Every once in a very rare while, we see what we call a Missionary statement (an action or a speech by a famous person or organization on a ubiquitous media platform) that has the potential to change the Common Knowledge (what everyone believes that everyone believes) about an important aspect of our investment lives.

Here’s one.

We are only given the world once. Usually that’s not a big deal from an investing standpoint, because the possible parallel universes aren’t that far apart in their market consequences. Over the next three weeks (and maybe longer than that!), the fact that we are only given the world once is a very big deal indeed.

Markets happen at the margins. So does narrative impact on the market.

That’s important for understanding our semi-bearish narrative monitor signals here in October, as well as for understanding why they may not matter very much right now.

This Friday’s jobs report could show a wage inflation “shock” as salaried Americans work fewer hours to help out their kids with a shattered school schedule.

Maybe it will end up being nothing, but there are plenty of algos that trade these releases immediately as they are reported, and this is classic example of how an algo can get really wrongfooted when the underlying ultra-stable data series goes haywire. Forewarned is forearmed.

No matter how hard you try to keep a beach ball underwater … pushing it, sitting on it, laying on top of it … it seems to have the mind of a trapped animal, turning and spinning to get to the surface at all costs.

I think exactly the same thing is true when it comes to volatility in markets.

I don’t know if this is what SoftBank did.

But this is how I would do it.

Although I wouldn’t because I think it’s probably illegal.

My take on the “massive” VIX election premium? Not massive enough.

This isn’t a “fiscal cliff” we’re talking, which was about as manufactured a “crisis” as I’ve seen. This is an honest to god non-trivial chance that we have an intractably disputed election and Constitutional crisis in the United States, against a backdrop of widespread violence in American cities. If that sounds like a VIX of 30 to you … well, bless your heart.

Massive real-world household formation growth + positively correlated stock and bond prices + ZIRP forever and ever amen = an inflationary shock to your portfolio.

I don’t know when, and I don’t think it happens before the election, but this is the recipe.

The time to start preparing your portfolio for an inflationary shock and the havoc it will wreak on what you think is a well-diversified portfolio of stocks and bonds is NOW.

It’s a big day for us here at Epsilon Theory, as we launch a new monthly narrative monitor – Security Analysis Methods.

That’s a mouthful and it sounds boring, but I promise you it’s anything but. Even more so than the Central Banks monitor, I think this is the most powerful investment application we’ve developed yet.

As the kids would say, I’m old enough to remember Charles Keating and Neil Bush.

I’m old enough to remember the slow-burning dumpster fire that was the S&L Crisis of the late 1980s, when politically connected bankers used their influence to enrich themselves and secure regulatory forbearance for their crappy loans.

It’s happening again.

The more I see these midday mysterious reversals in the growth/value relationship, the more I think that there is a Common Knowledge shift happening and not just a month-by-month shift in the Wall Street drum-beating for this sector or that sector.

A shift in Wall Street drum-beating is good for a trade. A shift in Common Knowledge, though … that’s a Big Deal.

I don’t expect everyone to be as excited about the arrival of the new ET Professional Narrative Monitors as Steve Martin was about the arrival…

The Fed completes its transformation of the credit market into a political utility, the EU tops the US in economic growth prospects for the first time in living memory, and Americans are losing faith in “America”.