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.

A Game of Sentiment

By Ben Hunt | November 3, 2013 | 0 Comments

I know. You know I know. I know you know I know. We know Henry knows, and Henry knows we know it. We’re a knowledgeable family. – Prince Geoffrey, “The Lion In Winter” We do not sow. – House Greyjoy motto, “A Game of Thrones” It would be ideal if we could have an uncontrolled …

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Render Unto Caesar

By Ben Hunt | October 31, 2013 | 0 Comments

There are two sides to the Epsilon Theory coin — looking at market-shaping current events through the lens of game theory and history, and looking at market behaviors through the lens of information theory. The former is all about the malleability of meaning within markets; the latter is all about the constancy of patterns within …

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What Were Once Vices Are Now Habits

By Ben Hunt | October 31, 2013 | 0 Comments

The central banks of the West announced today that their temporary swap lines would be made permanent. Like QE itself, the meaning of this emergency policy instrument instituted in the crisis of 2008-2009 has changed from a massive short-term intervention against an acute and life-threatening economic injury to a massive permanent insurance policy against a …

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The Koan of Donald Rumsfeld

By Ben Hunt | October 20, 2013 | 0 Comments

There are known knowns; there are things we know we know.We also know there are known unknowns; that is to say, we know there are some things we do not know. But there are also unknown unknowns – the ones we don’t know we don’t know. – Donald Rumsfeld There is an unmistakable Zen-like quality to …

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The Levelers

By Ben Hunt | October 13, 2013 | 0 Comments

Mr. Incredible:  You mean you killed off real heroes so that you could *pretend* to be one? Syndrome:  Oh, I’m real. Real enough to defeat you! And I did it without your precious gifts, your oh-so-special powers. I’ll give them heroics. I’ll give them the most spectacular heroics the world has ever seen! And when I’m old …

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A ‘Precise and Predictable’ Yellen Fed?

By Ben Hunt | October 10, 2013 | 0 Comments

The pursuit of greater predictability and transparency in Fed communications is a mistake, particularly in the context of broad guarantees concerning world-shaking policies. We learned this lesson early in the Cold War through the hard knocks of Korea and Vietnam (not to mention the scares of Berlin and Cuba), and it seems a shame that …

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A World of Guarantees

By Ben Hunt | October 6, 2013 | 0 Comments

“We’re gonna win the game. I guarantee it.” – Joe Namath, 3 days before Super Bowl III “Our torments also may in length of time Become our Elements.” – John Milton, “Paradise Lost” “When did the future switch from being a promise to being a threat?” – Chuck Palahniuk, “Invisible Monsters” “Some say the world …

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It’s Always Something

By Ben Hunt | September 29, 2013 | 0 Comments

More evidence that QE is no longer an emergency government policy, but is now a permanent government program. epsilon-theory-its-always-something-september-29-2013.pdf (508KB)

Uttin’ on the Itz

By Ben Hunt | September 22, 2013 | 0 Comments

High hats and arrowed collars, white spats and lots of dollars Spending every dime, for a wonderful time If you’re blue and you don’t know where to go to Why don’t you go where fashion sits, Puttin’ on the Ritz.– Irving Berlin Hegel remarks somewhere that all great, world-historical facts and personages occur, as it …

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Heeere Comes Lucky!

By Ben Hunt | September 15, 2013 | 0 Comments

“It is my understanding that the Constitution of the United States allows everybody the free choice between cheesecake and strudel.” – Sky Masterson (“Guys and Dolls”) “One of these days in your travels, a guy is going to show you a brand-new deck of cards on which the seal is not yet broken. Then this …

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It Was Barzini All Along

By Ben Hunt | September 8, 2013 | 0 Comments

“Tattaglia is a pimp. He never could have outfought Santino. But I didn’t know until this day that it was Barzini all along.” – Don Vito Corleone

Same with Emerging Market growth narratives. It was Developed Market monetary policy all along.

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Shifting Narrative around Central Bank Omnipotence

By Ben Hunt | August 27, 2013 | 0 Comments

The strong Narrative around Central Bank Omnipotence, which solidified in late September 2012, is now clearly weakening in late August 2013. There are two strands of this weakening: growing concerns over Fed competence given its reliance on communication as a policy instrument, and pronounced concerns that Emerging Market central banks are powerless to control their …

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The Narrative Shift around Emerging Markets

By Ben Hunt | August 21, 2013 | 0 Comments

The core Narrative around Emerging Markets is shifting away from growth and towards value. This is a profoundly disruptive development. epsilon-theory-the-narrative-shift-around-emerging-markets-august-21-2013.pdf (50KB)

Increased Instability in US Markets

By Ben Hunt | August 19, 2013 | 0 Comments

The Common Knowledge informational structure around the US market has weakened in recent weeks, making the risk/reward assessment of ALL exposures — long and short — less certain. epsilon-theory-increased-instability-in-us-markets-august-19-2013.pdf (246KB)

Schrödinger’s Portfolio

By Ben Hunt | August 3, 2013 | 0 Comments

“The world is given to me only once, not one existing and one perceived.” – Erwin Schrödinger “Quantum theory provides us with a striking illustration of the fact that we can fully understand a connection though we can only speak of it in images and parables.” – Werner Heisenberg “What we observe is not nature itself, but …

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The Framing of Macro Data

By Ben Hunt | July 31, 2013 | 0 Comments

A review of Narrative formation immediately after the July 31st release of Q2 US GDP data. epsilon-theory-the-framing-of-macro-data-july-31-2013.pdf (232Kb)

Rise of the Machines

By Ben Hunt | July 28, 2013 | 0 Comments

“Music, this complex and mysterious act, precise as algebra and vague as a dream, this art made out of mathematics and air, is simply the result of the strange properties of a little membrane. If that membrane did not exist, sound would not exist either, since in itself it is merely vibration. Would we be …

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The Tao of Portfolio Management

By Ben Hunt | July 21, 2013 | 0 Comments

“Shape clay into a vessel; It is the space within that makes it useful. Cut doors and windows for a room; It is the holes which make it useful. Therefore benefit comes from what is there; Usefulness from what is not there. ” – Lao Tzu “The limits of my language means the limits of my …

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The Market of Babel

By Ben Hunt | July 14, 2013 | 1 Comment

“But Achilles, weeping, quickly slipping away from his companions, sat on the shore of the gray salt sea, and looked out to the wine-dark sea.” – Homer, “The Iliad” The story of the Tower of Babel in the Book of Genesis, from whence we get the word “babble”, has always struck me as one of the …

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The Music of the Spheres and the Alchemy of Finance

By Ben Hunt | July 7, 2013 | 1 Comment

“You say that we go round the sun. If we went round the moon it would not make a pennyworth of difference to me or to my work.” – Sherlock Holmes (from “A Study in Scarlet” by Arthur Conan Doyle) “It doesn’t matter if the cat is black or white, as long as it catches mice.” …

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