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Teddy Vallee

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56
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2022-04-28
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2022-04-28
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  1. “Exactly right. We're net short stocks. We were long Brazil, which we found is trading significantly at this huge discount to commodity prices. And we're long Brazil against energy equities against the basket of tech names, as well as broad sort of indices stuff that's more done on an active basis. So all that's now, we've taken that all off effectively and have sort of repositioned for the next, call it six to nine months.”

    2022-04-28 · Forward Guidance · The “Short Everything” Trade | Teddy Vallee · IDENTIFIED FROM THE TRANSCRIPT

  2. “Timing is a huge thing. And path versus destination and situation here, destination, they might be correct in terms of where rates end up, but the path was pretty ugly to get there. So a lot of things were just completely off from a sentiment perspective and also from a fundamental perspective. And fortunately, we were able to take advantage of that.”

    2022-04-28 · Forward Guidance · The “Short Everything” Trade | Teddy Vallee · IDENTIFIED FROM THE TRANSCRIPT

  3. “I thought one from a growth perspective, if we have some of the strongest nominal growth that we've seen historically with some of the largest inflation prints, how is it that tens are trading at 200 basis points cheap to where they were at the prior highs of the last cycle, especially given that a lot of these market internals were saying that growth was significantly higher. So the twos were primarily more of a Fed reaction function to inflation and the long is more a reaction function to both inflation and growth being much stronger than many thought. And it's interesting just four months ago, no one thought that we could have any type of hiking process. I mean, there's multiple people I spoke to that said, look, the feds, they're going to be able to do any type of QT because the market's going to fall apart. So it was just this ingrained view that people cycle or recycle have just worked.”

    2022-04-28 · Forward Guidance · The “Short Everything” Trade | Teddy Vallee · IDENTIFIED FROM THE TRANSCRIPT

  4. “It's a materially different scenario from where we're then. So I'd say it fortunately worked out and at the end of the day, you need to stick to your process and listen to the markets and that's sort of what we did.”

    2022-04-28 · Forward Guidance · The “Short Everything” Trade | Teddy Vallee · IDENTIFIED FROM THE TRANSCRIPT

  5. “Inflation and growth perspective. That led me to think that, okay, if the Fed acts and moves pretty aggressively, that's going to really materially hurt multiples due to higher real rates, tighter financial conditions, which is going to really hurt the technology sector given some of the premiums that you're seeing there on the multiple side. And it's going to affect equities broadly. And then the bonds are going to like it either, especially given the fact that the trading 100 basis points cheap to where we thought rates should effectively be. So it was from our process that said, look, we still have a runway where we have an area of growth called for the next three to four months. And the markets were just so mispricing of hawkish Fed. And here we are today, 240 basis points layer on, call it two years.”

    2022-04-28 · Forward Guidance · The “Short Everything” Trade | Teddy Vallee · IDENTIFIED FROM THE TRANSCRIPT

  6. “Our process is effectively figuring out where GRL is going to be over the next, call it 12 to 9 to 12 months. At the time, coming, I'd say through the back half of last year, I was still of the view that growth was going to be pretty robust and all indications that I had from a data perspective continue to show that. At the same time, we rely very, very heavily on the markets, and the markets were pricing in a significantly, I believe the 10-year at the end of the year was around 139. Don't quote me on that, but in the vicinity of that. And we were looking at market internals that were implying 10 should be at least 100 basis points higher. One of the largest disconnects that I've seen historically, and to me it seemed one that rates needed to move pretty materially, and the Fed was completely offsides from both of them.”

    2022-04-28 · Forward Guidance · The “Short Everything” Trade | Teddy Vallee · IDENTIFIED FROM THE TRANSCRIPT