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 ‘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 …

Read moreA ‘Precise and Predictable’ Yellen Fed?

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 …

Read moreA World of Guarantees

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 …

Read moreUttin’ on the Itz

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 …

Read moreHeeere Comes Lucky!

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.

Read more

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 …

Read moreShifting Narrative around Central Bank Omnipotence

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 …

Read moreSchrödinger’s Portfolio

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 …

Read moreRise of the Machines

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 …

Read moreThe Tao of Portfolio Management

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 …

Read moreThe Market of Babel

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.” …

Read moreThe Music of the Spheres and the Alchemy of Finance

How Gold Lost Its Luster, How the All-Weather Fund Got Wet, and Other Just-So Stories

By Ben Hunt | June 30, 2013 | 0 Comments

Gold is money. Everything else is credit. – John Pierpont Morgan The relationships of asset performance to growth and inflation are reliable – indeed, timeless and universal – and knowable, rooted in the durations and sources of variability of the assets’ cash flows. – Bob Prince, Co-Chief Investment Officer, Bridgewater Associates Like every middle-aged white guy I …

Read moreHow Gold Lost Its Luster, How the All-Weather Fund Got Wet, and Other Just-So Stories

The Matrix Reloaded — Seeing Markets as Informational Structures

By Ben Hunt | June 27, 2013 | 0 Comments

A review of current market informational structure one week post the June 19th FOMC announcement. epsilon-theory-matrix-reloaded-seeing-markets-as-informational-structures-june-27-2013.pdf (295KB)

2 Fast 2 Furious

By Ben Hunt | June 23, 2013 | 0 Comments

We are all impaled on the crook of conditioning. – James Dean (1931 – 1955) This note is a sequel to my letter from two weeks ago, What We’ve Got Here Is … Failure to Communicate, a sequel made necessary by the market fall-out from the FOMC announcement on Wednesday. The Fed’s communications to the market are …

Read more2 Fast 2 Furious

The Narrative Battle is Joined

By Ben Hunt | June 21, 2013 | 0 Comments

A review of Narrative formation efforts on June 21st to support the market. epsilon-theory-the-narrative-battle-is-joined-june-21-2013.pdf (227KB)

What’s the Opposite of ‘Green Shoots’?

By Ben Hunt | June 20, 2013 | 0 Comments

An initial examination of the informational inflection point generated by the June 19th FOMC announcement. epsilon-theory-whats-the-opposite-of-green-shoots-june-20-2013.pdf (235KB)