friends and colleagues. Since then nearly 7,000 investors across more than 2,000 financial services firms have signed up for the direct distribution list, and through forwarding and republishing the effective Epsilon Theory audience …

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The Adaptive Genius of Rigged Markets

By Ben Hunt | April 20, 2014 | 0 Comments

Same as it ever was, same as it ever was, same as it ever was, same as it ever was – Talking Heads, “Once in a Lifetime” You may be a business man or some high degree thief They may call you Doctor or they may call you Chief But you’re gonna have to serve …

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Beta Earthquake

By Ben Hunt | April 13, 2014 | 0 Comments

One of the things I like to keep my eye on when I’m puzzling out what’s going on in the market are the specific company factors that loosely define concepts like Momentum and Value. I do this because any sort of big market move, like we’ve seen over the past week, is inherently over-determined and …

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The King is Dead. Long Live the King.

By Ben Hunt | April 7, 2014 | 0 Comments

Le roi est mort, vive le roi! – French proclamation as coffin of old king is placed into burial vault of Saint Denis Basilica. The throne shall never be empty; the country shall never be without a monarch. – English Royal Council on death of Henry III in 1272, proclaiming Edward I king even though …

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Hollow Men, Hollow Markets, Hollow World

By Ben Hunt | March 30, 2014 | 0 Comments

Apocalypse Now (1979), based on “Heart of Darkness” by Joseph Conrad Kurtz:  Did they say why, Willard, why they want to terminate my command? Willard: I was sent on a classified mission, sir. Kurtz: It’s no longer classified, is it? Did they tell you? Willard: They told me that you had gone totally insane, and …

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Two Shifting Narratives

By Ben Hunt | March 24, 2014 | 0 Comments

Two brief observations on incipient shifts in powerful Narratives … First, China. The pleasant charade that recent currency intervention was nothing more than an effort to reverse the “one-way bet” of speculators and to “increase volatility” as part of China’s accession to some brotherhood of liberal nations is starting to crumble.  Let me put it …

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Surely You Can’t Be Serious

By Ben Hunt | March 20, 2014 | 0 Comments

The Secret of life is honesty and fair dealing. If you can fake that you’ve got it made. These are my principles, and if you don’t like them… well, I’ve got others. I’m not crazy about reality, but it’s still the only place to get a decent meal. A child of five could understand this. …

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Panopticon

By Ben Hunt | March 16, 2014 | 0 Comments

Panopticon schematic, 1791 Michel Foucault, 1975 © Camera Press The Panopticon: a new mode of obtaining power of mind over mind, in a quantity hitherto without example. – Jeremy Bentham, founder of modern utilitarianism (1748 – 1832)  But the guilty person is only one of the targets of punishment. For punishment is directed above all …

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Rosebud

By Ben Hunt | March 9, 2014 | 0 Comments

Question: Mr. President, a clarification if I may. The people who were blocking the Ukrainian Army units in Crimea were wearing uniforms that strongly resembled the Russian Army uniform. Were those Russian soldiers, Russian military? Putin: Why don’t you take a look at the post-Soviet states. There are many uniforms there that are similar. You …

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Two Quick Points

By Ben Hunt | March 6, 2014 | 0 Comments

Two quick Epsilon Theory points before the jobs report tomorrow. First, remember the Goldilocks Narrative of the post-Great Recession Era…slow growth keeps the Fed in play, so disappointing but still positive job numbers are an initial shock but ultimately market friendly. Conversely, surprisingly good job numbers may be good news for the real world, but not for …

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The Power of Why, Exhibit 4,512 in a Continuing Series

By Ben Hunt | February 28, 2014 | 0 Comments

No man is an Iland, intire of it selfe; Every man is a peece of the Continent, a part of the maine; If a Clod bee washed away by the Sea, Europe is the lesse, as well as if a Promontorie were, as well as if a Mannor of thy friends or of thine owne …

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