The Zeitgeist – 3.7.2019


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.

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.

Billions Are Headed to One Market. You Can Get There First []

Four or five times a week, I’ll get an email from someone asking if they can place an “article” on Epsilon Theory. Sometimes it’s about something vaguely finance related, sometimes it’s not (a buying guide to survival knives is still my personal fave of proposed topics). Back in the day, almost all of these emails “offered” these articles as free for me to publish, because obviously they were doing me a favor by giving me “content” to put on the website. As ET has grown in reputation (?) or maybe just because we’ve been around long enough, I don’t get many emails offering free content anymore, but just directly asking for my rate to publish sponsored content. Not ads, mind you, which I’m happy to quote you a rate for, but for “articles” on such and such topic written by one of their clients.

My response is always the same. If Ken Fisher would rather die and go to hell than sell you an annuity, I’d rather die and go to hell than publish a bullshit “article” that someone paid me to flog. It’s not just a personal preference. It’s a smarter business model.

Every self-professed “financial media” website I read today publishes sponsored content masquerading as legit content. As a result, they have all become platforms for raccoons. All of them, including the biggest brand names in our business … Bloomberg, Forbes, Nasdaq, CNBC, you name it. ALL OF THEM now have websites that are infested by raccoons. It’s the most penny-wise and pound-foolish thing they could possibly do, but god knows we live in a profoundly penny-wise and pound-foolish world. It destroys their credibility and authenticity, which destroys the quality and engagement of their online readership, which destroys their CPM rates … it’s all a vicious cycle which is killing has killed the business model of these media sites.

So thank you, Forbes. Thank you, Bloomberg. Thank you, Nasdaq. Thank you, CNBC. Thanks for destroying your online media businesses and donating your audience to us. We really couldn’t do it without you.

Deputy SNP leader says new Scottish independence vote could happen without UK blessing []

California has wrestled with what I’ll call “the referendum problem” for decades. The UK, of course, has been knocked politically flat by this, as has Spain. And it’s coming to the US, too, in the form of “electoral college reform” to make our one national vote “more democratic”. It’s part of the widening gyre. It’s part of the shift in the Zeitgeist. Everyone can gnash their teeth and wring their hands if you like, but it won’t stop this.

What, you’re opposed to democracy?

US Govt not willing to go on ‘international fishing expedition’ for evidence in spoofing case [FinanceFeeds]

If I were a betting man (and I am), I’d be willing to place a large wager that the judge here will deny the defendant’s discovery request for information collected by US and UK market regulatory bodies. It’s all part and parcel of the phenomenal growth in the surveillance capabilities of market regulators, combined with the presumption of guilt if you outperform a market.

And of course I think Sarao and Thakkar are outright raccoons who deserve to have the book thrown at them. But when it comes to the Surveillance State, everyone who says “if you have nothing to hide, then you have nothing to worry about” is either a fool or a stooge. Probably both.

Amid Volatility, Advisers Report Ongoing Client Equity Focus [planadviser]

Another version of sponsored content here, but that’s not my point. I think what investors are going to “wake up to” over the next few years is the portfolio PENALTY from fixed income investing.

Howard Marks: The Paradox of Risk []

I’ll start by making the required genuflection to Howard Marks as a great investor. Yes, so stipulated. Seriously.

But there is zero functional or linguistic difference between a religious seminary and these sites that recite and interpret the Value Canon, and it drives me nuts.

Risk defined as volatility is the worst definition of risk … except for all the others. Defining risk as potential for (permanent) loss is a meaningless tautology, useful only to the Faithful.

The Market Gapitalization [Phil’s Stockworld]

This article is by Michael Batnick, riffing on an exhibit in the Credit Suisse global investment yearbook. It’s a good example of what makes Batnick a long-time Epsilon Theory fave, because he gets right at the heart of what’s interesting in the long-term DM vs. EM chart – World War II.

Everything you think you know about investing – EVERYTHING – is because the United States won World War II.

I don’t think we’re going to have another World War. I really don’t. But a change in the Zeitgeist can have the same functional impact as a World War. And I really DO think that’s happening.


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Interesting how Buffett just so-happened to NAIL the post-WWII zeitgeist.