Narrative vs. Molecules
To say that there is much that I don’t understand about the markets and the real world would be comically overselling myself.
In this way, I’m too much of a rationalist. My impression was actions is that there should be legible and tangible outcomes; Newton’s 3rd law, equal and opposite reactions.
Perhaps, though, story (narrative) really is more powerful than truth (molecules).
I definitely don’t know how the market should be reacting to the closure of 1/5th of the world’s oil and distillates every day for 80+ days now, but I definitely suspect that we’re in some kind of desert no-man’s-land following a mirage that is going to end soon.
The Traders seem to be desperately begging one of these headlines to be true one day, denying the molecule and embracing the narrative.
At the same time the Administration is desperately begging that the market, once and for all time, price in one of these fake Iran-MOU-Imminent headlines (representative tweet) then begging (their) god (AI) to manipulate the molecules so that there is never any shortage of oil and distillates.
The key for me to have any understanding, or to clarify my suspicion in any way, has been to find the Nerds (e.g. 1, 2, & 3) and see what they’re saying.
The Nerds are desperately begging the Administration to get-real-here and destroy demand; stop jawboning the market through fake Axios headlines and Barak Ravid (ideal tweet to illustrate) and let the market work this out before we skip over the part of the story where it’s uncomfortable-but-manageable for a long time which prevents leaping from “gas prices are a little high” to “gas a little unavailable for your part of town, sorry sir”.
The Nerds also seem to discount the Traders almost categorically at this point:
So, when and how does narrative catch up, or lose, to molecules…
Mid-July?
And we’re basically at the point where Big Brother will have convinced a great many of us that what we see with our eyes should not be believe. I.e., when gas is $5.15 average in July and inflation continues going up month over month that is not the case my good sir. Trust the president!
So, in a hurry to click Publish on this and hopefully come back to it later (I got stalled writing it for lunch with Doug and distractions this afternoon on where there is a new deal with Iran), I’ll say that I suspect…
something is going to materialize, damn the simulation! (Baudrilliard, everything loops back on itself and never resolves, only produces more images/simulacra and furthers the simulation), and the molecules, i.e. depletion of oil reserves, is going to be that materialization. Things should get uncomfortable if supply and demand are to align themselves in the coming weeks.
Let’s see if they can sell us a narrative so good and convincing and satiating that we somehow accept the lack of molecules.