Forward Guidance

Follow Jim Bianco https://twitter.com/biancoresearchFollow Joseph Wang https://twitter.com/FedGuy12Follow Jack Farley https://twitter.com/JackFarley96Follow Blockworks https://twitter.com/Blockworks_Timestamps:(00:00) Opening Thoughts(08:05) Powell's "Codewords"(15:10) The Balance Sheet: Stock vs. Flow(22:10) Is The Fed No Longer Credible?(27:32) When Is Inflation Going to Peak?(47:15) Worst Bond Market Sell-Off Since George Washington Became President(51:30) Systemic Risks For The Financial Systems(53:00) Are Rate Hikes Good for Commercial Banks?(1:01:04) How Far Can The Fed Go?

Danielle DiMartino Booth, founder and CEO of Quill Intelligence, joins Jack Farley and former senior Fed trader Joseph Wang to share her outlook on this week’s FOMC meeting. Booth argues that the Federal Reserve’s lateness to fight inflation has caused it to lose a lot more credibility, and makes the case that it risks to lose even more credibility if it fails to recognize that the economy is slowing rapidly. Booth notes that credit spreads are widening rapidly and argues that it will be a credit market blow-up, not an equity market drawdown, that forces the Federal Reserve to change course. Wang and Booth discuss how rising mortgage rates will deter the Fed from shrinking its holdings of mortgage-backed securities (MBS), and they each give their take on the continued sell-off in Treasury bonds.Follow Danielle DiMartino Booth on Twitter @DiMartinoBoothFollow Joseph Wang on Twitter @FedGuy12Follow Jack Farley on Twitter @JackFarley96--If you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter

Scott Skyrm, Executive Vice President in fixed income & repo at Curvature Securities, joins former senior Fed trader Joseph Wang and host Jack Farley to share his insights from deep within the repo markets. Skyrm explores whether the Fed’s forthcoming balance sheet runoff will agitate repo markets like last time in September 2019, when repo rates spiked higher. Skyrm (@ScottSkyrm) and Wang (@FedGuy12) weigh important considerations, such as the Fed’s involvement with the market and what current repo rates indicate about the level of bond shorting. Skyrm tells Farley (@JackFarley96) that the trillions of Treasury collateral that the market will have to absorb over the next year will drain the ~$1.8 Trillion in Fed’s reverse repo facility, yank repo rates higher, and eventually cause the market to rely once again on the Fed’s standing repo facility.--BCB is Europe’s leading provider of business accounts and trading services for the digital asset economy. With a dedicated focus on institutional payment services, BCB Group provides business banking, cryptocurrency and foreign exchange market liquidity for some of the world’s largest crypto-engaged financial institutions.For more information, please visit https://bcbgroup.com/jack

Jack’s next guest is someone who has timed this cycle better than literally anyone he knows in macro.Since the beginning of the year, the elusive Teddy Vallee has been short almost everything, stocks but in particular U.S. government bonds, which are in the midst of their most vicious sell-off in almost 40 years. But very recently, Teddy has closed his short in government bonds and has actually entered a massive long position in Treausurys. Teddy tells Farley why he expects growth and inflation to slow rapidly as the Federal Reserve tightens monetary policy.A note on the title: up until very recently, Vallee had “the everything short” (short stocks and bonds) on. But now that he is long bonds, he no longer does.Filmed on Tuesday, April 26.--Follow Teddy Vallee on Twitter: https://twitter.com/TeddyValleeFollow Jack Farley on Twitter: https://twitter.com/JackFarley96Follow Blockworks on Twitter: https://twitter.com/Blockworks_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--Timestamps:(00:00) Introduction(00:51) Teddy's Successful Bond Short in Early 2022(04:20) Teddy's Successful Equity Short in Early 2022(05:43) The Economy Is Slowing Rapidly(07:58) The Fed's Key Error(11:05) Chinese Lockdowns Destroying Economic Growth(16:06) Going From Short to Long The Bond Market(23:33) What If The Fed Remains Hawkish(26:14) Bit.com Ad(26:46) Oil & Bretton Woods 3(28:46) Confidence Levels Of Long Bond Trade(30:12) Quantitative Tightening's (QT) Impact on Bond Yields(38:35) When Will Powell Pivot?(41:30) Gold(42:25) CryptoIf you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter

Frances Coppola, Economist, Author & banking expert, joins Forward Guidance to give an update on how the West's new sanctions on Russia are playing out. Coppola explains how key commodities such as Russian natural gas and oil continue to flow to Western countries, and she makes an impassioned case for why a ban on Russian energy is necessary to thwart the imperial ambitions of Russian President Vladimir Putin.--Follow Frances Coppola on Twitter: https://twitter.com/Frances_CoppolaFollow Jack Farley on Twitter: https://twitter.com/JackFarley96Follow Blockworks on Twitter: https://twitter.com/Blockworks_BCB is Europe’s leading provider of business accounts and trading services for the digital asset economy. With a dedicated focus on institutional payment services, BCB Group provides business banking, cryptocurrency and foreign exchange market liquidity for some of the world’s largest crypto-engaged financial institutions.For more information, please visit https://bcbgroup.com/jack--(00:00) Introduction(00:58) Overview of Sanctions on Russia(07:08) Oil & Natural Gas(09:30) Wheat(14:20) Demand Destruction and Recession Risk(18:00) When Will We Hit Peak Inflation?(21:20) Central Bank Response Function(27:01) The European Central Bank (ECB) And Inflation(32:02) BCB Ad(35:45) The Dollar's Surge(1:20:36) Breton Woods III

“Liquidity” is a critical concept in markets that many may have heard, but few truly understand. Michael Howell, managing director at Cross Border Capital, is the global liquidity flows. He breaks down what liquidity is and he explains to Jack Farley how the tide of liquidity that has lifted asset prices over the past two years is reversing very quickly. Howell argues that, since 95% of central banks are tightening at the same time, the short-term risk/reward for stocks is poor, and he thinks a further 20% correction is ahead for the equity market. Howell explains the complex yield curve dynamics, and explains why the ongoing liquidity collapse might finally make long-term government bonds attractive once again. Filmed on Tuesday, April 19, 2022. A note on the title: Howell’s expectation of a 30% in stocks is from peak-to-trough, and since equities are down nearly 10% already, that would equate to a further fall of 20% from current levels (not 30% from current levels)._Follow Cross Border Capital on Twitter @crossbordercapFollow Jack Farley on Twitter @JackFarley96Follow Blockworks on Twitter @Blockworks_____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--If you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter--Timestamps--(00:00) Introduction(00:45) What Is Liquidity? (10:59) The Turbulence Zone(21:06) What Will Be The First To Break?(23:58) Why Are Stocks And Credit Still So Richly Priced?(26:35) But What About Inflation?(32:24) Bit.com Ad(43:32) Can China Save the Day?(47:05) Why Falling Liquidity Causes A Dollar Squeeze(50:33) How High Oil Prices Further Deteriorate Liquidity(53:04) History of Global Liquidity(56:28) Capital Wars and Bretton Woods III(1:08:25) Is The Yield Curve Signaling A Recession?(1:09:56) How Far Will The Fed Get With QT? (Bagehot's Dictum)

DC Analyst joins Joseph Wang and Jack Farley for a discussion about commercial banks, treasuries, and bearishness on banks.--DC on Twitter: @AnalystDCJoseph Wang on Twitter: @FedGuy12Jack Farley on Twitter: @JackFarley96Blockworks on Twitter: @Blockworks_--Links___Liberty Street Economics, "The Fed’s Balance Sheet Runoff and the ON RRP Facility":https://libertystreeteconomics.newyorkfed.org/2022/04/the-feds-balance-sheet-runoff-and-the-on-rrp-facility/Bullard's Triple Rate Hike Comment: https://www.bloomberg.com/news/articles/2022-04-19/last-resort-fed-hike-enters-debate-as-bullard-invokes-1994-moveDC's substack: https://dcchartbook.substack.com/p/chartbook-15?s=rJoseph Wang's writings: https://fedguy.com/draining-the-rrp/--(00:00) Introduction To DC Analyst(02:01) Why Are Banks Buying Fewer Treasuries?(14:30) Implosion Of The Japanese Yen(20:40) Who Will Buy The Treasuries?(31:20) What If Banks Don't Lend More?(37:30) Bearish For Banks? (No)(42:47) Quantitative Tightening - Will The Fed Be Forced to Sell?(46:57) Mortgage-Backed Securities(57:40) Bullard's Comments on Triple-Hike

An oft-cited fact is that rising rates support the profitability of the commercial banking system. Chris Whalen, veteran banker, chairman of Whalen Global Advisors & Author of The Institutional Risk Analyst begs to differ. Whalen explains to Farley that banks make money by the spread between their yield on their loans and their cost of funds, and that while rising rates do increase loan yields, they also increase banks’ cost of funds. Whalen also explains why he thinks the Federal Reserve will be unable to do Quantitative Tightening because it will be stuck with mortgage-backed securities (MBS) for many years.--BCB is Europe’s leading provider of business accounts and trading services for the digital asset economy. With a dedicated focus on institutional payment services, BCB Group provides business banking, cryptocurrency and foreign exchange market liquidity for some of the world’s largest crypto-engaged financial institutions.For more information, please visit https://bcbgroup.com/jack--Timestamps:(00:00) Introduction(12:35) Inflation(18:13) The Problem The Fed Faces with Mortgage-Backed Securities (MBS)(21:08) Can the Federal Reserve Become Insolvent?(24:57) Mortgage Lending At Commercial Banks27(27:32) BCB Ad(28:20) Are Rising Rates Good For Banks?(31:54) Why A Recession Is Likely?(34:51) Outlook on Bank Stocks and U.S. Treasuries(44:00) Biggest Risk: Non-Bank Lenders(48:31) Credit Card Lending(51:16) Will Banks Suffer Losses from Russia's Invasion of Ukraine?(54:40) European Banks(58:35) Jack's Post-Conversation Explanation

Jurrien Timmer, director of global macro research at Fidelity, joins Forward Guidance to explain his outlook of the current macro environment marked by slowing rates of growth and inflation coming down from high levels as central banks scramble to tighten monetary conditions. Timmer notes that while risk-free rates (as measured by Treasury yields) have risen sharply, risk premia as measured by credit spreads - and, in particular, the earnings yield of stocks - have barely budged.Timmer shares his outlook on bonds, commodities, equities at this point in the economic cycle, and he explains his long-term bull case for Bitcoin, as well as why one of his models indicates gold is severely undervalued (not investment advice). Nothing Timmer or Farley say is investment advice.Follow Jurrien Timmer on Twitter @TimmerFidelityFollow Jack Farley on Twitter @JackFarley96Follow Blockworks on Twitter @Blockworks_____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--If you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter--(00:00) Introduction(06:08) Where Are We In The Cycle Now?(12:40) Slaying The Inflation Dragon(21:29) The Stock Market(30:22) Bit.com Ad(31:00) Commodities(36:25) Gold(44:24) Will The Fed Reverse on Quantitative Tightening (QT)?(56:48) Japanification & Yield Curve Control(1:06:18) Bitcoin

Blockworks' Jack Farley, Host of Forward Guidance goes LIVE with Joseph Wang and George Goncalves to discuss the bond market, plumbing, inflation & more.--Follow Jack Farley @JackFarley96Follow Joseph Wang @FedGuy12Follow George Goncalves @bondstrategistFollow @Blockworks_If you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter