Watching The Narratives

Tyler Durden's picture

Submitted by Ben Hunt of Salient Partners Epsilon Theory blog,

You think you’re alone until you realize you’re in it. Now fear is here to stay. Love is here for a visit.


Elvis Costello, “Watching the Detectives”

A quick email to follow up on this week’s market debacle. The question, of course, is whether this was simply a blip – yet another one-day BTFD opportunity – or the start of something bigger and worse. The answer, I think, depends on how the media Narrative surrounding the week takes shape over the next several days. That’s what I’m watching closely, and I think you should, too.

Right now the media Narrative about the week is in complete disarray, because there was no obvious “reason” for the sell-off. Or rather, there were too many possible reasons, from bad earnings reports to the Argentina default to worries about a strong jobs number to Espirito Santo cracking up to new Russian sanctions to just a generic “we were overdue for this”. From a game theory perspective, this sort of seemingly out-of-the-blue sharp move had very little to do with anything that happened this week, but is a natural by-product of the Common Knowledge Game in action. The game was put into motion by Yellen’s recent version of Greenspan’s “irrational exuberance” words, together with continued Fed-speak about tightening sooner and faster rather than slower and later. As described in the Epsilon Theory note “When Does the Story Break”, the Common Knowledge Game plays out in investors’ heads, not in their behaviors, until a predictable tipping point is reached and a large group of investors simultaneously heads for the exit. Yesterday’s sell-off really began a couple of weeks ago. We’re just seeing the market manifestation of it now.

Were this week’s events important? Sure, particularly the Espirito Santo news, which puts a big crimp in the market-positive story that the ECB will take over the Fed’s role as the global punchbowl provider (see “The Red King” for more). These events were each catalysts, providing a wrapper of sorts for the decisions to sell. But they were neither necessary nor sufficient for the market sell-off. They just happened to be the subway train that stopped in front of us when we walked into the station. If it hadn’t been this train, another would have been right behind it.

So what now? Everything hinges on how the “Missionaries” like Yellen and Draghi and their mouthpieces respond. Like clockwork, Jon Hilsenrath is already out with his first remain-calm-all-is-well piece, and I expect several more before markets open on Monday. But we haven’t heard yet from the really big voices, and we have yet to see how the media microphones either amplify or mute the second-tier Missionaries like Hilsenrath.

I’ll be watching closely and posting occasional updates on Twitter @EpsilonTheory, but in general you want to see more articles like Hilsenrath wrote today (jobs data not strong enough to make Fed accelerate tightening) and fewer about failed loans and cracks in the monetary policy dam that the Fed and ECB have built. On this latter point, an Argentine default has extremely little impact on the Narrative of Central Bank Omnipotence. European bank defaults and forced capital raises, on the other hand … well, that’s the sort of thing that can make the Red King wake up. And that will not be a pretty sight.

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Deathrips's picture

Fuck the narrative... the TV is a mind control device.

Math doesn't lie...ponzis are fraud.

Mathematically going to end. Can cannot be kicked forever.


Fuck Money Changers....Long Independence!




macholatte's picture

A Harley Biker


A Harley Biker is riding by the zoo in Washington, DC when he sees a little girl leaning into the lion's cage.  Suddenly, the lion grabs her by the collar of her jacket and tries to pull her inside to slaughter her, under the eyes of her screaming parents.

The biker jumps off his Harley, runs to the cage and hits the lion square on the nose with a powerful punch.

Whimpering from the pain the lion jumps back letting go of the girl, and the biker brings the girl to her terrified parents, who thank him endlessly.  A reporter has watched the whole event.

The reporter addressing the Harley rider says, 'Sir, this was the most gallant and bravest thing I've seen a man do in my whole life.'
The Harley rider replies, 'Why, it was nothing, really.  The lion was behind bars.  I just saw this little kid in danger, and acted as I felt right.'
The reporter says, 'Well, I'll make sure this won't go unnoticed.  I'm a journalist, you know, and tomorrow's paper will have this story on the front page.  So, what do you do for a living, and what political affiliation do you have?'
The biker replies "I'm a U.S. Marine, and a Republican".
The journalist leaves.
The following morning the biker buys the paper to see if it indeed brings news of his actions, and reads, on the front page:


max2205's picture

I wouldn't do Yellen missionary or doggy....gloryhole, maybe if I was high in Denver....

svayambhu108's picture

Bad trip, she has teeth in her pussy

Implied Violins's picture

It's 'Mr.' Yellen. Those are man-boobs.

Deathrips's picture

It must be dizzying running in circles dictated by blue and red lines provided by the programming narrative. Tangible results? Nope. Righteous exceptionalism....pointless. Controlled opposition? Definitely.

With all that still dont get that its a waste of time?



WhyDoesItHurtWhen iPee's picture

Bankster Lingo / Excuses:


  • Irrational exuberance
  • Noise
  • Unexpected facts
  • No one could have seen this coming
  • Doing gods work
  • Big bazooka
  • .....
MH17FLIGHT's picture

My last pay check was $9500 working 12 hours a week online. My sisters friend has been averaging 15k for months now and she works about 20 hours a week. I can't believe how easy it was once I tried it out. This is what I do...

PacOps's picture

Faster please!

what's that smell's picture

fuck the narrative!

ben hunt: queen of the narrative.

why did the market go down? the narrative!

why did the market go up? the narrative!

fuck the narrative!

toady's picture

I don't watch cnbs, but the local news blamed it on Argentina.

Pairadimes's picture


BeetleBailey's picture

Here's my narrative;








.....hasn't changed in a while....AND FUCK THE NAYSAYING HOPEY-CHANGEY ASSOHOLICS....

g speed's picture

past performance is no indication of future performance--(disclaimer)

blindman's picture

Baseball’s Battered Bastards Made the Game Fun… and Occasionally Dangerous
By Joe Kloc
Filed: 7/15/14 at 1:01 PM
James MacArthur - The Ten Commandments Of Love (Scepter 1250, 1963)
pidgin english, elvis c.
Two little Hitlers

blindman's picture

undecipherable, extremely complex, proprietary
algorithmic, insider market moves with no
regulatory framework that need be recognized, an insider's
dream come true. a dream, made of dream stuff, in a dream;
let loose on a road and population worn and weary.
Grandma in standoff with police

fzrkid's picture

If anything this is merely a ~20% correction at which time higher highs will ensue. In other words BTFD

The FED cannot let interest rates rise this time, like back in 2006-2008. This is where the FED has their back against the wall.


Auntie Yellen will release statements ensuring the economy is on the mend while continuing to buy billions of dollars of GVT debt.


Go along your way and dont mind the chatter. We are not likely to see the major correction until sometime in September 2016, which will coincide with the inoguration of a new POTUS.

This will allow 'NEW' accomodative policy to be implemented becuase the new POTUS doesnt have any other choice.


I missed the glourous ride UP in the market, but I am ready to SHORT THE SHIT (STS) out of the market on the way down.

El Vaquero's picture

What new accommodative policy?  There is nothing left, except for bold, outright, in your face theft.  Bail-ins and stealing retirement accounts instead of taxes and income via seignorage.  The cocksuckers will try to spin it as something else, i.e. you get equity in the bank, so you're a shareholder!  Or "we're doing this to protect you from those mean investment bankers, and gubment bonds are safe."  And after (and probably during) that, they'll still have to print MOAR if they want to keep the system going.  


IMO, we're going to see a bout of deflation because the Fed cannot keep on printing (though it must also keep on printing = catch-22) and when the wheels start to come off the bus, they're going to flip the fuck out and go pedal to the metal.  

oudinot's picture

FYI: January 31, 2017 will be the date of the inauguration of Nov.  2016 elected POTUS.

Professorlocknload's picture

A Coyote doesn't change his ways 'till his pelt in hanging on the fence.

Oh, we don't do that anymore?

El Vaquero's picture

But coyotes do change some of their ways.  Once they're in an area where they get hunted, they are more apt to stay away from humans.  But the ones behind my house have come to within 10' of me.  They'll still eat chickens and rabbits, but they learn which are the safest ones to pursue.

Abitdodgie's picture

Coyotes hear in North Dakota are getting smarter you should see how they hunt cows in the winter.

El Vaquero's picture

The coyotes in Sioux Falls, SD, Washington DC, Wall Street, etc... aren't being hunted at all.  

The Alarmist's picture

I was recently passed by a fox trotting along a street in the City of London around 10pm.  More and more stories of fox incursions into the cities since they banned fox hunting.

ebworthen's picture

No doubt CNBC will be chock-full of "All is well" narratives come Monday.

Here's another Elvis Costello and the Attractions winner:

From the album "Imperial Bedroom" - "Beyond Belief":

"History repeats the old conceits
The glib replies the same defeats
Keep your finger on important issues
With crocodile tears and a pocketful of tissues

I'm just the oily slick
On the windup world of the nervous tick
In a very fashionable hovel

I hang around dying to be tortured
You'll never be alone in the bone orchard
This battle with the bottle is nothing so novel

So in this almost empty gin palace
Through a two-way looking glass
You see your Alice..."

Loucleve's picture

Actually, Marketwatch is full of 20% correction stories.

A Lunatic's picture

I could care less, but I'm too lazy.........

Atomizer's picture

Tomorrow, CNBC will roll out the new theme. Jump back into the market, the water is warm. Just stick a toe into the richest undercurrent around. Jump in bitchez. 


Playtime's Over's picture

Will math rule the day or will the fed step in after hours.  News at eleven.

joego1's picture

Don't worry Yellen will slay the beast with her Macro Prudential- aka macro poodle.

blindman's picture

seems the impulse to extract runs up
against resistance to give freely, finding
a paucity of good will to exploit every
2nd and 4th iteration. this goes on and on
to the zeropoint, death of that particular
sequence in the set.
the process requires no creative thought
and exemplifies the normal operation of
nature and markets.
Zero Point : Volume II - The Structure of Infinity FULL MOVIE 1080p
as has been said it has all been said, figuring that
out is the challenge but then, "so what"?
that too has been said.

GrinandBearit's picture

The futures should pop back up tonight. 

Retracement of over 50% of Thursday's loss by 4pm Monday.

Thomas Aquinas's picture

Game theory? What rubbish! Here is the governing power of events.


Wisdom 14:3

"But thy providence, O Father, governeth it:"

besnook's picture

yes the market is delusional so that fits into place.

Eyeroller's picture

A story from history come to mind here.

When Henry VIII died, he was succeeded by his 9 year old son Edward VI.

A few years later, Edward contracted tuberculosis (a death sentence back then).

His sisters Mary and Elizabeth were next in line for the throne, but at one time had been declared illegitimate.  The next legitimate heir was Frances Grey, who gave up her rights in favor of her eldest child, Lady Jane Grey.

Northumberland married one of his sons to Jane, and planned to rule through her once Edward was dead.

There was only one problem:  the nobility had not yet agreed to naming Jane as heir apparent, and Edward was fixing to die at any minute.

So Northumberland got a quack to administer a potion that would extend Edwards life for a crucial week.

The potion contained arsenic, and Edward suffered greatly, but was kept alive for the needed time.

Northumberland's plans came to nothing when the English people supported Mary and overthrew Jane after 9 days.

Northumberland (and the innocent Jane) were executed.

What does this have to do with the markets?

Yellen is Northumberland.  QE is the arsenic prolonging the life of the terminal stock market bubble.

Here's hoping Yellen's fate is the same as Northumberland... (and here's hoping we don't get stuck with a Bloody Mary)

besnook's picture

this is the most predicted correction in the history of the market(by the establishment). that is enough to know it is a setup. btfd. when rates start going up any second the market will go to the moon. who cares if it will be an inflation proxy spike.

I Write Code's picture

I don't think the market is capable at this point of organic moves, I've said for weeks that Yellen was just unwinding some technical indicators, and if this is true it looks to complete within another week or two, and the way things go now, maybe it will finish tomorrow - just take the Dow down to the 200ma, and maybe a tad below.  Then she will have it just where she wants it, and then what will she *do* with it, that is the real question.  The Fed might just release a spreadsheet every January 1 of all the price changes scheduled for the next year.

I suppose it's barely possible that the market still can move itself, and that Yellen's scheduled controls simply slipped a little last week, but even that only means the Fed will step up more strongly this week.  There have been several instances over the last six months where the market went weak for a couple of days before the Fed stepped in to fix it.

It is possible, however, that we've seen the local highs.  Yellen's plan I think is more likely to keep things stabilized around that 200ma rather than recover - after close last Friday at 16493 Dow will go down and stay around 16300 and not return back above 17100.  Stay tuned.

PeeramidIdeologies's picture

3%, 5%, 8%....

If I had a million dollars... I'd be rich!


Rusty Shorts's picture

 - "There are some people who realize that the physical evidence indicates that the official story is wrong, but don't understand what purpose or interest the government may have had in carrying out the attacks and thus have a psychological relation to the entire event as remaining quite mysterious even though the government's claims are patently absurd. I'll resolve that for you.

On 9/11/91 Bush Sr. spoke before Congress calling for a new world order. Alright, so the president is announcing a major initiative to the world. What could he be up to?

As the USSR was collapsing, there were major operations underway to seize control of their industry. We need to lay down a little historical context for those unaware before proceeding.

Throughout the 1980s the CIA was heavily involved in cocaine and arms trafficking, money laundering, etc. The most famous name here might be Oliver North, but Bush Sr. is neck deep. Mena, Arkansas is a major hub for this operation under the jurisdiction of Bill Clinton. Long trail of deaths surrounding North, Clinton, Bush, Mena, etc. You can educate yourself on those details.

This scandal goes mainstream around 1986. In 1989 you get the first major form of collateralized debt obligations in the form of Brady Bonds, invented by Bush Sr.'s treasury secretary. Minimally informed people are aware of the centrality of CDOs to the 2008 financial panic and the endemic fraud to securities trades of this type.

One of the Bush/North associates is Neil Livingstone, who acts as a go between to Semion Mogilevich. Mogilevich is one of the biggest mafia leaders in the USSR at the time. Mogilevich has had money laundering through the Bank of New York exposed to the tune of $10 billion. He is a major arms dealer at the time, and also heavily connected to al-Qaeda. Part of a bargain Livingstone tried to broker with DoJ involved Mogilevich handing over a bunch of his al-Qaeda connections.

Around 9/11/91 a bunch of fraudulent Brady Bonds are issued through the Bank of New York, Mogilevich's personal money laundering machine. This manifests ten years later. If you go back and look at the settlement imbalances at banks after 9/11, even the banks operating out of WTC complexes don't have any real settlement issues. There is one major exception however: Mogilevich's money laundering hub, the Bank of New York, is reporting book imbalances in excess of $100 billion per day following the attacks. The rules governing security clearance were lifted immediately after 9/11 - allegedly due to widespread problems - but really just to allow BoNY to clear it's balances without a record. It's worth noting that BoNY did not sustain structural damage on 9/11 - not in the WTC.

So these 100s of billions of fraudulent securities that were not clearing in the days after 9/11 - where did they come from? What were they used for? This is how the west launched their invasion of Russia following the collapse. You'll find exposes about crates of freshly printed US bills being shipped to Russia like The Money Plane in NY Magazine, used to buy influence; the other side of this is the securities fraud used to buy assets. It's estimated that something like 40-50% of Russia had been bought up through the mafia by late 92 or 1993.

In 2000/2001 Putin comes onto the scene. He starts nationalizing Russian assets that were seized by the US via the above mentioned securities fraud / money laundering and putting pressure on the mob. Next thing you know 9/11 happens. There are a lot of bones to pick with the official story, but rather than taking up those issues I'd like to highlight the importance of some officially acknowledged but underreported facts.

On 9/9/01 Ahmad Massoud is assassinated by a fake TV crew that disguised a bomb as a TV camera. Two days later the secret service denies access to a couple of guys claiming to have an interview lined up with Bush in Florida on the morning of 9/11. This is our first direct threat against Bush of the day and indication of some larger plot than hijacked planes. Upon learning of the attacks, Bush insists on returning directly to Washington. In flight, a threat is received in the form of a call from an unknown source saying "Angel is next," angel being code for the president that only insiders would have. (* "Can you confirm the substance of that threat that was telephoned in...that Air Force One is next and using code words?" Fleischer: "Yes, I can. That's correct."(September 13)* )Bush is at this point aware that there is some sort of coup effort going on; for example, all the reporter's onboard AF1 are required to turn their cellphones off because they are worried about the attacking faction tracking cell signals - a capability we can all agree is well beyond that of al-Qaeda.

So Bush is under threat from people with high level insider knowledge. Press secretary acknowledged all this on national TV the day after (Angel is next being called in). Bush diverts to Barksdale which is basically the #2 nuclear command site. After a couple hours there he proceeds to Offutt, which is the #1 nuclear command site. You should also be aware of a variety of drills running on the day of 9/11, Vigilant Guardian. This is a full scale mock up of nuclear war; the whole infrastructure is activated for first strike (incidentally, part of the Vigilant Guardian drill in 2001 included a hijacking of planes as the instigator of the conflict). So what is Bush doing going to Barksdale and Offutt? Clearly trying to bring the nuclear forces to heel in light of learning of high level insider power plays.

This might be starting to sound a bit over the top - high level insiders seizing control of nuclear infrastructure and threatening the president with it. But only a few years later we have a similar incident in 2007 as 6 nuclear weapons are seized, generally regarded as intended for use starting the war in either Iran or Georgia. Later, in 2013, we again have nukes going off base unauthorized. Hours after it was reported in the media Sen. Graham is on TV warning of a nuke hit on South Carolina to be blamed on Syrian rebels; two of top nuclear commanders get dismissed in the following weeks. So high level insider fighting over the nuclear arsenal is pretty standard stuff, well known to the public.

With the question of a struggle over the nuclear arsenal now being common sense rather than shocking, we consider Bush caving to the terrorism line and starting the whole war on terror. You have Putin immediately backing off the seizure of assets in Russia. It won't be until the last couple of years that Putin resumes his assertion of authority over Russia; the US responds in kind with attacks on Syria and Ukraine but Russia has since quietly updated it's missile program and is prepared for nuclear war this time around; you now see a defiant Putin in the face of the 9/11 coup faction. Alongside this remarkable shift in geopolitics, there is an emerging anti-dollar block with the BRIC countries establishing an infrastructure bank last year. Just weeks ago, Glazyev announced this and is widely regarded as being the mouth of Putin; he organized the recent gas deal with Chin for example.

So you see 9/11 was a pivotal event used to extend the US dollar empire under threat of nuclear war for another 10-15 years in the face of an assertive Putin back in 2001 and growing domestic problems for the US Government. (You may recall the 90s was full of anti government militancy, concern over globalization, NAFTA, extraordinary distrust, in general what you would expect of citizens in an empire with no apparent external threat ... the cold war had ended)

So now that broad outline of purpose and motivation for 9/11 is clear, it's easier to come to terms with what your eyes tell you looking at Building 7 implode into its foot print at free fall for example. You don't even necessarily have to view it as an evil thing; the US people are quite severely fucked without something being done to backstop the US dollar."

 - author unknown

gdpetti's picture

And remember who was involved in most all of those ops... Mossad. These type of Jews share the same psychopathic traits as their Christian buddies in the Agency, so it isn't a surprise to find them often in bed together sharing a smoke... and is it any surprise to find them operating with the same false front ops like the British as well? Moslem Brotherhood? How about our Al Qaeda or Mossad's Hamas... how about all the 'collective security' these agencies have developed as NGOs over the years? Like that infamous Israel security company that oversees ops at many an airport like the one in Ukraine from which that plane was sent on its way with a friendly little package of psycho-love? And these financial markets are prone to the same 'pulling of the rug', which shouldn't be too far off given the cosmic timeline. It seems the closer that day comes next year, the further these masks are falling from these psychos faces.... do we like what we see? Remember that line about 'If you build it, he will come'?...  make it a she and imagine lots and lots of 'dark matter' grounding out the system and putting on a real fireworks show.. should be fun, no? The market should react as it usually does when the rug gets pulled out... only problem is when a bank holiday gets declared to prevent anyone running away... not that it matters, because in this game of FU Buddy, another film line comes into play, "In the end, there can be only One." That should provide some stress to test the system's response or lack therein.

PeeramidIdeologies's picture

That's all well and good but as everyone knows, it's not what you know, it's what you can prosecute.

The Alarmist's picture

You can indict and prosecute a ham sandwich if you are so inclined.  It would be nice to have its confession to seek a conviction, but circumsantial evidence will fit the bill if a confession cannot be obtained voluntarily, by coercion, or otherwise.  

22winmag's picture

A grand jury can do it before noon.

Last of the Middle Class's picture

The narrative is that everything is fucking rosy until it isn't then there will be gazillions of talking heads who said they saw it coming. Where are they now?