Epsilon Theory Professional
In The Flow
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Where are we in March, 2019? We’re seeing a resurgence in the narrative and policies associated with a good old fashioned beggar-thy-neighbor currency competition.
Also, here’s our summary of where we think we are in each of the five evergreen macro issues of markets – inflation, central banks, trade and tariffs, US fiscal policy, and the credit cycle.
It’s not impossible for market volatility to spike massively through some deflationary shock to the financial system like a China-driven credit crisis or an Italy-driven euro crisis. What’s impossible is TO GET PAID for taking out an insurance policy against the last war.
Whether it’s ITT and Hal Geneen, or Teledyne and Henry Singleton, or GE and Jeff Immelt, or Berkshire Hathaway and Warren Buffett … at some point these companies get too big to continue growing through acquisition. There’s no more step-function P/E growth to be had on the E side of the equation. So they ALWAYS start focusing on the P side – the multiple – which is entirely a creature of narrative.
Narrative Monitors
ET Pro Inflation Monitor
We track the prevalence and attention of inflation topics in financial and broadly circulated news sources, including their attachment to narratives around financial markets.
Updated through April 30, 2019. Updated monthly.
ET Central Bank Omnipotence Monitor
We track the prevalence and attention of credibility attached by a wide variety of news sources to central banks and their influence on participants in financial markets.
Updated through April 30, 2019. Updated monthly.
ET Trade and Tariffs Monitor
We track the attention paid to and sentiment of a various trade and tariff-related topics in a range of news sources, especially with respect to their attachment to financial market narratives.
Updated through April 30, 2019. Updated monthly.
ET US Fiscal Policy Monitor
We track the strength and consistency of narratives about US fiscal policy, including budgets, tax policy and debt.
Updated through April 30, 2019. Updated monthly.
ET Credit Cycle Monitor
We track the strength of narratives about the credit cycle in general, plus lending, liquidity and other trends in credit markets.
Updated through April 30, 2019. Updated monthly.
In Focus
ET In Focus reports are single-issue topical analyses. They cover investment and portfolio construction topics, issues relating to the businesses of investment management and wealth management, and narrow analyses of the narrative structure and trends on specific issues, companies, sectors, countries or financial markets.
In this ET Pro In Focus note, we explore the narrative structure of ESG and SRI investing. Our question: is it finally part of the Zeitgeist, or a trend that will continue to come and go?
For fund managers and asset management executives, the fundraising question is often the most important and most inscrutable. Understanding how narratives and career risk factors interact with decision-making processes is critically important.
We introduce a new narrative measure and then put major global equity markets under the narrative microscope in Q1 2019.