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The Existential Narrative

Summary:
Every morning, we run the Narrative Machine on the past 24 hours worth of financial media to find the most on-narrative (i.e. interconnected and central) stories in financial media. It’s not a list of best articles or articles we think are most interesting … often far from it. But for whatever reason these are articles that are representative of some sort of chord that has been struck in Narrative-world. Echoes of D-Day in the China-U.S. ConflictSeventy-five years ago today, Allied troops landed in France, beginning a campaign to destroy Nazi Germany. It’s a decent moment to consider how such a situation came to be and how something like it might happen again.Noah Smith points out that, just 34 years before D-Day, Britain and Germany were such close trading partners

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Every morning, we run the Narrative Machine on the past 24 hours worth of financial media to find the most on-narrative (i.e. interconnected and central) stories in financial media. It’s not a list of best articles or articles we think are most interesting … often far from it.

But for whatever reason these are articles that are representative of some sort of chord that has been struck in Narrative-world.


The Existential Narrative

Echoes of D-Day in the China-U.S. Conflict

Seventy-five years ago today, Allied troops landed in France, beginning a campaign to destroy Nazi Germany. It’s a decent moment to consider how such a situation came to be and how something like it might happen again.

Noah Smith points out that, just 34 years before D-Day, Britain and Germany were such close trading partners that war between the two was almost unthinkable. World War I happened shortly thereafter, and out of the ashes of that nightmare grew the Nazis and World War II. Today the relevant players are the U.S. and China, seen as so close economically they could never go to actual war. But the current trade conflict could be the start of a long process driving the two countries into separate economic spheres, Noah writes, making armed conflict likelier.

For some time now, we’ve been saying that any shift in the Trade narrative away from economic issues and toward national security issues would be highly problematic for a market-friendly resolution in US-China negotiations. Why? Because the political stakes are much higher for both Trump and Xi in a national security game of Chicken than they are in an economic game of Chicken. It is much easier to be “the chicken” in an economic game and claim some sort of face-saving feature than in an national security game, so the latter is almost always a protracted affair of brinksmanship and high stress.

It’s happening.


About 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.

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