Andy Constan, veteran macro investor and founder of Damped Spring Macro Research, joins Jack to share his macro framework for 2023. Looking at rallying risk assets and an interest rate futures market that is pricing in over 200 basis points worth of cuts by the Fed, Constan argues that the market is assigning too high a probability to two “blue pill” scenarios - a soft landing or a Fed pivot. Constan says he is positioned to fade these two scenarios by being short everything - namely, stocks, bonds, and commodities. Constan explains why he is betting on red pill scenarios of either a severe recession or “higher-er for longer-er” interest rates. Filmed on January 11, 2022.
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Timestamps:
(00:00) Intro
(00:47) "I'm Short Everything"
(08:24) Blue Pill Scenarios (Soft Landing Or Fed Pivot) Are Less Likely Than Market Is Pricing In
(15:19) Betting Against Rate Cuts
(23:06) Curve ad
(24:08) Are Stocks Expensive Relative to Bonds?
(30:51) Equity Risk Premium (ERP)
(40:36) In China, Cash Is Trash
(49:08) Views on Commodities
(54:28) Can the Superb Macro Returns of 2022 Be Repeated?
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.
