A policy-controlled market, whether it’s today’s investment environment or the 1930s or the 1870s, places enormous pressure on investors—for yield and consistent return, to be sure, but even more so for a resurrection
Edward Tufte is a personal and professional hero of mine. Professionally, he’s best known for his magisterial work in data visualization and data communication through such classics as The Visual Display of Quantitative...
Apr 28 – "The primary instruments of monetary policy in 2016…are placebos,” says Ben Hunt PhD. In this podcast, Ben explains what this means for markets, under what conditions placebos fail to work, and the growing number of parallels between the 1930s and today.
I’ve had four or five true migraines in my life, mostly from getting whacked on the head with something like a baseball or a sharp elbow in basketball, and I honestly can’t imagine how horrible it must be to suffer from chronic migraines...
In the second half of 2014, export volumes in every major economy on Earth began to decline, the result of divergent monetary policies that crystallized with the Fed’s announced tightening bias in the summer of 2014. This decline in trade...
For the past six plus years, ever since the Fed launched QE1 in March 2009, we have lived in an era I’ve described as the Golden Age of the Central Banker, where the dominant explanation for why market events occur as they do has been...
The susceptibility of credit spreads to systemic risk(s) that I was describing last month was borne out last week. Protection on the ITRAXX senior European financial debt index widened by over 45 bps from 92 bps at the close of January to 137 bps at the close on February 8...
I'm going full-nerd with the "Lord of the Rings" introduction to today's Epsilon Theory note, but I think this scene—where Denethor, the mad Steward of Gondor, orders his son Faramir to take on a suicide mission against Sauron's overwhelming...
Dec 30 – Ben Hunt says that we are moving into a global economic environment where traditional economic models no longer apply. He discusses why this means more volatility, liquidity shocks, and how investors should prepare as move into 2016. Ben Hunt PhD is the Chief Risk Officer of Salient...
The world made two discoveries last week. Everyone is aware of the first discovery – that ISIS is not “a junior varsity team” but an able protagonist in what Pope Francis quite rightly calls “a piecemeal third World War”. Very few are aware of the second discovery – the existence of...
This is the concluding Epsilon Theory note of a trilogy on coping with the Golden Age of the Central Banker, where a policy-driven bull market has combined with a machine-driven market structure to play you false.
DIY’s newest frontier is algorithmic trading. Spurred on by their own curiosity and coached by hobbyist groups and online courses, thousands of day-trading tinkerers are writing up their own trading software and turning it loose...
Sep 9 – Cris Sheridan welcomes Ben Hunt PhD, Chief Risk Officer of Salient Partners and author of the Epsilon Theory newsletter. Ben discusses the role of narratives in driving large-scale investment behavior and market...
Back in my portfolio manager days, I was a really good short seller. I say that as a factual observation, not a brag, as it’s not a skill set that’s driven by some great intellectual or character virtue. On the contrary...
Jun 10 – Signals are everywhere, but sometimes it's just noise. For example, many big names in the investment world are pointing to recent large swings in the bond market as a signal of future financial instability. Cris Sheridan welcomes...
Oct 23 – Cris Sheridan welcomes Ben Hunt PhD, Chief Risk Officer at Salient Partners. They discuss the difference between AI (artificial intelligence) and a more cybernetic-oriented view of intelligence, and how we see the latter taking place in the use of Big Data for mass surveillance, tracking, and the prediction of human behavior.
Global growth is really bad! Hooray! That was the verdict of U.S. markets yesterday, as the Fed minutes “revealed” (to use the breathless phrasing of mainstream financial media) a “growing concern” with the damaging impact of European torpor...
Two years ago, the new seven-member Standing Committee of the Chinese Communist Party Politburo — the most powerful political entity in the country — was introduced to great fanfare. All seven men walked on stage wearing a dark suit and a red tie, but to me the most striking aspect of their appearance was their hair.
We’re all familiar with the Queen of Hearts from Alice in Wonderland, less so with the Red King. He’s sleeping all the while, and when Alice goes to wake him up she’s warned off by Tweedledee and Tweedledum, who tell her that everything in Wonderland — including Alice herself...
Deng Xiaoping and his ally/mentor, Zhou Enlai, are the architects of modern China, of China as a Great Power. For 30 years Zhou tempered the Maoist ideology of permanent revolution, preserving the kernel of a stable army and stable government bureaucracy, setting the stage for...
