The bottom of the Dead Sea is the lowest land mass place on earth. In order for a sea to be alive it has to flow and the water in that basin has nowhere to go. I was talking to a friend about the market and she made a comment about valuations falling back to earth, and it triggered this map in my mind. Suppose the valuations fall back to the lowest place? Suppose all the leverage, narrative, smoke, mirrors, sales gimmicks we get sold by CNBC FBN Bloomberg, guys with pony tails and bald heads, what if it all falls back to the lowest place, not a place of zero but a kind of gravity well of negative vitality. Why Not? Covid, Fires, Hurricanes, political idiocy, clueless arrogance, near open war fare in the streets, deficit to 6T, unemployment sky high, bankruptcy, what’s to stop it?
I belong to Real Vision as a narrative source which I use to inform my judgements (among others) and they sent me a survey about whether or not Covid (which actually to me means the present state of affairs) has changed reality forever. In my opinion the answer is yes. Reality feels different. There is a subtle hum of volatility and loss of cohesion in the background that didn’t exist before 2020. There is a radical shift in the narrative.
In times past the narrative oscillated around reality. It was like a metronome.
The center was reality and the narrative revolved around reality sometimes slightly correlated to the negative, sometimes to the positive, but always correlated to a relatively high degree. In times of crisis the correlation became very high. I think that correlation no longer exists.
Now what exists is alternate realities based on narrative alone. There is still a reality, you still need food etc but you can live entirely in a screen, work in a screen, see your people in a screen, and base your judgements entirely on what is presented by the screen and there is no longer much correlation between screen and reality. Reality and narrative have become uncorrelated or even counter correlated. To the extent the narrative is uncorrelated is the extent it becomes unreal and so who is going to win, reality or unreality?
That’s what is different now and why things will never be the same. We now live in a time where we have become unhinged, literally and I see little reason for people to become hinged once again.
Money in the future will be made by exploiting “unhingedness” If the narrative is a complete lie then the narrative will necessarily be crafted to separate you from your money, and that’s how you get to the bottom of the Dead Sea. That’s how you get captured by a gravity well.
We see vendors for THC based hallucinogens. It’s a big industry. In Canada they are expanding to other hallucinogens under the guise of “religion”. I recently met someone who was undergoing a series of ketamine “therapies”. Her particular series cost $11.000. In their nature these things are dissociative to the personalities of the users. Is it a measure of depravity that we have turned personality dissociation into a business under the guise of medicine and religion? I’m not speaking from a moral perspective but at what point does “freedom” become “slavery”? I expect at that point the future no longer a linear progression of the past.
I use a vendor that carves up risk into 4 quadrants based on economic growth and inflation
- QUAD 1 = Growth Accelerating; Inflation Slowing
- QUAD 2 = Growth Accelerating; Inflation Accelerating
- QUAD 3 = Growth Slowing; Inflation Accelerating
- QUAD 4 = Growth Slowing; Inflation Slowing
1 and 2 are when long portfolios make money
3 and 4 are when short portfolios make money
We are in Quad 3 also known as stagflation. The probability of Quad 4 is rising. Quad 4 is what happened in March. It is called deflation. Today the NAS is down 200 pts and the NASVOL (VXN) is up 2.5% to 37.