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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!

Wage Inflation Is Already Here

By Ben Hunt | May 11, 2021

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 Martingale Market

By Ben Hunt | May 4, 2021

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.

Building a Short Book

By Ben Hunt | April 22, 2021

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 Missing Wall of Worry

By Ben Hunt | April 14, 2021

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”.

Drawing the Narrative Battle Lines

By Ben Hunt | April 5, 2021

The internal narrative consistency – cohesion in Narrative Machine-speak – changed dramatically in both our Central Bank and Security Analysis Methods monitors this month. This is the necessary next step in the creation of market Common Knowledge and (I suspect) a longer-term investable trade/direction for markets.

Tiger King

By Ben Hunt | March 29, 2021

There is a tide that is flowing out today, and it’s revealing Lex Greensill and Bill Hwang just as surely as it revealed Jeff Skilling in 2001 and Bernie Madoff in 2008. The big trade around Skilling and Madoff wasn’t directly on their specific scams and frauds, but on what their specific scams and frauds showed us about systemic rot in the financial system.

The Darnold Dilemma

By Ben Hunt | March 23, 2021

I think Jay Powell and the Fed have locked themselves into a two to three year commitment to treating inflationary pressures as “transitory”, just like an NFL GM and organization lock themselves into supporting a “franchise” quarterback they draft in the first round.

And that’s pretty exciting for a discretionary alpha-oriented investor like me.

Spidey-Sense

By Ben Hunt | March 15, 2021

I think we are hitting an inflection point in a thirty-year globalization trade and a forty-year deflation trade at the same time that the Lex Greensills and Masayoshi Sons of the world have had 13 years to build their scams to the breaking point.

The game is afoot!

A Madoff Moment?

By Ben Hunt | March 8, 2021

Is the collapse of Greensill Capital a Madoff Moment for the unicorn market? Honestly, if you had asked me a few weeks ago, I would have told you that a Madoff Moment was impossible in our narrative-consumed, speak-no-evil market world of 2021. Now I’m not sure.

Subprime is Contained

By Ben Hunt | March 2, 2021

If you think that market-world fundamentally changed over the past week or two, you are absolutely correct. The market narrative has shifted significantly, as every macro event will now be judged against a backdrop of “does that increase or decrease the chances of market-negative action by the Fed” as opposed to the decade-long dominant backdrop of “does that increase or decrease the chances of market-supportive action by the Fed”.

The Opposite of 2008

By Ben Hunt | February 27, 2021

I am increasingly thinking that both a Covid-recovery world AND a perma-Covid world are inflationary worlds, the former from a demand shock and the latter from a supply shock to the biggest and most important single asset market in the world – the US housing market.

We’re All Nigeria Now

By Ben Hunt | February 23, 2021

For the past 20+ years, the real-world model for economists to understand unexpected deflation was Japan.

If the risk today is unexpected inflation, what’s the real-world model for that?

Barking Dogs and Super Bowl Commercials

By Ben Hunt | February 5, 2021

No one thinks their Super Bowl commercial is a dud going into the game, but only one or two will come out as the commercial that everyone knows that everyone knows was really special and witty and effective.

It’s the same with Wall Street narratives.

Narrative Monitors

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