Epsilon Theory Professional
More than ever I can hear the approaching hoofbeats of the Fourth Horseman – a regime change in inflation expectations. The hooves are still distant, and you’ll have more bites at the portfolio-preparation apple as global growth concerns in China and Europe persist. But prepare you should.
Soros’s Reflexivity is another name for the Common Knowledge Game, just focused on price action narratives. We see the development of just such a price action narrative today in macro world, one that surely makes Trader George’s ears prick up.
In the big picture, we’re still in the middle of a technically uncertain game of Chicken between the U.S. and China. But Powell’s VERY public about-face on Friday, coupled with the VERY strong jobs report, creates a VERY different investment backdrop for the US-China trade impasse.
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.
Ben’s weekly summary of the week that was in financial markets for the week ended December 7, 2018.
The market is not a clockwork machine, even though we all think it is. No, the market is a bonfire.
Some of our terminology, exhibits and analyses may not be immediately intuitive. We’ve assembled a short guide to help you familiarize yourself with the Epsilon Theory frameworks.
Legacy Monitor Archive (Pre-January 2020)