Jonny Matthews, Senior Portfolio Manager at Fortem Capital and creator of SuperMacro, shares his journey from engineering to finance and insights from his time at Salomon Brothers and Brevan Howard. He discusses the potential for low growth and high inflation in 2025, the challenges facing the S&P 500, and AI's impact on productivity and equity returns. Matthews also analyzes global economic conditions in Germany, Japan, and China while offering practical advice for aspiring finance professionals navigating today's complex market landscape.
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Early Career and Trading Style
Jonny Matthews initially aimed to be a trader like those in "Liar's Poker".
Early success at Salomon Brothers involved pricing complex volatility products with huge margins due to lack of competition.
insights INSIGHT
Hedge Fund Trading and the Value of Writing
Transitioning from market making to hedge fund trading requires a different approach, as there's no safety net from customer flow.
Writing about trading sharpens decision-making, even though Matthews initially doubted its value.
question_answer ANECDOTE
Anticipating the 2008 Crisis
In 2007, Matthews anticipated a market crash due to over-leveraging in the US housing market but missed the initial sell-off.
He capitalized on cheap volatility products in 2008, though he exited some positions prematurely.
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Liar's Poker is a non-fiction, semi-autobiographical book that details Michael Lewis's three-year tenure at Salomon Brothers, one of Wall Street's premier investment firms in the 1980s. The book provides a behind-the-scenes look at the culture of bond traders, highlighting the frat-boy camaraderie, killer instincts, and high-stakes games of bluffing and deception. Lewis describes the creation and use of mortgage bonds, the excessive bonuses, and the ruthless competition among traders. The narrative also touches on the author's disillusionment with the industry, leading to his resignation and transition into financial journalism.
Market Wizards
Jack D. Schwager
Market Wizards is a must-read for traders and financiers, offering a deep dive into the strategies and mental attitudes of the world's most successful traders. The book includes interviews with traders such as Bruce Kovner, Richard Dennis, Paul Tudor Jones, and others, revealing their approaches to trading and the factors that contribute to their success. It covers a wide range of markets, including treasuries, futures, commodities, and more, and highlights the importance of solid methodology and proper mental attitude in trading[2][4][5].
This Time Is Different: Eight Centuries of Financial Folly
Carmen Reinhart
Kenneth Rogoff
This book provides a panoramic view of financial crises from the Middle Ages to the modern era, covering government defaults, banking panics, inflationary spikes, and other financial catastrophes. The authors, Carmen Reinhart and Kenneth Rogoff, argue that financial crises are universal rites of passage for both emerging and established markets, and that the notion 'this time is different' is a recurring misconception. They document that financial crises occur in clusters and strike with consistent frequency, duration, and ferocity, emphasizing the importance of historical perspective in understanding and mitigating future financial crises.
Jonny Matthews is a senior portfolio manager at Fortem Capital and creator of SuperMacro, an institutional-level macroeconomic research platform. Before that, he spent 12 years as a partner at Brevan Howard, where he managed a $500 million investment portfolio. Earlier in his career, Johny spent 11 years at Citigroup, leading a team in equity derivatives trading following the acquisition of Salomon Brothers, where he began his career. His expertise spans fixed income, equities, FX, credit, and derivatives strategies, including relative value and volatility arbitrage trading. This podcast covers lessons learned during his time at Saloman Brothers and Brevan Howard, experience of trading before the GFC, thoughts on the US economy – growth, inflation and tariffs, and much more.
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