Enjoyed this first Stay Vigilant podcast idea exchange with Mr McNulty.
An interesting and honest discussion on current bearish sentiment/positioning vs weakening macro fundamentals, on underlying micro signals to watch, and cross-asset analysis.
Enjoyed it. Is this a fair summary---sentiment is so dire, BAML, CFTC, AAII...rally is coming...Uncertainty on recession whether its coming or not, slowdown yes, but recession not sure, nor is it at all clear how deep or whether at some point market might look through it....but in short-run equities rip over the next few months and then there is set up for a larger flush to the downside, possibly on more hawkish Fed or more likely data confirming recession fears??? Okay, this is my question...Do you actually know anyone who is short the market? I don't. Secondly, it was touched on, but here is my worry...in synch with equity rally, a topping out of the dollar is one idea that I have and they are probably joined at the hip these two things...how worried should we be that a dollar does not top out but goes into some parabolic advance--probably centred on EUR, cracking to 0.90, requiring a Plaza 2.0 sort of response. It really is not my based case at all...But its in the back of my head as risk scenario that I do not think many are ready for and when you look at cftc positioning, its not all that short on the EUR, which honestly with the cross at 20-year lows is pretty astonishing. In short, the dollar wrecking ball thesis could upset the applecart here, and cut short the optimism on stocks, which in full disclosure admission, I do rather support...
Fair summary. I know some shorts, some with heavy hedges on credit/convert, and some with big cash and not even thinking about putting money to work. CFTC data suggests someone is pretty short. FX market risk is a valid point. As we know with FX, it doesn't matter until it is the only thing that matters. I am warming up more to the idea that the Fed goes 75 this week, CPI starts to slow because of falling commodities, and global central bankers convene at Jackson Hole and start to talk about risks a lot more. I don't think this means the Fed pivots to nothing or even to hikes, but I do think it could talk about data dependency and not doing as much QT to help forestall volatility. This isn't my base case but it is one scenario with a growing probability in my mind. Maybe even make some comments on USD swap lines to calm FX. As we were talking on the podcast, I definitely had the feeling of 'Are we being too cute?' I think there is a possibility of that. I am open to a rally but not aggressively positioned as I do believe we will see lower levels this year and have a stronger view of that. Anyway, appreciate the thoughts as always. Perhaps you could be my guest next month on a podcast?
Thank you for posting this podcast. It’s really helpful and informative for me. I just have one question about the talk. During your interview, you and Mr McNulty were mentioning about someone named Danny from Charter about signal for the bear market. I can’t really hear his full name, so I just wonder if you can provide his full name so that I can follow him as well? Thank you and keep up the great work!
Great listen, love the podcast idea!
Isaac
Thanks Rich for the shout-out!
Enjoyed this first Stay Vigilant podcast idea exchange with Mr McNulty.
An interesting and honest discussion on current bearish sentiment/positioning vs weakening macro fundamentals, on underlying micro signals to watch, and cross-asset analysis.
Agree !
Enjoyed it. Is this a fair summary---sentiment is so dire, BAML, CFTC, AAII...rally is coming...Uncertainty on recession whether its coming or not, slowdown yes, but recession not sure, nor is it at all clear how deep or whether at some point market might look through it....but in short-run equities rip over the next few months and then there is set up for a larger flush to the downside, possibly on more hawkish Fed or more likely data confirming recession fears??? Okay, this is my question...Do you actually know anyone who is short the market? I don't. Secondly, it was touched on, but here is my worry...in synch with equity rally, a topping out of the dollar is one idea that I have and they are probably joined at the hip these two things...how worried should we be that a dollar does not top out but goes into some parabolic advance--probably centred on EUR, cracking to 0.90, requiring a Plaza 2.0 sort of response. It really is not my based case at all...But its in the back of my head as risk scenario that I do not think many are ready for and when you look at cftc positioning, its not all that short on the EUR, which honestly with the cross at 20-year lows is pretty astonishing. In short, the dollar wrecking ball thesis could upset the applecart here, and cut short the optimism on stocks, which in full disclosure admission, I do rather support...
Fair summary. I know some shorts, some with heavy hedges on credit/convert, and some with big cash and not even thinking about putting money to work. CFTC data suggests someone is pretty short. FX market risk is a valid point. As we know with FX, it doesn't matter until it is the only thing that matters. I am warming up more to the idea that the Fed goes 75 this week, CPI starts to slow because of falling commodities, and global central bankers convene at Jackson Hole and start to talk about risks a lot more. I don't think this means the Fed pivots to nothing or even to hikes, but I do think it could talk about data dependency and not doing as much QT to help forestall volatility. This isn't my base case but it is one scenario with a growing probability in my mind. Maybe even make some comments on USD swap lines to calm FX. As we were talking on the podcast, I definitely had the feeling of 'Are we being too cute?' I think there is a possibility of that. I am open to a rally but not aggressively positioned as I do believe we will see lower levels this year and have a stronger view of that. Anyway, appreciate the thoughts as always. Perhaps you could be my guest next month on a podcast?
Hi Rick.
Thank you for posting this podcast. It’s really helpful and informative for me. I just have one question about the talk. During your interview, you and Mr McNulty were mentioning about someone named Danny from Charter about signal for the bear market. I can’t really hear his full name, so I just wonder if you can provide his full name so that I can follow him as well? Thank you and keep up the great work!
Danny Sullivan who writes a newsletter called The Chartist
Hi Rich,
Much prefer written content, can you get a transcript on next one.
Love your content!
Nick
I will always write so you can count on that. I will check with Substack to see if I can get a transcript. Thank you for the feedback!