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.
I’m channeling my inner MST3K with the comments here. Premium subscribers should feel free to join me in the Comments section (but only if you know what MST3K is!), and I’ll reprint the best ones in an upcoming Mailbag note.
Brexit really doesn’t get my spidey-sense tingling. It’s a garden-variety deflationary shock for global equity markets, exactly the sort of thing that the entire arsenal of central bank firepower accumulated since 2009 was designed to defend. Brexit is a classic brick in the wall-of-worry that markets must have to climb higher.
I mean, when Neel freakin’ Kashkari is using Brexit as a “reason” for the Fed to be “patient” and MORE accommodative … nuff said.
What DOES interest me is the political gamesmanship around whatever happens here, which is what this article is talking about — Theresa May’s efforts to pick off a few Labour MPs by promising some sort of “workers’ rights” deal. Seems unlikely on the surface, which makes me think that May is already looking ahead to general elections and is using this as part of a larger Tory v. Labour metagame. Everyone seems to have concluded throughout this entire Brexit fiasco that May is an idiot. She’s not.
I see this all the time in the nexus between market-world and narrative-world … people who are immersed in a particular area of market-world, like a sell-side healthcare analyst, are almost always surprised by the market reaction to a policy announcement or initiative that “we knew was coming.”
THIS is the Common Knowledge Game in action. It’s not what you know about what’s coming down the pike that moves markets. It’s not what everyone knows (the consensus) that moves markets. It’s what everyone knows that everyone knows that moves markets. And that everyone-knows-that-everyone-knows knowledge formation occurs if and only if a Missionary makes that statement through a media megaphone.
Who’s a Missionary? A group of House Dems announcing a Medicare-for-all bill (M4A, as the cool kids would say) bill. Not a BMO healthcare analyst.
But therein lies the opportunity.
So this article was written by one of Elon’s fanboys, not by Jim Cramer. It’s taking one of Cramer’s MANY video “explanations” of how those darn shortsellers attack an innocent stock, and repurposing it for the excuse du jour on “why” TSLA has had a bad week.
The constant Cramer shtick on “market manipulation” by “algos” or “shortsellers”, which has been going on for YEARS, is just too tiresome to address at length here. Plus, of course, there’s an Epsilon Theory note for that! It’s an oldie-but-goodie that I’ll have to dust off and revise sometime soon, but it still reads awfully fresh – Wherefore Art Thou, Marcus Welby?
As for TSLA … I realize that I don’t have a sociology background, so take this for what you will, but what’s happening is a classic shift from Growth! to Value? in both the stock and the narrative. This will not be a fun ride for the Elon fanboys. And yes, they’re all boys.
The market narrative on Chinese economic stats is interesting to me. We’ve gone from private knowledge that their statistics are politically constructed to consensus knowledge that their statistics are politically constructed to common knowledge that their statistics are politically constructed. And yes, I’m thinking that there’s an opportunity there, too.
Also, I can’t help but do a doubletake on the word “unleash” here. Some of us are old enough to remember when the US was threatening to “unleash” Chiang Kai-Shek.
Also, I ask myself why Breitbart is publishing a “straight” China economy piece. You should ask yourself that, too.
I like to read articles from regional newspapers to get a rough sense of common knowledge on monetary policy. The Fed’s highly intentional and coordinated strategy to use their communications to shape investor behavior and beliefs is the most successful marketing campaign of the past decade.
Coming soon to a pension fund public hearing near you. It’s no longer enough to have a long-only ESG mandate. It’s no longer enough to avoid companies that don’t meet your environmental or social or governmental mandate, whatever that mandate means to you. No, no … we need to allocate to alternative ESG funds (i.e. ESG hedge funds) that will actively short “unethical stocks”.