AI and the Game of Markets Ben Hunt March 2018 Disclosures This - PDF document

AI and the Game of Markets Ben Hunt March 2018

Disclosures This commentary is being provided to you by individual personnel of Salient Partners, L.P. and affiliates (“Salient”) and is advice of a financial advisor. The appropriateness of a particular investment or strategy will depend on an investor’s indivi author W. Ben Hunt’s affiliation with Salient Partners, L.P. and affiliates and does not reflect the opinions of Salient. 2

How Does a Horse Run? 3

How Does a Horse Run? 4

How Does a Horse Run? 5

AI Processes (Visualizes) Unstructured Data 6

Another Unromantic Truth Quality factor useless since QE began 7

Another Unromantic Truth Hedge Fund convexity vanished since QE began 8

How Does a Market Run Without Quality? Central banks have purchased more than $20 Trillion of financial assets, lifting the price of ALL financial assets. How does that work? 9

Central Bankers Call it Communication Policy The crisis has passed, but I think the Fed’s need to educate and explain will only grow. ― Ben Bernanke, November 19, 2013 10

The Common Knowledge Game the the get the the the don’t the other the “At ” 11

The Power of the Crowd Watching the Crowd 12

The Power of the Crowd Watching the Crowd 13

Our Modern Missionaries 14

And Our Missionary-in-Chief 15

Media Barons Have Known This Forever 16

Even Today 17

Even Today 18

Wall Street Has Known This Forever 19

Wall Street Has Known This Forever Henry Blodget and Frank Quattrone in happier days … 20

Even Today 21

Then ― – 22

― 23

Use AI to Visualize Missionary Narratives 24

Use AI to Visualize Narrative Networks 25

What Does the Mexico Narrative Look Like? TMT (11%) Auto (3.9%)

What Does the Mexico Narrative Look Like? TMT (11%) Auto (3.9%)

What Does the Trump Narrative Look Like? Bloomberg Narrative re: Trump Bloomberg Narrative re: Trump Bloomberg Narrative re: Trump Election week T-5 to T-2 Election week T-1 Election week T+1

The Evolution of Market Technology 29

AI Doesn’t Replace Humans - It Saves Them 30

What To Do? Think Critically Don’t Be the Sucker at the Table 31

What To Do? Think Critically Don’t Be the Sucker at the Table 32

What To Do? Think Differently 33

W. Ben Hunt, Ph.D. bhunt@salientpartners.com 34

AI Powered by Videogame Processors 35

How AI Works (NOT One Big Brain) 36

What’s Next With AI (Quantum Compute) 37