The Lystrosaurus

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An illustration of a particularly dapper-looking Lystrosaurus georgi specimen

One of the foundational ideas of the Zeitgeist is that measuring linguistic similarity is a powerful way to observe what we are being told matters by those who publish most of the words we read in a given day.

It should be intuitive that the source of that similarity is sometimes reducible to topics. If a single event is dominating headlines, then language that describes that event is going to cause measures of similarity to rise. This is useful, but not especially interesting. You don’t need us to tell you when a topic is dominating headlines.

That is why when we write about narrative in terms of our measures of linguistic similarity we tend to either control for topic (i.e. we look at measures within topical sub-sets of news) or focus on the evolution of topic behaviors over long periods of time. We think these are powerful ways to observe when a story and its associated vocabulary have become common knowledge.

Sometimes, however, concentrating on a single topic can make it easy to miss the connections of a narrative across multiple disciplines. In other words, there is practically no information (by which we mean something that would make you change your mind about something) in the observation that people are talking about the same things. There is some information in the observation that they are using the same language patterns to talk about it, since that implies some measure of other-regarding behavior. But there is a lot of information in the observation that multiple otherwise unconnected disciplines or lenses for looking at the world are applying the same language to those different angles of a connected problem.

You can think of it as the linguistic equivalent of the discovery of the fossils of a handsome specimen like that lystrosaurus pictured above on the Indian subcontinent, China, Africa and Antarctica, a discovery that permitted us to draw new connections between an entire range of scientific and cultural topics that went far beyond a pig-like creature from the early Triassic. Like, say, plate tectonics, geology, evolution, and cross-cultural similarities in mythologies and legends.

But just in case the analogy feels like I’ve been playing a bit too much quarantine science teacher (guilty as charged), let me tell you in more practical terms what I’m talking about.


Yesterday I got three emails.

The first was from a long-time friend, a specialist in technology and VC law, who sent me a link to this piece from the Wall Street Journal.

If Inflation Is Coming, the Market Isn’t Ready

The second was an email from a CIO at a Top-5 university endowment who circulates a daily list of what he is reading to friends and colleagues. This one is behind a research paywall, but you get the topical gist from the headline even if you don’t subscribe.

The State Of The Stock/Bond Relationship

The third was an article that topped the Zeitgeist last week, but didn’t make the cut to produce a full-blown article from us (at the time, anyway).

Why It’s Time to Rethink Bonds

If you don’t subscribe to the WSJ, all three of those links may be behind a paywall for you, but it doesn’t matter. I don’t think any of the articles is particularly informative, or at least I don’t think that any of them provides any new or novel insight. What is fascinating to me is that within a week, a professional market research shop, a personal finance writer and a financial markets journalist all took on the question of “the role of bonds.” What is fascinating to me is that within that same week, a bright private markets specialist (but public markets layperson), one of the ten or so most important asset owner CIOs in the US and an NLP algorithm all told me that “the role of bonds” is something that was on their mind and the minds of others.

We aren’t predicting. We are observing.

I can’t tell you how to gaze through the fog of a deflationary shock to predict what the Fed’s unprecedented intervention will mean in the medium- and long-run for prices. I can’t tell you if and when the macro regime will become one in which bonds cease to diversify stock exposures like they have for the past 35+ years. I can’t tell you whether financial advisors and individuals change the way they think about the role of the bonds in their portfolios.

But I can observe that enough people are thinking about it – and enough people know that other people are thinking about it – that common knowledge is forming around the question. If I can be permitted one pretty uncontroversial prediction, it is that the narrative, NOT the reality of inflation or correlation matrices in the real world, will be the force that causes investors to change their behaviors and portfolios.

We’ve been ringing the bell for asset owners and advisers to figure out how our industrialized investment ecosystem and crystallized processes may need to be adjusted to handle change in the narratives of inflation and the stock/bond relationship for a couple years now.

We rang the bell here:

We rang the bell here:

And we rang the bell here:

And while the uncertainty and opportunities of COVID-19 and politics may be (appropriately) front of mind for investors, while the reality of inflation may feel miles away, we are ringing that bell again.

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Hateful Memes and Election Season

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As the core COVID-19 narrative shifts from the mixture of human and economic tolls that dominated news over the past few weeks to the coverage of lockdown relaxation across the United States, we are starting to observe other topics and language creeping back into the Zeitgeist for the first time.

Unsurprisingly, most of them have still been tangentially related to the pandemic.

For example, we are observing a lot of shared language in the ether about direct sales and e-commerce (a term I thought had gone out of vogue years ago, to be honest). The framing of these pieces positions them squarely – and consistently – in context of a response to pandemic-driven buying behaviors.

Pepsi Unveils 2 New Websites to Sell Its Products [The Street]

Likewise, there are fascinating micro-clusters of only-sort-of-coronavirusy language popping out in ways we have not observed before, too. For example, this standard wire service blurb is representative of a wide swath of health care companies reporting, affirming guidance and trading up a bit on the news. It is an odd bit of linguistic uniformity.

Mylan’s stock gains 2%, reaffirms guidance for 2020 [DJ Newswires]

And if you can manage to link a holiday like……Mother’s Day with COVID-19, well, then you’ll probably find your way to a brief top billing on our check for language with high interconnectedness across clusters and topics. Nice one, Mike.

Mike Rowe: Moms are ‘the ultimate’ essential workers [Fox News]

We have also observed that story stocks – the ones which have some kind of non-fundamental appeal that crosses typical demographic and investor style boundaries – frequently make their way to the top of the Zeitgeist. It is an unavoidable result of their connection to all sorts of other pop culture, technology, social and cultural trends. Which, in a nutshell, is what we mean when we call something a story stock.

Elon Musk says he’s willing to be arrested as Tesla reopens Fremont factory [NY Post]


Yet we are observing some emerging consensus topics and language that have little-to-no pandemic relationship, and which we think are likely to be our companions for the next few months. One of the biggest appears to be the role of AI and machine learning in the identification of patterns of online behavior. Or, in the words of researchers at Facebook, ‘hateful memes’.

Facebook says AI has a ways to go to detect nasty memes [ZDNet]

The article itself is largely a summary of a paper published by the Facebook AI team in connection with their prize-sponsored effort to crowdsource solutions to the problem of systematically analyzing combined text and image data (or other multi-modal forms) that typifies most internet memes. In short, it’s pretty hard to spot whether the most common type of internet meme is abusive, mean or hateful, and we’re still not very good at it. It is technologically fascinating exercise. It is also terrifyingly Orwellian.

To their credit, ZDNet asks some good questions.

A second question was what the scale of the problem is of hate speech at Facebook. Given that the premise of the work is to enlist AI to clean up hateful utterances on social media, it’s important to know things such as how much hate speech is removed on a regular basis, or perhaps a tally to date. Facebook declined to comment.

Facebook says AI has a ways to go to detect nasty memes (ZDNet, May 12, 2020)

M’kay.

There ought to be an impulse to ask “why am I reading this now?” in response to this piece, and perhaps even more so to the underlying Facebook research. It’s reasonable to wonder why its language is so deeply connected to other news being published right now. At risk of answering what is usually intended to be a rhetorical question, I’ll offer what I think based on the language I’m observing in other articles it was connected to: election season.

It’s here, and this is ripe territory for the top-down political narratives we will be discussing at much greater length in the coming weeks. If you have not prepared yourself for a news and social media cycle framed in highly polarized terms of misinformation / censorship / manipulation, now is probably your last chance.

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That Old Canard

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If there is one defining feature of high attention narrative structures, it is the crowding out of off-narrative topics and language. Since mid-March, financial media has been all-coronavirus, all-the-time. That is, with the exception of the occasional diversion into the nightmarish adjacent world of oil and gas.

In the last week or so, however, we have observed a surge in “how the world will be different” language across financial media. We have observed that language in pieces nominally about other things, like earnings, guidance or the fortunes of various industries. We have also observed that language in pieces dedicated to the idea that how we consume X will be changed forever.

Here is one that rose to the top of our Zeitgeist run this morning.

CEOs Changing The Way We Invest, Trade, And Manage Our Money During COV-19 [Forbes]

It’s a stretch to say that this piece is really about anything. It is a laundry list of companies, buzz words and CEOs that straddles that line between news, analysis and advertisement that Forbes Contributor content is all about. SEO-bait.

Now, it isn’t a new idea that the COVID-19 pandemic will “change everything about the way we do business forever”. Zoom, Amazon, Netflix and Softbank have been trading on changing sentiment about this idea for weeks. What IS new is that the language is now so ubiquitous in marketing, advertising, puff pieces, corporate statements and actual news that it is creating connections – at least on some slow virus / shutdown news days – that are as strong as the core narratives of COVID-19’s impact on the market itself. It is now common knowledge that every company must tell a story about how it will actually emerge stronger from COVID-19 than it was before.

In short, it is becoming a cartoon.

‘Cartoon’ doesn’t mean that the underlying thing being caricatured is fake or unimportant. Quite to the contrary, most cartoons are built around really emotionally charged truths. And that old canard about companies being purpose-built for the future that technology will bring us? That’s a powerful cartoon because it IS often the most important thing that some companies have to demonstrate to the market or customers, even if it’s a bit silly on its face.

Just as often, however, that same cartoon becomes the sine qua non for all companies and institutions, even those whose businesses are probably just fine the way they are. Or companies who should be thinking more expansively about how this could be an opportunity to transform things about their business that haven’t been working correctly. Or companies who should be thinking about much more important and vastly more difficult to predict second- and third-order effects of an event like this – not “does all this online services utilization during the coronavirus pandemic mean it’s the right time to make our big push into low margin robo-advisory services?”

Remember, it was last year that the institutions who will tell us that their vast experience delivering a premium online experience for a post COVID-19 world were telling us that the future was in personal, physical cafe environments in their brick-and-mortar bank branches. When something becomes a cartoon, it changes how people make decisions in the real world to fit the cartoon.

We are now in the Flooz.com phase of the “how is COVID-19 going to change the world forever” process. Be careful out there.

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The Miracle Max of MBS

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Miracle Max: Don’t rush me, sonny. You rush a miracle man, you get rotten miracles. You got money?

Inigo Montoya: Sixty-five.

Miracle Max: Sheesh! I never worked for so little. Except once, and that was a very noble cause.

Inigo: This is noble sir. His wife is… crippled. The children are on the brink of starvation.

Miracle Max: Are you a rotten liar!

Inigo: I need him to help avenge my father, murdered these twenty years.

Miracle Max: Your first story was better.

The Princess Bride (1987)

We have published fewer Zeitgeist notes in the last few weeks. The reason won’t be surprising: they’d all be about the same thing, more or less. Sometimes certain language dominates market attention.

This is one of those times.

Even then, there are occasionally articles which hit our screens and so capture the spirit of the age in multiple ways at once that it would be almost criminal of us not to include them.

This is one of those times.

Colony’s Barrack Urges Margin Call Moratorium in CMBS Market [Bloomberg]

In most Zeitgeist submissions, we excerpt enough of an article to give you a sense of what it is about and why we think its language brought it to the top of our Zeitgeist dashboard. In those cases maybe it isn’t necessary to read the full article. I hope you will make an exception for this one – read it in full. Once you do, I suspect you’ll get the same sense that I did.

This is not news.

This is not even fiat news.

This is a press release.

The article’s opening salvo permits its subject – Colony Capital Chairman Tom Barrack – to frame the issue of bailing out CMBS investors in morally loaded terms: doing so would represent “cooperation” and “support.”

“America needs the immediate cooperation and support from our banking sector,” Barrack, chairman and chief executive officer of Colony Capital Inc., said in a white paper he posted on Medium.

Source: Bloomberg, Colony’s Barrack Urges Margin Call Moratorium in CMBS Market (3/29/2020)

In the very next paragraph, the author helpfully provides contrasting ethical framing for what the banks are currently doing. Instead of cooperating and supporting, they are demanding and seizing.

The threat of widespread defaults has caused waves of selling in the market for commercial mortgage-backed securities. Banks in turn are demanding cash and seizing collateral from vehicles that borrowed to invest in CMBS and other forms of asset-backed debt, a practice that drives down prices even further. One index of mortgage REITs, or real estate investment trusts, has collapsed by more than 50%, in part because of those margin calls.

Source: Bloomberg, Colony’s Barrack Urges Margin Call Moratorium in CMBS Market (3/29/2020)

From there the article simply cribs the emotional appeal straight from Colony’s Medium article and Barrack’s Twitter feed.

At stake, he said, are trillions of dollars in securities owned by insurers, asset managers, pension funds — even banks themselves…If the investment vehicles get such relief, they can subsequently grant forbearance to the hotels, retailers, malls and other tenants and borrowers who can’t pay rent or interest while the economy is largely shut down because of the pandemic, Barrack said.

Source: Bloomberg, Colony’s Barrack Urges Margin Call Moratorium in CMBS Market (3/29/2020)

Then, because it’s 2020 and this is how we do it now, the article presents – verbatim – Barrack’s tweet arguing that the only way to help American enterprise is by bailing out leveraged investors in commercial real estate securities. Words fail.

The only way to accomplish relief for American enterprises is by receiving forbearances on the interest obligations that real estate owners and mortgage real estate investment trusts owe to the banks and their other security lenders.

Source: Twitter, Posted 8:57 PM, March 28, 2020

There are no challenges to factual assertions made by the subject. No alternative views are presented. No counterpoint is provided. No contextual facts are sourced. Do you, dear reader, think that Mr. Barrack’s role as the chairman of President Trump’s inaugural committee might be a newsworthy addition to the article’s cheerful characterization of him as a “longtime friend?” The article does nothing to shed new light on a topic. It provides a free lectern and and a megaphone for the advocacy aims of one particular market missionary looking to establish a preferred narrative.

Apparently it also serves as the promo for an interview – today on Bloomberg TV!


Look, I’m not mad at Tom for bringing his mostly dead asset class to Miracle Max and asking for a miracle. That’s his job.

I’m also not mad at the author for seeking out knowledgeable, well-known interview subjects to probe about current issues and news. That’s his job (and in full disclosure, many of his interviews are really very good).

But there is an emerging news practice of “presenting verbatim what famous people said” under the tenuous guise that what a wealthy, famous person said or tweeted is inherently newsworthy in itself, rather than newsworthy in context of some broader event of public interest. This practice played a not-insignificant role in the woefully unchallenged and uncontextualized repetition of talking points from WHO leaders, New York City health officials and others in many outlets over the past few months. It has been the on-air M.O. of financial media for far longer.

More importantly, the practice forms a critical part of the machinery of narrative construction and transmission.

Clear eyes.

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