YouSaid · the spoken record

Mark Dow

lines on the record: 132
first: 2024-04-15
most recent: 2024-04-15
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

“But the home builders have to start putting up the earnings numbers to get to the next level. Their valuations are very low. And I think that when people start seeing the numbers, it will change.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“And I think even when the supply comes back online, they're not going to go down meaningfully. They might in some areas or more than others or whatever, but it's really been more of a COVID phenomenon than a monetary policy phenomenon. But I think so many people were conditioned, the combination of the GFC and the belief of how monetary policy pumped up the housing market. That combination led a lot of people astray. And like I was saying, this being able to, not fearing monetary policy the way others do has over the past 15 years just been the single most important, I mean, it's just been huge, single most important thing. And I think for the home bills, you have the added bonus of the scar tissue from the last time around. I don't think now people are still looking for the kind of crash they were looking for a year or so ago. But I think home builders are at the point where they have to put up the numbers, right? People realize homebuilders aren't going to die and home prices probably aren't going to go down a ton.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, so it's basically a very high beta and levered homebuilder, which if homebuilder does well, it will do well. And if homebuilders don't do well, it won't do well. Obviously, people should do their own research and risk manage their own views. Mark, I think the thing about which I have been wrong the most in the way that you've been talking about, about focusing too much on monetary policy is the home builders. I mean, I like many people, to be fair, consider it almost a shoe-in that the housing market would suffer. And it did in terms of new listings and activity as interest rates rose, but the prices really, they went down a little bit and now they're stabilizing going back up.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Like a lot of the different home builders, but this one has a lot of financial leverage. And when things are going well and something has financial leverage, it does a lot better, right? Then it does worse when things go poorly, but it does better when things go well. So that's kind of the thinking behind it. But all the home builders should do well. We have a really bad housing shortage and it's going to take a long time to fill.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Basically, this is a company that almost went bankrupt a number of years ago. The global financial crisis, like all the other home builders, they were out over their skis, but they weren't in as bad a shape as the others, and they started buying land too quickly. And they almost didn't make it. And there was a point where people thought they were going to go bankrupt. I looked at it and I said, this doesn't look like a bankruptcy to me. So I bought the stock. And I've been involved off and on since. But what's happening now is they've been paying down their debt and they're doing a great job, but they're now at the point where they can return to growth. So they don't have to dedicate all of their earnings to paying down the debt. And like all the home builders, they have demand on TAP because what I was saying earlier, there's a massive housing shortage. The post-traumatic stress disorder of the GFC caused people to underbuild for a long time.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“You're putting it on, you think there's going to be a breakout, you put on an extra large position and you peel off half of it after it's had that first seven percent move and then you ride the rest with your stop. So there are techniques to help you ride things further. But as a general proposition to get the meat of the move, not to be the first guy to buy or not to be the last guy to sell, to get that meat of that move with a concentrated position for me personally is the easiest way to trade.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“For me, investing is much harder because it's just harder to predict the future. And there are people who spend 24-7 analyzing these companies and their moats and their margins and their management. And I don't know how you can possibly get an edge against these people. So for me, trading is a lot easier, shorter timeframes with more concentrated positions, sometimes even leveraged. So if a stock is going to move 15%, just catching the first half of that move is enough. You know, get out while the trend is still powerful sometimes. But bet more aggressively. That means you have to have a tighter stop if you're wrong, right? So you have to pick your setups pretty carefully. But that's easier than trying to ride a trend to the absolute last point because how long the trend persists is a function of a lot of things that are really hard to forecast. There are other techniques too. So you can overclock a position when”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“It can happen. I mean, I can't even tell you. I remember in 2021, I was too early shorting ARKK and I got hurt a little bit and it ended up going down massively, right? I was just, my timing was off and I stopped out several times and my typical people on behavioral macros see this, but I stop out. I'll take a couple shots at it where I lose a little bit each time. And I think if I'm up at bat four times, my odds of getting hit improve significantly. So I try and keep my losses short. I tried so many times with AAK. I finally gave up because I wasn't. And then, of course, as soon as I gave up, then it collapsed. So this stuff happens.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Pretty much. Yeah. One form or another, I do. The real key to me, you know, I always say that you can be a good trader without knowing much about the fundamentals, but you can't be a good trader if you don't know much about risk management. And it's not about a lot of people say, well, I'll just be right on the thesis. That doesn't, you need strategies that protect you from yourself.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“And I might set my stop a little bit wider. If I don't believe in it fundamentally, then I'm going to take a smaller position and I'm going to have a tighter stop.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“That it had run into several times. So it's just by force of having seen these patterns time and time and time and time and time again and being able to map them to human biases, to our cognitive shortcomings. It's based on us being inefficient, but it's reading the charts to extract information of how we're being inefficient and why. I don't use, for example, I don't use Fibonacci lines or anything like that because I can't map that to human behavior. The charts I look at and the patterns, if I can see that and I say, I map that, I can map that to behavior and I can map that to a narrative, then it makes sense to me. So whether or not the rationale, underlying rationale is efficient or not, right people I've bought speculative assets just because they look like they were going to explode and not for any other reason. Now, if I have a fundamental belief, I might bet larger.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“This moment, I actually am. I haven't been for a while, but I have been since this morning, and I've been short MSTR, which is a proxy of Bitcoin for about a week now. And it's been a great trade. But yeah, so the way I look at it is the other thing you see in patterns is you see repeated behaviors. So say something really banal that everyone can relate to. You know, a lot of people say, well, I'll sell it when it gets back to the level where I bought it. Now that's not good investing, but a lot of people feel that. You can see that behavior in chart patterns. When we return to a level that something broke down from, that's typically overhead resistance. And it's usually not going to run straight through it. If it's headed higher, it's going to have to back and fill and work its way higher. So you see repeated behaviors. And it's not like, yeah, you just see patterns. You say, okay, I see this like the gold pattern recently. I said this gold pattern is going to break higher. It's going to break sharply higher because it had built up a lot of pressure at a resistance level.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“What the market believes to be the case, and then I can judge whether or not I think that's correct. And then rather than if you think the market's incorrect, you won't necessarily want to bet on it immediately. You want to wait until that narrative starts to get exhausted and show signs of reversing before you jump on it. So that's kind of how I marry my fundamental analysis with my technical analysis. I use it to reveal to me what other people believe to be the case.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Not rational, it's revealed preference. So I'm trying to read what other people believe to be the case from the price action and from the correlations, right? So a little bit like I was saying earlier, we had higher valuations in 2000 than we did at the peak in 2021, but interest rates were higher. That's telling me interest rates aren't so there's information in that, that interest rates really aren't the determinant of things. Well, you can look at the correlation between gold and real rates when that breaks down. So that's a form of technical analysis. I look at those things to inform me what other people believe. And then I try and match that to a narrative. Is that something, this is what I do on behavioral macro a lot, is there, for example, if positioning gets really skewed to one side? And, you know, can I see a narrative? Because sooner or later, the pendulum swings back and forth, right? We get too optimistic. We get too pessimistic.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Mark, I was going to say, how do you square? Because when I hear you criticizing or critiquing the mono focus on monetary policy, the Fed is the only thing to matters. It sounds, you know, like you're going against witchcraft and the cause of rationality, but then I also see that you're this big chart guy who's doing a lot of technical analysis. At least maybe it's my bias the way that I was raised or studying Warren Buffett and stuff. I don't think of a super rational. Obviously, I do, I've had interview technical analysts who I have a lot of respect for.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Or setting up a 60 40 portfolio with periodic rebalancing, low cost, high tax efficiency, that makes sense for most people.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“SMCI, those are kind of the poster boys, as it were, for this phenomenon. I think those guys need to correct more. But the rest, I think we're good. If you're a long-term investor, there's not a lot to be afraid of. And I know it's always, it's surprisingly hard to say that because you look like a total fool if there's a 10% correction. It always sounds a lot better to say, oh, I'm worried about this, this, this, this, and these things could happen. Yeah, they could happen, but I just don't think it makes a lot of sense to bet that they will. You know, you wait for signs of weakness first rather than anticipate it because markets tend to go up over time. A lot of investing protecting us from ourselves, right? I'm a discretionary trader. I've been doing this for a while, so I have systems to protect me from my biases, right? All kinds of technical things. For a lot of people who don't have the time or the inclination, dollar cost average.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Of other people do, and it creates that placebo effect. So I think there are no reasons to be bearish. Yeah, people will sell before tax day and it's an election year, so we might get noise. But the underlying fundamentals are pretty strong. So I'd want to be bullish on the things that are linked to the underlying economy. Some of the stuff that's run really hard that obviously you see some head and shoulder tops, as a technician would say, in some of the names like MSTR and COIN and NVIDIA.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“I like to say that. But I think right now the story for me is that the things that went parabolic in February and March need to correct, right? And they need to correct further. So whether it's in video or SMCI or coins or whatnot, it got a little bit out over at skis. It didn't feel quite like the end of 2021, but kind of close. So I think those need to correct. But the other areas of the market should do really well. Nominal GDP is still strong. People are grasping for reasons to be bearish and about credit deterioration of things. Those things could happen. And we have to be on watch for them. But if you think about a situation where unemployment is really low, growth is good and not showing signs of abating. Inflation isn't all the way down the target, but we'll see whether or not that continues. And the Fed has a lot of ammunition to cut, even though I don't think it's that powerful or it matters that much.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Mark, what are your views on the market right now? You've been very bullish, and I think I've seen you say multiple times on Twitter throughout this rally that the easy money is about to be made and then it is, and then I like, I like.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“But so, if you want to say someone is tactically right about something, that's fine. But the bigger thesis, I think you can reject it by now. I remember saying in the depths of 2022, like in August or September, October was the absolute depth. But around that area, I kind of put a tweet out saying, okay, if we make all-time highs by the end of 2023, we can pretty much say that the whole QT is dragging down the market and interest rates drive everything that thesis is dead. And people were willing to say, okay, at that time, because they didn't think it would happen. I wouldn't even know if it would happen. I wasn't necessarily predicting it, but I knew it could happen because interest rates and QT didn't matter that much. And indeed, it ended up happening. So we've got, I mean, it's one of those things where there's that old economist joke where they say, okay, fine. So it works in practice, but doesn't work in theory.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“But think about there was one moment where people ascribed the market tanking to the Treasury announcement. But there were other factors going on as well. And we had a, you know, like I said, post hoc ergo propter hawk. Over time tells the story, right? And supply in treasuries hasn't abated. Interest rates have gone higher. QT has proceeded. and none of those things have happened. They might have happened for short windows.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Ah, well, there might have been a brief moment. Yeah, but if you look at on average where the multiples are now compared to where they've been in history, it's not at the highest, they're close to, they're very high. They're much higher, put it this way, that anyone would have ever forecast if they thought interest rates and QT mattered. And I think that's the biggest piece of evidence. None of the things that the term premium multiples, none of that stuff really played out. So it just says these other factors matter a lot more. Like I said, all the story about shadow QE, Janet Yellen. Thus fatuous stuff by guys making up reasons to cover for having been wrong.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“No, absolutely. That's probably the area where it has the most impact is in the mortgage-backed securities market, right? That's where it has the most impact because the smaller market than...”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and I mean, I agree if QE had a huge impact on the economy, we would have had a boom after the great financial crisis. We didn't. But what about on sort of those interest rate sectors or the asset? Like if you're a huge, you know, I think Bank of America had half a trillion dollars in treasuries and agency mortgage-backed securities, at least, like they probably care about whether the Federal Reserve is buying or selling 80 billion of those or 95 billion of those a month, right? Like it has like.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“So, yeah, the Federal Reserve has immense influence in plumbing issues. 99% and probably much higher than 99% of the time are fine. It's just that when there's a crisis, the Federal Reserve can fix that. Yeah.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Stimulus and plumbing is extremely important. And I think a lot of people don't make it when they're analyzing what the Fed is doing and why.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“To change it, you might, like I said, like we were saying, you might buy some mortgages instead, or you might buy some other kind of high quality fixed income. But that effect where it goes out the curve, out the risk spectrum kind of stops in the fixed income market. It's not very powerful. And I think we've seen that. Like I said, if it were that powerful, we wouldn't be seeing stocks at all-time highs. I mean, just think about it. If you're on margin, it doesn't matter what the Fed does, right? No one's going to pull your margin. It's your decision, right? So think about the mechanics of if the Fed sells a bunch of bonds or lets a bunch of bonds mature and they take in the cash, who does that affect? It just, right? It doesn't affect, it really doesn't affect bank lending. It only affects potentially bank settlement, and the banks have to figure out what they need for settlement purposes. So the distinction between”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Or Tesla, right? So it's not like people have this idea that they're pumping money into the financial system and they're pumping money into the settlement system, a very different animal so that banks have enough money. So they're pumping, they're not pumping, they're not pumping any wealth into the system. They're basically allowing you to have more money in the cash register in case you have a moment where everyone rushes to liquidate their bonds for cash. That's all it really is. And that's why it doesn't really have any effect. Now down the road, like I said, people might decide to go from their 60-40 allocation to a 70-30 on their own. It doesn't matter if they're holding T-bills or deposits at the Fed, right? If they're risk appetite increases for whatever reason, they can do that. But that's what it takes. The act of changing the nature of your fixed income portfolio doesn't change that 40% allocation, right? And it's not going to like.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“If they have a duration goalie, if they have a duration goal, they do, they might, but then they might not sell them either or hold out for a better price or whatnot. But like I said, these guys aren't going to be buying equities, right? So they might buy, okay, well, I sold my bonds. I'm going to replace them with another bond somewhere else on the curve. Or maybe a mortgage bond, or maybe a high grade bond. But the guys from whom the Fed is buying don't have it in their mandate to buy NVIDIA.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Right, but when the Federal Reserve does quantitative be using, it issues reserves and it buys bonds from primary dealers, the banks then don't have those bonds. Don't they have to then buy bonds back to replenish their assets”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“But they need to hold a lot more than used to be the case under a floor system. So you'll see a lot of guys, well, oh yeah, Course QT hasn't worked. They've got six billion left or 5 billion left or whatever the number is. They're not going back and that number didn't get pumped into the market anyway. And they're certainly not going back to the number. It's sitting there in the cash register for transactions in case they're needed. So I think it's just kind of a fundamental misconception of how these things actually work.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Illustrates. I'm sure you love it. It's for geeks. Monetary guys who like monetary stuff. I love it. He did one with Bill Nelson recently, who used to work at the Fed, ran the discount window. And they talk about how obviously in a floor system, you need a lot more reserves. Okay. You need a lot more reserves. But the amount of reserves for their high quality liquid assets, but banks can hold either reserves or bonds. They can choose. And that preference is influenced by their past. So if they live through a crisis, right, they're going to be much less, much more reluctant to put too much into bonds. Because as I was saying earlier, bonds settle T plus one. So if you get a settlement rush, you might not be able to meet your settlements if you've got a liquidate bonds. Whereas if you have Fed funds, you can meet that immediately. So there are a lot of regulatory things and incentive things that can be done to reduce the amount of reserves that banks need to hold.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“About is that the markets function, that they clear. They're not trying to pump anything up or pump anything down. I know there are wealth effects and things like that, but their thought is if we take care of the economy and make sure we minimize collateral damage and structural damage, when the economy recovers, stocks will go up and maybe there'll be a wealth effect from that and that will be a bonus. But we need to make sure that the economy is functioning. So I really think it's not about the size of the balance sheet. It's about the facilities that they've understood these markets much better and they're ready for market failure to a degree they weren't last time. I think that's the big difference. The big difference with the balance sheet, there's a great, I'm going to do this again. I'm sorry. Another podcast, David Beckworth. Oh, yeah.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Yes, I do. I agree with you. I don't think it's the size of the Fed balance sheet. I think they were surprised by a lot of the plumbing issues that a lot of the governors probably weren't fully aware of even. They just kind of assumed that the plumbing worked, right? And they had to learn this on the fly. And so they're a little slower to respond. When COVID happened and that shock happened, they knew what to look for. They had a much, so it's more the facilities that were willing to roll out, the swaps that they do with overseas banks to provide because they have systems through their shadow banking systems. They're creating dollars too, right? And sometimes they have a liquidity squeeze. I think it's the facilities that they rolled out and the sense of awareness from having lived through the GFC that got them on top of this much more rapidly. And now anytime philosophically, and I think people mistake this a lot, what they can.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Do you also think that in the great financial crisis, there were pipes over which the Federal Reserve did not have control like asset-backed commercial papal market or something like a CDO market or the LIBOR market, the Eurodollar market, whereas now much more of that because of the size of the Fed's balance sheet, but also because of Sofa has replaced LIBOR and a handful of other reasons.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Think with the benefit of hindsight, it works great for the plumbing. It provides that the dealer system is imperfect and all these other kinds of things, but it provides the elasticity for the monetary system that we need for it to function so that settlements can take place in orderly fashion. For economic stimulus, I think we have enough evidence now to look back.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“No, plumbing is important. So I should make this distinction because it's really important because I kind of say things very forcefully and it's easy to think I don't think monetary policy matters at all or whatever, but there's an important distinction between monetary, so QE or balance sheet size or monetary policy for the plumbing and monetary policy for economic stimulus.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Yes, exactly. So Brad and I were both kind of forensic economists on balance of payments issues on countries around the world. We were kind of like the Treasury guys that were sent to figure out the balance of payments that countries in trouble that we were kind of like hitmen in that regard. Brad stuck with it. I took a wrong turn and ended up managing money. But that's the kind of stuff we used to do. Brad doesn't He does an amazing job at that.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“I love Brad. I love odd lots. And I really like how he's brought up, you know, I learned from him how Belgium, China basically buys a lot of your treasuries through Belgium. So their official treasury account looks like they're dumping treasuries, but they're actually not by as much if you include blood.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Or the dollar would be going down against other things. That's what I'm saying. So ideally, I think people would want to diversify out of gold to a greater out of dollars to a greater degree, but they can't. No alternative. There was a great me for mentioning another podcast here, but odd lots with Brad Setzer. He talks a lot about... Brad and I have a common history. We have the same job at the treasury for a bit and kind of, but He went on at some length about just the dollar dominance and fading increasing Y, etc. And he goes through a lot of these things, I think, and lays them out really well, looking at the stats just not spouting from memory as I am. It's worth a listen. It's just really, really hard to diversify away from the dollar. It's so entrenched in the global system and the masses is so large.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Okay, but doesn't that validate, or in other words, wouldn't you agree then with the core thesis of many gold bugs if I'm allowed to use that phrase that people don't want the dollar and people want gold? I mean, on your Twitter, it says you're a fee on enthusiasm.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“We worked recently. People said, oh, it must be that because in their minds, in their ideological framework, that's what drives gold. But we've seen this in previous cycles when this has happened and it hasn't drived gold. The new feature is the fear of the weaponization of the dollar and the massive discrepancy between the size of the dollar market and the size of the gold market.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“The correlation broke. And it's been going up. And then the chart recently got good and had a breakout and all the chart monkeys got excited. Chart monkeys like me got excited and said, okay, golden's going to move. And I'd recognize though that this, because I follow Gold closely, and I recognize that the correlation had broken down a long time ago. And this weaponization of the dollars is a real fear. And it looks fine against the dollar too. In dollar terms, gold looks okay too these days over the past two years or something like that. But again, I think it's this phenomenon. Normally when real rates go up, people say, oh, well, I can get 5% in T-bills or I can get nothing in Iraq, right? And the rock goes down. That's not happening. But because it's going up, we get back to the post hoc ergo proctor hawk phenomenon. People say, oh, it's going up and the debt is going up. And maybe now we're talking about inflation again, even though.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, and actually, you know, gold is going up recently, but over the past three years, it's definitely struggled in dollar terms. But if you look at it chart of gold in Japanese yen terms, it just looks like the most bullish chart ever. So you're saying that gold, quote unquote, quote, should have gone down or basically because the real rates exploded higher from very negative to positive in 2022, let's say gold, which normally trades on real rates ought to have gone down, but it didn't go down by as nearly as much because of there's that bid for away from the dollar.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“It's really about fear of weaponization of dollar. And proof, as it were, that it's not hurting the dollar is because against all the currencies, dollar is not doing badly whatsoever. It's doing fine against all the currencies. It's only a little bit of money going out of the dollar market into the gold market makes the gold market go up a lot.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“They got their sanctions, and all the other countries kind of said, Oh, no, they could weaponize the dollar against us. So you had a lot of state and non-state actors who were all of a sudden saying, at least at the margin, I should try and diversify. And they've been diversifying. And a small flow out of the dollar market into a much smaller gold market makes it go up. And that's what's been driving. And I don't know when that goes away or if that goes away. Now we're at the stage where momentum players and other people with their narratives about unsustainable debt and inflation coming back, they're entering the chat, as it were. But the genesis of this and the breakdown of the correlation started then. But again, like these other things, this is a phenomenon I've seen before, at least the one about people ascribing the goal going up to too much debt, expansive fiscal policy, and coming inflation. And that's not it. That's not it this time.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Usually, and not always gold trades on a few different things, but dominantly, very strongly, it trades on real rates and to a lesser extent on nominal rates, right? There are points in time when it'll correlate to the dollar or to other things. But by and large, day in, day out, it correlates to real rates. That broke down a few months ahead of, I'm going to say four, five, six months ahead of the Russian invasion. Why? Russia wanted to diversify to the extent they could. Now, they couldn't do much, right? because the dollar market is massive and the gold market is small. But they invaded.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Is not because of inflation or it's not because of the debt, all the things that the gold bugs always repeat every time. We saw this in 2009, yields were going up and gold was going up and they said it must be they're afraid of the debt. It must be afraid of inflation because they're printing money. None of that happened. What's happening now, what changed, and we saw this in the correlation between rates and gold in the run-up to the Russian invasion”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT
“Well, the first thing is not happening, right? People are buying treasuries and the policy rate is higher than inflation. So that's the first thing. So they're not doing it. Second is I heard all these arguments in 2008. I remember there was a guy who came into our hedge fund and he was a large family office and he was thinking about allocating to our fund. And oh, he said, oh, they've got to inflate away the debt. There's going to be, and that's what they're doing. There's massive inflation. It's coming because look at all the money they're printing, right? And I said there's not going to be inflation. And he kind of went, what? And I said, and besides, the treasury's issuing a bunch of tips to signal that they're not trying to inflate away the debt. But that person didn't notice that. And they went back, you know, they went back and they didn't invest with us. And they told my boss to go, Mark, it's a real smart guy, but my God, he's going to be wrong on inflation, right? Why getting getting back to what I was.”
2024-04-15 · Forward Guidance · Mark Dow: The Bears Are Making Stuff Up About Fed/Treasury Plumbing To Excuse The Fact That They Were Wrong · IDENTIFIED FROM THE TRANSCRIPT