YouSaid · the spoken record

Dirk Willer

lines on the record: 43
first: 2025-11-15
most recent: 2025-11-15
sittings or episodes: 1
sources: podcast

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“Strong lesson used to be that don't assume you get these sort of fairly well behaved politics that you get in the US and other countries. But that lesson, of course, is somewhat undermined. But, you know, the main issue is really political risk. And we have a lot of elections coming up, especially in that time, right? We have Chile, we have Colombia, we have Brazil. So these things can really make I used to say much, much bigger difference than in the US, although that is more debatable at this stage.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Starts to move, it can move a lot. So we have one particular volatility index that is actually the sort of maximum z-score, if you like, of all the various different volatilities people care about, the move index, VIX index, 210 implied wall index, yam implied wall index, and higher spreads. But we take the maximum of that, not the average, which is a bit different than other people do it. And the reason is that no matter what goes wrong, MFX will not like it, right? So if the stress comes from US rates and the move index, you will not like it if it comes from VIX and S&P will also not like it. And that volatility indicator so far is still relatively well behaved. And again, I'm glad you keep mentioning when exactly we're recording this because it could change the name.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“And that is a bit linked to the volatility trade because it works well when volatility is low, right? And so that is a very heavily owned trade. It's very hard to forecast volatility spikes. I told you I'd have a quantum and we backtest a lot of potential strategies that we think are credible. And we did not find a good rule to say volatility is low enough by volatility or volatility has been low enough for extremely long time by volatility. On average, you're obviously meant to sell volatility because implied are higher than realized. And yes, they unpleasantly low right now, I would say. But on average, it's just not right to buy volatility in these circumstances. So what do you do about it? I think what you can do is you can find rules that essentially tell you, well, volatility has started to move up by x and it's probably a good idea to get out because when it's positively correlated, right?”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“No, it's true. I mean, many crowded trades, I would say. Again, broadly speaking, we never found US equity position all that heavy, but it certainly, and people own it, right? Gold was on our survey of these asset allocators. Gold was for a long time the standout. It came back a little bit. One other trade that people really quite like is the EM carry trade.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“In the emerging market would when these things happen, right? Because in the sense if it happens in Brazil, it's not that the government can control or that the central bank is able to keep the bond yield at a certain level. The US has many tools that is posed that they could use, I think.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Exactly. And of course, the initial headline was for the UK, right? When the List Trust issue happened and the pound sort of and then Gill sold off. And so people said, oh yeah, the UK is moving in that direction. And for the US, again, you can argue a little bit. I would say though that what will likely happen Is that if that should become a problem? So if you Hammer rates back down. And I think they can do that in a sense they're physically able to do it, but the tragedy could phase out the 20-year bond if they wanted to. They could do more buybacks. And yes, it will weaken the dollar for you. But it's not that they run out of rope.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Right, and on that definition, which is a trading centric definition of emerging markets, you actually find China is not the emerging market because CGBs rarely when there is a risk off and Korea is an emerging market. So it's a much more sensible definition for traders than the World Bank definition, right? And so in the end,”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“That's right. And so by putting that aside, I mean, I think for trading, the right definition is a little bit whether your bonds rarely when the VIX goes up or you don't.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“I think people made the case first of all, the question is how do you define an EM? It's actually a harder question than you think because traditionally people do it just looking at GDP per head and then obviously, right?”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Very much from it. There's no, you know, there's not that much AI related credit in the indices. And in any case, people start to worry about credit on the AI front and spreads are extremely tight, of course. On the other hand, if the US has a bigger problem than we are thinking and the labor market falls through trapdoor and then creditably protect you really well. So credit is something to look at.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, so I think the obvious thing actually became harder to do in a bubble. The other issue is, can you use currency? And that is also very interesting, right? Because the correlation between the dollar and the S&P changed somewhat. And it changed in April. It used to be the case when the S&P starts off, the dollar goes up. That correlation flipped on us in April. And there is a lot of debate whether the correlation will move back to positive or stay negative. I think if we are talking about bursting bubble, that would be dollar negative, right? So there are structures that allow you cheap hedges if you're willing to bet on S&P lower and at the same time dollar weaker, right? So that might work. What we have actually recommended is to do something in credit because the way I see it, I mean, either the AI bubble continues to move higher and then credit will not benefit.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Very good question. What people typically do, which is actually dangerous in the bubble, is they just buy some put spread in the S&P. Now The issue is in a bubble, if you first go up another 30, the strikes are so far out of the money that it will just not help you.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“To happen, and so the debasement story could come back, but you have to time it fairly well because you had a lot of retail in it and it already moved a lot, right? So on the debasement fears, I think it might be next year's story around this year's story. The central bank story will come back eventually, but it's, I mean, China loves to buy pullbacks rather than the high. So I'm not quite sure how when they will come back. But structure, I think gold is likely still okay. In the short term, we are a bit more cautious.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Debasement fear. And you saw people lining around the RBA in Australia trying to get physical gold out of the vault, right? So it was, it became a meme stock almost for a while. And so it hasn't actually triggered our bubble levels if we apply the same methodology. It certainly, I think, became too dangerous. And so we actually got out of gold a little while ago. The debasement story is an interesting story. It could come back, right? You saw gold consolidate for white and then when Trump discussed $2,000 for everyone, then gold started to take off again because people started to think, well, maybe we have to trade the basement again. And that's the way we call. And personally, I think the new FOMC will be more dovish than the old one, right? I mean, we don't know quite yet who will be the head of the FOMC. It's like...”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“You know, the Fed is going to cut. And whenever the Fed cuts, you know, the dollar sold off into the first cut, rates fell into the first cut, and gold went up. So that is as it should be. Now then what happened, if you remember, after the first cut, rates went up, the dollar went up, and gold kept going up, right? And that was roughly the time when Stephen Marion talked about the third mandate for the Fed and things like that. And so the debasement fears became more acute and that propelled gold higher. Now, the interesting issue is that it was really not that much the institutional investors, right? Because all the other debasement trades did not work. I mean, the curve did not steepen, break evens, did not rise. The dollar did not fall. It was a retail driven.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Making, in a sense, three bets when he diversified away from the dollar, right? He bought euro, he bought CNY, and he bought gold. And Euro was not a particularly promising bet in the end. CNY was a good bet for him, but obviously China cannot bet on the CNY and that leaves gold for China. And so I think in the very, very big picture, central banks are just very important for the gold market. The gold market bottomed in the 90s when the Bank of England was done selling gold and will probably peak when the PBOC is done buying gold. And they still could buy a lot. So that I have no issue with as a structural story, long-term story. What happened this year was not the central bank buying, at least not as far as we can tell from the official data. It was much more this whole debasement fears that crept into gold. And the first leg was very easy for macro guys to understand and participate. And that was just”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“What's going on there? Gold is just very, very interesting. I mean, the first leg up was essentially this whole central bank story, right? If you think about it, it all started really with the Crimea issue and Putin.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, David just, in the sense, we just backtested it. We realized, okay, there's something special about these bubbles where the leaders carry the weight for a long time, right? And so you have to find out, well, when the leaders break what is a danger signal that actually works. And it's always a trade-off between giving you too many signals. leave money on the table and too few signals where you take part in the downside that you want to avoid. And so what we found is if you use that rule for 2000 or for other It's becoming. The odds are not in your favor anymore.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, exactly. So, I mean, we measure the long-term performance, it's actually rolling a window, so it grows every year, and it's just a linear trend that you put through it. And then you can see how much you go above it.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“200 day okay it will not be early right because by the time it triggers the market is obviously down from the peak but i think following that has saved us a lot of money on the downside when these things happen so that is something you can use because it will be technical it will not be oh fundamentally this happened and get out”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Precisely on the day you're either early, you're either or you're late, right? And I think if you're late, you can control a little bit more how much money you don't make in a sense, right? And so one framework that we have, we call it the general's framework. Because what happens in this bubble? Generals. The generals, because it becomes very narrow. And that's a feature of the bubble. It's not a exception, right? And so this narrowness means that if the leaders start to break down, it's a real warning sign. And so what we look at and we just looked at the top seven leaders because people are excited about Mac 7, but it could be 10 or basically on our numbers, if three of the top seven break down, meaning they fall below the 20 moving average, that's a really dangerous sign.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Takes a while for that to roll off. Yes, exactly. And of course, it's highly circular. People spend on CapEx while their equity is going up. So equity stops going up. They start to reconsider what do we do next. So then everything rolls over exactly. So if you look at fundamentally, probably not capture it, which means it will be a highly technical thing if you want to call the top. And it would be helpful if you get a blow off top. Like, you know, if you do the 50% in one quarter, you know, you probably have a bigger chance to get it right. But I think it's really quite dangerous to be early in this thing because, well, you will not hit it.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“And when that happened, fundamentals rolled over in September. So there was a six to seven month period where fundamentals still looked just the way that it had looked before.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“When you study that, it's not that clear how long they last. I mean, on average, I can tell you that two years of above average returns followed by below average returns and on a 10-year time horizon, you're below average return. But it can vary a fair amount. And so that makes it hard. I would say... If you look at 2000 again as a template, it'll certainly not help you to look at fundamentals. So what happened was Nasdaq broke in March and everything still fine. Which year are we talking about? Sorry, 2000. Okay.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“We did that too, and so therefore that's the only one. All the other episodes you go straight up. So you buy it when you enter. But the interesting thing is then clients ask me, well, if that is true, what's the difference between the bull mark and a bubble? You tell me it's going up. And the difference is that if you buy it and enters a bubble, you will give it back eventually most of it. Most of the in-bubble gains will be given back. So it will end badly, right? And so that, I mean, you don't necessarily give back everything all the time, but in most episodes you give back most of it. And so that makes it an important definition. Now, unfortunately.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Zero, and so you have to rebuild it. And on that framework, we entered bubble territory sort of, I guess, in May, June of this year. And when you do that, the interesting thing about it is, as you point out, it goes up. So once you enter Bubble Territory, you're supposed to buy it. And the only time when that didn't happen was 1929. It went straight down. And I think the reason for that is a little bit that the way people define water bubble is they use 1929, right? And”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“The question really believes me that it's a bubble, but we have a definition. So I feel we can actually do something with it. So the definition for us is it's a little bit like the GMO one, which is essentially saying if something goes up more than two standard deviations against the long-term trend in real terms, we call it a bubble, right? And then whenever you have a big seller, we restart the clock because when you have a big sell off, you essentially sentiment goes.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Given the weakness, so the, I think the question is, of course, all about the job. The reason of that is a job market You know, reassure the market, yes, there'll be a car done, there won't be. So the job market data will be very, very important. We got a lot of alternative data sources, of course, in the meantime, but we're waiting. They were a bit on the weakish side. So that's why the city call is actually for a cut. I mean, the noise is out of there from C. We're certainly a little bit all over the place, so it's not that obvious.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, I mean, well, I think the single biggest thing is, of course, all the comments we're getting out of the Fed, right? And we had the tweet earlier this week. And so in the end, if you try to forecast the Fed, you better listen to what you're saying.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“And that was a great bull thesis. And so now we are doubting that a little bit, right? I mean, so we are basically having a fed that might be more hawkish December went to 50-50, essentially. And so if you remove that plank of the argument why you should be all in inequities, it has consequences, right? And so we wobble a little bit for that reason. But I mean, I would also remember, I mean, they hiked 175 basis points before the bubble peaked in 2000, right? Will be the end of the equity bull market if the Fed doesn't go. I mean, I doubt it.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“I think the reason is that a lot of the bullishness over the last weeks was based on one simple statement, which is saying, listen, we are building a bubble and the Fed is cutting into that. That never happened before, right? And obviously in 2000 they hiked by 175 basis points. They hiked 50 basis points after the bubble had already peaked. So, I mean, you know, and they had inflation, so it was not without any reason. But for sure, it's very unusual for the Fed to cut into a bubble.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“And I do think 2000 is probably the closest just because it was also very tech heavy and it had a big CapEx buildout attached to it. So that makes it good. I mean, the 1929 one is of course the mother of all bubbles, if you like. And that was about, you know, like cars and electrification and consumer gadgets and appliances rather. So you could. Was that, but and that is actually the one that people used in 2000? So you always go one bubble back if you like to make your case and to argue maybe why things can go very crazy. But I think here the many things that rhyme.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, everything, but of course, not every bubble has to get as crazy as the 2000 one. It wasn't extreme even by bubble standards. So that is a bit of a risk if you focus too much on that one.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Yeah, you know what gives me sleepless nights is actually that the 2000 episode is not the right benchmark, right? Because if you use 2000, you could say”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“There's And of course, now to pick on Akamai, but it, you know, it went up from, I don't know, 30 to 300 after the IPO and back to one. These type of things happened, which”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“The reason why the company will do well is that only three people who understand the formula that's basically at the base of it and all three work for Akamai. So don't worry. Don't worry about it. We know it's good.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“And I remember some stories, we had some analyst pictures all the time, so there was an analyst for Nokia who said, don't worry that we need more than 100% cell phone penetration in the world because pets will wear cell phone-like. They were kind of right. It wasn't wrong. Or you got my favorite pitch was for Akamai when analysts said, you know what?”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“They're it are haunted by that for the rest of their careers. They're very, rare. They're very, very. But yeah, so at Citibank, I covered emerging markets for a long, long time and switched back to global macro a few years ago. And as you can imagine, it's mostly speaking to hedge fund clients, to some real money clients, some corporates. What we do a bit differently is that I have a big quant team. So essentially we backtest everything under the sun, at least to get your price right. Things are always slightly different, but I think it's very important to have the right price, and that's what the back tests give you. So we have a big quant effort. We are very trade sort of aggressive and putting a lot of trades out and monitoring carefully. And I have a bigger emerging market angle than most, which I still think is extremely helpful in this environment.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“How'd you land here? Yeah, I came over to the US in 1999, essentially joining a macro hedge fund. We traded back then. And again, right now, actually, I think it's all about the bubble. It's the single biggest call. Everything else will fall into place. Whenever the bubble bursts, the dollar weakens, the Fed rates will go to zero or maybe not quite to zero, but you get aggressive factor. So everything, that's what you have to focus on. And so even though I joined.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Yes, that is very true. I mean, I think the market is starting to question those numbers a little bit, right? When the Oracle deal came out, for example, the stock jumped. Guess what? We're back to where we were before the deal was announced. So I think there is a certain sense of skepticism, partly because some people think they've seen all that before, right? And people are bullish. I'm not telling you they're bearish. Telling you they're not as excited as you might have expected just watching the price action. I think that is more than norms here. And actually none of the indicators suggest that. I mean, I'm sure everyone has their own favorite, but it's really very rare to find one that tells you, you know what, this is in line with what we've seen at other market tops. You know what?”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“Of 2000 of a bubble. And on our definition, actually, it is a bubble, but it's not close to the end of it. And one missing component was really the sentiment that never got as extreme on our measures.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“It's actually really key to this because if you were to say, listen, this is the top of a bubble or something, you would have to see really, really enthusiastic sentiment. And we never quite saw that. My favorite indicator is we call the poles indicator. It stands for positioning and various other things. And that is something that we put out and that worked really, really well this year and actually the last five years for that matter. And that never went into territory that really told us to be cautious. We do a bunch of surveys, so we survey all the big assets allocators worth a few trillion asset under management. And they never got as bullish on US equities because after April there was a big move outside of US equities, as you know, and they never really fully jumped into the US equity market as much as they went outside of the US. So we always thought, you know what, there are certain stories here that definitely remind”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source
“I mean, I'm trafficking more among the macro people than the equity folks. Sure. And the macro guys are always half class empty, right? So you did find some bears. And I would say actually only a few weeks ago that disappeared because there was a really strong buy-in into the center, really. So meaning November and December have exceptionally positive seasonality always. And they've even better seasonality. Exactly. So I think the bears that we found disappeared over the last few weeks. So maybe just at the wrong time, you might argue. But that's how it goes, right? Yeah.”
2025-11-15 · Odd Lots · Citi's Dirk Willer on How You Know When the Bubble Is Over · IDENTIFIED FROM THE TRANSCRIPT · source