The Zeitgeist – 3.26.2019

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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.


“Flashing amber”: Stocks tumble, bonds rally on U.S. recession risk [Reuters]

It’s hard to create a wall of worry when the Fed is in full CREEP mode (yes, that’s a Nixon reference … you could look it up) and all the US PMIs are way over 50, but haters gonna hate and the Street gonna fake. Or at least that’s what Taylor Swift would say.

We have a BLARING SIREN that is FLASHING … … ummm, amber. I mean, AMBER!

I feel like JPM is increasingly becoming a parody account.


It’s Not Too Late to Buy LivePerson Stock [Fox Business]

Whew! And here I thought that it might be too late.

Small-cap and mid-cap TMT stocks like LivePerson ($1.8B mkt cap) are the mothers milk of sell-side coverage and Fiat financial media, with far more analyst coverage and media puff pieces than you’d think. Why? Because they’re pure story.

Two “‘feels” and one “sees” in this paragraph, plus two “earlys” and a “massive”. It’s all a steak-and-egg breakfast for narrative connoisseurs, with a “seek to evolve” as Hollandaise on top.


Bond market says not only is a recession coming, but the Fed will cut interest rates to stop it [CNBC]

Scary signals. It’s a technical term.

I love this idea that the market “fears” that the Fed will need to get even more dovish. Kinda like Br’er Rabbit was afraid of that briar patch.

And yes, I know that Joel Chandler Harris has been unpersoned. But anyone who tells a good Trickster God story will always have a place at Epsilon Theory.


Tradeweb Aims for $5.8 Billion Valuation in Upcoming Nasdaq IPO [Bloomberg]

Speaking of Trickster Gods …


How Medicare for All Could Eliminate the $600 Billion Private Insurance Industry [Fortune]

They’re coming to get you, Barbara!

Did I mention CREEP earlier? You really should look it up.


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Victor K
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Victor K

I looked up CREEP. I found both references (Nixon and Radiohead). How you (ET) can pull these cultural/political references out of the hat is a wonder to behold!
Meanwhile: …eliminate…insurance…industry [Fortune]. Haha LOL
(I wished you had used the Hubble Deep Field for the Unicorn background!)

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Victor K
Member
Victor K

(Because Big Bang Cosmology, Climate ‘Science’, and even Darwinism are the knowledge Unicorns – on a much longer disruption time scale – today IMO!)

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Sandy McIntyre
Member
Sandy McIntyre

I’m confused. A 30 year treasury at a 2.9 coupon is an effective 35 PE. What you get is a flat 30 year stream of coupons and a capital value that depreciates with inflation. Based on 2% target inflation purchasing power will be almost cut in half over the term of the bond.

Buying a quality basket of companies (I refuse to index invest but that is a different rant) I can acquire multi cycle earnings growth of 4 to 7 % with dividend growth that is directly correlated to earnings growth. A generic PE is tough to generate but assume it is at a premium to the forward market PE of 17xs.

Why is the growth asset considered expensive and the “safe” asset’s price desirable?

For the record, the most destructive bear market in history is the 1950 to 1981 bear market in bonds: 2.5% on the long treasury to 15.8%. The decline in purchasing power was around 90%. In bond land that was permanent destruction in purchasing power.

In PE terms, 1950 was 40xs. 1981 was 6.3xs. The average 10 year 1954 to now is 5.85%. In PE terms that is 17xs. Both are absolutely meaningless numbers given the range of data points over the the time frame.

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