Epsilon Theory Professional
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.
Coming into June, the dominant market narrative around central banks is a constructive what-me-worry attitude about inflation and the Fed’s ability to deal with it.
Personally, I think this is nonsense. But that’s the core strength of systematic narrative analysis … who cares what I think!
We have been working on developing a platform for expanding our narrative monitors for almost a year now.
We are really excited to show it to you – and to work with you to develop something that will be USEFUL and ACTIONABLE.
The head-on narrative collision between ESG and crypto, which has been building for months, finally happened.
It’s the biggest threat that Wall Street’s Bitcoin! ™ has ever faced.
We believe that looking at momentum and trend-following in narrative-space through the lenses of Bullish, Bearish, Expensive, and Cheap gives a much sharper and more predictive view of this behavioral phenomenon than looking at it through the lenses of price-space alone.
New from the Narrative Machine, coming to ET Pro this summer!
The investment question you hear constantly today is whether or not supply-driven inflation will eventually make its way into wage and price inflation. This is the wrong question … wage and price inflation are already here.
The right question is how bad this wage and price inflation cycle will be.
The growing narrative resignation to a future hawkish Fed and a future tough road for high-flying, high-multiple stocks is a martingale … it makes market exuberance impossible, but also keeps the market from getting totally spooked.
I’m building a target list of individual companies where I want to do further research in developing a dedicated short or long-vol portfolio with highly asymmetric risk/reward qualities. Here’s what I’ve found so far.
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”.