The 'Narrative' Vortex

No shortage of stories to support whatever investment thesis you want to believe.

(This friendly reminder: My Red Flag Alerts and selected On the Street content are no longer free. But while the paint is still drying on my paywall, my introductory price remains. Here’s more on my decision to go paid, and what to expect from my Red Flag Alerts.)

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In this market, which is always grasping for something to hang its hat on, the narrative du jour is as good a reason as any…

What will the narrative be today? Tomorrow? this week?

It’s becoming downright comical...

Or as I wrote on social media the other day...

A narrative here, a narrative there... there’s always a narrative everywhere.

It depends, I supposed, on whichever way the algos are blowing.

Or whatever you want to believe.

Narrative Rotation

Good old-fashioned “market rotation” has morphed into “narrative rotation”...

Like the narrative of a few years ago that a recession was just around the corner. (It wasn’t.)

Or the narrative of just a few weeks ago that a recession is here or near.

Or the one last week... that it isn’t.

Or the that says any lowering of interest rates by the Fed will, early on, cause the market to collapse.

Or the most recent one, which says just the opposite.

But Wait, There’s More…

Or the narrative that gen-AI was most important development since the creation of the Internet itself.

Or the one that it was all a big bubble that won’t amount to any more than a laughable moment in Wall Street history.

But to be fair, some narratives are right…

Like the one about an unwind of the so-called yen “carry trade.” This specific trade involves borrowing against the yen or to buy dollars or other higher-yielding currencies. It’s a narrative that was making the rounds for months among currency traders and others who deal in the esoterica of Wall Street… but a narrative, nonetheless.

And it was pretty specific: That when it was unwound, and it would unwind, it  would cause a worldwide unwind of the markets.

And it did, for two days. The second part of the narrative was that the very same carry trade unwind would signal the start of something even bigger and considerably longer, which of course, didn’t happen.

The good thing is, nobody is keeping score.

Tuning out the Noise

And that’s the point…

Narratives come, narratives go, but the noise they emit never seems to slow.

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DISCLAIMER: This is solely my opinion based on my observations and interpretations of events, based on published facts and filings, and should not be construed as personal investment advice. (Because it isn’t!)

I can be reached at herb@herbgreenberg.com