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The Missing Wall of Worry

By Ben Hunt | April 14, 2021

The hallmark of Information Theory is this: information is neither true nor false; it is only more or less powerful, with power defined by how much it changes your mind from what you believed before.

For stocks to go up on good news, there must be a negative story of woe and doubt that the good news “overcomes”.

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Drawing the Narrative Battle Lines

By Ben Hunt | April 5, 2021

The internal narrative consistency – cohesion in Narrative Machine-speak – changed dramatically in both our Central Bank and Security Analysis Methods monitors this month. This is the necessary next step in the creation of market common knowledge and (I suspect) a longer-term investable trade/direction for markets.

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Tiger King

By Ben Hunt | March 29, 2021

There is a tide that is flowing out today, and it’s revealing Lex Greensill and Bill Hwang just as surely as it revealed Jeff Skilling in 2001 and Bernie Madoff in 2008. The big trade around Skilling and Madoff wasn’t directly on their specific scams and frauds, but on what their specific scams and frauds showed us about systemic rot in the financial system.

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The Darnold Dilemma

By Ben Hunt | March 23, 2021

I think Jay Powell and the Fed have locked themselves into a two to three year commitment to treating inflationary pressures as “transitory”, just like an NFL GM and organization lock themselves into supporting a “franchise” quarterback they draft in the first round.

And that’s pretty exciting for a discretionary alpha-oriented investor like me.

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Spidey-Sense

By Ben Hunt | March 15, 2021

I think we are hitting an inflection point in a thirty-year globalization trade and a forty-year deflation trade at the same time that the Lex Greensills and Masayoshi Sons of the world have had 13 years to build their scams to the breaking point.

The game is afoot!

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A Madoff Moment?

By Ben Hunt | March 8, 2021

Is the collapse of Greensill Capital a Madoff Moment for the unicorn market? Honestly, if you had asked me a few weeks ago, I would have told you that a Madoff Moment was impossible in our narrative-consumed, speak-no-evil market world of 2021. Now I’m not sure.

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Subprime is Contained

By Ben Hunt | March 2, 2021

If you think that market-world fundamentally changed over the past week or two, you are absolutely correct. The market narrative has shifted significantly, as every macro event will now be judged against a backdrop of “does that increase or decrease the chances of market-negative action by the Fed” as opposed to the decade-long dominant backdrop of “does that increase or decrease the chances of market-supportive action by the Fed”.

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The Opposite of 2008

By Ben Hunt | February 27, 2021

I am increasingly thinking that both a Covid-recovery world AND a perma-Covid world are inflationary worlds, the former from a demand shock and the latter from a supply shock to the biggest and most important single asset market in the world – the US housing market.

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We’re All Nigeria Now

By Ben Hunt | February 23, 2021

For the past 20+ years, the real-world model for economists to understand unexpected deflation was Japan.

If the risk today is unexpected inflation, what’s the real-world model for that?

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Narrative Monitors

Legacy Monitor Archive (Pre-January 2020)