On Ben Hunt’s Epsilon Theory Manifesto

From a young age, I’ve always been fascinated by financial markets. My fascination began as curiosity; a desire to understand the daily movements of the S&P and Dow Industrial Average that I read in the newspaper or heard on NPR on my way home from high school.

This desire led me to studying finance as an undergraduate student, where I gained an entree into the theorizing behind the markets’ mysteries: the efficient market hypothesis, modern portfolio theory, and the relationship between risk and return. I supplemented my college coursework with books that poked holes in the arguments and dented the authority of my theory-first finance professors: Lowenstein’s When Genius Failed, Michael Lewis’ Liars Poker, and Taleb’s Black Swan and Fooled by Randomness. These books (especially Taleb), as well as the ongoing financial crisis that served as the backdrop for my initial finance education, led to an ingrained skepticism of markets and the strange mix of rationality and irrationality belying their daily movements

From this early education onwards, markets always seemed to be a human construction more than a mechanical reliability, subject to fashionable trends, human hubris, and a level of inherent enigma that captivated me. I relished the opportunity to accompany the markets as a casual observer: an intellectual exercise of (mostly) intelligent individuals squaring off against one another for an “edge,” with extremely high stakes coloring their emotions and behavior.

A tidy summary of the mystery of investing were recently summed up by Morgan Housel on his Collaborative Fund blog, which gets at what I find so inherently interesting about the practice:

If investing were all about math, mathematicians would be rich. If it were all about history, historians would be rich. If it were all about economics, economists would be rich. If it were all about psychology, psychologists would be rich. In reality it’s a mix of many disciplines, but some of the brightest people specialize in one topic and can’t see the world through another lens.

To me, it seemed like these individuals, with decades of experience under their belts and a full and nuanced understanding of efficient markets and the average return of so-called “active” investors (one thing professional investors aren’t lacking is information), had to be a bit crazy, arrogant, or both to clear-headedly take on such a massive challenge. Further, the key players  operating within “the market” seemed pulled from the pages of classic novels, with their stories of espionage, closely-held tradecraft, economy-shaking speculation, and robber baron behavior. Active investing seemed like a contact sport — as entertaining to watch as football, and potentially as dangerous to play.

I first came across Ben Hunt’s Epsilon Theory blog via Tyler Cowen’s Marginal Revolution, a repository of curiosity and knowledge from the wide-ranging mind of Cowen and his team. The first blog post I read, offering advice to a passive college-aged observer like I was once was, rang immediately true to me, and as with other writers that I quickly fall in love with, I traveled back in time to familiarize myself with his work and broader worldview.

Undergirding Hunt’s observations and analyses, I soon learned, was the Epsilon Theory Manifesto, explaining the origins of the blog’s title and his view of markets.

Hunt believes that the Greek letter “epsilon,” meant to signify error in the modern portfolio theory (return = alpha + beta + epsilon), is a vastly underexplored concept worthy of its own school of study. Whereas countless ink had been spilled on the relevance of beta (i.e., the passive return of the market) and alpha (i.e., unique characteristics of a specific security that made it differ from beta), epsilon is an afterthought. However, Hunt sees that ‘error’ as something that merits an equal amount of study to the other two Greek letters it shares an equation with, and even further can be an opportunity for ‘arbitrage’ – to outwit other market participants via a clearer picture of the environment around you. Every single active investor in the world has a position on their ability to achieve alpha – i.e., returns above a passive investment strategy – but very few offer a position on epsilon.

In Hunt’s interpretation, the “error” underlying the equation are humans themselves, and our strategic decision-making capabilities and shifting behavioral preferences. The discipline of behavior economics has provided an introduction to the human role in markets’ imperfection, but Hunt suggests taking things a step further: using the study of game theory (“a methodology for understanding strategic decision-making within informational constraints”) and informational theory to analyze the oftentimes counterintuitive movements of the markets. Like a game of poker (beloved by investors), movements are made up of “dynamic interactions,” considerations that are far beyond traditional investment indicators or financial ratios.

Following the hypothesis of the efficient market theory, as more and more information has become available over time, the markets theoretically should be closer to perfect, with limited legal ability to gain an informational edge on other market participants. This has led to an environment of “alpha scarcity,” and countless examples of one-time esteemed market “gurus” with multiple years of sub-passive performance, an embarrassing reality for any billion/millionaire who grew rich on their initial rightness and their hubristic belief in themselves to beat the monolithic market.

(Note: Another example of investors ‘seeking alpha’ was highlighted in this week’s New York Times via a profile of Farnam Street’s Shane Parrish, who pitches “reading, reflection and lifelong learning” as the antidote to the attack on the active investor: “These days, if you are not getting better you are falling behind. Reading is a way to consume people’s experiences, to learn something timeless and then apply it to your life.”)

According to the Manifesto, Epsilon Street represents Hunt’s attempt to analyze the markets through the lens of game theory, by studying “narrative” and “common knowledge,” two concepts that seemingly color the day-to-day political newscycle than the financial markets. However, as Hunt presciently explains, narrative is far from truth (it just has to sound truthful), and is normally driven by our human appetite for “news,” even in its absence. The competing narratives of Trump’s impact on global trade, and the ongoing EU/Brexit spat, and the various competing interests (oftentimes without “skin in the game”) inserting their views into the global conversation, serve as ongoing examples of the power of narrative, and its divergence from the “truth.” Per Hunt, the ability to “identify narratives, measure their strength, assess their likely impact” through an analysis of narrative through the lens of game and information theory is an underexploited and worthy of examination.

Similarly, the concept of common knowledge, known as “what everyone knows that everyone knows,” adds a further, postmodern wrinkle to narrative. Common knowledge, or the “second order” consensus (“the consensus view of the consensus view”), represents a war of competing narratives to reach a consensus, and the second order effect of how those competing consensus arrive at a universally held view. The battle for common knowledge is a battle of loudly promoting one’s view and one’s ability to conquer competing views to reach ubiquity, either by virtue of the loudness with which one shouts, or the ability to compound-grow these beliefs onto others. Confusing, but actually incredibly insightful.

An example of the impact of narrative and common knowledge pertain to the recent rollercoaster ride associated with Tesla’s ($TSLA) stock. For the past few years, short sellers, who seek to profit from poor performance of a stock, have sought to create a narrative around Tesla’s inevitable decline, associated with production shortfalls and a perceived inability to ever meet demand for vehicles in a cost-effective way. Meanwhile, Tesla products continue to wow both consumers and automotive reviewers, coloring their view of Tesla’s ability to dominate the market in the future, driving up its stock price. In both cases, the truth is not the underlying driver of their ongoing attempts at creating common knowledge – their behavior is guided by their financial and human incentive to be right. Even more recently, comments made by Elon Musk, who has every right to be incensed by the economically-counterproductive efforts of short sellers, have sent the stock plummeting among questions of his fitness as a leader, and Tesla’s future as a result. In all of these cases, the actual value of Tesla is far from point – it’s very quickly turned into a battle of competing narratives in an attempt to reach a common consensus.

Amid all of this news, a fascinating but incredibly rare volte-face was recently published by a Tesla short seller, which shared the underlying assumptions behind their initial dour view of Tesla, followed by information that rebuts these initial hypothesis and has now led them to reverse their decision. The fact that this type of reversal is so rare gets at the heart of Hunt’s thesis – that a better understanding of how we shape narratives to reach common knowledge is a fundamental tool worthy of study.

Per their summary page:

The story has become too compelling to ignore.

As much as you can’t believe you are reading this, we can’t believe we are writing this!

The most challenging part of being a short seller is to constantly check your thesis to make sure nothing has changed. You must let all predispositions and prejudices disappear and stay focused on only the facts. It is in that spirit and with a great deal of analysis and due diligence that we can say for the first time, Citron is long Tesla as the Model 3 is a proven hit and many of the TSLA warning signs have proven not to be significant.

It has been almost 5 years since Citron published the following line: “By the time this product is even approaching market, there will be multiple other 200-mile range plug-ins that have been out for years.”

Rumors of the Tesla killers have been as constant and unfounded as Bob Lutz’s call for Tesla’s bankruptcy.

While the media has been focused on Elon Musk’s eccentric, outlandish and at times offensive behavior, it has failed to notice the legitimate disruption of the auto industry that is currently being DOMINATED by Tesla.

What has changed?? Plain and simple — Tesla is destroying the competition.

A new narrative? Maybe. There inlies the challenge of the markets, and the reason that so many are drawn to its magic and mystery as a hobby, career and/or vocation.

On “The Mystery of the Havana Syndrome”

The New Yorker has a habit of posting their longform articles weeks before their physical publication to the benefit of their online readership. This week’s edition of The Best Thing I Read This Week (still a working title) comes from the November 19th issue, entitled ‘The Mystery of the Havana Syndrome.’

The article is a fascinating inside look at the insider’s game of US / Cuba diplomatic bartering leading up to the historic normalization of relations in 2015 (which Wikipedia calls ‘the Cuban thaw.’) The article counts as its primary sources many of the principal players leading the US side of the negotiations, including Deputy National Security Advisor and Obama’s right-hand man, Ben Rhodes and Ricardo Zuniga, a career Foreign Service Officer with with extensive LatAm experience (matched with Rhodes to buoy his limited knowledge of the region and lack of Spanish).

On the opposite side of the negotiating table was Alejandro Castro, the only son of Cuban leader Raúl Castro, then thought of as the third most powerful person in Cuba (after Raúl and the now-deceased Fidel). Faced with shrinking revenues and resources from its ideological partner in the region, Venezuela, Alejando’s appointment to lead the Cuban side of the negotiations underlined its importance to the Cubans, and the seriousness with which they were pursuing a potential agreement.

The article capably sheds light on the complicated history that colored the considerations on both sides leading up to the deal, further underlining just how unlikely the accord actually was. On the surface, the deal was an almost overnight success, leading to an almost six-fold increase in US tourists arriving to Cuba by 2017, just three years later.

However, the initial optimism of a rapprochement and normalization of diplomatic and economic ties was always beset by a vast and ingrained ideological chasm, including Cuban anti-imperialism and historic (and warranted) distrust, as well as hawkish views on both sides. Neither side sought to cede any ideological territory in the agreement — it was more so a typically Obama-ian attempt at hoping cooler, more logical heads prevail — letting progress take over, and getting out of the way. After Obama’s historic visit to Cuba, Fidel Castro wrote an editorial in the Communist Party daily (the primary Cuban government mouthpiece), where he wrote: “Nobody should be under the illusion that the people of this noble and selfless country will renounce the glory, the rights, or the spiritual wealth they have gained.”

The teetering balance of voices that formed the US / Cuban agreement was thrown into disarray with the death of Fidel Castro and election of Trump. In the infamously disorganized leadership transition which followed, career Foreign Service Officers were kept out of the loop, and hundreds of State Department roles were left unfilled by the inept management of Secretary of State Rex Tillerson. Many of the deal’s architects were suddenly disempowered (and soon to quit) or outright fired, creating vast uncertainty and an ununified voice towards Cuba.

The US priorities in Cuba seemingly shifted overnight from opening up dialogue, normalizing relations, and trying to rehabilitate a 70 year relationship of distrust and antagonism to trying to “make Rubio happy” (Trump’s words, per a source), referring to Trump’s need to placate Senator and Republican leader Marco Rubio. Rubio, the now-Senior Florida Republican Senator, is a loud anti-Cuban voice and leader of the all-important Latino-Republican union in Florida that has been fundamental to recent Republican victories in Florida (including the recent Republican victories of Rick Scott for Senate [over Bill Nelson] and Ron DeSantis for Governor [over Dem darling Andrew Gillum]).

For Trump to secure his hold over the the Republican Party, the buy-in of Rubio was crucial. The sudden shift in US policy towards Cuba was best summed up by the condolences offered by outgoing President Obama and President-elect Trump towards deceased Cuban leader Fidel Castro:

Obama: “At this time of Fidel Castro’s passing, we extend a hand of friendship to the Cuban people,” he wrote. “History will record and judge the enormous impact of this singular figure on the people and world around him.”

Trump: “Today, the world marks the passing of a brutal dictator who oppressed his own people for nearly six decades. Fidel Castro’s legacy is one of firing squads, theft, unimaginable suffering, poverty and the denial of fundamental human rights.”

The article also provides a fascinating picture of the symbiotic relationship between the State Department and CIA, and the CIA’s dependence on the State Department to provide diplomatic cover and on-the-ground resources for its field agents operating around the world.

Some time beginning in 2016, these field officers, operating under diplomatic cover in the US Embassy in Havana, began complaining of concussion-like symptoms (difficulty concentrating and sleeping, blurred vision, pounding headaches). Before long, after numerous complaints surfaced, officials became convinced that ousted CIA officers were being specifically targeted. Initially dubbed “the thing,” later morphing into “the immaculate concussion” (for its concussion-like symptoms despite a lack of impact), before landing in the name its taken on publically, “the Havana syndrome.”

As the article hints, the Cuban government vociferously deny any involvement in the attack, forcing US officials to speculate the origin and motivation behind the attack. Popular theories include include the denying Cuban leadership, hardline dissidents within the Cuban intelligence establishment angry with the ‘thaw,’ foreign agents of Russia or China seeking to create distance and sow discord between the two countries, or a malfunctioning of Cuban spy technology. The article cites a private suggestion by Raúl Castro that China was behind the attacks, certainly plausible given the Chinese’s growing strength in surveillance and espionage technology, but given the high stakes of US/Chinese relations at this moment, it feels like an incredibly risky adventure halfway around the world.

Meanwhile, incidents of the attack continued to be perpetrated in private residences and hotel rooms alike against CIA officers, their support staff, and State Department Foreign Service Officers. In all, the State Department announced that twenty-one Americans had been “targeted in specific attacks.” As a direct result of these attacks, in an attempt to to protect the identities and careers of the cia officers, as well as the livelihood of the diplomatic staff in Cuba, Secretary Tillerson announced that the US would significantly reduce its US footprint in Havana from 54 staff on-the-ground to 18 or so, including a near-complete exit of the CIA (at least that’s what they’ve publically claim.)

If the ultimate aim of the unknown perpetrator was to create distance between the US and Cubans, it’s clearly been successful in its aims, and have given further ammunition by US hawks that the Cubans are not to be trusted. Meanwhile, the “Havana Syndrome’s” actual cause, effect, and intent remain a medical, technological, and intelligence mystery.

On Twin Profiles of Larry Krasner, Philly DA

Over the past two weeks, the New Yorker and NYTimes published pair of profiles on Philadelphia District Attorney Larry Krasner, one year into his term.

Between the NYTimes Magazine piece on the Kensington neighborhood of Philadelphia and the recent obsession with the Philadelphia Flyers’ new mascot, Gritty, it seems like Philadelphia has suddenly been thrust into the national spotlight. Even the South Philly Mexican restaurant Barbacoa was given Netflix’s Chef’s Table treatment in October, leading to even-longer lines. Stretching further back into this extremely long year, Philadelphia’s unlikely Super Bowl LII ascendance and subsequent parade captured the hearts of millions. In some ways, it really does feel like the Year of Brotherly Love.

However, much more quietly and behind the scenes, Larry Krasner has been remaking Philadelphia’s criminal justice system from inside the institution — a career-long criminal defense attorney with no prosecutorial experience suddenly given the keys to the opposing side’s castle.

In an national environment where Trump’s ‘tough on crime’ rhetoric seems to have won over voters nationally, and his appointed (but mostly reviled) DA Jeff Sessions has become renowned for the impunity with which he carries out his job, it feels like strict adherence to law-and-order would be in ‘vogue’ politically.

However, as both articles recount, there has been a countervailing wave of ‘progressive’ district attorneys being voted into office across the country (and not just on the overwhelmingly-Democratic coasts). In cities like Kansas City and Corpus Christi, voters are clearly exhausted with a broken system that overincarserates offenders into overcrowded jails, boasts extremely high rates of recidivism, and shields violence committed by policemen.

Krasner is at the vanguard of this movement, seeking to radically rethink managing urban crime in one of the most historically violent cities in America, and bravely trying to do so within the system, as opposed to as an system-opposing activist or from within an academic institution.

Aside from the obvious sympathy one must feel for the reporters who worked for months on their respective articles, I do think they are mostly complementary. For the most part, they use different sources, and choose to focus on different aspects of Krasner’s assumption of the job.

Drawing on the work and literature of inspiring individuals like Michelle Alexander, Bryan Stevenson, Adam Foss, and others, Krasner has dramatically changed how crime (especially minor crimes) are prosecuted in Philadelphia, removing minimum bail and minimum sentencing for crimes like petty theft, marijuana possession, and prostitution, and instructing his prosecutors (including pre-Krasner city prosecutors and new recruits) to share the estimated cost of incarceration associated with any prison sentence.

In the wake of Obama’s Presidency, where an idealist and (mostly) outsider was suddenly charged with ‘change’ in an institution that is designed to impede dramatic action, Krasner’s first year is a fascinating case study in trying to change an ingrained culture, bring along naysayers, make an immediate impact on a broken cycle of criminal justice, and operate within the political system, all while trying to maintain the support of the activists and idealists who brought Krasner into office in the first place.

The articles are also a useful look into the bifurcated politics of Philadelphia, a city I continue to call home even while away — where no-tolerance district attorneys (Specter, Rendell, Abraham) have been a consensus for the past 30-odd years despite overwhelmingly liberal Congressional and Presidential voting, and the local policemen’s’ union, the Fraternal Order of Police, is a powerful and unified voice in support of the police force. In addition, the articles are cast in the backdrop of an opioid epidemic that has completely ravaged parts of Philadelphia, compelling Pennsylvania Governor Tom Wolf to declare the drug-laden North Philadelphia a ’state emergency’.

While Philadelphia has long been an afterthought, proclaimed part of the ‘acela corridor’ (i.e., between NYC and DC), or ‘the sixth borough’ of NYC every couple of years by story-starved NYC journalists, it is heartening to see innovative thinking and progressive action being taken in the city.

The Blog of Frank Chimero

Sometimes, you come across the right art / essay / information at the exact right time. Whether due to serendipity or some greater cosmic force, the subject matter or its conclusion seems almost preternaturally tailored to you and your current situation, and provides some nugget of wisdom that guides your path forward. And no, I’m not talking about horoscopes.

I first came across Frank Chimero’s blog via two released released (and hugely popular) posts: A Modest Guide to Productivity and MVP Soundsystem, a guide to listening to music in our age of plenty. Both articles immediately resonated with me, as they presented methods for managing our relationship to technology in a way that works for you, as opposed to letting yourself be driven by technology and its designs on your time and attention (increasingly a popular topic, though ironically mostly in online circles.)

As much as I’m generally drawn to articles that offer methods or systems for greater organization / clarity / space for reflection, his posts and the advice therein seemed genuine  and uniquely human, based on his own experience and shared in an attempted to help others, rather than as a ploy to increase email subscribers or shill a book or course.

My favorite tip, from the Modest Guide:

Get enthusiasm on the cheap by buying a fancy wooden pencil to write everything down. A $3 pencil is now more exciting than a $2,000 computer. Many people will do the most mundane work just to feel a good tool fly.

I’ve since taken this advice to hard, though my apartment is now strewn with more $10 notebooks and $3 pencils/pens than I’d care to admit.

After reading these posts, I made a mental note to check out Frank’s blog and work in general, as he is a designer in “real life.” Last week, I finally visited the archive of his blog, and pulled out several non-design-related posts to read. Three posts in particular have stuck with me, and are the Best Thing I Read This Week™ (yes, I know I’m stretching the concept a bit – it’s my blog and I can do what I want!)

Jettison the Rest (October 2014) deals with the taking on of obligations, and the need to consiously pit those committments against your own desires, facing headfirst “the whiplash of modern life, to automatic and unchecked desire, to the anxiety created by spinelessness.”

I oftentimes feel this spinelessness after a long session of email digestion and response, where at the end I feel no closer to my initial intentions than when I started, yet find myself when reduced mental capacity as a result.

As Chimero counsels, himself inspired by Joan Didion’s 1961 essay on self-respect, “It’s best to identify and do what you’re required and able, then jettison the rest.”

I Can’t Read Walden (August 2014) follows my recent capsule review of reading Walden, where I contemplated what motivated Thoreau to write a treatise on his retreat from the modern world as a 30-year-old.

Chimero, who admits to not making it much further than 15 pages into Walden but successfully imagines its contents and conclusion, ponders Thoreau’s decision to leave behind to “noise” (both literal and figurative) of modern society and dissatisfaction of adulthood.

Chimero sees himself in Thoreau’s Walden, “reflected 150 years in the past, still just as foolish and making the same mistakes I make today.” However, Chimero openly questions Thoreau’s decision to flee from obligations and seek refuge in nature and his own mind:

Did escaping modern life leave you feeling curiously trapped? Were you running away or running towards? And, most importantly, were you ever able to reconcile the tension between enjoying the world and trying to set it straight? I want to ask because Thoreau ostracized himself, and seclusion, for some, can be just as addicting as any drug. It’s a defacto solution that feeds the problem which requires itself as a solution.

As someone who has taken the active step of moving continents, not necessarily beset by the same immediate struggles but certainly wary of the constant revolutions of modern life, this line of questioning opened me up to questioning my own desires of retreat, whether, as Chimero asks, “those fussy middle parts between the mind and nature  (family, your relations, workplace, city, nation, society, etc.) weren’t a crutch, but the third leg of a stool?”

Lastly, This One’s For Me (March 2014) is a reflection on the eve of his thirtieth birthday. In this post, Chimero takes stock of the various personas we assign ourselves as our identities become more congealed as working adults, and the associated traps that break the illusion of those “perfect personas,” including fear, judgement, and pressure – all enemies of modern life (and especially public life, online.)

The essay is incredibly personal, as it touches on his experience returning to work and the world after the traumatic and unimaginably difficult experience of losing both of his parents, months apart.

At the risk of merely repackinging his powerful words, I’ll just post them here below:

Two terrible years taught me the most important lesson about life I’ve ever learned on my own: you only become bulletproof when you refuse to disguise your injuries. This ends the show and deflates any notion that you have your shit together all the time. The wounds are a gift: with the mask gone, you get to be a person again. You learn how to accept help, and better yet, how to better give it.

Suddenly, all the stakes become much lower. Life is somehow more precious and less. You are a monkey in pants, after all. So what? There’s no need to be loud and stupid and desperate, because the desire that made you behave that way was so convoluted to start. What could those desires be for, and what would you ever do if they were fulfilled? You don’t know. But you shouldn’t feel bad for not knowing or for thinking such silly things. You’re just a monkey, kid, so cut yourself some slack.

On “Nardis and the Curious History of a Jazz Obsession”

In an (long-time, ongoing) attempt to shift from consuming less to reflecting more, I’m hoping to start a new weekly routine, which I’m calling (working title) the best thing I read all week.

While I read tens of articles / news stories / blog posts every week, I end up forgetting most of them hours later, let alone retaining them by the end of the week and beyond.

However, every once in a while there’s an article / podcast / “thing” that completely captures my attention and engages me in an intellectual and oftentimes surprising way. Those are the articles that I hope to highlight here, once a week.

Hopefully, by intentionally singling out a single essay / article for attention and reflection, I can more closely hone in on what’s meaningful to me, and simultaneously spend less time trying to stay on top of the endless news/newsletter cycles.

At the very least, I’ll end up sending less of these articles to my family and friends directly via email, which I’m sure they’ll appreciate.

Broken Time: “Nardis” and the Curious History of a Jazz Obsession, by Steve Silberman

The article takes on two separate forms, woven masterfully: a profile of Bill Evans, one of the most enigmatic jazz musicians ever (saying something, as every jazz player seems to have their own idiosyncrasies) and a personal essay on the author’s “full-on musical obsession:” the jazz standard “Nardis,” which was written (though never recorded) by Miles Davis but popularly performed by Evans throughout his career.

Silberman covers Evans’ arrival onto the jazz scene playing with Miles Davis as a white musician in a then-black-dominated jazz world, onto his formation of the Bill Evans Trio, and his descent and ultimate demise from drug addiction. Incredible stories are interspersed throughout, including Miles’ initial recognition of Evans (“I know that motherfucker”), his initiation into Miles’ band, the legendary sessions behind Explorations and the Village Vanguard Recordings, and the last chapters of his life, where he was penniless and strung out, yet still seeking out inspiration and pushing the boundaries of his craft.

The author’s background as a science writer focused on the brain and autism provides a unique lens into the work of Bill Evans, who is considered an especially cerebral player. As the author describes, Evans demonstrated a “nearly mystical immersion in the music: a state of pure, undistracted concentration.” While many of his contemporaries grew more frenetic, skittish, and fast-paced in their explorations of free jazz and fusion, Evans’ playing remained meditative and almost-methodical, seemingly seeking out a ‘zen’-like state through his playing. Per Evans himself: “it’s more the mind ’that thinks jazz’ than the instrument ‘that plays jazz’ which interests me.”

In addition, the piece is a study of the act of interpretation, re-interpretation, study, and homage. The author has become something of a scholar of ‘Nardis’ as a piece of performance art, dutifully cataloging and ranking his favorite versions of the song, which span genres as wide-ranging as Latin Jazz and ska. Silberman’s top two versions of Nardis are two different Evans recordings, followed by a gypsy guitar version by Ralph Towner, and then Richard Beirach’s epic version (which sounds very much in the vein of Kamasi Washington). In his drive to understand the song and its enduring appeal to the musicians who’ve played it, Silberman goes to lengths to speak to some of the more inspired interpreters, asking for their own favorite versions of the tune.

Throughout the magic of music streaming catalogs, over one hundred of these versions are conveniently (mostly) available via Spotify, which I’ve compiled below (yet unranked):

The author masterfully weaves his own personal relationship with Nardis with Bill Evans’ relationship with the song, which remained a standard tune played at Evans’ gigs until his death. Despite its mainstay status, Nardis became a vehicle for Evans’ experimentation, including “unusual harmonies, dissonant lines, [and] spontaneous themes.” Later in Evans’ life, as he openly struggled with heroin followed by cocaine addiction (heartbreakingly dubbed the “longest suicide in history” by jazz critic Gene Lees), Nardis was played night-after-night. Up until his death, Evans’ mental energy focused on continued exploration into the depths of jazz music, even as his body increasingly succumbed to its chemical dependencies. Silberman again: “”Nardis” became [Evans’] way of projecting himself into the future–of conjuring another resurrection out of the sheer force of his craft.”

In many ways, “Nardis” is a story of Jazz’s ongoing struggle of breaking through convention while staying true to its founding principles and roots that continues to alienate, frustrate, and captivate fans of jazz, including myself.

After discovering Blue Trane and Kind of Blue as a eager 14-year-old, I remember my frustration with my inability to find things that resembled these two melodically pleasing masterworks. In my mind, jazz followed a single convention: one or two leading horns playing leads and alternating solos with a backing rhythm section keeping time. Over time, led by a continued exploration into these two masters’ discography and continued exploration, as well as my own journey through the catalogs of Blue Note, Impulse, Black Jazz, Atlantic, Colombia and plenty of others, my tastes, as well as my appetites, expanded.

Beyond merely seeking to enjoy the music, I began to try and understand it: its evolution, the setting and context behind the recordings, and their relative importance to jazz music. Each of these musicians, while mostly uniformly trained, underwent their own personal evolutions and explorations deeper into the music. Throwing on a random song by Cecil Taylor, Roland Kirk, Albert Ayler, or Sun Ra might leave listeners confounded by what they are listening to, but with a bit of historical context and background, one might find themselves inspired, or at the very least provoked into thought.

I continue to marvel at jazz’s refusal to sit still, with each era mixing in new ideas and fusing with other music to expand conceptions of the genre, led by 70s jazz fusion like Bitches Brew and On the Corner, the 80s jazz downturn and its adoption of disco and dance music, the 90s revival, led by the Marsalis family, as well as the funk-laden stylings of Maceo Parker or Roy Hargrove, into the 2000s hip hop-infused work of Robert Glasper. At the same time, each era has its own share of with its own series of radicals and pioneers, requiring the listener to try and engage with what they are listening to (try if you don’t believe me, or some of ECM’s catalog). In short, the spirit of Bill Evans lives on, not only through new interpretations of “Nardis,” but also via the unabated exploration of jazz by its practitioners.

Updates on Brazil, Venezuela, Argentina, Central America, and US/LatAm policy

There has quite a bit of interesting and/or alarming US/Latin America-related news over the weekend:

Financial Times: Argentina creaks under extreme stress (Sept 7, 2018)

“if Mr Macri’s technocratic government, which heads the G20 and has followed economic orthodoxy while also enjoying full international support, cannot ride out fickle markets, who can?”

Trump’s strengthening of the US dollar, Turkey’s ongoing economic struggles and related contagion, and Argentina’s significant indebtedness have led to a significant devaluation of the Argentine peso and a rush to shore up the government’s coffers via a $50B IMF loan.

Unlike many Latin American leaders and Argentinian predecessors, Macri has mostly followed austerity-based economic orthodoxy and market-first principles in trying to assure investors and international markets of Argentina’s resilience. However, Marci’s upcoming reelection in 2019 is looming, and criticism levied by his political opposition is continuing to mount. Complicating matters further is general Argentine antipathy towards the IMF, who previously put the country into extreme austerty after it defaulted on a 2001 loan.

In the background, the Argentinian public sector, including former President Cristina Kirschner, have been implicated in upwards of “$36 billion”  in public contract graft and broader corruption reminiscent of to Brazil’s Lava Jato scandal. Per Macri, a longtime opponent of Kirschner and her populist agenda: “This beats watching Netflix.”


New York Times: Stable After Attack, Brazilian Candidate May See Political Fortunes Rise (Sept 7, 2018)

“This plays straight into his message: the security issues, the violence and the need to address those issues. There are still a lot of undecided voters. It might be that a number of them now say ‘Bolsonaro is our guy.’”

My Whatsapp feed, the ubiquitous social media app known in Brazil as “Zap,” blew up on Friday afternoon with live images of the stabbing of Brazilian presidential candidate Jair Bolsonaro. As the video clearly demonstrates, while Bolsonaro was being paraded through doting supporters, a man approached him and stabbed him in the abdomen.

For a reviled candidate who has been hugely critical of Brazil’s violence, and the inability of mainstream Brazilian politicians to adequately address the violence issue, the stabbing seems to play directly into Bolsonaro’s hands, and has led many to predict that this episode will further strengthen his lead ahead of the October 7th first-round Presidential election.

Following the Supreme Court’s judgment of Lula’s ineligibility to run in the election, Bolsonaro leads a crowded pack of aspiring Presidents in the low-20s, with several center-left/left wing candidates trailing him with 12% of the vote.

As the electoral hour of Presidential coverage has begun, one of the common discounts levied against Bolsonaro is the weakness of his political party, leaving him with under 8 seconds of television time for every 12.5 minute bloc of Presidential political coverage, far behind the leading 5 minutes, 30 seconds for Geraldo Alckmin. However, tv news has been transfixed on the stabbing and Bolsonaro’s recovery at São Paulo’s Albert Einstein hospital, effectively serving as a supplemental platform for Bolsonaro and his views.

Subsequent conversations with Brazilians has led me to believe that Brazilians are increasingly recognizing Bolsonaro as a more serious candidate, and to some a near-certainty to make it into the October 28 second round of elections. Defenders of Bolsonaro sexist, racist, and anti democratic past have become more vocal, as have the doubts from his detractors of his ability to win the second round (“what about the female vote?”), as well as his ability to govern and create a coalition post-election. Again and again, the similarities between Bolsonaro and Trump rear their head.


NYTimes: Trump Administration Discussed Coup Plans With Rebel Venezuelan Officers (Sept 8, 2018)

In a series of covert meetings abroad, which began last fall and continued this year, the military officers told the American government that they represented a few hundred members of the armed forces who had soured on Mr. Maduro’s authoritarianism.

Back in February, then-Secretary of State Rex Tillerson raised the prospect of a potential Venezuelan military-led response to the ongoing disaster in Venezuela, which has led millions to flee the country and has left the majority of those remaining subject to constant food shortages and hyperinflation. However, it appears as if Trump has been transfixed with the idea of military action in Venezuela for some time, raising the idea of a military “invasion” of Venezuela, first with his military and diplomatic advisors (the now-ousted Tillerson and McMaster), and then with Latin American leaders including Colombian President Juan Manuel Santos and others. Now, the NYTimes is reporting that a potential military-led coup in Venezuela is not just bluster: there has been US-Venezuela discussions via backchannels regarding a potential military-led rebellion.

As the article recounts, following news leaks of President Trump’s comments on a military option in Venezuela, rebel officers reached out to Washington (again, it seems), seemingly curious whether Trump’s endorsement could lead to concrete support by the Americans. However, the US did not provide a definitive response and many of the plotting officers were detains, and suspected to have been subsequently tortured for their role in the potential plot.

The article also mentions previous attempts by President Obama and his administration to weigh the potential benefit of allowing the Venezuelan military to unseat the Maduro administration against the potential backlash associated with another in a longstanding record of US-supported anti democratic interventions in Latin America, as well as the US’ low opinion of the Venezuelan military, seen as corrupt and complicit in the illegal drug trade in the region. The article presents division within the Obama White House, with some believing in the military’s ability to transition to democracy in the country, and others highly skeptical.

With the aerial drone-based assassination attempt of Maduro last month and the subsequent crackdown on his opposition, and the now-confirmation of the US’ potential role in a military coup, it is likely that Maduro will feel empowered to act with further impunity, creating even-worse conditions in the already beleaguered country.


NYTimes: U.S. Recalls Top Diplomats From Latin America as Worries Rise Over China’s Influence (Sept 8, 2018)

“Trump has openly and systematically offended Latin American countries and their people. He labels us as rapists and criminals, has never traveled to the region as president, has deported and separated families, and threatened to cut all sort of aid. China comes with an offer of friendship and economic development (albeit one that I don’t think will pan out). Why the surprise?”

As recounted back in March, China is quietly and effectively asserting itself across the world in an attempt to unseat (or join) the US as leaders on the international stage. Through its belt and road initiative and infrastructure investments across Africa (mostly built by imported Chinese workers), China has been building physical infrastructure across the world in an attempt to increase trade and Chinese exports to these regions, use “soft power” to build Chinese goodwill around the world, and to develop surveillance, intelligence, and military capabilities around the globe (as in the frightening case of the Chinese space station in Chile).

To finance these projects, the governments often sign convoluted deals with the Chinese construction and infrastructure banks that are oftentimes “junk” at signing, i.e., highly unlikely to be repaid. Clauses inserted in these financing contracts allow for Chinese possession of sovereign assets in case of non-payment.

In Zambia, the national power utility ZESCO, as well as the state-owned TV and radio news channel ZNBC are either at risk or already Chinese-owned due to the government’s default on more than $8B in loans. In Sri Lanka, who is more than $3B in debt to the Chinese, the Hambantota Port has been taken over by the state-owned China Merchants Port, creating the awkward situation whereby China now has land and sea access in a sovereign nation.

In an letter written by members from both parties of the US Senate addressed to Secretary of State Mike Pompeo and Treasury Secretary Steve Mnuchin, the Senators call Chinese loan efforts to poor countries ‘debt-trap diplomacy’ and ‘predatory Chinese infrastructure financing’.

Rather than previous liberalist attempts by the US and its allies to tie foreign direct investment to democratic elections and press freedoms, China has made little requests of the sovereign nation/debtors, to the delight of the oftentimes democratically elected leaders. However, one fairly consistent request from China has unwavering and consistent: an adherence to its One China policy, and a subsequent severing of diplomatic ties and recognition for Taiwan.

As the Senators write in their letter, “Beijing’s attempts to weaponize capital is not just limited to Asia and Africa, but extends to Europe,” before citing ties via the Belt and Road initiative to countries in the Balkans such as Montenegro and Serbia. It appears as if the Senators, like Trump so many times over in the first years of his Presidency, overlooked even closer neighbors to the South.

Now, the United States has taken the dramatic action of removing diplomats from three Central American countries with historically warm ties: Dominican Republic, El Salvador and Panama, after each of the countries have severed diplomatic ties with Taiwan, no doubt in an attempt to appease their Chinese benefactors. Due in part to Trump’s indifference, these leaders see the entrance of China and the few strings attached to Chinese capital as a counterbalance to the longstanding US-led hegemony in the region. As the article recounts, there are further fears that the four Central American nations that still recognize Taiwan (Belize, Guatemala, Honduras and Nicaragua) could soon disavow Taiwan as well, complicating matters even further not only for Trump and his administration, but for longstanding ties and goodwill in the region.

Weekend Reading — June 10, 2018

1. Despite Maduros re-election in Venezuela and his promises of food for votes, an estimated 4,000 Venezuelans are leaving the country every day for Peru, Colombia, Ecuador, and Brazil, creating further dysfunction in a country already considered a failed state by most.

Last week, the Washington Post checked in on the increasingly fragile state of the country following Maduro’s reelection, and the increasingly sparse civil institutions that undergird any working society.

“If we continue like this, Venezuela won’t even be a Third World country anymore,” said Flores, the school principal.

2. A recently published study has debunked the famous marshmallow test, which correlated the recipients ability to delay gratification (in this case, by not consuming a single marshmallow based on the promise of a second to come) with successful outcomes later in life. The long-held notion, popularized in a bestselling book entitled The Marshmallow Test: Why Self-Control Is the Engine of Success was that children able to innately understand the benefit of self-control and delayed gratification in childhood would carry into their education and adulthood, and ultimately produce less impulsive, and more successful adults.

Using a larger sample size that spanned across race, class, and parents’ educational level, the revised study tied the child’s social and economic background as the primary determinant behind the childrens’ decision to forego the first marshmallow, with limited long-term correlation between the decision to consume the marshmellow and the childrens’ medium term outcome (using performance in standardized testing as a barometer).

As the Atlantic hypothesized, children who are brought up in relative abundance are able to more easily internalize the promise of a future reward than someone of limited means, where meals, rewards, and other day-to-day routines are less promised.

3. In the NY Times Opinion section, Paul Krugman provides a “primer” on the history of the politicization of trade and trade “wars” in the United States, and the “political realism” that often outweighs economic theory in trade-related decisions.

While Krugman concedes that it is historically the role of the Executive Branch to manage trade relationships and implement tariffs, he sees no logic or justification for Trump’s levied tariffs.

Related to Trade, NPR podcast Planet Money did a feature on the current state of the WTO several weeks ago that explained the Trump Administration’s efforts to paralyze WTO rulings by vetoing all nominated judges.

4. Marking the publication of a 930-page collection of the works of Brazilian writer Machado de Assis, NYTimes Book Critic Parul Sehgal writes on the literary legacy of the author, who has been compared from everyone from Dickens to Kafka, and in between.

The collection of stories appears to span decades and various styles, from straight romances to modernist stories to political satire. While a bit maximalist in its scope, the book lover in me has already mentally filed this onto my to-buy list.

5. With the recent announcement of the June 2018 release of John Coltrane’s  “undiscovered” album, Both Directions at Once, there’s always a lingering doubt in my mind whether is getting the Jimi Hendrix / Tupac treatment – a thirst for new and repackaged material that doesn’t necessarily justify a new release.

However, all signs point to the album being a worthy addition to Coltrane’s catalog, including the “who” (John Coltrane’s reknowned quartet – Tyner, Garrison, and Elvin Jones), “where” (recorded in famed engineer Rudy Van Gelder’s Studio) and “when” (1963 – leading up to the 1965 Love Supreme sessions), not to mention the “what” (a new John Coltrane album!).

Attached to this article was a posthumous appreciation of Coltrane written by the Times’ longtime jazz critic, Ben Ratliff. The article provides incredibly useful contexts for the prodigious rigor and study behind Coltrane’s genius, and his desire to continually improve, expand, and innovate. Ratliff’s commentary led me to reexamine and listen to two of Coltrane’s later albums, Ascension and Meditations, both of which are hardly easy listens, but avant garde, free jazz masterpieces in their own right.

6. In an article reminiscent of the B”razil’s initial pre-sal discovery and Lula’s 2008 proclamation that “God is Brazilian, Brazil has once again returned to the auction markets to sell blocks of its offshore oil deposits, with global oil corporations like Exxon Mobil, Chevron, and Royal Dutch Shell lining up to own a piece of some of the world’s richest (and most inaccessible and expensively extracted) stores of oil.

Invoking Brazil’s mix of capitalism and state-subsidized industrialization that was so apparent over the past month’s trucker’s strike, Petrobras exercised its ‘legal’ right to own a stake in each of the blocks, as well as serve as their operator. The Economist provided a helpful explanation on the convoluted rules surrounding the purchase and operation of the blocks back in 2013.

7. The Financial Times checks in on the current state of Bitcoin, which seemed ubiquitious last year as it climbed up to $20k / bitcoin and has since settled around $7k over the past few months.

Using data from blockchain research company Chainalysis, there seems to have been a shift in the trading volume from longer term holders, or investors to traders/speculators, who are focused on the rewards from smaller fluctuations.

While Steven Johnson’s longform piece in the NYTimes Magazine remains essential in explaining the long-term use case and potential of bitcoin, for the moment bitcoin continues to remain primarily an investment vehicle. Quoted at the risk of ridicule years from now, one cryptocurrency observer commented: “Speculation remains the primary use case for these digital assets; merchant or institutional adoption does not appear to be a primary driver of price,”

As the number of coins and their use cases continue to grow exponentially, I am curious to what extent bitcoin will continue to be at the vanguard of innovation and an accurate measure of cryptocurrency sentiment more broadly, or whether the decentralized nature of the currencies will result in a fracturing of investment vehicles and use cases.

8. This week’s NYTimes Book Review has no shortage of compelling reviews of books that seem worthy of reading, just in time for the summer: