Epsilon Theory Professional
In Summary
For the first time in weeks, the recessionary fearfest narrative is now declining, not growing. And that means Treasuries will have a really hard time working, no matter what happens in equities.
All of the heartfelt prayers to the Fed gods went unanswered last week. Or rather, the answer was “No.” And without a Fed backstop to US-China negotiations (where the narrative continues to worsen), we are immersed in technical uncertainty.
The Street is beating the recession narrative drums, culminating in Friday’s sharp sell-off in US markets. But there’s a chance for Powell to save the day, by shifting the Fed narrative to provide a market backstop to US-China trade disputes.
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In Focus
ET In Focus reports are narrower analyses of the narrative structure and trends on specific issues, companies, sectors, countries or financial markets.
US Banks have a common narrative structure – two competing topics of vastly different sentiment, with one dominating market attention at any given time. Worthy of some thought going into bank earnings week.
We examine how Apple found both of the ways to lose on narrative in less than two months’ time, and outline how that might change the playbook for the near-, medium- and long-term for different investor types.
With increasing attention to trade and tariff narratives and falling attention to inflation and growth narratives in the U.S., we believe that investors may benefit from focus on sectors on which the latter narratives have weighed heavily in 2018. Of particular interest? Brand-oriented consumer stocks, especially many staples that have been left for dead.
In The News
ET In the News delivers ET Professional subscribers weekly summaries of the news articles most critical to the narrative surrounding companies reporting on earnings, major economic and central bank reports, etc.
Another big earnings week across banks, insurance, energy services, staples, transports and other industrials.
A busier than usual week, as first quarter earnings season kicks off for banks and airlines. A few other notables in tech and energy, as well.
Three reporting companies this week. The most-connected articles include an odd weed obsession among media and analysts, and a…rather unfortunate Delta experience.