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Lessons of a Short Seller: Navigating the Great Ravine without an ISDA

By Ben Hunt | July 13, 2024

New webinar scheduled!

Lessons of a Short Seller: Navigating the Great Ravine without an ISDA

Wednesday, July 24
4:00 pm EDT

Unemployment Enters the Conversation

By Ben Hunt | July 5, 2024

Big change in our dominant central bank and monetary policy narratives. For the first time in years, unemployment is at the top of the network mind.

ET Professional Webinar Replay – Four Roads to the Great Ravine (June 26, 2024)

By Ben Hunt | June 29, 2024

My long vol / tail risk scenarios for 2025:

1) A US election that will be close – very close in the electoral college – where both the winning side and the losing side will claim that the other guy cheated, and the winning side will unleash a tsunami of spending and tax cuts to buy political support.

2) A Phony War between Israel and Iran where both sides are actively planning an existential conflict, temporarily dormant today in the same way that the war between Germany and France was temporarily dormant in 1939 after Hitler invaded Poland.

3) A preventive war to come between China and the US, initiated over access to advanced technology and catalyzed by a technology embargo in the same way that the preventive war between Japan and the US in 1941 was initiated over access to oil and catalyzed by an oil embargo.

4) A new Great Financial Crisis stemming from the overleverage, regulatory arbitrage, self-dealing, balance sheet shenanigans, malinvestment, financialization and profound derivative basis risk that permeates the modern insurance/reinsurance sector.

Registration for Professional Webinar, Weds June 26th at 4p ET

By Ben Hunt | June 21, 2024

For compliance and replay purposes, we’re asking participants to register beforehand (name and email address) for our Zoom webinar on Weds, June 26 at 4p ET, where I’ll be walking through my long vol / tail risk scenarios for 2025.

Registration link in post.

The Triple Systemic Risk Thesis

By Ben Hunt | June 12, 2024

My spidey-sense for major systemic risk has sounded an internal alarm three times in my investment career. Once in Q4 2007 over alt-a and subprime RMBS. Once in Jan/Feb 2020 over Covid. And today.

I’d like to invite all Epsilon Theory Professional subscribers to join me on Wednesday, June 26 at 4pm EST to review the full thesis – the triple systemic risk thesis – and how I’m thinking about trading it.

PIK Financing Narratives

By Ben Hunt | May 24, 2024

I continue to feel like it’s 2007 all over again, and I’m looking forward to talking this Friday about how we prepare for the 2008 corollary.

It’s the Funding, Stupid

By Ben Hunt | May 14, 2024

Here’s the question we need to ask in order to evaluate the systemic risks of a fundamental change in the provision of credit to the US economy, from highly regulated commercial banks to less regulated asset managers:

How do non-bank private credit issuers fund themselves?

Godzilla vs. King Kong

By Ben Hunt | May 7, 2024

What’s happening today is not only a war between commercial banks and asset managers over credit provision to large US companies, it’s also a war between bank asset managers and non-bank asset managers over investment flows.

Lots of people are going to be squashed beneath the feet of these behemoths or crushed by the collateral damage of their combat. Let’s work together so that it’s not any of us.

Looking for an Excuse to Cut

By Ben Hunt | May 2, 2024

The Fed is looking for an excuse to cut, and as soon as they have that excuse, they will.

There are two possible narrative excuses, one immediate and one with a slower fuse …

Private Credit Update

By Ben Hunt | April 26, 2024

My spidey-sense is no longer tingling like crazy about the overall rise in scale and scope of private credit. It’s a profound shift in the core social function of credit provision to the real economy, but I think it moves systemic risk around rather than creating new systemic risk.

The associated transformation of the insurance industry, on the other hand …

Iran’s Attack was a Neutron Bomb in Narrative-World

By Ben Hunt | April 17, 2024

It doesn’t happen often, but every few years there’s a real-world shock that leaves the old narrative structures standing but eliminates all the people who believe strongly in them. These events are like neutron bombs for narrative-world, and that’s how I’d describe Iran’s attack on Israel this weekend.

The Last Hurrah

By Ben Hunt | April 9, 2024

I think everyone in Washington and on Wall Street is in the bag for nominal growth (ie, number-go-up) by any means necessary through November.

Washington is in the bag because their world ends if they don’t win in November. Wall Street is in the bag because it’s their last chance for a big score before a stagflationary vol event of enormous proportion hits the economy regardless of who wins in November.

That which we call QE by any other name would smell as sweet

By Ben Hunt | March 14, 2024

That which we call QE by any other name would smell as sweet.

I think if Shakespeare were reincarnated as a Fintwit luminary, that’s how he’d rewrite the Juliet bit about roses, at least if he were thinking about what’s happening in bank regulation today.

This is the privatization of QE and debt monetization.

Two Quick Narrative Observations

By Ben Hunt | March 7, 2024

I got some more color from Rusty on the shift in our Narrative Monitors this month from hawkish to dovish central bank narratives, and I thought it was well worth forwarding to everyone.

Private Credit Working Group Call 3/1/24

By Ben Hunt | March 6, 2024

Recording of last Friday’s private credit working group call, along with a transcript for those who prefer reading over video.

The main takeaway is that we are increasingly thinking that the expansion in private credit is less of a ‘bubble’ than it is a structural transformation within capital markets.

Why Don’t Real Assets Work Better as an Inflation Hedge?

By Ben Hunt | February 29, 2024

I think the reason real assets like commodities are typically so disappointing in their inflation-hedging reality relative to their inflation-hedging theory is that they have no inherent pricing power. They only have a market story – and a mechanistic one at that – that they are an inflation hedge. It works for a while because enough people tell the story and believe in the story, until it gets trounced by another story, like growth/recession or supply-and-demand.

Is private credit any different?

Real-Time Narrative Shifts

By Ben Hunt | February 22, 2024

Once a truthy-sounding explanation for a market crash is widely publicized, the crash stops. It becomes safe to get back in the water.

That’s true for China today just like it was true for Bitcoin a few weeks ago.

Epsilon Theory University: ETFs with Dave Nadig

By Ben Hunt | February 16, 2024

Exclusively for Professional subscribers, I recently hosted ETF expert Dave Nadig for a wide-ranging discussion on everything you always wanted to know about ETFs (but were afraid to ask).

It’s one of the best things we’ve ever done, and regardless of how extensive your investing experience with ETFs might be, I promise you will learn something new here!

The ‘No Landing’ Narrative

By Ben Hunt | February 8, 2024

We’re starting to pick up the “no landing” macro scenario in the Narrative Machine.

Private Credit Working Group Call 01/26/24

By Ben Hunt | January 30, 2024

Recording of the private credit working group conference call on Jan 26.

Round Two of the Unmooring Rates Trade

By Ben Hunt | January 18, 2024

I think that we’re gearing up for Round Two of the Unmooring Trade.

January Professional Monitors

By Ben Hunt | January 9, 2024

The language FROM central bankers remains hawkish (“slow down on your projected 2024 rate cut schedule”), but the language TO central bankers is not only decidedly dovish but is starting to veer into “we need a Fed put” territory.

From a Promise to a Threat

By Ben Hunt | January 5, 2024

We’ve moved from the promise of cutting rates (mission accomplished on inflation and a soft landing, so now the Fed should cut rates by choice rather than by necessity … well done and take a bow, you geniuses!) to the threat of not cutting rates (if the Fed doesn’t cut rates soon, then it will cause a recession … hurry up and cut, you fools!).

Private Credit Working Group Call 12/15/23

By Ben Hunt | December 20, 2023

Recording of our kick-off call for an ET Professional working group on private credit.

Narrative Monitors

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