Salient Partners

Like the Soprano Family in 2002, the problem with the US economy in 2014 is not that there is too much private debt being created, but too little. The danger for US markets is not that there is some private debt bubble about to burst, but that markets have become disconnected from the natural cycle of debt and growth, a cycle which remains decidedly anemic.

Gregg Greenberg at TheStreet.com was kind enough the other week to give me a few minutes (2:30 to be exact) in a video interview to enumerate the three biggest risks I saw facing markets today. At first I rolled my eyes at the request and the format. 150 seconds? Really? I mean, have you heard my Alabama drawl? It can take me 150 seconds just to order a cup of coffee.

One of the things I like to keep my eye on when Im puzzling out whats going on in the market are the specific company factors that loosely define concepts like Momentum and Value. I do this because any sort of big market move, like weve seen over the past week, is inherently over-determined and over-explained. That is, there are dozens of "reasons" trotted out by the financial media and various experts, ALL of which are probably right to a certain degree.

Master Limited Partnerships (?MLPs?) are a unique asset class in the investment landscape. Historically, MLPs have been primarily owned by high net worth and retail investors due in part to the tax complexities. However, MLPs have started gaining traction over the past few years among institutional investors as they seek alternative sources of yield in our present low-yield world.

Clark didnt poll America to determine their taste in music. He told them their taste in music...not directly, but by creating common knowledge - ideas that a crowd believes that the crowd believes. Its certainly the most potent force in the social world of markets, and every Central Banker today is playing the Common Knowledge Game just as hard as Dick Clark ever did.