The Zeitgeist – 3.12.2019


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.

Junk Bonds Are Winning Even When They’re Losing [Bloomberg]

Answer: the opposite of Climbing a Wall of Worry.

What is Descending a Slope of Hope? I’ll take Market Expectations for $800, Alex. (and yes, there’s an ET note on this).

[PS from Ben. I grew up watching Art Fleming’s Jeopardy with my dad on a black-and-white TV and it only took me 30 years to get used to this upstart Alex Trebek fellow … a Canadian to boot, I understand. You’re an immortal, Alex. And I’m not a praying sort of guy, but I hope you can feel the good will emanating from me and millions of others just like me, coming at you through the human ether.]

Trump says economy may be the ‘greatest in history.’ Let’s check the record. [Washington Post]

The power of the missionary in a widening gyre is built on the ability to polarize. On a practical level, one of the most effective tools of that polarization is the creation of hyperbolic cartoons. Whether it is the absurd Green New Deal spec sheet that AOC’s people put out there, or a Trumpian claim of “the greatest economy in history”, the point is to say the words and bring them into the Zeitgeist, knowing full well how everyone will respond.

The opposition will launch cringeworthy fact-checks. Supporters will say, “Come on, we all know what they meant. They’re directionally right, and that’s what matters.” Together both groups magnify common knowledge.

To control your cartoon you must embrace cartoonishness.

This is not the why, but it is the how of Trump’s success. AOC’s, too.

Sustainable finance grows in the world’s worst-polluting country [Bloomberg]

OK, answering this kind of question with a poll is…questionable (pause for groans), but another day, another ‘impact investing’ story at the top of the heap.

So IS there a change in the ESG/SRI Zeitgeist? Sorry, this is still a “Watch the News at 11 to find out” bit. Our answer is coming soon to ET Pro.

CalPERS scouting for general investment and alts consultants [P&I Online]

Biggest fish there is for most consultants, but I can tell you that most shops will only grudgingly fill out the RFP. Not just because incumbents usually win this kind of legally required rebid process, not just because of the level of competition, and not because there’s anything undesirable about working with CalPERS staff. Lot of lovely people there in my experience, actually.

It’s a tough RFP because you know going in that the clearing price will be well below the correct price for the employee time, aggravation and most of all, risk transfer that goes along with subjecting yourself to the layers of bureaucracy and conflicted oversight which attend a $300 billion+ plan in the most highly regulated state in our nation. The price for every bid is driven by a figurative DCF of the value of putting the logo on page 2 of your marketing deck.

It is sometimes hard to quantify the more subtle costs of heavy-handed regulation. This is one.

Neiman Marcus Creditor Group Counters ‘Devil’s Bargain’ Proposal [Bloomberg]

In my opinion, there is nothing – nothing! – more fascinating in the world of finance than a debt restructuring. And there is nothing – nothing! – more frustrating than having to watch it through media outlets which report just enough details to whet your appetite and not nearly enough to completely understand what’s going on. Oh, we can see the narrative shots fired (“Devil’s Bargain, indeed!”), and even more such bullets if we read the creditor group’s letter, which you should. It observes all the forms of the genre, up to and including accusing the board of ‘wanton disregard’, ‘putting a storied franchise and jobs at risk’, ‘self-serving’, ‘concocting schemes’, the whole shooting match. God, the only thing that would make it even better would be to conclude with…yep, they did it.

They signed it ‘respectfully.’

Invesco QQQ Celebrates 20 Years of Curating Innovation [Press Release]

When Invesco (then the awfully named AMVESCAP, for fear of insulting the AIM folks post-merger, I suppose) bought Powershares back in 2006, it was one of the first asset management M&A deals I worked on, and one of the few that ended well for just about everyone involved. QQQ was the crown jewel even then. Happy birthday!

But come on, y’all. Curating innovation? You’re managing a Nasdaq index fund, not launching a sea urchin-themed food truck in the Tenderloin. Especially if the first executive quote is going to be from…Dan Draper.

Image result for don draper shrugging


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