The Zeitgeist – 4.25.2019

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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.

Source: Quid, Epsilon Theory

April 25, 2019 Narrative Map – US Equities

What ‘Junk’ tells us about America’s tangled relationship with debt [Washington Post]

“Playwright Ayad Akhtar explores Wall Street in the greedy ’80s.” – Washington Post review

I recently saw the play “Junk,” a retrospective of the 1980s, when Wall Street junk-bond kings were revered and then reviled.

It was a time when financial wunderkinds figured out how to use massive amounts of debt to go on buying sprees, leaving a path of devastation. Think of a plague of locusts swarming companies while wearing business suits and ties.

What is the only true superpower? The power to name things.

We name Milken and Boesky as junk-bond kings. We name their actions as a spree. We name their outcomes as devastation. We name their instrument as debt.

Today we name it balance sheet expansion.

Everyone talks about how we’ve privatized gains and socialized losses, especially for the Big Banks. And I suppose that’s true.

But even more pernicious is the socialization of debt. We’re all junk-bond kings today.

Every man a king!


China could help push ‘Avengers: Endgame’ to a billion dollar weekend [CNN]

The plot of Lysistrata, first staged in Athens in 411 BC, is that the women of Athens and Sparta agree to withhold sex from the men of Athens and Sparta until they stop fighting the interminable Peloponnesian War.

Want to end the interminable US-China trade war? Stop making superhero movies.

I mean, no one has sex these days, so that’s not a credible threat. We’re too busy watching Netflix.


Cannabis Operators To Create National Brands Through M&A [Forbes]

Once US federal legalization happens, Brent Johnson, managing partner of the Hoban Law Group, a full-service firm that specializes in cannabis, said he expects many companies with US operations that touch the plant and are listed on the Canadian Securities Exchange and OTC Markets Group to move to the NYSE, Nasdaq and Toronto Stock Exchanges. Currently, companies that have US operations that touch the plant cannot list on those three exchanges.

Tomorrow’s headlines today – Trump will propose federal cannabis legalization, and his primary argument will be how “unfair” the status quo is for American exchanges.


Emerging-market currencies hit by strong dollar; stocks fall [Reuters]

We write a lot about the dollar and EM on Epsilon Theory Professional. Here’s the money quote from a recent note:

Bottom line: I don’t think that the narrative around central banks is weakening, but I do think it is evolving. I think it is evolving in a way that’s good for some small-e emerging markets and bad for others, but eliminates a coherent, investable narrative around big-E Emerging Markets. 


The Daily 202: Trump looks to defuse trade wars as 2020 nears, deploying Pence to Michigan and Mnuchin to China [Washington Post]

President Trump waits with his trade team for a meeting with Chinese Vice Premier Liu He

The most venal collection of talent that has ever been gathered together at the White House, with the possible exception of when Ulysses Grant dined alone.


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Peter
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Peter

Dude, U. Grant was a very good General!
Not dumb at all.
Is this the southerner in you coming out?

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Christopher Beirn
Member
Christopher Beirn

How about Warren Harding?

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Mark Clark
Member
Mark Clark

Nixon, Haldeman, Erhlichman.

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Christopher Beirn
Member
Christopher Beirn

We have a winner.

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Roy Blanchard
Member

“It was a time when financial wunderkinds figured out how to use massive amounts of debt to go on buying sprees.” We’re back there now only that the debt is used to buy back shares to sweeten C-Suite options.

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The Daily Zeitgeist

As Good Once As It Ever Was

By Rusty Guinn | September 20, 2019 | 2 Comments

What happens when profitless-growth-forever narratives start breaking?

We need a new drug.

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Narrative is not a Disease. Narrative is Us.

By Ben Hunt | September 16, 2019 | 3 Comments

Robert Shiller’s new book, “Narrative Economics”, will be out soon, and the publicity effort is kicking into gear. I am SO HAPPY that the rigorous study of narratives is finally being taken seriously, and grateful to Shiller for making that happen.

I am also SO DEPRESSED about how Shiller’s central metaphor, that narrative = infectious disease, will be used against us. Because the “cure” is the Nudge.

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Sparks, Arcs and Trademarks

By Rusty Guinn | September 13, 2019 | 0 Comments

I’m not sure if electric buses are really a national security risk. Even if they are, I’m not sure characterizing them that way is really an escalation of the trade war into existential rhetoric land.

But it’s worth watching.

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When Meta-Analysis Goes Meta

By Rusty Guinn | September 9, 2019 | 4 Comments

What does it mean when it becomes common knowledge that other investors are focused on evaluating common knowledge?

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I’ve Got a Secret

By Ben Hunt | September 6, 2019 | 8 Comments

Is there a bubble in passive investing? Honestly, I’m not even sure what that question is asking.

I DO think there’s a bubble in markets today – a behavioral bubble I’ll call ABB.

Always. Be. Buying.

And the Common Knowledge around passive investing is what blows this bubble. That’s MY secret.

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The Industrially Necessary Egg

By Ben Hunt | September 5, 2019 | 1 Comment

In modern farming and in modern investing, we have become prisoners of the monoculture. It’s efficient. It’s necessary for a mass society of ever-increasing Desire.

But here’s the thing …

In the investment monoculture, you’re not the farmer.

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