Pressure and Time

Investors are caught between a hunger for real economic growth and a narrative about infrastructure spending that no one genuinely believes is economically sound. The gap between what makes sense and what moves markets keeps widening, yet money continues flowing into ideas everyone knows are specious.

• A massive infrastructure spending boom is crystallizing as investment dogma. It's being positioned as a "smart investment" and "free lunch," but underneath the rhetoric it's the same deficit spending that's been repackaged in language Wall Street will embrace.
• The economic case doesn't hold up, yet that doesn't matter to market outcomes. Productivity gains would come from policy changes, not from building what the private sector won't touch. The narrative wrapper is what matters, not the merit.
• Markets operate on what everyone thinks everyone else thinks, not on truth. Common Knowledge Game players track consensus creation through four media channels where central bankers and politicians plant ideas that shape collective behavior.
• The infrastructure theme will drive returns in the near term because the pressure is real and the time is right.Investors can profit from narratives they don't believe, just as they've profited from central bank support they don't trust.
• Eventually reality will collide with hope, but that collision likely won't come until after the 2016 election. The thin gruel of dashed expectations gets served much later, which means the game stays investable even though the ultimate debt reckoning will be worse.