YouSaid · the spoken record

Jack Farley

lines on the record: 85
first: 2024-09-24
most recent: 2024-09-24
sittings or episodes: 1
sources: podcast

Every line below is reproduced as it was said and linked to the record it came from. Nothing here is summarised or generated. Directory · Search · Corrections

“Yeah, I think so, but you know, maybe the private credit. Thing is it's got to pop until two more years, three more years. And I don't see any evidence why it has to be a systemic financial crisis. I think the more likely outcome is just subpar performance for fixed income investors, but they can handle that.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Investors, like they have been taking the marginal credit risk of financing leveraged companies, low quality speculative credit risk. And obviously taking credit risk has been the correct trade over the past two, two and a half years because there has not been a recession. And interest rates have gone up. So that's why you have all of these chief economists and strategists from these private equity firms. They believe in the no landing because they want high nominal interest rates and then they no recession. So credit performs well. And that's why Aries, Apollo, they've been performing well. But interesting odd lots interview with someone from PIMCO who talking their book sounds like they're pretty long duration. But private credit like even if you own a high yield bond, you know, the spread blows out. You do get some protection because the risk-free component comes in because the Federal Reserve is cutting interest rates and the Treasury yields fall. You don't get that at all with floating rate securities.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“We're more maybe it's households not professional investors who are overweight, but I think a lot of the market is overweight. But just because they can get more overweight, it's not necessarily bearish. I do think the CFO thing, like if you're a chief financial officer, I think that you don't want to fade that. I'm sure going into a recession, chief financial officers are bearish. And if 10% of CFOs are bullish, like that's not a good sign. I'd rather have 90% of them bullish, you know, I'd want to go with the trend, but I don't know. I haven't done the work. High yield, you're absolutely right. I think I don't believe in the word de-risks, but I think the risk in high yield is lower because the worst deals have been refinanced into the private credit market. And that is, you know, the word bubble just like is a very judgmental word. It implies like it's going to collapse. But I do think that private credit.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Often the Fed Reserve cuts a lot when it cuts. I think that's just true because cutting cycles have been bigger than hiking cycles. And that's why interest rates have been going down for the past 40 years. But I want to go back to something my good friend Tyler said. He said, so I think your chart of the fund manager survey, that is an accurate sentiment tell if all these fund managers are saying that we are not loaded up on risk. I believe that. And that's interesting. That surprises me. I would have thought that they.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Okay, okay. I think it has a mistake that I'm sure the person who created it is aware of. It's not a mistake. It's just an issue that I think it's not correct is that it's assuming that where we're starting from the highest point is the same. Like in 1984, they didn't start from 5% and cut into negative 75 basis points. They probably started from like 12% or something. And in 2019, they didn't start from 5%. They started from 2.25% and went down to zero, not 3%. So like, I think if you're at 12%, of course you're going to cut more than if you're at 1%. So I think that that's a little bit of an issue. The general thing that it shows is that it.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Long bond prices down. And yeah, and I think it's because by going so hard so quick, it's nipping it in the bud, and that is making for less cuts priced in. So I want to tie this into Joseph's comment about the Dixie heading lower, the US dollar heading lower, I personally feel like when you look, and this is, I've been ranting a bit about it this week, it's just like implied forward differentials in currency markets. Like when you look at the Dixie over the last month, it's just been down only because we priced like incredibly quick and swift cutting cycle. That gets priced into currencies. That's why we saw Yenna 140. So, I feel personally like that move has already happened, and because they've gone so aggressive so soon, we're actually going to see a shorter cutting cycle, which means less US dollar weakness.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Move down to three, roughly speaking. That would make us show like a return to neutral. I wouldn't say that this is recessionary pricing by any means from the bond market. But what is interesting is that when this 50 bits cut came in, the long bond yields started to surge higher and they'd pretty much been in an upward fashion since. And I think that gets a lot to what Quinn was talking about. Yield higher fields, not price higher. Yeah. Yield higher price is lower.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I think the rest of world trade and hard asses trade. I mean, looking even at the price action today, like spies down 0.8% on the same day that gold's up 1.1%, that's sort of the vibe that I'm getting. So, I mean, what we're talking about here is basically the trajectory of the cutting cycle. And I really like this chart because it shows the path that is currently priced in versus previous historical cycles. The big thing now, and this is something that Powell actually mentioned in the press conference where he really emphasized this fact that he believes neutral rate is significantly higher now. That was pretty interesting. That was probably the only marginally hawkish thing that we heard. And it's something that market participants have been talking a lot about over the last year. So it's good to see them take that seriously. But what that's effectively causing here is that the market is implying that neutral rate is around 3% and we're just doing a quick.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Narrative that's broken and the fact that I think we're just kind of going to go up. And to Felix's point, if the spice is flowing, the Fed liquidity and stocks are expensive, they're unlikely to crater. So there's kind of a floor on stocks. Maybe that multiples are expensive. So maybe they have to chop wood. They do these things where they sprint up, chop wood, sprint up, chop wood. But the spice and the liquidity is still flowing. And so that's why it's very constructive for Bitcoin and gold. And you see these inflation hedge assets coming back as oils getting priced higher for this growth. Look at China stock breaking out. So I think you are seeing this global rest of world trade. It's the glimpse. Just like in July when we saw the glimpse of the small cap trade.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Recessionary fears. I think to your point, Tyler, the other aspect on the sentiment part is, you know, for nonstop, you know, September was the bad seasonal. Now we're breaking that. And the next one is I think that's going to get broken is, oh, very dangerous pre-election stay out of the way of risk. I think stocks can't move up. I can't tell you how many times I've heard that 5,600 is the ceiling on the S&P before the election. I'm like, guys. What do you like just regurgitating these like notions that, oh, no one, no business managers can't make hiring decisions and purchasing managers? And I'm like, the world's fine. Like just go about your business. It's not going to trump. Kamala, like, it's going to matter around the edges. But the macro is going to rule over a medium, multi-week, multi-month horizon. So I think that's going to be the next commonly regurgitated.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“I want to touch on that point on Joseph's point because I tweeted something to actually combating that, which is. I think Joseph's going to be right in 2025 when inflation is a problem again and the Fed is still too easy. That's going to weigh on the dollar. You're going to see the situation of rising yields, but actually weakening dollar because people are losing credibility, the Fed's losing credibility, people are losing trust in the U.S. asset markets. But in the meantime, if you believe that Fed rate cuts will stop the bleeding and by them going 50 and giving a very dovish dot plot, that is that signal that we're ready to stand by the economy and the labor market. So I take them at their word and I believe that the economy is actually not that bad. And so what that does is it actually removes accommodation out of the monetary path of policy because they've, you know, they've stopped gapped with a 50 up front and removes cuts and actually makes interest rates rise, yields rise in the market and bolsters the dollar because there's less.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“You think stocks are going to be up and up and down six months from now? And I was like right out of college. And he was like. They're going to be down 35% at least. And so the bond market was telling you in 2008 that it was just was imploding so that the rate cuts were seen as a bearish thing. Like, oh my God. But this is the legit opposite of this. So I don't know. There's growth, large cap tech. I'm not like super bullish about, but industrial stocks are on fire. Utilities are on fire. Banks are about to break out to the upside. Like this is everyone bearish. What's going on here?”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Exactly. So, this is the last 12 months upgrades to downgrades and says the number of high yo bond issuers upgraded in August exceeded downgrades for the fifth consecutive month, specifically August 30th saw 30 upgrades impacting $49 billion in 21 downgrades totaling $20 billion, registering a 1.431 ratio to upgrades to get upgrades. So look at this. The chart's inflecting upwards. Everyone's calling rate cuts are bearish, but they're not even looking at bonds. Because we're bearish in 2008 because the bond market was falling apart. I remember I was working at KBW. This is a good story. And there's this old bond trader. He was like, I think he was in like the book Liars Poker. And he looks at me like he just smoked a cigarette and he's like, Tyler.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“The thing I saw is like, oh, every time they lower rates, you know, that's a sign that there's some demons in the system. And you're like, No one's even looking at high yield bond market. Check out. Spreads are narrow. Spreads are coming in, and you have this Goldilock scenario where growth is good, inflation's They're buying it. I yield bonds hand over fists. Not only that, but we also have this demographic. Whom or a demographic like rolling over where baby boomers want to yield. And so they're going further out. And then the balance sheets of high yield are even getting better. Like there's some upgrades. Like this is a great chart from JP Morgan, slide 41. This looks like we're starting a new credit cycle.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Can I play contra to that? Because I like disagreeing with Jack just because. Naturally, I just want to disagree with you. So just I want to hate you with a couple sentiment charts on sentiment slide 42. Is the share of CFOs who say now is a good time to take greater risks and It's at new lows. Which is just really, I find this so fascinating. Markets at all time highs in CFOs are just so risk averse. And the fed's beginning an easing cycle, then go to the next slide. This is the Bank of America fund management survey. The net percentage taking higher than normal risks is so low. So the positioning for a lot of people is really negative. I'm getting more and more bullish here. And one thing that I find so fascinating is nobody is looking at the fixed income market.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Decent part of my analysis is paying attention to people. And if someone always thinks there's a recession and they say they think the recession is like, yes, okay, that's like saying, oh, Kathy Wood likes Tesla. But if someone who is a giant Tesla bear and actually says, you know what? I'm seeing the fundamentals and I actually embulled Tesla. I pay attention. And likewise, when someone who, you know, has been very bullish stocks like Joseph Wang has is cautious, I pay attention to that.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“A 50 basis point cut is not bullish because it will weaken the dollar and foreigners who are massively into the SP 500 do not hedge their dollar holdings of US stocks, whereas they mostly do hedge their dollar holdings of US bonds. And then that could force an unwind somewhat similar to what we saw in that horrible Monday in early August after the Bank of Japan raised interest rates and we had the weak very weak labor market data which forced Japanese interest rates higher, US rates lower, and the yen strengthened dramatically, which precipitated a sell-off, steep sell-off in equities. Joseph is a little cautious. Felix, you as a podcaster and me too, we pay attention. We have our own views and we do our own analysis, but also I think at least for me.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Bullish dots. It was sorry, dovish dots and. You know, I don't see my base cases that dovish dots are bullish dots. You can say, well, historically, they haven't been, although Felix, you've got an alternative read of the data, but dovish dots or cutting interest rates itself is stimulative. Now, often it is the case that the Federal Reserve cuts interest rates because there's a financial crisis, which is obviously not stimulative. But it's just like saying, you know, going to the hospital, oftentimes makes you makes you better and healthier. But the people who are in the hospital are not healthy people, but that's because they're sick. So I think that devastators are bullish dots. Joseph Wang on my first interview with Monetary Matters, and he has been a near permeable, you know, going back all the way to late 2023. He actually had an interesting bearish take that”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Yeah. And then, I mean, look at the real GDP forecast that we're just going to stay flat perfectly at 2% for the next four years. Like, that's the silliest thing I've ever heard. So, you know, there's a lot of criticisms about the dot plot and the SEPs and whether they're useful or just noisy. And I think some of those criticisms are warranted.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Be at 4.4%. To me, I think that's rosy. And the idea that out of all of the nearly 20 people on the FOMC who are writing then the dot plots and making these projections, that the most bearish, the highest unemployment rate that projected is 4.5%. Imagine if instead of being four of us today, there were 20 of us. I think that we, you know, there would be some people who would be in the 4.9 or 5 or 6. And I think it's just optimistic.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“I think that's really Rosie. I mean, history shows, and those are two dangerous words, history shows, but that when the unemployment rises, it tends to spike higher in a nonlinear fashion and it tends to be in a recession. So the SOM rule was triggered. And Claudia Sommer herself has says that she hopes it wrong will be wrong and that there's a decent chance that it will be wrong. And also she didn't design it so it's an infallible way to be a macro hedge fund manager. She designed it so that policymakers could be alerted and act appropriately and in a quickly timely manner. And maybe so the Federal Reserve is paying attention to the same rule by cutting 50 basis points. And therefore, the SOM rule will be proven false. So that's definitely a possibility. But yes, the odds that by 2025, the unemployment rate peaks at 4.4%, or actually that it will.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, that's fair. I think that's fair. I want to talk a little bit about and open it up also to you, Jack, is just looking at some of the summary of economic projections. I found there's some really interesting components in the economic forecast side of things. You know, this is something we're back in June, the unemployment rate forecast for year end was 4%. That seemed low. We passed that very quickly. We went up to 4.3 in two prints ago, back down to 4.2. When you look at the actual rounding of it, it's like barely moved. But the fact is we're above that year-end target. So they brought up their year-end target now for 2024 to 4.4. And for that to hold flat for the entire year of 2025 at 4.4. And then to do this beautiful little decrease down to 4.3 after that in 2026. That seems rosy. What do you think, Jack? You've had some interesting takes on this from what I've listened to.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Get this. I'm just doing the unit eight. Basically, since the start of the year, IBIT is up 35%. The spy is up. 19% and the queues are up 17%. Crypto has outperformed over the year, even though it's not at all time high.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Having evaluation is a trouble because it can always be too expensive or too cheap. It's just like the Silicon Valley quote. Don't be don't have revenue because then it'll never be too much. You want to be a pure play. And yeah,”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“No, I think it's a good point. And my nuance there is I'm definitely more bullish on crypto and gold in this regime because I feel like equity valuations are really elevated right now that the upside there's upside and unbullish equities. But I feel like the runway isn't as long as it is for gold and crypto just because of those earnings multiples that are a bit stretched and there's some big hurdles to meet there. So definitely easier to represent that view in assets that don't have cash flows.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Call that this would be a bullish 50 based on yesterday's price action that definitely has been a correct view. So I just want to roll out the red carpet for you there. And Quinn and Tyler, if you deserve to join, you're welcome to join as well. Tyler First off, pumping our own tires here.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Right. I was leaning towards 50 when it like on Monday and Tuesday. But it's interesting how, and it is historic just how the markets didn't really know what was to come. Like this was the first surprise that I can remember in terms of not being a near certainty, like the morning of or even days before. You remember like in June 2022 when the Federal Reserve did a 75 basis point hike the media and the interest rate markets had to be convinced, oh, actually it's going to be 75 rather than 50. It seems now the Federal Reserve doesn't really care whether people whether the market is prepared for something and that that's a very interesting perspective. It sounds like Quinn and Tyler you also had this view, but Felix, you know, I just follow you on Twitter and see your Telegrams and everything that your”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Cuts because the economy will be stronger. So I think the interesting price action looking ahead, and I do believe these few days post the meeting are pretty good examples of what's to come on the reignition of the economy and inflation front.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“View as the narrative now going forward, though, is that the Fed cuts, the Fed put is supporting the market and going to prevent a recession. Because as we're already seeing it, this dramatic decrease in yields has reignited housing activity. Bank lending now with a steeper yield curve is much more profitable. That's going to continue to improve as the Fed holds down the short end and the long end rises on higher growth expectations. And so you're looking at the scenario of a reinfecting economy. I think the long end goes higher in yields. And this is kind of, there's some areas here that really confuse people about the dollar, for example, kind of, oh, if the Fed goes too much, they're going to reignite the N carry trade when in reality, because they started sooner, they're actually kind of nipping the problem in the butt. And what the market will be able to do is price out a lot of these.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“At the same time that we're coming up on this consequential Fed meeting that everybody kind of knew was the first rate cut even many months ago. And behind that in election that's a month and a half away, a little gap there. And then the next Fed meeting behind that. And I think it all culminated into what ended up obviously being 50. But these fears in the market, as we saw with the Yen Carrie trade and the things that knocked it off that had people very, very concerned about recession and the slowing growth tipping over. And so it beat down yields. It beat down the dollar and expectation of rate cuts coming. Stocks wobbled, but they didn't really break. We saw cyclicals taking the brunt of it energy was very disinflationary vibes. Rumors about China, that always kind of comes back, whether it's actually because of China or not. And so I've”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, sure. Yeah, this was a, I was a few hours early to this as we dip back down on that Friday of the jobs report on the 6th. But I think most of the logic held up. I describe it as this funny coincidental timing of the recession fears and weakening data, reaching a crescendo.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“The big bets are liquid, but even the presidential election one, I don't know the million dollars behind it, but somebody can come in there and move it pretty easily, I feel like. Quinny nailed the two men. Do you want to expand on what you were mentioning here back in early September and your framework leading into this?”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“And yeah, I threw a bet on Poly. I just wanted to try out Polymarket because I keep going to less stuff and I'm like, man, I haven't actually used it yet. So, you know, I threw in a little bit of money and decided to bet it on 50 and it worked out. So happy about that.”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“I think it was before, but it's shocking to me how people are not watching. or break evens it's almost borderline deflationary and jack has all these like super expert academics on here talking about you know god knows how many like crazy expert economist things but all you have to do is watch break evens and then you know anticipate you know look at the two year yield too it's pretty it's pretty simple but um you know that's what the fed's been doing for for years now and you can argue about the politics behind it and you know with the market at all time highs but they're really they're they're telling you what they're going to do before they do it so we got it and you know we can put it put it past us and all the chatter now”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT
“Appreciate that a lot. Well, before we get into it, I want to roll out the red carpet a little bit and give us a little bit of a chance for a little victory lap here because I do think it's somewhat deserved for a few of us here. So we're recording this on Friday. Obviously, it's FOMC week. We just had the first FOMC cut of the cycle two days ago, and they cut 50, not 25, despite 101 economists predicting 25. They went higher on 50. But you know who did predict it? Tyler Neville coming in on the 50. No, I want to give props. Seriously, because at this time, I don't remember where the odds were when he called this, but”
2024-09-24 · Forward Guidance · What The Latest Fed Decision Means For Markets | Weekly Roundup · IDENTIFIED FROM THE TRANSCRIPT