Today we introduce the Epsilon Theory Election Index, a service intended to help you spot when you are being told how to think about the upcoming election, and to help you make up your own damn mind about it.
In this edition we introduce the key terms of our analysis and show you how the early days of the Democratic primary season are playing out.
In short? Whatever polls are saying, the narrative from the media appears to be that progressive is in, and Biden ain’t it.
Wage stagnation in 2016 was actually much worse than you were told. Did this make a difference in the Midwestern states that swung the election, in that actual labor conditions were worse than everyone thought they were? I think yes.
Wage growth in 2018 was actually much better than you were told. Did this make a difference in the current Fed/Wall Street/White House narrative that inflation is dead and the easy money punchbowl can be maintained without consequence? I think yes.
For a few days, we’re making this ET Professional note available to everyone to review. We think the ET Pro service is something that every portfolio allocation, wealth management and active investment team can find useful, particularly for risk management.
The student loan crisis is a Big Deal. And it is only a part of a Bigger Deal: the Myth of College.
This issue will be front-and-center in the upcoming elections. We will all be handed our very own ‘Yay, College’ signs to raise high. More often than not, we will be asked to raise them in service of market-distorting policies which will make our problems worse.
You don’t hate education, innovation, progress, equality and merit-based reward systems…do you?
Time to add a fourth shift in the Zeitgeist: capitalist productivity, now 200+ years old, is becoming capitalist financialization.
Wall Street gets something to sell, management gets stock-based comp, the Fed gets a (very) grateful Wall Street, and the White House gets re-election.
What do YOU get out of financialization? You get to hold up a card that says “Yay, capitalism!”.
Most Recent Notes
“The world is given to me only once, not one existing and one perceived.” – Erwin Schrödinger “Quantum theory provides us with a striking illustration of the fact that we can fully understand a connection though we can only speak of it in images and parables.” – Werner Heisenberg “What we observe is not nature itself, but …
A review of Narrative formation immediately after the July 31st release of Q2 US GDP data. epsilon-theory-the-framing-of-macro-data-july-31-2013.pdf (232Kb)
“Music, this complex and mysterious act, precise as algebra and vague as a dream, this art made out of mathematics and air, is simply the result of the strange properties of a little membrane. If that membrane did not exist, sound would not exist either, since in itself it is merely vibration. Would we be …
“Shape clay into a vessel; It is the space within that makes it useful. Cut doors and windows for a room; It is the holes which make it useful. Therefore benefit comes from what is there; Usefulness from what is not there. ” – Lao Tzu “The limits of my language means the limits of my …
“But Achilles, weeping, quickly slipping away from his companions, sat on the shore of the gray salt sea, and looked out to the wine-dark sea.” – Homer, “The Iliad” The story of the Tower of Babel in the Book of Genesis, from whence we get the word “babble”, has always struck me as one of the …
“You say that we go round the sun. If we went round the moon it would not make a pennyworth of difference to me or to my work.” – Sherlock Holmes (from “A Study in Scarlet” by Arthur Conan Doyle) “It doesn’t matter if the cat is black or white, as long as it catches mice.” …
Gold is money. Everything else is credit. – John Pierpont Morgan The relationships of asset performance to growth and inflation are reliable – indeed, timeless and universal – and knowable, rooted in the durations and sources of variability of the assets’ cash flows. – Bob Prince, Co-Chief Investment Officer, Bridgewater Associates Like every middle-aged white guy I …
A review of current market informational structure one week post the June 19th FOMC announcement. epsilon-theory-matrix-reloaded-seeing-markets-as-informational-structures-june-27-2013.pdf (295KB)
We are all impaled on the crook of conditioning. – James Dean (1931 – 1955) This note is a sequel to my letter from two weeks ago, What We’ve Got Here Is … Failure to Communicate, a sequel made necessary by the market fall-out from the FOMC announcement on Wednesday. The Fed’s communications to the market are …
A review of Narrative formation efforts on June 21st to support the market. epsilon-theory-the-narrative-battle-is-joined-june-21-2013.pdf (227KB)
An initial examination of the informational inflection point generated by the June 19th FOMC announcement. epsilon-theory-whats-the-opposite-of-green-shoots-june-20-2013.pdf (235KB)
A review of Narrative formation immediately after the June 19th FOMC announcement. PDF Download (Paid Membership Required): http://www.epsilontheory.com/download/15677/
There are unwritten rules for almost all social phenomena, from investing to writing epic poetry. Not that these weekly notes aspire to Homeric levels (although they do get pretty lengthy), but Epsilon Theory does follow one unwritten rule taken from the Iliad, the Aeneid, etc. in that I began this story in media res– in the middle of …
From the classic Paul Newman movie, Cool Hand Luke, as the Captain administers Luke’s punishment in the prison yard for yet another escape attempt: Captain: You gonna get used to wearing those chains after a while, Luke. Don’t you never stop listening to them clinking, ‘cause they gonna remind you what I been saying for your …
Our times require an investment and risk management perspective that is fluent in econometrics but is equally grounded in game theory, history, and behavioral analysis. Epsilon Theory is my attempt to lay the foundation for such a perspective. The name comes from the fundamental regression equation of modern portfolio management: y = α + β+ …
An initial examination of the informational inflection point generated by the Nov. 18th Boehner/Reid press conference. epsilon-theory-friday-was-an-important-day-november-18-2012.pdf (247 KB)
Early research on the relationship between informational surfaces and structural market change. epsilon-theory-dont-mess-with-mister-in-between.pdf (244 KB)
An analysis of systematic error in BLS data and its role in the Narrative regarding US labor conditions. epsilon-theory-jack-welch-was-right-october-29-2012.pdf (219 KB)
Early notes on investment as an exercise in decision-making under uncertainty. epsilon-theory-donald-rumsfeld-and-risk-management-october-7-2012.pdf (197 KB)
Growing political fragmentation in Europe and its structural consequences for markets. epsilon-theory-hello-darkness-my-old-friend-september-29-2012.pdf (123 KB)