YouSaid · the spoken record

Cem Karsan

lines on the record: 67
first: 2024-11-06
most recent: 2024-11-06
sittings or episodes: 1
sources: podcast

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“At KiVolatility.com. We also have a wealth advisory.com. Feel free to reach out to either of those channels. There's ways to request calls and talk to us. We have family hedge funds as well as advisory. And then you can find us on Twitter or X at jam underscore croissant. So just a play on my name. And again, we do a lot of media that you can subscribe to, including a partnership with the CBOE where we're doing a podcast going for once a month, interviewing kind of big names in the volatility space. So tune into all that. But yeah, happy to be here. Thanks for having me.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Much better risk adjusted returns to keep playing it this way. And the trend is higher. When it feels scary, you want to keep buying this dip, you know, not going to dip. And that's going to be, you have to have conviction when it pulls back, but you should have conviction given flows in your corner until early in January.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“They got up to like 13 14 ball, and guess what? They're right back to where they markets are, right? So you got to benefit some of the benefits of Vega expansion before the election. You now got the rally. And ball itself is cheap.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“And then we'll make another run. If it was just easy to go buy long data calls and sit on them and make money, everybody would do it. And they got every time the calls, I tell people you need to be in, you know, they make a bunch of money. Everybody then's like, oh, wait, no, now they're losing money. Like, why, you know, yeah. Take your profits, reload onto a dip, like find your ways to digest the theta and the decay. There's a reason I'm saying long dated calls, right? Because there's a lot of decay to short dated stuff. There is a vague component that I will say importantly, VAL has gone cheap again and particularly out of the money calls long dated out of the money calls. You can own them again. We highlighted that there are a 10 ball a month and a half ago. What do they do for a month? They just went higher, right? in terms of Vega.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Charm and Vanna for like the knowx is relatively small and could, you know, people are used to just being like, oh, it's a monthly expiration. You buy in this part. So that part now is less strong. And I would say I would not feel comfortable leaning into, oh, we're going to squeeze higher now. I think now it could happen. But I think that's not what the flows are going to be pushing at this moment. I do think that as we approach Thanksgiving, in the holidays and then get into December, we will see higher prices. And so I think we are likely to have a consolidation and digestion, have people lose some of their confidence, calls that they've just had explode higher are going to have to kind of decay for a little bit again.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“So, those van and charm effects are still alive and well in December or January. Between now and December, those are going to be weaker now. So you kind of have this bump in the election. And then you have this bump in December, January. And December, January is still, again, come down, but there's still very much a lot of push there. Plus the end of the year reinvestment part I've talked about. All of that's still there. But this initial push, right? for the event vault is what you've seen okay that is Gone in terms of short term push. Any remaining”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“You've seen the unwind of the event fall. Which was some reasonable portion of what we talked about. On top of that, you've seen a decline in the extra premium that was in December 20th. Which was really there because the contested election and again, just the open interest that we've talked about of structured talk. So you have not seen all of it come out. The positioning is still very big back there in terms of December and January.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“And there's a reason they talk about the January effect, which is the first two weeks. Again, that reinvestment doesn't necessarily come in first of the year. It's like, okay, we need to set this money to work or buy someone the first year, but we'll also maybe average it in over a week or over two weeks, right? Because we don't want to be all in on one day. So these flows come in. They tend to be very positive in the first several weeks once they dissipate. You also have kind of a lot of trump for January, January is a big expiration as well. And then you tend to have a period of weakness, and particularly an opt year that's something to be watchful for. So we are circling calendars. We've done this before in 22. We were very almost called to the day. In January, about six, nine months up. But you should be prepared for that, the Wednesday, or the Monday before January expiration into that Friday of January expiration should be a period to really take chips off the table and be hedged. Doesn't mean we're going to collapse per se. We'll see what happens.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“To be clear, that year we didn't have what we have now. It's a 20% up here, the massive structure product issues, the bigger amount of open interest that drives that buyback. It is a bigger year than most. And these are the primary things that are driving it the other year. Just like anything, there's a give back once these flows are gone. It's not like these flows take you higher and then push you higher forever, right? These flows are there. They're structural. They bend longer-term realities to an extent. And then there tends to be some type of impact. The second worst month of the year is February. That's not a why February. Why is February? December and January are so positive. By the way, if you look not just at, if you look at it at February, it's not just Feb1 to Feb, it starts in the middle.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“The tail is going to be really fat. And by the way, those puts that are out there, that extra open interest, if it ever activates, you're not going to be down 15%. You're going to be down 30%, right? And if you look at late 2018, I think that's an interesting story, right? You saw some of that happen in 2018 into Christmas and into the end of the year, right?”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Particularly in a big up here. You're a fool to get in front of that. People know it. If you're underperforming, you better do it with leverage. You better try and get ahead of it. And so it becomes a self-fulfilling prophecy on top of that. But the point is, by the way, there's no free lunch, right? This is not like it's not 100%. And by the way, the reason these are there to a great extent, because they're there, that means there's a fat tail. Because if something wins 82% of the time and everybody knows it's coming and the flows are there to support it, and everybody's on one side of the boat.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“That have longer duration tend to happen on January 1st. And they happen again because, oh, it's a new tax year. Oh, it's a new launch, right? Now, what portion? I have no freaking idea. Is it five percent of that money? Is it 10%? Right. If everything was monthly, you know, be like 10% more than that happens with Gen 1 for sure, right? And again, because gains tend to happen in an OFDs, a lot of it's accelerated at a momentum effect that's more short-term in that period too. But Jan 1, there is a significant reinvestment that happens in the market. And that reinvestment, JN1 people frontrun because they know it's coming. And to that, that was vaunt and charm effects I talk about, again, the collapse of time because there's less holidays. There's more holidays and less time in the office. There's less relative volume to absorb the liquidity. And you get a chase. There's structural liens on us releveraging plus the von and charm.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Need to be 20 bigger. And so the whole way, the whole system works is there's a releveraging effect. There's a reinvestment of the new collateral, which is a momentum effect which happens. Now, that 20% didn't just happen just now, right? And that reinvestment for some strategies, some banks, some things happens on a daily basis. Some happens on a monthly basis, some happens on a quarterly basis, right? So importantly, right, it's not like you're getting this 20, you know, 40 trillion dollar, sorry, 20 trillion dollar, I apologize, I'm not coming in jam one. But some portion of that $40 trillion, which is generally the slower, more lagging things, I think private equity, which again has a ton of embedded leverage, think bigger new funds coming on from the appreciation. All of these leverage pieces, which have a little bit of lag.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Loans right, and so the whole system is built on collateral. And so when you have $40 trillion of appreciation, you have 40% more assets. You have 40% more money. And if we were just, if there was no leverage in the system, it wouldn't matter because there's nothing else to buy. But the whole system is built on leverage. So when collateral goes up, there's more lending against that collateral. There's more investment relative to the collateral. As a hedge fund manager, this hits home, right? Because if I'm non-correlated and if I make, you know, and there's embedded leverage in every hedge fund portfolio, if my assets go up 20% a year because I made 20%, guess what? My positions next year”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Your average person, I like collateral. What does that mean? I just, you know, my stocks just went like, what do you mean I had more collateral? You can post those. I don't know who people do, but wealthy individuals, institutions, banks, they take that collateral and they can lend money against that collateral. The whole system is built on leverage, right? The Federal Reserve lends money to banks. Banks then can take that and then leverage that collateral to lend money Whole, the majority of money period, is not actual money. It's leverage.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Not a coincidence. And the reason it exists primarily, I've got these other, the charm and von effects, etc., which feed into it as well, right? But the biggest reason is because generally speaking, the market is up in any given year, right? Why is the market generally up? Because companies make money over time. They have inflation. You have naturally structural factors that feed money into the system and things go up over time. On average, not every year. And when the market is up, there is what's called a relveraging effect. What do I mean by that? If there is a $50 trillion US market, which is what the amount of stocks are, the combined market cap of the US market. $200 trillion of assets. What happens when those assets are up 20 a year? What happens? You have $40 trillion, trillion of the T, more collateral.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Which I cannot emphasize enough is also a critical part. It is not a coincidence that the last two weeks of the year and the first two weeks of the year, a full month out of 12 months, almost 10% of the year, if you look at 125 years of history, not just five years, 10 years, 20 years, the full history dramatically outperforms any other period in history, right? Dramatically, it's like an 82% winning rate, the returns or something like a one and a half percent for a month, right? It is traumatic. Everybody knows there's all kinds of, oh, it's the Santa Claus effect. It's like, oh, it's this January effect. People put names on it, technical analysts realize it, but how many people talk about the why? People attribute magic to it. It's like, oh, it's in the Trader's Almanac. No, there's a reason it exists.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Is enormous, right? You've heard people talk about the JP Morgan hedge equity trade and pinning, you know. That trade is $20 billion. Context, right? We're talking about 500 billion, right? They're talking about massive positioning. So that is part, a big part of this. Now, again, people are broadly more aware of these things. It was historic in size, so still massive flows, but you did have people preparing ahead of it. On top of that, and again, this is what I've talked a lot about. I think Andy Constant always asked me about this. He's obsessed with this idea that I kind of presented. It was new to him when we talked about it, but I think he still questions it, but I think an important one is. This releveraging effect.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“I know you contribute some of that. I mean, but we've seen this again and again. At the end of the day, that is a major driver. And we've seen a decent chunk of that ball come out. We've seen a decent chunk of that skew come out. But skew is still relatively high in December and she and Quarry. There's still more to come. The vault itself, these pushes can lead to a pullback. We likely will see some type of pullback because everybody is on the same side of the boat. People want to take profits. People are largely prepared for it, as we talked about. This isn't a shock necessarily to the world. But again, the trend is still higher and those flows are still very much there. So that's a major, major force. And again, I tie you back to these numbers. I said 500 billion structure products out to a trillion, you know, 25 to 175. So the amount of positioning being digested.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“People front running what they know is coming because dealers have this flow, banks have these flow. It's like human beings just actually banks and market makers say more sophisticated saying, okay, this is likely coming. I don't want to wait till the market's 100 points higher or 200 points higher to try and buy these deltas, right? I might as well take a little bit of a lean. And so it started happening and that started kicking things off. And of course, we saw a good two-day rally going into this. And again, the world just sees that as, oh, they're pricing in a Trump victory. No, it's very different than that.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Rationally, it doesn't make sense. This was all very high. Preparing for the election, everybody was all ready. And then two days before the election, weird. They start crushing it, right? Because people see, and guess what? The market started percolating.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“As that they're short puts decay also get rid of the puts or things that they have against their reinsurance other things they have against. All of this structurally means the market once that comes off the table. Once the event is done because the event happens, things expire, time moves forward, that you get charm, which is that moving forward of time delta difference, and you have vana, which is the decrease in effects on delta as well. And all of that flow of delta comes back. We started seeing that two days before the election. That was the sign that actually people are aware of this now. I've talked about a lot. Other people are aware of these effects. People are out there.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“What that does at the end of the day is it creates dealers being short put, long call, and mass. And we saw, not to mention, by the way, all that issuance has created not just more volume that needs to be digested and warehoused by the market, but higher prices. Because the more supply and demand and balance, the higher the pricing of that skew goes. So the skew is historically high going into the election, way higher than it's been in past elections, even before the election, starting in August when we had the crisis, you know, that the crisis, the vault pop, that skew exploded because everybody was shorted. Everything else came down in front of it and that stayed high. So all of that positioning means potential energy. It means that dealers are short because there's a great, it's an easy trade to capture on an edge on a relatively basis as long as you manage that warehouse that risk. But they need to be quick to buy back their delta, right?”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Brilliant per year. So we've had it doubling. Two years of structured product issuance. The ETF business that's tied to options has gone from $25 billion two years ago to $175 billion. So you can see another $150 billion increase just at ETF's tide to structured products. All of these, or the overwhelming majority of these, have one structure, which is short call or long put or somehow hedging portfolios, right? And again, or just selling yield broadly, right?”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Or if you do, there's like almost no volume, right? Because people have their annual years tied to the end of the year. People pay taxes based on the year. The whole system is structured by the calendar year. So all of this supply and demand and balance skew in the market with the world buys puts to hedge their portfolio or sells calls against their portfolio. All of that structure in all of its forms tends to be the overwhelming amount tends to be tied to the other year. On top of that, you have an election, which is November, right before the end of the year. And all the hedging for that of that has driven even higher. This year, just a couple of important facts that people don't realize, the last two years, sorry, combined, we've seen structured product issuance go from $500 billion globally to a”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Everybody thinks like, oh, we're up 110 and we're going to be strong because Trump got elected. No, very little to do with it. It has something to do with what's moving and how it's moving and acceleration in certain assets and that we may run a faster economy next year, et cetera, like we talked about. But in the short term, the flow that are structural are dramatic. And what are those flows? Let's start from the beginning. One, December, the end of the year is where the overwhelming majority of all structured product issuance, all hedging, all put buying, all skew is in the marketplace. Why? Because it's the end of the year. Because everything gets issued.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“The reason we were able to so clearly say at it expect of all started in the summer we were like, look, expect incredibly slow, you know, summer George, like absolute volatile crush, very low movement. And then starting in the fall, you know, expect a 10% or so freak out because there's a lack of all supply and skew and the amount of hedging that would need to happen up there would cause something. And that was your chance to buy the dip because at the end of the year we're going to make stronger. That was everything. We've been very clear. And by the way, the rally's not over. It doesn't mean that we're not going to get some potential pullbacks along the way if they come, right? But it does mean that the structural realities going into the end of the year and the flows that are tied to it, which by the way, has nothing to do with anything we just talked about. Like all of the stuff we just talked about.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“So, like it's zero. Yeah. So that's what we'll do. And yes, we will continue to do as much of that as. As we can, and I think I don't think that's necessarily wrong as the United States, but again, that will drive inflation abroad, right? Our ability to do that.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Seeing and the continued strike, it's a free lunch. Why do you think Japan did what they did? We're going to do the same damn thing. That doesn't mean we are Japan. Let's not take that any further. It's a different story, right? And part of the reason Japan could is because the US said, okay, you know, we stand behind you, Japan, as an ally and everything else. And so Japan is able to. We have the US dollar. We could buy as much debt as we can. People are like talk about default all US, you know, default default. We're just going to buy it all and make it go away. And then we're just going to shake hands. That's what Japan did. And that's what we will do. So that doesn't matter as long as the dollar is not going to crash. And the dollar's not going to crash. So we will have higher, higher, you know, Japan was what, 275% of GDP, but it's nonsense because it's just the central bank just owned it.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“I don't think it matters if they do that or not, right? They can do it explicitly or implicitly. I think they're politically, their incentives are to not do it explicitly. I think it's amazing how few people actually call QE money printing. And it's like you say that, people are like, oh, no, no, no, no. It's not money printing. It's QE. It's a slot. It's literally the same thing. You just create a fake intermediary so they can exchange hands. It's literally printing money. And yeah, it doesn't matter if they're going to continue to put other names on it. Try and obfuscate what they're doing. But one side's printing and the other one's spending. And the more spending we do, we need to print more. Or in theory, like you should print more, you know, you might as well if it's not going to affect the US dollar. And given the strength of the US dollar here and what we're”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Most important, powerful lever. He has the ability to pull and he wants access to that. If he doesn't, he's not paying attention. And trust me, he is paying attention. Powell's job is he's out of a job. I'll tell you that much. And somebody else is coming in. We don't know who it is, but it's going to be somebody who's very, very willing to work more directly with Trump and do his bidding. And that bidding is to run a very hot try and push lower interest rates, try and push growth above more importantly than inflation. That'll work great on the short end of the curve, but inflation is going to be a problem eventually. And that'll ultimately be the end doing. And the big issue we've been talking about for some time.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“He has the ability to kick out the Federal Reserve president and put somebody else in. And he will. He will. Now, is it going to be overnight? No. He's going to try and do it in a political way that seems more palatable. Sure. I mean, does the Federal Reserve, does that person have to get passed by Congress? Sure. But I would expect something that very few people are talking about seriously is big moves at the Federal Reserve early next year. I think it's going to happen way sooner than people realize he has an ability. When somebody comes in with all houses, which I assume at this point he's going to, right? And the first thing is, okay, I have a mandate. I have the ability to get stuff done right now. And everything that he really needs to continue to have power and to continue to pull on these levers and have success for four, you know, who knows how much longer with Donald Trump, he's going to go pull the handles of power and try and secure those right now. Federal Reserve is number one.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Before. I think we all know Nixon's story and his connection to the Federal Reserve. These are coincidences. These are similar times. He was a Republican that was looking to do populist policy, but at the same time understood behind the obscenes he needs to do more still traditional Republican supply-side economics to try and balance that and run economy. Same exact situation. How do you do that? How do you do that? Because he's boxed in, hardened past policy, blah, blah, blah, blah. How do Kicked out the Federal Reserve Chief, and he put Arthur Burns in charge. What Trump's going to do. Everybody responds to its sensitive. He's somebody who wants power and control and wants to do what he wants to do. He's pretty clear. He's not going to let anybody get in his way.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“I think you cannot separate politics from what the Federal Reserve does. I think everybody tries to talk about Federal Reserve independence. That's ridiculous. Like the Fed can't be independent. If it is doing the bidding of the United States, which it is. This is not a, you know, they're not here to serve other countries and is the central bank of the United States of America. If they are doing a bit in the United States, there is no way they could do their work without coordinating or at least understanding what policymakers are going to do. And they can talk about how, well, not our responsibility, we don't talk to them. We're independent, but there is clear coordination going on. There has been from the beginning of time since the Federal Reserve was created. Again, I mentioned Nixon.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Overnight. But it is a dangerous long-term precedent to make. And we would, in my opinion, be borrowing from the future by doing that. I think that's what Trump is taking us. And I think It could be Very positive U.S., particularly relative to the rest of the world in the short term.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“But again, we just saw the bricks get together. Weeks ago, and that if you are listening, like there are a lot of people, a lot of countries that showed up there a lot more than you'd expect to shake Putin's hand, to shake Z's hand, and to say, okay, yes, we agree, we need another way other than just King Dollar. And so I think that's a real issue. And I think that's part of what Bitcoin's been telling you for some time now. I think that's what Gold's telling you right now in a world without that's continuing to see secular pressure against the US, not against the dollar itself, but the survival of the dollar. Now, that doesn't mean weak dollar, by the way. It usually means strong dollar until, you know, because it's flight to quality until down the road. Now, I think we're 10, 20, 30 years, at least away from that. Empires don't crumble.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“I think it's pretty clear what the incentives are on the other end. And if you want to continue to have the exorbitant privilege of the US dollar, you have to be a benevolent dictator, right? At least to some extent. And if you're not going to be benevolent, at least some semblance of a ruler that is going to allow the others to benefit as well or to share the benefits. The future is pretty ugly for the long term strength of the United States and Portland exorbitant privilege of the U.S. dollar. The exorbitant privilege of the US dollar is the US's strongest asset. Never mind the military, never mind the economy without the dollar, the strength of the dollar, the US is just like any other country ultimately. I know a lot of people would like to hear that. But that's true. In a fiat world, it is an immense power. It's unlimited power.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“It's actually that that undermines the whole system if you are not in some level fair to the rest of the world, at least provide some level of, not that fair or it's ever truly fair, but allow some level of benefit to the rest of the world of the gains. At some point, the rest of the world is going to kind of give me a big middle finger and team up against you. And there's already signs of that's in the works, right? China is not very happy. They've expressed it. They're teaming up with Russia. Russia's teaming up with Iran. We have a global conflict that is likely to continue to grow. The more isolationists and more we try and say, okay, you know, we are going to do it our way, you know, deal with it.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“The short term, you heard me say in the short term, is that a year? Is that five years hard to say The problem with that system is that you're taxing the rest of the world. You know, Rome can grow by taxing the rest of the, you know, its provinces for some time and generate great strength, you know, empower amidst away.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“With great success for a short term, now they're experiencing 80 to 100 inflation. It took a while, right? And the reason they didn't get more inflation earlier on is because they had the protection of really cheap interest rates globally and kind of the deflationary pressures of all that. But you could argue the United States with exorbitant privilege of the US dollar as long as it could maintain the exorbitant privilege of the US dollar, which again, that's pretty entrenched. I mean, it's not forever, that's for sure. But it's pretty entrenched. If it can, then it has the ability to do that. It has the ability to really tax the rest of the world, export a lot of the inflation. That's caused by fiscal policy. And that is an America first policy in every way and would be a boom in the short term for the United States economy.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Economic system. The other one has a big impact, sticks around for a little longer. It's demand push economy, but then structurally is inflationary, right? When you put them both together, it is cyclically inflationary on steroids, right? And that instead of being deflationary on the back end, it is, you know, it remains inflationary on top of that. So instead of getting, if you were to just do monetary policy on full tilt and then do fiscal on full tilt, you will have a massive push. And then inflationary, the short-term inflationary impact could be dramatic, right? The long term is already there with the fiscal. The other one is really pushing along. You could argue, and I don't think this is wrong. We've never seen this, to be clear. But if you do both full tilt and you're the United States of America, now you can't do that in...”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“And then the other one is cyclical, right? What's happening in terms of stimulating from a cyclical perspective? What Trump is talking about doing is we're running broadly a demand push economy. And a demand push economy when you do the fiscal policy like we saw in 2021, you get a cyclical boom, right? much like monetary policy. They both will drive cyclical liquidity at the time of impact. One of them, monetary policy does it in a way that fades quickly, right? But that structurally that is deflationary, right? Because you're getting again globalization. A lot of the money moves out of the system. The velocity of that money is zero.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I really break it into two major impacts. One is the secular piece, which is Completely devoid of whatever is happening in terms of cyclical business, right? That's why it's secular, right? We're not worried about business cycle at all.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“So anyway, I don't know if I answered your question directly, but these are the things that we've been talking about for time and to see them accelerate during this is not just a Trump reality. It's a societal reality. Trump is an accelerator.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Once people start, and not just people, but markets start to capture on the idea that, okay, this is not over, right? This is a secular problem. Then what happens? Then there's a pulling forward a demand because people realize they need to build inventories because inflation is structural. One, two, anytime interest rates come down, there's a rush to borrow money to buy anything pinned down, which again accelerates inflation. This thing is a circular, you know, once it gets started, it's really hard to stop. It's actually impossible to stop because the underlying things that are causing it are political are much more structural.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“Tenured in 1966 to a 20% 10-year in 1982 in a straight line. We actually went from three to six. Three to ten to five to fifteen to ten to twenty. That's how it went. That's what it looked like. And every time it came down, everybody was like, well, solved inflation, at least the first time arousing. Like, it was better. Looks like we're getting back. Eventually, they lost control of the long end of the curve. The Fed was no longer able to control inflation, which they honestly can anyway, but over time it's even harder because there's a lag to a lot of these effects.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“But it's not just about Trump. Yes, it's about Trump accelerating. Think about COVID, right? COVID has created a lot of things that people originally pointed to and said COVID was the cause of work for home. You know, it was the cause of inflation. It was this, that, and the other. But what it did is just accelerated things that were already in place. And once we got there, now it's there's no going back, right? These are just accelerating trends. Anyway, so yeah, to speak to what we're seeing, we're seeing an acceleration of something that we've seen that we saw start a little while ago. And if you think it's just a short-term thing, you're missing the big picture. It is an accelerant into what is a trend. And yes, they'll be pulled back along the way. We didn't go from 3% in.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“But any number of things can happen that are going to follow this broader zeitgeist and the demand. People respond to incentives. Things happen in line with push and pull. The general pressures are. And so my point to you is, yes, the dollar is strong. Yes, interest rates are starting to accelerate on the longer end of the curve and you're getting a steeper, something we talked about for some time.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“The downside is you have the status quo, which is already structurally inflationary. Maybe it pushes it down the road and makes it less, it doesn't happen right away, right? And it becomes a little, it's a little slower. But if you look through that 60s and 70s period, yes, you have periods which all of a sudden like OPEC crisis that accelerated or increases of activation, the Vietnam War or Great Society program, but all of those things are accelerants to a trend that's in place. And so the reality is those are very convex opportunities and it's hard to say exactly who's going to get voted in, what's going to happen when. I mean, you can predict and say you're not surprised by X, Y, and Z because they're likely to happen.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT
“And so you can point to that period and say, oh, it was Nixon that drove this, or it was LBJ or Kennedy didn't get us out of it. And I'm like, no, no, they're all just vehicles of a much bigger thing that's happening. And so what's happening here? Because protectionism and populism, we're not being more efficient. We're not getting flooding free markets go ahead. We're not maximizing to mean outcomes in Geneva. Maximizing the median outcomes, how is the average person doing? And that is a very different approach to policy. And that is very inflationary. We've seen that throughout history. And again, If you look at markets and what they were seeing going into this, it's not just the sweep from Donald Trump, it's because the downside on these bets was so small relative to the potential EPSA.”
2024-11-06 · Forward Guidance · Unpacking The Election’s Impact On Markets | Cem Karsan · IDENTIFIED FROM THE TRANSCRIPT