Epsilon Theory In Brief
Daily short-form pieces for those without the time (or attention span) for classic Epsilon Theory notes. Look out for regular features like the subscriber mailbag and guest contributions from within the Epsilon Theory network.
Rusty and I are thrilled to announce that Brent Donnelly will be joining us as a guest contributor to Epsilon Theory.
Brent writes a daily email focused on FX markets that is my go-to source for understanding that enormous corner of the market, but in truth his writing is applicable to every aspect of investing. You’ll see what I mean when you read this post!
The spread of B117 in a Covid-fatigued country like the US is a profoundly deflationary, risk-off, dollar higher, flight to safety event in real-world.
Does it matter to market-world?
In episode #3 of the Epsilon Theory podcast, Rusty and I discuss the spike in Covid cases in Ireland and the risk of seeing a similar “Ireland Event” here in the US.
The time to act is NOW, not with indiscriminate lockdowns, but with strong restrictions on international and domestic air travel to contain the UK-variant virus while we accelerate vaccine delivery.
I believe there is a non-trivial chance that the United States will experience a rolling series of “Ireland events” over the next 30-45 days, where the Covid effective reproductive number (Re not R0) reaches a value between 2.4 and 3.0 in states and regions where a) the more infectious UK-variant (or similar) Covid strain has been introduced, and b) Covid fatigue has led to deterioration in social distancing behaviors.
There is a brief window where I think we have the opportunity to commit to building a common national identity together. Seizing this opportunity will mean leaving a lot of anger we will feel is entirely justified at the door.
Not seizing it, I fear, will mean that we all reap the whirlwind.
ET contributor Pete Cecchini isn’t buying the reflation / small-cap rally narrative, even with a mini Blue Wave.
A conversation with Brian Portnoy, author of The Geometry of Wealth, about the role of money in shaping a life of meaning. How do we give better advice about money to others … and to ourselves?
As Monty Python would say … and now for something completely different.
It’s JPow fanfic day here at Epsilon Theory! Or “every day” as they refer to it on Wall Street.
It may seem ironic that a narrative about the long-term could be deployed to distort the rewards of effective, market-based long-term capital allocation for short-term benefit.
This is, I think, the heart of The ZIRP Paradox:
The myth of infinite horizon investing is the enemy of long-term investing.
So an agent for a new over-the-top variety act finally gets a meeting with the biggest producer in the world. I mean, maybe ‘the world’ is selling it short. Word on the street is this guy’s even got God’s ear, if you can believe it.
In this kick-off Epsilon Theory webcast, I’m joined by renowned cryptocurrency miner and trader @notsofast for a wide-ranging conversation on Bitcoin and crypto. Here’s the core topic:
Can Bitcoin preserve its revolutionary potential after a Wall Street bear hug?
I’m highly skeptical, but @notsofast has some ideas on how to make this work.
The merger between the Treasury and Fed is now complete with Janet Yellen’s apparent appointment as the Secretary of the Treasury. Let the self-fulfilling market narratives begin!
These are The Ghosts of Wall Street Commentary Future. And if their chains are not already clanking around in your inbox, they will be very, very soon.
COVID-19 is endemic, and its mutations will likely be part of our lives going forward.
But there is another disease this virus has caused, and it is a disease of the mind. It is the endemic mindset. And we can eradicate it.
Today.
There’s a moment when the real world peeks through the narratives that surround us, and we convince ourselves that this will be the truth that frees our fellow citizens/investors/neighbors from their delusions.
But truth is only one of the necessary conditions for this kind of change. The other?
Mercy.
Three weeks ago, I didn’t see a narrative path for Trump to win a turnout-based election hinging on four or five swing states.
Today I do.
It’s the same funny feeling I got in 2016, but with a twist.
The corruption of media by missionaries means that we now live in a world of two sets of facts. It is a world which gives us two choices: to champion our truth, or to work toward eliminating the world-of-two facts structure.
To hell with OR. Let’s choose both.
Sometimes a grift isn’t in what you say, but in the difference in what you say to different audiences.
It’s not the information. It’s the meta information.
It is a literal golden age for CEOs whose talent is the creation and propagation of narratives.
Why? Because it works. And it works because we have accepted a financial and business media that has been redesigned into a cheering section.
This is a short-form summary of our long-form note The Projection Racket (Part 2), located here. While it attempts to present the most accurate picture of the arguments made, we always think that the long-form note provides the most helpful context. In any representative democracy (RD), your vote is never your full expression of political …