Forward Guidance

Is a recession imminent? What will the impact be on asset prices - and to what degree would it cause the Federal Reserve to stop tightening monetary policy?Today Jack welcomes Joseph Wang, former senior trader for the Federal Reserve, and Eric Basmajian, founder of EPB Macro Research, to answer these very important questions.--Follow Eric Basmajian on Twitter https://twitter.com/EPBResearchFollow Joseph Wang on Twitter https://twitter.com/FedGuy12Follow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/Joseph’s writings can be found at https://fedguy.com/--(00:00) Introduction(02:00) Economic Growth Is Stalling(05:00) What Is A Recession?(07:22) The Fed's "Unconditional" Commitment To Fight Inflation(09:20) Odds Of A Soft Landing(17:36) Timeline of a Recession(24:28) Fall Of The Commodity Complex(32:13) Demographics and Inflation(41:45) Bank Lending's Role In Inflation(53:45) Conclusion--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.

In the spring of 2020, the idea that the world would see persistent inflation was laughed at. No one is laughing now.Vincent Deluard, head of global macro at StoneX, is one of the few macro analysts who foresaw this inflationary spiral to its full extent. He returns to Forward Guidance to explain how in the next leg of this inflationary saga, corporate profits will plummet as unemployment remains low and inflation fails to return to normal levels. Deluard shares several trade ideas and argues that the bear market has only just begun.--Follow Vincent Deluard on Twitter https://twitter.com/VincentDeluardFollow Jack on Twitter https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/--Bit.com is a full-suite cryptocurrency exchange launched by Matrixport, an integrated financial services firm headquartered in Singapore. Since August 2020, Bit.com has been online supporting the spot, perpetual, futures, fixed income and options products, with a particular highlight being pioneers to launch BCH options. Bit.com is the second-largest in the BTC and ETH options market.Call to action: For any further enquiry, please contact vip@bit.com.Sign up URL: https://bit.ly/3KlgLR3App download URL: https://bit.ly/3xer6uI--(00:00) Introduction(04:41) Reflecting On Inflation Projections(19:35) The Reverse Wealth Effect(24:05) Attributing Inflation As The Cause of Asset Prices Deflating(29:20) Looking at Economic Trends(35:02) Bit.com Ad(35:32) Companies Investors Should Take Caution(40:10) Financing Equity via IPOs and Specs(42:50) Disruptions Caused By Millennial Lifestyle Companies(46:50) Zombie Companies(48:45) The Big Tech Companies(53:17) Outlook on Inflation Over the Next Year(59:00) Yields and the Eurocurve(1:05:40) The Financial System Driving Behaviors(1:09:00) Inflation In Other Countries(1:14:20) The Five Inflation Trades(1:20:30) Japan And the BOJ(1:24:23) Vincent's Psychological Advice for the Market(1:30:04) The Grasshopper Analogy--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.

In this episode of Forward Guidance Benn Eifert, Founder & CIO of QVR Advisors joins the show for a deep dive discussion on all things volatility. As markets are all down year to date, many investors have been surprised with the orderly selling and lack of increase in the VIX. Luckily we have Benn on the show to share the role of put options in this market, wether or not macro matters for volatility traders and volatility at both the single stock and index level.We also discussed the past two years of stimulus induced retail options trading, how market structure has evolved, the best hedges for a slowly falling market and when we could expect a market bottom. To hear that, you'll have to tune in!--Follow Benn Eifert on Twitter https://twitter.com/bennpeifertFollow Jack on Twitter https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/--(00:00) Introduction(00:15) Background(05:10) The Rise (And Fall?) Of Retails Options Traders(08:50) Put Options' Role In This Year's Viscous Sell-Off(13:57) The VIX(19:29) The Pricing of Tail Risk(24:32) Best Hedges For A Slowly Falling Market(28:00) Single-Stock Volatility(33:34) How Responsive Are Options Market Makers?(39:58) Credit and Treasury Volatility(48:11) Options Expiry ("OpEx")(55:35) Common Options Mistakes(1:01:00) The Macro(1:05:50) Does The VIX Have To Spike In Order For Stocks To Bottom?--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.

Noel Smith, chief investment officer and head of options trading at Convex Asset Management, joins Forward Guidance for a special time-sensitive episode to share an observation from the options markets that he thinks could exert some buying pressure over the next two weeks. Smith notes that, due to a large asset manager putting on a “collar” a while back, options market makers are long lots of gamma at the 3620 level on the S&P 500, and thus will be forced buyers on the way down as they strive to remain delta neutral. This dynamic will only become stronger until the very end of June, and the “fireworks” in the S&P 500 may not start until July. Not investment advice. Filmed on June 16, 2022.--Follow Noel Smith on Twitter https://twitter.com/NoelConvexFollow Jack on Twitter https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/--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.

Alfonso “Alf” Peccatiello, author of The Macro Compass and former $20 Billion fund manager, joins Jack Farley to break down yesterday’s action-packed Fed meeting, in which Fed Chair Jay Powell laid out the Fed’s revised framework for moderating the rampant inflation that has beset the U.S. economy. Alf tells Jack why the tightening of financial conditions that the Fed aims for requires a further fall in risk assets, and therefore he expects that cash will perform well. Filmed the morning of June 16, 2022.--Follow Alf on Twitter https://twitter.com/MacroAlfFollow Jack on Twitter https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Alfonso Peccatiello’s writings can be found at https://themacrocompass.substack.com/His most recent piece that he and Jack discuss can found here: https://themacrocompass.substack.com/p/bad-cop-good-cop?s=r#details--The Fed’s June statement: https://www.federalreserve.gov/monetarypolicy/files/monetary20220615a1.pdfThe Fed’s Summary of Economic Projections (SEP): https://www.federalreserve.gov/monetarypolicy/files/fomcprojtabl20220615.pdf--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/--(00:00) FOMC Overview (06:30) Powell - Good Cop or Bad Cop?(09:40) Inflation Expectations and Terminal Rate(12:25)Leverage and VaR Shock(17:08) Can The Fed Actually Control Inflation?(23:13) The Impact Of Higher Rates On Portfolio Allocation(29:37) What Does This Mean For Your Portfolio?(41:43) The Fed's Real Yield Paradigm Shift--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 today’s episode of Forward Guidance, Jack is joined by two phenoms of macro analysis: Juliette Declercq of JDI Research and Darius Dale of 42Macro. The two explore the likelihood of the Fed’s much-desired “soft landing,” a scenario in which inflation moderates without a severe hit to economic growth or asset prices. Both Declercq and Dale argue that a soft landing is unlikely and that a fall in inflation will likely require not only a steep selloff in stocks but also a nosedive in economic growth that could amount to a recession. The trio also discuss the natural rate of interest (“R*”), financial repression, and demand destruction.--Follow Darius Dale on Twitter https://twitter.com/42macroDDaleFollow Juliette Declercq on Twitter https://twitter.com/JulietteJDIFollow Jack Farley on Twitter https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletter____Bit.com is a full-suite cryptocurrency exchange launched by Matrixport, an integrated financial services firm headquartered in Singapore. Since August 2020, Bit.com has been online supporting the spot, perpetual, futures, fixed income and options products, with a particular highlight being pioneers to launch BCH options. Bit.com is the second-largest in the BTC and ETH options market.Call to action: For any further enquiry, please contact vip@bit.com.Sign up URL: https://bit.ly/3KlgLR3App download URL: https://bit.ly/3xer6uI--Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter: https://blockworks.co/newsletter/--(00:00) Introduction(00:45) The Most Confusing Times In Macro?(04:30) How Far Can The Fed Go In Tightening Monetary Policy?(10:35) Odds Of A Soft Landing(21:02) What Will It Take To Break Inflation?(26:20) Bit.com Ad(26:52) The End Of Free Money(29:54) Europe(34:14) Shorting Equities(38:00) "The Scariest Chart in Macro"(44:07) Asset Allocation --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 stocks, crypto, bonds, gold, and commodities tanking, Jack calls an emergency podcast and asks trusted Forward Guidance regulars, Joseph Wang and Alfonso Peccatiello, to put the ongoing market volatility in the context of runaway inflation and central bank tightening. Filmed live on June 13, 2022.Follow Alf on Twitter https://twitter.com/MacroAlfFollow Joseph on Twitter https://twitter.com/FedGuy12Follow Jack on Twitter https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Subscribe to Fed Guy: https://fedguy.com/Subscribe to The Macro Compass: TheMacroCompass.substack.comJoseph's latest piece, "Turbo Tightening," can be found here: https://fedguy.com/turbo-tightening/Alf’s latest piece, “The True Reason Why Central Banks Do QE,” can be found here: https://themacrocompass.substack.com/p/portfolio-rebalancing-qe?s=r#detailsSubscribe To The Blockworks Newsletter: https://blockworks.co/newsletter

In this episode of Forward Guidance, fan favourites Michael Howell and Joseph Wang pair up to discuss the overarching theme of liquidity and the Fed. After sounding the alarm and forecasting a decline in equity markets towards the end of 2021, those predictions are now beginning to manifest in markets. Michael walks listeners through how he tracks market liquidity as a leading indicator for equity prices. Joseph provides an in depth look at the signals driving the Fed in this environment. Both guests share their thoughts on the Powell pivot myth, volatility, signs of stagflation, QT and so much more.This episode is jam packed with insights you can't afford to miss, but to hear them, you'll have to tune in!--Follow Joseph Wang on Twitter: https://twitter.com/FedGuy12Follow Michel Howell on Twitter: https://twitter.com/crossbordercapFollow Jack Farley on Twitter: https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Subscribe To Fed Guy: https://fedguy.com/Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletter--Timestamps:(00:00) Introduction(00:28) What Is Liquidity?(09:10) Declining Refinancing Capacity(13:46) Bagehot's Rule and The Discount Window(24:50) Is This Unprecedented?(28:35) Is Waiting For A Powell Pivot Futile?(30:16) The Fed And The VIX(33:16) Inflation and Recession(36:24) How Much QT Can The Fed Actually Do?(39:20) Gold and Crypto(41:17) The U.S. Dollar's Role(45:17) The People's Bank of China(46:43) How Much Power Does the Fed Actually Have?(49:12) The Commercial Banking System(53:33) Where Are Long-Duration Bond Yields Headed?(1:02:28) Yield Curve Interpretations(1:07:08) Is There A Problem Lurking In Credit?(1:09:03) "Good Liquidity" vs. "Bad Liquidity"(1:12:55) China(1:18:10) Closing Thoughts On The Market --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 Jack is joined by none other than the Convexity Maven himself, Harley Bassman, who shares why he is “wildly” bullish on mortgage-backed securities (MBS) even as the Federal Reserve is in the process of reducing its balance sheet via quantitative tightening (QT). Bassman explains why long-term interest rates have shot up by so much and makes the case that, while he is confident that inflation will continue to run hot, the sell-off in long-duration Treasurys may not continue. Bassman goes on to explain the significance of the spike in interest rate volatility as measured by the MOVE Index, his creation, and shares several investment theses on municipal bonds and equity LEAPs. Filmed on Friday, June 3, 2022.--Follow Harley Bassman on Twitter: https://twitter.com/ConvexityMavenFollow Jack Farley on Twitter: https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletter--Bit.com is a full-suite cryptocurrency exchange launched by Matrixport, an integrated financial services firm headquartered in Singapore. Since August 2020, Bit.com has been online supporting the spot, perpetual, futures, fixed income and options products, with a particular highlight being pioneers to launch BCH options. Bit.com is the second-largest in the BTC and ETH options market.Call to action: For any further enquiry, please contact vip@bit.com.Sign up URL: https://bit.ly/3KlgLR3App download URL: https://bit.ly/3xer6uI--Referenced In The Show:“The Water Is Warm In The MBS Pool”: https://www.convexitymaven.com/wp-content/uploads/2022/05/Convexity-Maven-MBS-Pool.pdf“Fire Insurance - Revisited”:https://www.convexitymaven.com/wp-content/uploads/2022/01/Convexity-Maven-Fire-Insurance-Revisited.pdf--Timestamps:(00:00) Introduction(01:18) Historic Bond Sell-Off (09:48) Credit Vol(17:14) Is There A Powell Put On Credit?(21:56) Is Quantitative Tightening (QT) Money Burning?(25:05) Bit.com Ad(33:49) Yield Curve Inversion(41:26) Outlook on Mortgage-Backed Securities (MBS)(44:59) Pre-Payment and Extension Risk(51:42) Will MBS Convexity Humble the Fed?(1:00:08) Bassman's Highest Conviction View(1:03:38) Municipal Bonds(1:04:42) Longer-Dated Calls on Equity Indices --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 Jack welcomes Michael Kao, retired hedged manager and private investor, on Forward Guidance for a wide-ranging conversation on liquidity, energy markets, cryptocurrency, and convertible bond arbitrage.Kao argues that risk assets have benefited from a “liquidity lottery” of quantitative easing and low rates, and that as a result financial markets are in a huge bubble that reminds him of the dotcom bubble of the late 1990s. Kao explains why he is skeptical about the value of digital assets, and he does a deep dive into the capital structure of MicroStrategy ($MSTR). Important disclosure: Kao recently entered a short position in $MSTR.Kao is a veteran investor with a wealth of expertise in options pricing, commodity trading, convertible bond arbitrage, and global macro. He has over three decades of investing experience at Goldman Sachs, Canyon Capital Advisors, as well as Akanthos Capital Management, his own hedge fund. Nothing in this podcast should be considered as investment advice.Filmed on June 2, 2022.--Follow Michael Kao on Twitter: https://twitter.com/UrbanKaoboyFollow Jack Farley on Twitter: https://twitter.com/JackFarley96Follow Blockworks on Twitter https://twitter.com/Blockworks_Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletterTo get in touch with Jack Farley about sponsoring Forward Guidance, email jack@blockworks.co.--(00:00) Introduction(00:46) Michael Kao's Background(08:30) The New Dotcom Bubble 2.0(22:50) The Rho Hedge War Story From 2008(29:16) Will The Fed Pivot? Can The Fed Pivot?(34:45) MMT(42:05) The Energy Crisis(49:16) The Black Swan For American Oil(59:09) Speculative Bubbles As Inflation Capacitors (1:02:12) How Do You Value Crypto?(1:10:05) Housing Bubble?(1:11:14) Will QT Steepen The Yield Curve?(1:14:38) Digital Assets(1:18:00) How MicroStrategy Funds Its Bitcoin Purchases(1:28:58) "He's Not In Trouble Right Now"--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.