The Zeitgeist – 4.5.2019

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.

We thought we’d post the underlying Narrative Maps for the Zeitgeist today. Let us know if you find this feature a) interesting or b) distracting !

April 5, 2019 Narrative Map – US Equities

Source: Quid, Epsilon Theory

April 5, 2019 Narrative Map – Selected Articles

Source: Quid, Epsilon Theory

Preferred Securities: Still Attractive Despite Modestly Higher Prices [Seeking Alpha]

Schwab pitching preferreds today. And every day. Just another example of an advertisement presented as “analysis” … the ubiquitous commercial version of Fiat News.

Two observations …

  1. When I was running a hedge fund, whenever I read a sell-side report that said a security was “still attractive for long-term investors”, I would immediately get a borrow and short the hell out of it.
  2. Fannie Mae preferreds. Never forget. Although everyone has.

Target Raises Its Minimum Wage to $13 an Hour [The Street]

March wage growth came in at 3.2% today, which is being described by everyone in financial media as “muted”.

Kinda like the Disney flacks telling us that Blue Will Smith is “fine”. A different genie, but still.

As the immortal line in The Outlaw Josey Wales would have it, “Don’t piss down my back and tell me it’s raining.”

Natixis US Trends Report: Bonds Make Comeback Acting as Portfolio Ballast in Turbulent 2018 [PR]

As volatility continues? What the hell are you talking about?

Oh, I see … it’s the Natixis report on 2018 “trends”, pushed on BusinessWire (A Berkshire Hathaway Company ™) in April 2019.

It’s a variation on The Prediction Polka, a great little note that Rusty wrote in December.

Value Versus Noise In Emerging Markets [Forbes]

As the legendary money manager Peter Lynch used to say, “If you spend more than 13 minutes analyzing economic and market forecasts, you’ve wasted ten minutes.” No one can predict the economy, the markets, or the direction of currencies. Only a charlatan would pretend to. Yet if you click on your financial news most days, that’s all anyone is trying to do. Pundits rarely invoke the wisdom of Socrates: “I know that I know nothing.”

Author then proceeds to compare the earnings yield of Emerging Markets ™ with the earnings yield of The Dow ™ and calls this Value ™.

You know, just like Peter Lynch used to do. Gag.

CalPERS not alone on private equity shift; A growing list of investors act to enhance returns, lower fees [P&I]

If you’ve been reading Epsilon Theory for more than a nano-second, you know what we think about this … greater allocations to private equity isn’t stupid, it’s NECESSARY as all capital markets (including private capital markets) become public utilities.

Global Stocks Edge Up as Trump Signals Trade Progress [Morningstar]

I just can’t write another blurb about the China Trade narrative. Just can’t do it.


  1. Narrative map is interesting. Not distracting.

  2. “get a borrow” is my new catch phrase, I’m using it everywhere.

  3. Avatar for nixon nixon says:

    Ditto. Also, it provides context with regards to article selection (you mean you’re not making this stuff up?) and provides those of us in the infant stages of processing the narrative maps daily practice.

  4. It seems I read several “this is going to be the hottest IPO market EVER, topping the dot-com one of twenty years ago” article(s) every day. Thus, I expected the IPO cluster to be more central and a larger amount of the US Equity narrative map.

    Regarding the AHE number in today’s employment report (and thinking back to a few ET comments on rates of change/second derivatives, for example, in “2 Fast 2 Furious -” excellent piece), how does the drop in annual wage growth from 3.4% to 3.2%, MOM, impact that aspect of the “game” / market psychology?

    Kudos to you - you called, early on, how the trade narrative would become both a market dominant one and a meaningless headline - a totem evoked to answer the daily questions of why the market went up or down or something in the financial world moved.

  5. Avatar for nick nick says:

    Let me get this straight. You’re telling me Peter Lynch chestnuts such as “Behind every stock is a company. Find out what it’s doing.” are NOT, in fact, the secret sauce for investment performance?!?! I’m in a snarky mood today so I pulled a small selection of timeless chestnuts from the interwebs (Source:

    “The key to making money in stocks is not to get scared out of them.”

    “The person that turns over the most rocks wins the game. And that’s always been my philosophy.”

    “All you need for a lifetime of successful investing is a few big winners, and the pluses from those will overwhelm the minuses from the stocks that don’t work out.”

    “I talk to hundreds of companies a year and spend hour after hour in heady pow-wows with CEOs, financial analysts and my colleagues in the mutual-fund business, but I stumble onto the big winners in extracurricular situations, the same way you do.”

    “If you’re prepared to invest in a company, then you ought to be able to explain why in simple language that a fifth grader could understand, and quickly enough so the fifth grader won’t get bored.” (Some genuine ET-flavored insight in this last one if you read between the lines)

  6. Just one day in this case! Different days, mileage may vary.

  7. Interesting, for sure. I always like seeing the narrative maps.

  8. I like ET narrative maps muchly, so I vote yes.

  9. i like the map… but I still need to learn how to digest (interpret) it.

  10. This is one quote (by way of Marc Faber ) that seems as true today as when it was written in 1976 :
    “The late Joe Granville wrote in Granville’s New Strategy of Daily Stock Market Timing for Maximum Profit, (1976), that “News is of generally little value.” Granville explained: “Traders and investors get into more trouble and make more expensive wrong decisions by following news than for any other reason. So heavily influenced by the news, the majority get lost in the maze, unable to see what the smart money is doing. News is also important to the smart money because they understand the role news plays in the market game, and they can usually act more effectively under the protective cover of news. They know that the news misleads the opposing game player into selling them stocks when the smart money wishes to buy and into buying their stocks when the smart money decides that the time has arrived for distribution. As a market aid, news is of little value in playing the market game successfully. News is generally for suckers. IT misleads more often than it guides. It creates mistimed fears which provoke selling at the wrong time and raises hope which encourages the buying of stocks at the wrong time”

Continue the discussion at the Epsilon Theory Forum


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