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Ben Hunt

Ben Hunt

He is the chief investment strategist at Salient, a $14 billion asset manager based in Houston and San Francisco, and the author of Epsilon Theory, a newsletter and website that examines markets through the lenses of game theory and history. Over 100,000 professional investors and allocators read Epsilon Theory for its fresh perspective into market dynamics.

Articles by Ben Hunt

Self Assured Destruction

4 days ago

Epsilon Theory PDF Download (paid subscription required): Self Assured Destruction

In the 1960s, our Cold War strategy evolved into Mutual Assured Destruction, a dangerous but stable relationship with the Soviet Union.

In 2020, our Covid-19 War strategy devolved into Self Assured Destruction, a dangerous and utterly unstable relationship with the SARS-CoV-2 virus.

As the story goes, a few weeks after JFK was inaugurated in January 1961, his new Secretary of Defense – Robert McNamara – was briefed by the head of Strategic Air Command on US nuclear warfare strategy. Under the “Massive Retaliation” doctrine of the day, there were two options: go and no-go. Any provocation by the Soviet Union sufficient to trigger a go action would result in the immediate launch

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The PPP Narrative for Asset Managers

6 days ago

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the

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The Hertz Story Isn’t What You Think

6 days ago

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Carl Icahn, sharing a laugh

U.S. car rental company Hertz Global Holdings (HTZ.N) said on Tuesday it has paid about $16.2 million in retention bonuses to a range of key executives at the director level and above, days after the company filed for bankruptcy protection.The company paid President and Chief Executive Officer Paul Stone $700,000, and Executive Vice President and Chief Financial Officer Jamere Jackson $600,000 as retention bonuses, Hertz said in a filing to the U.S. regulators.Last week, the board of the company, which counts billionaire investor Carl

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Children of Men

13 days ago

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the

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A Truth That’s Told With Bad Intent

20 days ago

Epsilon Theory PDF Download (paid subscription required): A Truth That’s Told With Bad Intent

A truth that’s told with bad intentBeats all the lies you can invent.William Blake (1757 – 1827)

That’s Isaac Newton in William Blake’s painting, one of the major villains in Blake’s philosophy. Why? Because Newton was a modeler, a proponent of Science with a capital S, the most repressive force in the modern age.

I think Blake was absolutely right.

Our narratives of COVID-19 are all lies.

They are lies of a particular sort, political narratives that have a nugget of truth within them, but are told with bad intent. They are told this way because it works. Because the nugget of truth hides a deeper, unpleasant truth. And a Big Lie.

Some are narratives of the

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Everything You Always Wanted to Know About CDS … But Were Afraid to Ask

22 days ago

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the

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American Idol

27 days ago

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An 89 year old man who hasn’t gotten a haircut in months sits at the dais, alone, accompanied by a hotel ballroom all-purpose drinking glass filled with Coca-Cola and a stack of printed slides. The slides are text-only, black font on stark white. No frills.The speaker is the most legendary investor and business personality in the world. His financial conquests have accrued an almost mythological tincture in their telling and retelling over the decades. He is Daedalus, having built a labyrinth of intersecting interests from insurance to electricity, and then a pair of

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The Pent-Up Demand Narrative

29 days ago

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the

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The Bear Stearns Bounce

April 23, 2020

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the

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Bear Stearns and the Narratives of Systemic Risk

April 23, 2020

In May 2007, Bear Stearns – one of the crown jewels of Wall Street – traded at nearly $160 per share. The S&P 500 peaked five months later, in October 2007. Five months after that, in March 2008, Bear Stearns was taken out in the street and shot in the head by regulators. The stock closed at $2 per share that day. A few weeks later, the Bear Stearns carcass was sold to Jamie Dimon and JP Morgan for just under $10/share, although the effective price (long story) for most people who hung on to the bitter end (employees mostly) was $5/share.

So ended the House that Ace and Jimmy built.

Everyone who has been in markets long enough has their Bear stories, and I’m no exception. I liked Bear Stearns the company and I loved Bear Stearns the people! Bear was one of my two prime

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Through No Fault of Their Own

April 20, 2020

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“I think we all agree with you that more money for Main Street is needed. But maybe not in spite of the money to all of these companies and whatever that make up the economy, as well. More money is needed everywhere, perhaps.Why does anybody deserve to get wiped out from a crisis created like this? It’s like a natural disaster! Why does anyone deserve to be wiped out? Wouldn’t that be immoral itself?”

“Mr. Clarida also dismissed a question about whether the central bank had created a “moral hazard” that encouraged risky investor behavior when the Fed

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Inception

April 14, 2020

Epsilon Theory PDF Download (paid subscription required): Inception

You infected my mind. You betrayed me. But you can make amends.

If you’re going to perform inception, you need the simplest version of the idea – the one that will grow naturally in the subject’s mind.

You mustn’t be afraid to dream a little bigger, darling. — Inception (2010)

We’re going to change the world, you know … you and me.

It won’t happen the way you think, because you think that someone is going to lead you. You think that someone is going to organize you. You think that someone is going to give you a top-down, political Answer in the form of something to march for or somebody to vote for, some ‘ism that requires your allegiance and attention.

You mustn’t be afraid to dream

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Our Finest Hour

April 2, 2020

There is no country in the world that mobilizes for war more effectively than the United States. And I know you won’t believe me, but I tell you it is true:

Last week we wrote a brief note (Getting PPE to Healthcare Workers and First Responders) to introduce our efforts to get personal protective equipment (PPE) directly into the hands of frontline heroes: healthcare professionals and emergency responders who put their own lives and their families’ lives at risk every freakin’ day to stem the tide against this virus.

Today I want to share with you the story of how this effort has come together into something real and tangible.

Today I want to invite you to join us.

First let me tell you what we’re NOT doing. We are not competing with federal or state emergency

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But Barry Sternlicht Says …

April 1, 2020

DISCLOSURES

This commentary is being provided to you as general information only and should not be taken as investment advice. The opinions expressed in these materials represent the personal views of the author(s). It is not investment research or a research recommendation, as it does not constitute substantive research or analysis. Any action that you take as a result of information contained in this document is ultimately your responsibility. Epsilon Theory will not accept liability for any loss or damage, including without limitation to any loss of profit, which may arise directly or indirectly from use of or reliance on such information. Consult your investment advisor before making any investment decisions. It must be noted, that no one can accurately predict the future of the

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Once in a Lifetime

March 29, 2020

Epsilon Theory PDF Download (paid subscription required): Once In A Lifetime

The Moving Finger writes; and, having writ,Moves on: nor all thy Piety nor WitShall lure it back to cancel half a Line,Nor all thy Tears wash out a Word of it.– Rubaiyat of Omar Khayyam (c. 1080)

That’s a poem attributed to Omar Khayyam, an 11th century Persian philosopher and all-around genius who lived near the modern-day city of Qom, the epicenter of the COVID-19 plague wracking Iran today.

Here’s another philosopher and all-around genius, David Byrne, saying the same thing one thousand years later.

And you may ask yourselfAm I right? Am I wrong?And you may say to yourself“My God! What have I done?”– Once In A Lifetime (1981)

David Byrne lives in the modern-day city of New York, the

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Getting PPE to Healthcare Workers and First Responders

March 23, 2020

I think there are two critical logistical requirements to coming out of the current crisis.

Develop and distribute a quick, dependable CV-19 test. Everywhere. On-demand.

Manufacture and distribute effective personal protection equipment (PPE) to healthcare workers and first responders. Everywhere. On-demand.

Rusty and I can’t do much to help the first, except to continue to call attention to its urgent need and its current lack. But maybe we can do something to help the second.

First a disclaimer. It’s an important disclaimer and you should read it.

Everything we’re doing here is a personal effort. Meaning that nothing I am describing here is affiliated with Second Foundation Partners (the company that Rusty and I started) or with Epsilon Theory (the brand name for

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Do The Right Thing

March 19, 2020

Epsilon Theory PDF Download (paid subscription required): Do The Right Thing

I’m angry that I have to write this note.

I’m angry that when we have people dying left and right in this country, when there is an urgent need for ALL of us to spend ALL of our time helping our families, helping our neighbors, helping our emergency responders and healthcare workers and social service providers to DO THEIR JOBS … that I have to write a note about the airline industry and how to structure the bail-out of United, Delta, American and Southwest. And Boeing.

But I do have to write this note, because of course the raccoons and the high-functioning sociopaths are out in force on this, looking to get their private losses socialized and their private gains locked in.

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The Python and the Pig

March 13, 2020

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Seattle-area emergency room

The city now has 95 confirmed COVID-19 cases, with 42 of them reported in the last 24 hours, he said. More than 1,780 people are under voluntary quarantine in the city, with an additional 29 people under mandatory quarantine, he said. By next week, the number of cases in the city is projected to rise to 1,000, he said. 

Here’s what I think de Blasio (and every mayor of every big city in the United States) is looking at. This is data publicly available from NYC Health.

The graph below is a count of the number of NYC emergency room

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Tick-Tock

March 12, 2020

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“Death inspires me like a dog inspires a rabbit.“

“If Hitler invaded hell I would make at least a favorable reference to the devil in the House of Commons.“

That first quote is from Twenty One Pilots and the second is from Winston Churchill. I thought about both while listening to Donald Trump’s address to the nation last night.

I think Trump’s speech last night was constructive. Weeks late? Yes. Too late? Maybe. But it was his first public statement on CV-19 that reflected seriousness and resolve in the national interest. It was his first public statement

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Minimax Regret

March 10, 2020

This email is the foundation of a much longer ET note that I
hope to publish next week, but wanted to share the basic idea with you and get
your feedback.

The title of the note is going to be Minimax Regret, which is a game-playing strategy referring to minimizing your maximum regret. It’s a very different approach to playing any game, whether it’s investing or voting or living with our families, than the approach we almost always take in life, which is straightforward Utility Maximization. I don’t think I need to spend a lot of time describing what Utility Maximization is, except that it’s so embedded in our social psychology that sometimes people have a hard time imagining that there is any other way to think about their choices in a game … or in life. Certainly it’s

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Don’t Test, Don’t Tell (10 Days Later)

March 9, 2020

Last week, Claire Lehmann, the founder and editor in chief of Quillette, asked if I’d be interested in publishing a new version of Don’t Test, Don’t Tell on the Quillette platform. I’ve never published anywhere except the Epsilon Theory platform in the seven years I’ve been doing this, and to be honest I find many of the articles published on Quillette to be more than a little problematic.

I immediately agreed.

As Rusty described in his magisterial note, The Elton/Hootie Line, what we need so desperately here in The Long Now are, to use the ten-dollar phrase … epistemic communities … opt-in places of thought and speech for truth-seekers. Or, to use the ET lingo … packs.

Quillette is a pack. It’s not my pack, but so what? We truth-seekers gotta stick together.

So here’s

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The Mozilo Market

February 28, 2020

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Angelo Mozilo, tanning bed aficionado and former chairman/CEO of Countrywide Financial

I’m willing to bet that fewer than half of Epsilon Theory readers know who Angelo Mozilo is. And that’s a shame, because no one better epitomizes the intense financialization of the American stock market from 2001 – 2007 than Angelo. No one better epitomizes the corrupt lending and securitization practices that led directly to the Great Financial Crisis of 2008 than Angelo.

The fact that Angelo Mozilo was allowed to pay a $67 million fine (leaving him with only … oh, $400

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Don’t Test, Don’t Tell

February 27, 2020

I believe that a healthy society should not have only one voice.Li Wenliang, Wuhan physician, born October 12, 1986, died February 7, 2020.

Last night, I received a Twitter DM that included screenshots of an email that went out to staff at the UC Davis Medical Center. After checking for authenticity, I posted the screenshots in a tweet of my own.

And that’s when, as the kids would say, it blew up.

I want to highlight a couple of quotes from this email.

Since the patient did not fit the existing CDC criteria for COVID-19, a test was not immediately administered. UC Davis Health does not control the testing process.

The facts here are pretty clear. Patient comes in from another hospital on Wednesday, Feb. 19 – this is one week ago – already intubated and

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The Fall of Wuhan

February 24, 2020

Epsilon Theory PDF Download (paid subscription required): The Fall of Wuhan

Two weeks ago I wrote about the corrupt political response of China to COVID-19.

Last week I wrote about the corrupt political response of the World Health Organization to COVID-19.

This week I’m writing about the corrupt political response of the United States to COVID-19.

Because it’s happened before.

In August 2005, the city of New Orleans fell.

New Orleans did not fall because of Hurricane Katrina.

New Orleans fell because of the corrupt political response to Hurricane Katrina.

We can stabilize the situation. Again, I want to thank you all. Brownie, you’re doing a heckuva job! President George W. Bush

In January 2020, the city of Wuhan fell.

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Not Gonna Lie

February 18, 2020

Not gonna lie … the more I dig into the statistical analysis
of the Wuhan coronavirus outbreak (I used to call it nCov2019, but going
forward I’ll call it COVID-19 to follow the latest World Health Organization
naming convention), the more I believe that the virus has not been contained in
China and that we are far more likely than not to have a major outbreak of the
disease outside of China.

This statistical analysis is principally based on two research papers (both attached here as PDFs), one written by WHO-sponsored doctors based in Hong Kong and published in The Lancet, and the other written by DARPA-sponsored researchers based at Los Alamos National Labs. The skinny from these notes is that COVID-19 is ridiculously infectious. Yes, it’s airborne. Yes, it’s

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Love in the Time of COVID-19

February 17, 2020

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A professional baseball game during the Spanish Flu epidemic of 1918

The problem in public life is learning to overcome terror.Gabriel Garcia Marquez, “Love in the Time of Cholera”

Within a few months, the reality of COVID-19 will overtake the propaganda of the CCP and their toadies at the World Health Organization, as real-world companies begin making real-world economic decisions to maintain their enterprises in the face of a real-world threat.

Those decisions will be led by sports franchises.

I realize this sounds pretty out-there to most people.

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The Industrially Necessary Doctor Tedros

February 16, 2020

Epsilon Theory PDF Download (paid subscription required): The Industrially Necessary Doctor Tedros

The World Health Organisation will lead a mission to China this weekend to start investigating the COVID-19 outbreak. Sky News, FEBRUARY 15, 2020

There’s this pleasing mythology out there that the World Health Organization is like some international version of the Center for Disease Control, that it’s staffed by scientists and doctors flying all over the world and racing against the clock to battle infectious diseases and – against all odds – find The Cure.

I mean, that’s an actual subplot of Contagion, where an intrepid WHO scientist tracks down the disease origin in Hong Kong, goes to the remote Chinese village where all of the children are

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That Escalated Quickly

February 10, 2020

I published this note today on the website, and it’s making a bi of a splash. We’ll publicize it more actively tomorrow, but wanted to give you a headstart, including a copy of the PDF.

From a narrative perspective, China is fighting this war against
nCov2019 exactly like the US fought its war against North Vietnam.

It’s what the Best and the Brightest always do …
they convince themselves that the people can’t handle the truth, particularly
if the truth ain’t such good news. They convince themselves that they can buy
enough time to win the real-world war by designing and employing a carefully
constructed “communication strategy” to win the narrative-world war.

That strategy proved to be a social and
political disaster for the United States, as the cartoon tail (gotta

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Body Count

February 10, 2020

PDF Download (paid subscription required): Body Count

Over time, continual bad news will discourage any civilian population, and Americans had the lowest tolerance on the planet for bad news. Karl Marlantes, “Matterhorn” (2009)

Have you read Matterhorn, by Karl Marlantes? You should. It’s not just the best novel I’ve ever read about the Vietnam War, but it’s also one of my irreplaceable sources of inspiration for understanding The Maw – that unlimited gluttony of the violent State to chomp on our bones and suck out our minds … and the oddly not-so-rare instances of individual human bravery to persevere regardless.

I would bet my life that there are thousands of instances of individual human bravery persevering against The Maw happening right now … in Wuhan … in

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The Promised Land!

February 5, 2020

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Every once in a while, narrative-world gives you a gift that just keeps on giving.

So it is with outgoing CEO Ginni Rometty’s regime of despair at IBM.

I mean, I haven’t even gotten to the billions of dollars frittered away on stock buybacks. We still haven’t seen the 8-k IBM will file after the close on a Friday afternoon detailing the tens of millions of dollars that the board will lavish on Rometty as she walks out the door.

I’ve already compiled all 167 of Rometty’s SEC Form 4s to figure out just how much money in stock comp alone she’s sucked out

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