What Goes Up

Selling bonds short—a trade that for decades hadn’t worked consistently—has helped fuel a 37% return so far this year for the managed-futures strategy fund at AlphaSimplex Group. And the trade looks like it has further to go, according to Kathryn Kaminski, chief research strategist at the quantitative-investing firm. She joined the “What Goes Up” podcast to discuss this and other market moves that have made trend following in futures markets such a lucrative strategy this year.  “The short-bond trade has more legs to run,” Kaminski says. “A lot of the core problems that have driven [markets] to the point where we are now have yet to be completely solved.”See omnystudio.com/listener for privacy information.

Rising food prices have been one of the big drivers of inflation this year as farmers across America were hit with price spikes for fertilizer and fuel. They’ve also been forced to grapple with lingering supply-chain issues and labor shortages. Brian Duncan, operator of a family farm and vice president of the Illinois Farm Bureau, joins this week’s episode of “What Goes Up” to talk about the agricultural commodities markets and offer his perspective on the US economy as he plans for next year’s crops.“I do not see our prices coming down anytime soon,” he says. “Remember how base-fossil fuel dependent agriculture is, both on the fuel side and on the fertilizer side. I don’t see a solution.”See omnystudio.com/listener for privacy information.

Jeremy Siegel, a longtime professor of finance at the University of Pennsylvania’s Wharton School and author of “Stocks for the Long Run,” joined the latest episode of the “What Goes Up” podcast alongside Jeremy Schwartz, global chief investment officer at WisdomTree, to discuss the state of the economy, inflation and markets. Siegel also threw in some advice for retail traders caught up in the meme-stock craze. “I always recommend to young people, if you want to play with 10% or 15% of your portfolio in those games, fine. But, you know, put the other 85 into some sort of a long-term index fund that will have meaning for you when you finally become an adult,” he said. “Do not make that a big portion of your portfolio unless you have unbelievably excess money and you can afford to lose 80% of it.”See omnystudio.com/listener for privacy information.

By mimicking strategies common among some quantitative hedge-fund firms, the iM DBi Managed Futures Strategy ETF has surged 21% so far this year—beating the S&P 500 Index by about 30 percentage points. Andrew Beer, one of the managers of the active exchange traded fund, joined the latest episode of the “What Goes Up” podcast to explain the secrets of its success amid a brutal year for both stocks and bonds. See omnystudio.com/listener for privacy information.

The chief investment officer of Morgan Stanley Wealth Management has a warning for investors who are chasing the latest rally in stocks: Don’t get too excited about a potential peak in inflation after the consumer price index cooled off a bit in July. Lisa Shalett joined this week’s episode of the “What Goes Up” podcast to explain the firm’s cautious stance toward the market, and how CPI is still elevated enough that the Federal Reserve needs to continue lifting rates aggressively. “The direction is correct, but the levels are wrong,” she says of the latest inflation data. See omnystudio.com/listener for privacy information.

Investors are turning to some thematic exchange-traded funds to hedge against inflation and take advantage of the renewed performance of value stocks this year, according to Jay Jacobs, US head of thematics and active equity ETFs at BlackRock. Jacobs joined the “What Goes Up” podcast to discuss how the firm is sizing up investing opportunities amid the uncertain economic outlook. See omnystudio.com/listener for privacy information.

Mimi Duff, senior client adviser at the $3 billion registered investment adviser GenTrust, joined this week’s “What Goes Up” podcast to discuss the outlook for markets, the economy and borrowing costs following the latest Federal Reserve interest-rate increase and a second-straight quarter of negative economic growth. Duff also explains the rationale behind some of the more interesting investments her firm is excited about, including biotech and uranium exchange-traded funds. And she gives her thoughts on the bond market, and what areas of markets are attractive following this year’s selloff.See omnystudio.com/listener for privacy information.

While China’s stock market has been seen as a pariah by some global investors this year, Citigroup is taking a contrarian view, positing a bullish outlook for the nation’s equities even while favoring defensive stocks in the US.  Shawn Snyder, head of investment strategy at Citi US Wealth Management, joined the “What Goes Up” podcast to discuss how the firm is sizing up investing opportunities amid an uncertain economic outlook. See omnystudio.com/listener for privacy information.

Mark Zandi, who has been an economist for more than three decades, says he’s never seen so many people convinced that a recession is imminent. And while he believes the US economy can still avoid an economic downturn, sentiment is so poor that it poses its own risks. Zandi, the chief economist at Moody’s Analytics, joined the “What Goes Up” podcast to discuss his outlook after government data this week showed the highest level of inflation in almost 41 years. “I talk to CEOs, CFOs, investors, friends, family—to the person, they think we're going into recession. I've never seen anything like it,” Zandi says. “When sentiment is so fragile, it’s not going to take a whole lot to push us in.”See omnystudio.com/listener for privacy information.

During the day-trading craze that erupted amid the Covid-19 pandemic’s lockdowns, market professionals repeatedly warned a new flock of Reddit-reading, Robinhood-using retail investors that equity options were risky, and that bold bets in that market could end badly. It turns out their caution was spot on. Day-traders managed to lose more than $1 billion during the bull market, with the bill climbing to $5 billion when the cost of doing business with market-makers is factored in, according to Svetlana Bryzgalova, Anna Pavlova and Taisiya Sikorskaya of the London Business School. The three researchers joined the “What Goes Up” podcast to talk about the findings of their study, and discuss what retail traders need to know about options trading.See omnystudio.com/listener for privacy information.