The Zeitgeist – 5.21.2019

1+

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.


May 21, 2019 Narrative Map – US Equities

Source: Quid, Epsilon Theory

Washington’s Huawei reprieve triggers relief rally in bruised EU chip stocks [Reuters]

Shares in European semiconductor companies, one of the most sensitive sectors to the global trade tensions, recovered from their worst day in 4-1/2 months on Tuesday after the White House backtracked overnight on tough limits on China’s Huawei.

If you’re playing this game out of necessity … my condolences.

If you’re playing this game out of choice … you’re nuts.


Rise in CMBS IO Loan Issuance Surpasses Pre-Recession Levels, Worrying Some in the Industry [NREI]

Competition that is fueling a spike in interest-only (IO) loan issuance is drawing mixed responses from industry observers. Some view the spike as a worrisome rise in risk that could come back to bite borrowers if 10-year loans mature in a higher interest rate market. Others see IO loans as an opportunity for borrowers to take advantage of healthy lender competition for high quality deals.

Things you see at a top …


Institutional Investors Think They’re Ready for the Next Downturn [Institutional Investor]

Eighty-seven percent of the 75 institutional investors surveyed by Wilshire Associates say they are more or “far more” prepared for a bear market than in 2007, according to a statement Monday from the consulting firm. About 95 percent of investors are at least “somewhat confident” in their readiness to steer through market volatility, while 39 percent feel “very confident,” Wilshire said.

And they’re right.

Not because they’re doing anything special or have any new awareness, but because central banks Will. Not. Allow. a 2008-style deflationary crisis to exist.

Everyone always prepares for the last war …


The Shocking Number of Americans Without a Retirement Account [Fox Business]

According to the Aspen Institute, close to 6 in 10 working-age Americans do not have a retirement account. Sadly, the Aspen Institute also warns that things are likely to get worse due to the changing nature of work.

“Sadly.”

The American worker is the proverbial boiled frog. Or Milton from Office Space. Same thing.

And yes, there’s an Epsilon Theory note for that. First read this:

And then read this:

Money quote:

Over the past eight years we have thrown our money into relatively unproductive activities (experiential consumption), and we have thrown our bodies into relatively unproductive jobs (experiential production).

It’s as if we’ve intentionally returned to the recommended farming practices of Cato the Elder in 200 BC, where instead of a tractor with a 43 horsepower engine to get the work done, we’ve got “a foreman, a foreman’s wife, ten laborers, one ox driver, one donkey driver, one man in charge of the willow grove, and one swineherd”. Because god forbid we miss out on the experience of being a swineherd. Hey, with modern technology, you can drive for Uberherd swine whenever you like. Just imagine the personal satisfaction, not to mention all that extra cash, that comes with “being your own boss” as an on-demand swineherd.

It’s as if we’ve intentionally returned to the recommended farming practices of Cato the Elder because it IS intentional.


Why High-Class People Get Away With Incompetence [New York Times]

In several experiments, researchers found that people who came from a higher social class were more likely to have an inflated sense of their skills — even when tests proved that they were average.

It’s the only possible outcome of the Lake Wobegon effect … where all of our children are above average. Now they’ve grown up believing that.


1+

To receive a free full-text email of The Zeitgeist whenever we publish to the website, please sign up here. You'll get two or three of these emails every week, and your email will not be shared with anyone. Ever. It's our effort to spread the word about what we're doing, and allow you to read more Epsilon Theory!

2
Leave a Reply

Please Login to comment
  Subscribe  
newest oldest
Notify of
CMG
Member
CMG

Not that we were necessarily considered “high class,” but my parents’ most common refrain growing up was, “Life ain’t fair and you ain’t special.” Seems like a message more kids would benefit from hearing.

4+
ike
Member
ike

Remember, you’re unique, just like everyone else.

1+

The Daily Zeitgeist

Food Innovation Meets Financial Innovation

By Rusty Guinn | August 21, 2019 | 5 Comments

Markets are boring. Hey, what if we securitized wokeness?

Read more

Frauds and Traitors

By Ben Hunt | August 16, 2019 | 2 Comments

Throwing words like “Fraud!” and “Traitor!” around so casually … it doesn’t reveal the true frauds and the true traitors.

It makes it easier for them to hide.

Read more

When Potato Salad Goes Bad

By Ben Hunt | August 15, 2019 | 4 Comments

On Tuesday, the Macy’s narrative was “I think they can make their comps.”

On Wednesday, the Macy’s narrative was “I think they can cover their dividend.”

This is what it means for a narrative to go bad. This is what it means for a story to break.

And when a story breaks, so does the stock. Not just for a little while, but for a loooong time.

Just ask GE.

Read more

A Cartoon in Three Parts

By Rusty Guinn | August 8, 2019 | 2 Comments

Cartoons are not evil. And yet they are the engine behind the Long Now, and very much at the center of our financial Zeitgeist. What is a clear eyed, full-hearted investor and citizen to do?

Read more

The Last Chance

By Rusty Guinn | August 7, 2019 | 6 Comments

You want scarcity? Access to the upper echelons of high society? Well, say no more. It’s your very last chance to buy this most special, most fantastical, most legendary, most unattainable of whiskies.

Read more

Are You Sweet Talking Me?

By Ben Hunt | August 6, 2019 | 4 Comments

It’s my favorite part of any Batman movie … that scene where the henchman pays a visit to the crazed supervillain – the Joker is the gold standard here – and you just know that the meeting is about to go terribly, terribly awry for the thug.

It’s a funny scene in a movie.

It’s a crappy way to run a country.

Read more

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the market with certainty or guarantee future investment performance. Past performance is not a guarantee of future results.

Statements in this communication are forward-looking statements. The forward-looking statements and other views expressed herein are as of the date of this publication. Actual future results or occurrences may differ significantly from those anticipated in any forward-looking statements, and there is no guarantee that any predictions will come to pass. The views expressed herein are subject to change at any time, due to numerous market and other factors. Epsilon Theory disclaims any obligation to update publicly or revise any forward-looking statements or views expressed herein. This information is neither an offer to sell nor a solicitation of any offer to buy any securities. This commentary has been prepared without regard to the individual financial circumstances and objectives of persons who receive it. Epsilon Theory recommends that investors independently evaluate particular investments and strategies, and encourages investors to seek the advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s individual circumstances and objectives.