Here We Go Again

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Every morning, we run the Narrative Machine on the past 24 hours worth of financial media to find the most on-narrative (i.e. interconnected and central) stories in financial media. It’s not a list of best articles or articles we think are most interesting … often far from it.

But for whatever reason these are articles that are representative of some sort of chord that has been struck in Narrative-world.


Trump says he’s optimistic about trade deal with Chinese President Xi, in interview with Tucker Carlson  [Fox News]

“You just recently hours ago met with the Chinese president, Xi Jinping,” Carlson said. “Are you closer, do you think after that meeting, to a trade deal?”

“I think so,” Trump replied. “We had a very good meeting. He wants to make a deal. I want to make a deal. Very big deal, probably, I guess you’d say the largest deal ever made of any kind, not only trade.”

One of the weirdest things about Donald Trump is how he forcefully pulls you close to his body when he shakes your hand. Watch for it whenever he has one of these formal handshaking events. He doesn’t extend his hand – or rather, he does for a nanosecond to lure you in – and then he yanks you really hard into his belly. It’s hilariously weird. Like the extra-long ties that he wears and the inverted-pyramid hands when he sits, I’m sure he read this in a “body language secrets” book long ago and has now seared these behaviors into his “deal-making” soul.

And yes, there’s an Epsilon Theory note on this.

In the same way that I can’t help myself but eat that last piece of fried chicken, no matter how long it’s been sitting out on the kitchen counter (and I’m talking DAYS here, people), Donald Trump can’t help himself but say things like this:

“The largest deal ever made of any kind”.

It’s hilariously weird.

And so here we go again … it’s the game of Chicken, where everyone thinks they can assign odds to a multiple-equilibrium game where odds are not just difficult to assign, but IMPOSSIBLE to assign. And whenever Trump says or tweets anything, no matter if it’s said or tweeted as mindlessly as any other behavioral compulsion, we will ascribe information to it. Or better yet, we will all believe that this is what we all believe. It’s Common Knowledge creation in action. By a natural, if compulsive, Missionary.

But there is a big difference today in the backdrop for Trump’s game of trade (and national security Chicken with China. When I originally wrote this note, it was December 18 and Jay Powell was still sailing the monetary policy barge up the tightening river. Now Powell is driving the Trump Train, or at least some version of it.

And there’s no way on god’s green earth Powell can reverse course AGAIN.

We’re on a one-way street with monetary policy now, at least through the 2020 election. So if we DO end up with a bona fide deal with China … if that’s the outcome of this game of Chicken … if the market rips and commodity prices soar and all is good with the world … even if all that happens, the Fed STILL isn’t going to tighten.

And that’s when the melt-up happens.


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Rafa Mayer
Rafa Mayer
1 year ago

Yum. Ain’t nothing bette than 3 day old friend chicken. That’s what catsup was invented for!

Fed may not reverse course…but after the job reports…it may slow that train way down…and the market not gonna like that. Today was a risk weird day. Treasuries way off, gold down and equities meh. Fascinating,

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