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Another Brick in the Wall

The Fed completes its transformation of the credit market into a political utility, the EU tops the US in economic growth prospects for the first time in living memory, and Americans are losing faith in “America”.

The PPP Narrative for Asset Managers

A narrative backlash is developing against RIAs and other asset managers that took PPP money.

Fair or not, this narrative is pure red meat for anti-Wall Street sentiment, particularly in an election season and particularly as the stock market goes up even as the real economy suffers.

Children of Men

Can a free world survive an endemic COVID-19, where there’s no vaccine but a chronic global affliction?

I used to think yes. Now I think no.

Everything You Always Wanted to Know About CDS … But Were Afraid to Ask

I know it’s forbidden to say this, but I like Woody Allen movies. If you’ve never seen “Everything You Always Wanted to Know About Sex* … But Were Afraid to Ask”, it’s worth your time just for the Gene Wilder scenes. And yes, credit default swaps are the sheep in this story.

The Pent-Up Demand Narrative

The dominant COVID-19 narrative today is a “short and deep” economic impact, with a corollary narrative of “pent-up demand”. These are market-positive narratives.

Here’s how we think those narratives could reverse, and here’s what investors should watch for to see if that reversal happens.

The Bear Stearns Bounce

In 2008, the market came roaring back after Bear Stearns was sold for parts to Jamie Dimon. Why? Because narrative. Because with Bear’s elimination, “systemic risk was off the table.”

That’s the question you need to ask yourself today. Is systemic risk off the table?

Pandemic Playbook Notes – 4/7

We provide an update on our thinking about narrative structure as of April 7, 2020. In short, there is an emerging “we flattened the curve” narrative. We think it has some meaningful implications.

But Barry Sternlicht Says …

I honestly have no idea what the world is going to look like in six months! I’m sure I’m not alone. And if you honestly have no idea what the world is going to look like in six months, are you going to live up to your commercial obligations (like a lease) over the next six months as if the world is still spinning as always on its axis?

Pandemic Playbook Notes – 3/23

We update our thinking based on the framework we published on 3/17, especially in two areas with active changes in narrative structure: fiscal and monetary policy responses.