Forward Guidance

Steven Kelly, Associate Director of Research at the Yale Program on Financial Stability, returns to Forward Guidance to update Jack on the Federal Reserve’s forthcoming plans to increase capital requirements for U.S. banks. Filmed on July 11, 2023.____Follow Steven Kelly on Twitter https://twitter.com/StevenKelly49Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Kelly’s latest “Without Warning” Substack: https://www.withoutwarningresearch.com/p/the-macro-story-of-svb-isnt-just____Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Timecodes:(00:00) Introduction(02:45) Bank Capital Ratios, Explained(18:52) Busting Myths About Banks' Interest Rate Hedging(38:15) Accounting For Unrealized Losses(46:56) How Much Money Is Leaving the Banking System?(54:16) U.S. Banking System Is "Stable But More Fragile"(01:02:47) The Basel III Endgame(01:05:54) Interest Rates And Financial Stability____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.

Vítor Constâncio witnessed firsthand severe recessions, inflationary bouts, and a global financial crisis, as former Vice President of the European Central Bank (ECB) (2010 to 2018) and Governor of The Bank of Portugal (1985-1986, 2000-2010). He brings this considerable experience to examine the current challenges facing central bankers at the ECB as well as the Fed.Constâncio argues that while U.S. inflation is driven by a strong demand generated by loose fiscal policy, the primary agent of European inflation was the surge in energy prices in 2022. However, he recognizes that what began as supply-side pressure has broadened out to other sectors of the Euro area economy, so the ECB’s hiking of interest rates to 4% was necessary. Constancio expects that a mild recession in Europe will tame inflation and that substantial further rate hikes from the ECB will likely not be needed. Filmed on July 6, 2023.____Follow Vítor Constâncio on Twitter https://twitter.com/VMRConstancioFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_____Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Timecodes:(00:00) Introduction(00:48) Euro Area Inflation Is Mostly Due To Energy Shock, Not Demand(08:13) I Would Support A Pause In Interest Rate Hikes, Says Constancio(10:11) Recession In Europe Is Likely For 2023(14:35) ECB Unlikely To Cut Interest Rates During A Mild Recession(16:20) There Pressure on The European Central Bank (ECB) To Follow The Federal Reserve?(20:44) Exploring The Logic Of Negative Interest Rates(25:29) Interest Rates' Impact On The Economy(32:04) Fixed vs. Floating Mortgages(34:48) ECB's Reaction Function During The 2008 Great Financial Crisis(44:16) Recent Bank Failures (Silicon Valley Bank)(49:51) Credit Suisse(51:51) Basel III Regulation of Held-To-Matuity Accounts and Interest Rate Hedging(54:47) Fighting Inflation In 1970s Portugal____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.

On todays episode of Forward Guidance Jay Shabat Senior Analyst at Skift & Author of both Airline Weekly & Railroad Weekly joins the show for a discussion on the state of the Airline & Railroad industries in 2023.After the pandemic shock of 2020, Jay walks through how the ensuing 3 years have shaped the industries stating that airline demand continues surging, but freight demand is painting a different picture. Does airline & railroad demand give a useful insight into the health of the U.S economy? To hear all this & more, you'll have to tune in!--Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Follow Airline Weekly: https://airlineweekly.com/Follow Railroad Weekly: https://railroadweekly.substack.com/--Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissio...Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos--Timecodes:(00:00) Introduction(00:52) The State Of Airlines In 2023(03:09) How The Pandemic Impacted The Airline Industry(10:32) We're Not Seeing An Economic Slowdown Yet(20:40) International Travel(25:06) Why Airlines Aren't A Great Business(29:15) The Airline Industry Would Have Gone Bankrupt If Not For Government Assistance(36:20) The State Of Freight In 2023(51:44) Consolidation In The Freight Industry(57:40) What Can Freight Tell Us About The U.S Economy?(01:10:02) How Do Airlines Hedge?--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.

Edward Chancellor, distinguished investor, financial historian, and author, joins Forward Guidance to discuss his latest book “The Price of Time: The Real Story of Interest.” Chancellor shares with host Jack Farley and Joseph Wang (“Fed Guy”) how artificially low interest rates can distort markets and foment bubbles.“The Price of Time”: https://www.amazon.com/Price-Time-Real-Story-Interest/dp/0802160069____Follow Edward Chancellor on Twitter https://twitter.com/chancellor_e?lang=enFollow Joseph Wang on Twitter https://twitter.com/FedGuy12Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Joseph Wang’s YouTube channel: https://www.youtube.com/@Fedguy12/featuredJoseph Wang’s writings can be found at https://fedguy.com/____Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Timecodes:(00:00) Introduction(00:31) How Ultra-Low Interest Rates Cause Asset Bubbles(11:03) The History Of The Gold Standard(18:54) Deflation Isn't Always Bad(30:06) Negative Interest Rates Are A Tax On Capital(37:17) Low-Rates Boost Venture Capital and Private Equity(45:27) I'm Fairly Dubious About Cryptos(46:44) Unicorns and Zombies(54:20) Elite Overproduction(57:39) How High Can Interest Rates Go?____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.

Since the fall of Silicon Valley Bank (SVB) in March 2023, many investors have been closely monitoring the Federal Reserve’s recent lending to U.S. banks, which amounts to roughly $100 Billion as of late June.What has received far less attention is the Federal Home Loan Bank (FHLB) system, which has extended over $1 Trillion of liquidity (10x the Fed!) to banks throughout the U.S.Kathryn Judge, Harvey J. Goldschmid Professor of Law at Columbia Law School, joins Forward Guidance to explain the history and purpose of the FHLBanks, calling them the “lender of second-to-last resort.” Judge argues that the FHLB system has grown beyond its original mission and that reform is desperately needed. Judge also opines on the SEC’s move to regulate crypto, as well as SOFR’s replacement of LIBOR. Filmed on June 29th, 2023.____Follow Kathryn Judge on Twitter https://twitter.com/ProfKateJudgeFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_____Kathryn Judge’s book, “Direct: The Rise of the Middleman Economy and the Power of Going to the Source”: https://kathrynjudge.com/books/direct“The Problem Lender of Second-to-Last Resort”: https://prospect.org/economy/2023-03-29-problem-lender-federal-home-loan-banks/____Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissionless-2023Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/____Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos____Timestamps:(00:00) U.S. Banking System Is "Uneven"(03:06) What Is The Federal Home Loan Bank (FHLB) System?(07:24) Deregulation in 1980s and 1990s(11:22) Commercial Banks vs. Thrifts (And Glass–Steagall)(17:31) FHLB Lending During Great Financial Crisis (GFC)(25:14) "FHLB Has Never Lost Money On Advances"(33:54) FHLB's "Abuses" Must Stop(34:28) Permissionless(41:24) What Will New Bank Regulation Look Like?(50:38) Risk-Weighting In Bank Capital Regulations(53:42) Blockworks Research(54:42) Held-To-Maturity Accounting(58:37) The Rise Of Middlemen in Finance And Business(01:06:00) SEC's War With Crypto(01:08:04) The End Of LIBOR Eurodollar Contracts____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.

--On todays episode of Forward Guidance, Michael Kao, former hedge fund manager turned private investor & Alexander Stahel, Founder & CIO at Burggraben Holding AG join the show for a discussion on the current state of global macro & how those current macro factors are impacting energy markets.Turning bearish on oil in late 2022, Michael & Alex were able to sidestep the current downward price action experienced in 2023. Expecting macro headwinds and a less bullish setup in the supply & demand fundamentals, Michael & Alex walk through what the oil bulls got wrong & what to expect in the second half of 2023.Michael also shares his framework for the U.S dollar wrecking ball, which seems to be claiming its most recent victims over in Asia, but to hear that, you'll have to tune in!--Follow Michael: https://twitter.com/UrbanKaoboyFollow Alexander: https://twitter.com/BurggrabenHFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_--Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissio...Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos--Timecodes:(00:00) Introduction(06:37) Why The Oil Bulls Were Wrong In 2023(13:47) Did Russian Sanctions Actually Impact Oil Supply?(23:43) Forecasting Oil Prices(31:05) European Gas Prices(33:37) The U.S Dollar Wrecking Ball(38:41) Lessons From The Asian Financial Crisis(41:34) Chinese Oil Demand(01:01:33) Why We're Not In An Oil Bull Market(01:17:23) Oil Has Further Downside Risk(01:24:13) Final Thoughts--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.

Follow On The Margin On Spotify: https://spoti.fi/46mn1n3Follow On The Margin On Apple Podcasts: https://apple.co/3UsnTiMFollow Blockworks Macro On YouTube: https://bit.ly/3NKpujX__This episode is taken from the weekly roundup edition of the On The Margin podcast hosted by Mike Ippolito where we discuss the biggest news stories of the week.As economic data & growth remains resilient, markets continue rallying despite negative sentiment coming into the year. We discuss whats in store for the second half of the year & whether the Fed will get their soft landing? —Follow On The Margin: https://twitter.com/OnTheMarginPodFollow Jack: https://twitter.com/JackFarley96Follow Michael: https://twitter.com/MikeIppolito_Follow Blockworks: https://twitter.com/blockworks_—Research, news, data, governance and models – now, all in one place. As a listener of On The Margin, you can use code "MARGIN10" for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/—Use code PODS20 to get 20% off Permissionless 2023 in Austin: https://blockworks.co/event/permissionless-2023—Disclaimer: Nothing discussed on On The Margin 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.

To get $1,000 off an annual subscription to QI Pro, Danielle DiMartino Booth’s institutional-grade research service, go to https://quillintelligence.com/register/qi-pro-friends-of-farley/.$3,000 instead of $4,000 for the first year, offer ends in July. Interested parties may request a sample report of QI Pro by emailing Danielle DiMartino Booth at danielle@dimartinobooth.com.Danielle DiMartino Booth, CEO and chief strategist of QI Research, returns to Forward Guidance on a mission to dispute the notion that the U.S. economy is strong.Booth challenges the apparently-rosy economic data and points to where the data is either very lagging or, as she says about the Bureau of Labor Statistics’ (BLS) data, “painfully corrupted.”Booth explains why she expects inflation to continue to fall very sharply, and why she expects the Federal Reserve to hike interest rates at least one more time in July (and perhaps again in September). Filmed on June 20, 2023.--Follow Danielle: https://twitter.com/DiMartinoBoothFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos--Timecodes:(00:00) Introduction(00:47) Laying Inflation To Rest(07:43) Shortages Have Become Gluts(09:32) Housing Is Strong, Right?(14:04) Hidden Cracks In The Labor Market(16:49) Official Bureau of Labor Data Is "Painfully Corrupted"(24:23) Global Economic Impulse Is Disinflationary(28:56) Liquidity Is NOT Increasing, Says Danielle(35:04) QI Pro Discount(39:06) Fed Will Likely Hike Rates In July (And Maybe September), Says Danielle--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.

Today’s special guest is a true expert in global money. Robert McCauley’s life work on the international monetary system is authoritative and seminal, and he joins Jack Farley and Joseph Wang to answer questions such as:- how do Eurodollars actually work?- is the rest of the world long or short dollars? (the answer may surprise you)- how does the level of the dollar mechanically impact offshore dollar credit?McCauley confirms many rumors about Eurodollars (offshore dollars), as well as debunks several of their myths. He shares his view on the dollar’s role in the future of global money, and he details the astronomically large sums in the FX swap market used to hedge dollar exposure. McCauley also asks Joseph Wang a question about the fall of LIBOR (London Inter-Bank Offered Rate) and the rise of SOFR (secured overnight financing rate). Filmed on June 21, 2023.Robert McCauley is the Senior Fellow at the Global Economic Governance Initiative at the Boston University Global Development Policy Center. He previously served as senior advisor to the monetary & economics department at the Bank for International Settlements (BIS), as well as at the New York Fed.--Robert McCauley’s Eighth Edition of “Manias, Panics, and Crashes”:https://www.bu.edu/gdp/2023/03/22/manias-panics-and-crashes-a-history-of-financial-crises/On Amazon:https://www.amazon.com/Manias-Panics-Crashes-History-Financial/dp/303116007XRobert McCauley’s papers referenced during the show:“The Global Domain of the Dollar: Eight Questions”:https://www.bu.edu/gdp/2021/02/09/the-global-domain-of-the-dollar-eight-questions/“Dollar debt in FX swaps and forwards: huge, missing and growing”:https://www.bis.org/publ/qtrpdf/r_qt2212h.pdf“Seven decades of international banking”:https://www.bis.org/publ/qtrpdf/r_qt2109e.pdf“The International Economic and Financial Order After the Pandemic and War,” pages 123-128:https://media.iese.edu/research/pdfs/76606.pdf“London as a financial centre since Brexit: evidence from the 2022 BIS Triennial Survey”: https://www.bis.org/publ/bisbull65.pdfJoseph Wang’s latest piece on SOFR (paywalled): https://fedguy.com/long-live-sofr/--Follow Joseph Wang on Twitter https://twitter.com/FedGuy12Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Joseph Wang’s YouTube channel: https://www.youtube.com/@Fedguy12--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos--Timecodes:(00:00) Introduction(01:33) Origin Of The Eurodollar System(19:46) Eurodollar Deposits Rarely Take Losses, But Silicon Valley Bank's Eurodollars Are In Limbo And May Be Lost(26:12) Can Non-U.S. Banks Print Dollar Deposits At Will?(39:50) Banking As A Percentage of GDP Peaked Many Years Ago(43:14) Is The Rest Of The World Long Dollars, Or Short Dollars?(53:49) Is The De-Dollarization Narrative Just A Lot Of Hot Air?(01:11:49) Who's Going To Buy U.S. Treasurys?(01:20:38) The Dollar's Role Does Not Give The U.S. An "Exorbitant Privilege"(01:24:29) $35 Trillion Dollar Hidden Debt Via FX Swaps(01:38:05) Robert McCauley's Question For Joseph Wang On SOFR & LIBOR--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.

With the VIX at a 3-year low, Kris Sidial, tail risk manager & co-chief investment officer of The Ambrus Group, returns to Forward Guidance to tell Jack about what it’s like hedging tail risk during a volatility bear market (bull market in risk, bear market in vol). Sidial sheds light on the spectacular rise of Zero Day To Expiration (0DTE) Options and explains why he thinks their proliferation poses a serious risk to market structure. That being said, Sidial thinks implied volatility could continue to decline for a while. Filmed on June 23, 2023.--Follow Kris Sidial on Twitter https://twitter.com/KsidiiiFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Forward Guidance on Twitter https://twitter.com/ForwardGuidanceFollow Blockworks on Twitter https://twitter.com/Blockworks_Ambrus’ paper on Zero Day To Expiration (0DTE) Options:https://static1.squarespace.com/static/5f6299603ceb25330f902e7d/t/644beff4e8d2ee6519d85da2/1682698232481/Ambrus+Capital+-+Dispelling+False+Narratives+About+0DTE+Options.pdf--Use code GUIDANCE20 to get 20% off Permissionless 2023 in Austin:https://blockworks.co/event/permissio...Research, news, data, governance and models – now, all in one place. As a listener of Forward Guidance, you can use code GUIDANCE10 for a 10% discount when signing up to Blockworks Research https://www.blockworksresearch.com/--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:https://rb.gy/5weeywMarket commentary, charts, degen trade ideas, governance updates, token performance, can’t-miss-tweets and more. Subscribe to the Blockworks Research “Daily Debrief” Newsletter: https://rb.gy/feusos--Timecodes:(00:16) Market Volatility Is At A Three-Year Low(07:34) Implied Volatility Could Go Even Lower(15:14) Tail Risk Strategies(36:01) The Stunning Rise Of Zero Days To Expiration (0DTE) Options(41:29) Huge Amounts Of Unregulated Leverage In 0DTE Options(52:31) Market Crash Is "Inevitable" Because Of Zero Day To Expiration Options(01:04:14) Banks' Hedging Of Interest Rate Risk(01:07:52) Performance Reporting of Tail Fund Risk Funds--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.