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 chord that has been struck in Narrative-world. And whenever we think there’s a story behind the narrative connectivity of an article … we write about it. That’s The Zeitgeist. Our narrative analysis of the day’s financial media in bite-size form.
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I really miss The Far Side.
I thought about this Gary Larson cartoon when I heard a live example of a narrative going bad on CNBC yesterday, before we even got into the whole “buh, buh the yield curve” ™ thing.
The Macy’s narrative went bad yesterday.
Bloodbath at Macy’s: Stores see ‘massive bleeding off of traffic and customers’ [Fox Business]
“Rising inventory levels became a challenge based on a combination of factors: a fashion miss in our key women’s sportswear private brands, slow sell-through of warm weather apparel and the accelerated decline in international tourism,” Macy’s Chairman and CEO Jeff Gennette said in the earnings release.
“We took markdowns to clear the excess Spring inventory and are entering the Fall season with the right inventory to meet anticipated customer demand.”
What do I mean when I say that the narrative went bad?
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.”
The Macy’s narrative is no longer about its P&L, but about its balance sheet. In narrative-world (if not the real-world), Macy’s is now fighting for its life. The question is no longer whether Macy’s turns a nice profit, but whether Macy’s can survive.
The Macy’s story is broken.
This oldie but goodie ET note is driven by a beautiful line from Arthur Miller’s “The Crucible”:
“Until an hour before the Devil fell, God thought him beautiful in Heaven.”
Or in the modern context, until an hour before Macy’s earnings release, Jim Cramer thought the company was a Buy. The next morning? Not so much.
What’s the moral of this story, other than that God hath no fury like Jim Cramer scorned?
When a company’s story breaks, the stock breaks, too. And not just for a little while, but for a loooong time.
Healing a broken stock can take years and years. It requires a new story to replace the old, broken story. It may never happen.
Just ask GE.
It’s not just Macy’s, everything is broken. I don’t trust anything anymore. Quite frankly, even reading this blog has become negative for me. I can’t count the times I’ve asked myself “why am I reading this NOW?”, only to be disappointed in my interpretation.
So why don’t I quit reading? Great question. It’s because I’m mentally weak and the writing is too good. But I’m trying.
Congratulations. That means you have ascended to the next level in the game. The one where you realize that your life is built on a bunch of ridiculous assumptions about what the world is and what the world wants from you.
Reason I keep reading?
Clear Eyes, Full Heart, Can’t Lose
Still resonates with me.
Plus Rusty and Ben know all the good bbq places in Fairfield.
GE and Sears will be the poster children of this market top
no…bc like any horrific car wreck on the highway, you can’t help but slow down to look.
Continue the discussion at the Epsilon Theory Forum