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The Inflation Narrative’s Third Act

By Ben Hunt | February 8, 2022

The structure of a market Narrative isn’t as settled or as constructed as a Hollywood script, but it’s not too far off, either.

We’re in Act Three of the inflation narrative.

A Shortseller’s Perspective

By Ben Hunt | January 24, 2022

I am a shortseller by nature and (former) profession. Like my favorite comic book character, Karnak the Inhuman, my superpower is to see the flaw in all things, which doesn’t exactly make me much fun at cocktail parties but is a (sometimes) valuable skill for a portfolio manager.

So here’s my perspective on what’s happening … one big place where my spidey-sense is tingling and one big place where it’s not.

Bye Bye, Punch Bowl

By Ben Hunt | January 5, 2022

You know who understands how inflation absolutely wrecks the popular support of any government? The Fed.

You know who doesn’t get it? You know who doesn’t get it AT ALL? The White House.

Inflation Is

By Ben Hunt | December 16, 2021

Today Jay Powell had a press conference, where he had a very simple and well-delivered message: Inflation Is.

Does this mean that we’re off to the races with risk assets? No. Not by a long shot. But for one day at least, Jay Powell and the Fed got ahead of the Common Knowledge game.

Corporate Margins Are Stronger Than You Think

By Ben Hunt | December 1, 2021

Inflation as Common Knowledge gives pricing power to consumer-facing companies.

Industrially Necessary Inflation

By Ben Hunt | November 23, 2021

Is The Narrative Machine of Wall Street powerful enough to create a perceived reality of “transitory” inflation even if that transitory-ness is always 12 months away from resolving itself? Even if the real-world endures high levels of realized inflation year after year after year?

Lions and Tigers and Bears … Oh My!

By Ben Hunt | November 4, 2021

If I had to describe our Narrative models of market behavior as simply as possible, it would go something like this: markets climb a narrative wall of worry and fall down a narrative slope of hope.

Except for central bank narratives.

The Robbing Hoods of Robinhood

By Ben Hunt | October 27, 2021

Robinhood has been managed to generate a payday for insiders.

Then again, that’s how our entire world is being managed today. For a payday to insiders.

The Common Knowledge OF Central Banks

By Ben Hunt | October 20, 2021

This note isn’t about our Common Knowledge of central banks. It’s about the common knowledge within the crowd of people who are engaged in the profession of central banking. It’s about the common knowledge OF central banks. It’s about the one thing that everyone in central banking knows that everyone in central banking knows: you can’t taper and tighten at the same time.

Big Change in the Narrative Weather

By Ben Hunt | October 4, 2021

Our directional equity Narrative signals have switched from bullish to bearish, and our equity trend narrative signals now point to a 0% allocation to directional trend-following strategies, their lowest possible state.

The rest, as they say, is commentary.

The Unbearable Lightness of Corporate Margins

By Ben Hunt | September 27, 2021

Labor inefficiencies are so bad for FedEx that their return on invested capital (and FedEx has a LOT of capex) is, like, maayyybe greater than their weighted average cost of capital during the most insanely cheap financing period in the history of man. I mean, FedEx margins are SO BAD that this was actually a detailed point of conversation.

This is insane.

Why Take A Chance?

By Ben Hunt | September 20, 2021

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.

Pushing on a String

By Ben Hunt | September 13, 2021

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.

Thanks I Hate It

By Ben Hunt | September 2, 2021

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!

Barking Dogs and Not-Barking Dogs

By Ben Hunt | August 23, 2021

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.

US Dollar Exposure Dashboard (NEW)

By Ben Hunt | August 10, 2021

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.

Narrative Machine Webinar Replay

By Ben Hunt | July 29, 2021

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.

The Third Horseman

By Ben Hunt | July 27, 2021

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.

The Narrative Machine v3.0

By Ben Hunt | July 6, 2021

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.

The Fed Won the Narrative Battle in May

By Ben Hunt | June 11, 2021

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.

The Shift to Dovish

By Ben Hunt | June 4, 2021

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!

Radiant: A Sneak Peek

By Rusty Guinn | June 1, 2021

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.

Bitcoin! ™ Can’t Unring the ESG Bell

By Ben Hunt | May 25, 2021

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.

Bullish, Bearish, Expensive, Cheap

By Ben Hunt | May 19, 2021

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!

Narrative Monitors

November 2023

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December 2022

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