Essence of Decision

Here’s the thing. The Fed is now revealing its one True Love — its own reputation and its own political standing — and that’s going to be a bombshell revelation to investors who think that the Fed loves them.

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Crisis Actors and a Reichstag Fire

Man in Bar: Tomorrow, I’m gonna be a hero. Gideon: I’m sorry?  Man in Bar: You may just be a patsy, but you’re an important one. In fact, I don’t think I’ve ever met a bigger crisis actor than you before. … This is for our country! [Man in Bar shoots Gideon in neck, killing …

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When Narratives Go Bad

How many things served us yesterday as articles of faith, which today are fables for us? – Michel de Montaigne, The Complete Essays (1580) That same night, I wrote my first short story. It took me thirty minutes. It was a dark little tale about a man who found a magic cup and learned that …

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Waiting for Humpty Dumpty

Humpty Dumpty sat on a wall, Humpty Dumpty had a great fall. All the king’s horses and all the king’s men Couldn’t put Humpty together again. Brexit is a Bear Stearns moment, not a Lehman moment. That’s not to diminish what’s happening (markets felt like death in March, 2008), but this isn’t the event to …

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Cat’s Cradle

Negative rates are ice-nine. If you don’t know what ice-nine is, read the book. Spoiler alert: the world ends. TIAA will end the voluntary expense waiver on the CREF Money Market Account by April 14, 2017. This decision was reached after ongoing discussions with the TIAA and CREF boards, as well as our state insurance …

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Who’s Being Naïve, Kay?

The Mysterious Stranger is a liar, to be sure, but he’s a proper villain, as the Brits would say, and he’s quite upfront about his goals and his use of clever words to accomplish those goals.

Your goal? Survive the encounter.

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Optical Illusion / Optical Truth

Portion of original dot map by Dr. John Snow, the founding father of epidemiology, showing the clusters of cholera cases in the London epidemic of 1854. The visual representation of Snow’s data analysis convinced local authorities to shut down the contaminated public well at ground zero of the cholera outbreak, although it would be another …

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The Placebo Effect

BOTOX® is the only FDA-approved, preventive treatment that is injected by a doctor every 12 weeks for adults with Chronic Migraine (15 or more headache days a month, each lasting 4 hours or more). BOTOX® prevents up to 9 headache days a month (vs up to 7 for placebo). BOTOX® therapy is not approved for …

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My Passion is Puppetry

Campaign Company Launch Date “Flo” Progressive Insurance 2008 “Rhetorical Question” “Happier Than A … ” “Did You Know?” “It’s What You Do” GEICO 2009 2012 2013 2014 “Mayhem” Allstate 2010 “University of Farmers” Farmers Insurance 2010 “Magic Jingle” State Farm 2011 2011 “That’s Not How It Works” Esurance 2014 “Chicken Parm You Taste So Good” …

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Rewardless Risk

Faramir: Then farewell! But if I should return, think better of me. Denethor: That depends on the manner of your return. – J.R.R. Tolkien “The Lord of the Rings” (1954) I’m going full-nerd with the “Lord of the Rings” introduction to today’s Epsilon Theory note, but I think this scene — where Denethor, the mad …

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You Can Either Surf, or You Can Fight

Kilgore: Smell that? You smell that? Lance: What? Kilgore: Napalm, son.  Nothing else in the world smells like that. – Apocalypse Now (1979) Hello, hello, hello, how low? [x3]– Nirvana, Smells Like Teen Spirit (1991) Outside the bus the smell of sulfur hit Bond with sickening force.  It was a horrible smell, from somewhere down in the stomach of the …

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Storm Warning

Unfortunately for mariners, the total amount of wave energy in a storm does not rise linearly with wind speed, but to its fourth power. The seas generated by a forty-knot wind aren’t twice as violent as those from a twenty-knot wind, they are seventeen times as violent. A ship’s crew watching the anemometer climb even …

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“Suddenly, Last Summer”

A quick Epsilon Theory email and a quick announcement. Announcement first. I’ll be giving a 1-hour webcast on Risk Premia strategies next Tuesday, August 4th, along with Salient President Jeremy Radcliffe and Salient Portfolio Manager Rob Croce, who knows more about the guts of these strategies than anyone should. The webcast qualifies for CE credit …

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The New TVA

War is too important to be left to the generals.– Georges Clemenceau (1841 -1929) Competition has been shown to be useful up to a certain point and no further, but cooperation, which is the thing we must strive for today, begins where competition leaves off. … If we call the method regulation, people will hold …

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Two Growth Announcements and One Not So Much

I’m with you in Rockland where we are great writers on the same dreadful typewriter. – Allen Ginsberg, “Howl” (1956)  Give me a long enough lever and a fulcrum on which to place it, and I will move the world. – Archimedes (287 – 212 BC)  Play-offs?!? Don’t talk about…Play-offs?!? You kidding me? Play-offs?!? – …

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Why Take a Chance?

Vinny Forlano: He won’t talk. Stone is a good kid. Stand-up guy, just like his old man. That’s the way I see it. Vincent Borelli: I agree. He’s solid. An effin’ Marine. Americo Capelli: He’s okay. He always was. Remo, what do you think? Remo Gaggi: Look… why take a chance? At least, that’s the …

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7 Quick Points on Europe

#1) Here are the most relevant recent notes for an Epsilon Theory perspective on the underlying political and market risks in Europe: “The Red King” (July 14, 2014) and “Now There’s Something You Don’t See Every Day, Chauncey” (Dec. 16, 2014). #2) Markets reacted positively to last Thursday’s announcement because Draghi doubled the amount of QE that he …

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Catch – 22

Four times during the first six days they were assembled and briefed and then sent back. Once, they took off and were flying in formation when the control tower summoned them down. The more it rained, the worse they suffered. The worse they suffered, the more they prayed that it would continue raining. All through …

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We Now Return to Our Regularly Scheduled Programming

Hilsenrath Analysis: Friday’s Jobs Report Assures Global Central Banks Going in Two Directions ― Wall Street Journal, December 5th, 9:59a ET Earlier today I tweeted that “I should write a note on Draghi today, but after 2.5 yrs of reviewing the same song and dance I’d rather put out my eye with a rusty spoon.” I feel the …

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Hey Spike

The strong do what they can, while the weak suffer what they must. — Thucydides, “The History of the Peloponnesian War” (395 BC) Global growth is really bad! Hooray! That was the verdict of US markets yesterday, as the Fed minutes “revealed” (to use the breathless phrasing of mainstream financial media) a “growing concern” with …

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