Epsilon Theory Professional
Is Evergrande a systemic risk? Is this China’s Lehman moment?
I don’t know. Could be. But unless and until the market loses confidence in China’s response to Evergrande, it’s not a Lehman moment. It can’t be.
Banks have a problem. Deposit growth is too high and loan growth is too low.
It’s all just another signal that real economic growth is struggling, even as inflation becomes more embedded.
For the past several months our Narrative Monitors have been quite bullish on risk assets, despite all of the Fed-related and Delta-related and China-related and inflation-related concerns that have been on my personal radar screen. Rusty’s, too. The fact is, though, the Monitors have been spot-on and I’ve been dead wrong, which is … well, it’s exactly why we’re so excited about this research program!
I learn a lot from Camp Kotok, the 5 day fishing trip up in the wilds of Maine that David Kotok, founder and CIO of Cumberland Advisors, hosts every summer for wealth managers, economists, traders, etc.
Most of what I learn at Camp Kotok has nothing to do with the actual facts being discussed and debated, but on whether topics are being discussed and debated at all.
This month we are adding an entirely new “cuisine” to ET Professional by applying our methods to predicting strength/weakness in the US Dollar (specifically the DXY index). We’re taking the techniques and tools and ingredients that we’ve been using to understand central bank narrative archetypes, and applying them to an analysis of dollar index price movements instead of equity index price movements.
A replay of the July 2021 Epsilon Theory webinar covering our latest narrative research and the release of our new ET Pro Monitors: the Consolidated Directional Equity Dashboard and the Consolidated Equity Trend Dashboard.
Will the politically-motivated slamming of Chinese ADRs pass? Sure. But that’s small comfort if you’re getting crushed in the meantime. Here’s what I’m looking at to see if this gets worse (ie, systemic) before it gets better.
Today we’re releasing the first research findings from the Narrative Machine 3.0, a process for measuring the patterns of individual linguistic components of narrative archetypes that comprise narrative structure – what we call narrative DNA. Yes, we think we’ve unlocked the genetic code of market-driving narratives.
Have I changed my views about the reality of inflation? Nope.
But will that impact market world? Not until it shows up in the narrative, and I have no idea when that will be.
Legacy Monitor Archive (Pre-January 2020)