YouSaid · the spoken record

Vincent Deluard

lines on the record: 109
first: 2022-06-23
most recent: 2022-06-23
sittings or episodes: 1
sources: podcast

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“That's pretty much it. And try, you can follow me. I try to do as many of these podcasts as I can. I think it's really fantastic that, I mean, we have tools to learn about markets. It's really fantastic. You can speak to this or hear the smartest people talk and give you trade ideas. I mean, if you want to educate yourself, I think places like Ford Guidance, like the work that Blockworks do is really fantastic for retail investors, it's change a game. You have access to the best mine of finance in real time, and it's a fantastic tool to educate yourself. So thanks, Jack.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Thanks, Jack. So Twitter is fantastic. So my handle is at Vincent Deliard. Vincent V-E-I-N-C-N-T. Deliard D-L-U-A-R-D. If you go to my pin tweet, there is a link to a page where you can register for a free trial of the research. We grant 100% of these requests, you know, or you can just simply DM me and I'll take it with you. I generally try to answer everybody on Twitter. I found that I get a lot of smart ideas, get to interact with a lot of people from all walks of life on Twitter. And then if you happen to trade with Sonix, a very large broker dealer with Fortune 100 company, well, contact your rep, ask if you can be put on my distribution list and it will work something out. And, um...”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“I think so too. I mean, it's the beginning of the end. No, sorry, it's the end of the beginning, not the beginning of the end.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Well, I would just dodge the question altogether and go short credit, high yield credit. That's it, right? Because you get both of these things work for you, right? You know, the inflationary bit means that duration is a risk and then the recessionary bit means that credit is a risk. So I think that's the instrument to trade. And you still think that's a good trade.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“All right, I promise you, this is my final question. I promise. Okay. So if you have inflation, you want to be short long-term bonds, short TLT. If we have a recession, you want to be long TLT. You want to be long those bonds. If you have an inflationary recession, where does the long-term bond? What happens there?”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“GDP growth in Europe is likely going to be negative this year. And still, we have the exact same inflation as we do in the US. Which is one of the reasons why I get frustrated with this recession debate. And I don't want to take a strong stance because what does it matter? If inflation is still at 8.5%, does it matter what real GDP is? Absolutely not because the central bank needs to focus on inflation. And I think that's the part that the Americans still haven't understood that they can have inflation and recession at the same time.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Embrace of its policies or program. So I think our performance of European indices is somewhat unlikely to last. And when the winter comes, we'll still have the same issues we had before, which is our dependency on Russian natural gas. And the fact, which I think is relevant for the US, and maybe you can finish on that. In the US, we kind of had this view of either or when it comes to recession or inflation. There's a view that if we have a recession, inflation will go away. What you see in Europe tells you that you can have both. I mean, I think Europe is in a recession right now, at least, you know, Germany probably is. France may be a little bit better, but as a whole, Europe, you know.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“I feel like there's a little bit of that for Europe up until the past week, Europe was outperforming. I was in France for the past two weeks. There was a sense that things were somewhat back to normal. The Jubilee SQL obligatically, you know, we saw the queen. It was a nice moment. People were going out summer vacation in France always feels fantastic. People just wanted to kind of enjoy their time. There's the view that, you know, that, you know, the Russia war has made Europe more stronger. There was some optimism that came out of the Macron re-election. And my view is that these things are somewhat illusory. And we are seeing these things as we speak, right? I mean, I don't know if you followed the parliamentary elections in France, but the popularity of Macron was somewhat of an illusion. People just didn't like the other option, but there was certainly no...”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“It's a little tale by Aesop. There is a grasshopper who's kind of like partying and singing in summer and she's happy. And the ant, on the other hand, is kind of working and storing food the winter and the winter comes. The grasshopper is freezing and starving, comes to the ant's house and asks for hospitality in the end. He's like, well, you know, why?”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, right. And yeah, in my personal account, I've been shorting a lot of individual stocks. I'll say the juice there, I think it might be, it's been very good, obviously, but it might be close to being over. And like some of the stocks that have gone down the most, like 90%, they now have more cash on their balance sheet than the equity market capitalization. And they have no debt. And yes, the CEO is like my age and, you know, probably a criminal. Yes, but it's still, you know, it's maybe not a wise idea. Maybe a wise idea to cover your short if you're short. Like that could rally 100%. And so what's your sort of risk reward? When you're shorting something, you're short, your long volatility, yes, but you are short convexity.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“And, you know, make sure you don't use too much leverage. You can afford to lose what you have at play. And if the market moves against you, don't take it personally either way. If it's going with you, don't think you're anything special. And the hubris falls, but that also works the other way. Like if it's going against you, it could be that there will be setbacks along the way.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“And I think it's being comfortable, the idea of not being right all the time and occasionally losing money, which again is something that we haven't been accustomed to because we had such a favorable environment. Like if you look at your 60-40 portfolio with the exception of 08, it was pretty much in 2018 as well. two years, but for four years, it was up every year. And most of these years it was like eight to nine percent, like a clock. I think we are moving to a much harder environment where even if you're right, you can lose money. And I would say a psychological aspect, don't beat yourself about it. You know, it's going to be volatile. There's going to be market dislocation.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“For example, one thing that hasn't worked for me is precious metals. Very, I mean, this hasn't gone poorly, but it hasn't done much. Gold is at, you know, 1850 and hasn't moved for two years. That's okay. That's okay. I think we had this. Very deluded view that financial markets are not there to double your money every two months. It's a long aim and you're there to survive and not to lose money or too much money. So I'm sure in the next two to three years there will be really bad hiccups along the way. On the energy stuff, I mean, just I haven't checked today, but you know, Friday energy prices got club, but there will be more these days.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“It's an excellent question. One thing that comes to mind, I think, is expectations, and I think one of the things that the bubble did is it. Really screwed up in people's heads, you know, this quote, I think, like Kindleberger, there's nothing as disturbing to one's mental health as the site of a neighbor getting rich very quickly. And I think we saw a lot of that with the crypto, the spac, the stunks, the NFTs. I've had friends ask me, how do I double my money in the next two months? And my answer is you don't. You don't. I mean, anyone who tells you you can double your money in two months is selling you a pipe dream. And that was clearly a problem, I think, in our generation. And that's something that also we must keep in mind that You can be right on the macro stuff and still lose money.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Invested in the lowest quality, most speculative companies would have been right. And the lower speculative, the lower quality, the better they would have done in returns. And folks who were shorting or were questioning and cynical, they were not doing well. Clearly, we're in a different world. So just as those folks, you know, they were right for a year and now they're definitely not right. What would you say, psychological advice you'd give as well as perhaps like a heuristic for how to tell if you're wrong? Like, oh the energy stocks I'm invested in are down 20% like it's time for me to actually pour cold water in my face and take my loss rather than clinging to a narrative.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Right. So the Bank of Japan is keeping Japanese bond yields artificially low, so the valve, the pressure has to go through the currency valve so that JPY Japanese yen is depreciating against the dollar over the past year, we've had the dollar yen go from 110 to 135. So I want to be clear your trade is short the Japanese yen, but don't short the Japanese yen and buy Japanese government bonds with them. Just hold the yen, right?”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“The Euro Swiss franc was. I think the same thing will happen to the yen. So you have the yen will shoot up and the Nikkei will plunge. So, I know it's a very painful trade to hold because right now you're losing on both legs. But at some point, long hand, short knee is going to be on one day make you fabulously rich if you can hold it and take the pain until it happens.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Japan is very the relation between the government, business sector is very tight. Stop When that happens, I think that there will be one day, I don't know what day that will be. But there will be one day where the BOJ will come up and say, okay, we are no longer defending the JGBs. Let the price be what the market wants it to be, which will be very difficult because there are entire days when there's no private transaction in JGBs for many, many days. So it's at this point an administered market that the BOJ does all the buying. There's no other. And I think at some point it will step out. And then when that happens, you will see the mother of all short squeezes on the yen. The yen will just go through the roof. My example would be what happened when the Swiss central bank about seven years ago, 2015, they targeted a peg to the euro and they kept it for many, many years and then one morning they said, okay, we can't do this anymore. And then the Swiss franc jumped by like 25%. I think back then it was a 96 standard deviation move.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“And when they do that, effectively they're, I would argue, destroying the Japanese economy, manufacturing sector. I mean, you have like, you know, 30, 40% PPI in Japan at this point. And yes, there's still very little inflation in Japan, right? It's about 2%. So PPI producer price rises by 35%, consumer price rise by 2%. What does that tell you about margin? Complete squeeze. And keep in mind that Japan operates in kind of traditional economy stuff like they are very manufacturing heavy automotive. So it's not like they have these huge margins to start with. So I don't think they can absorb this price shock, especially when the yen is falling by 10% every month. So my idea is that at some point there will be tremendous amount of pressure from the business sector.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Well, that is That is a pretty crazy one, a risky one, but I feel like at some point something has to happen in Japan. They can't keep this thing going. As you were mentioning before, Japan is the odd man out, right? I mean, the entire world is hiking and then the BOJ just keeps that forward guidance and then this yield curve. That caps the yield on JGBs at 25 basis points.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“So, what we're seeing is the actual price of the two instruments that I was mentioning before, meaning the three-year change in the price level, this is the free change in oil prices. And you can see the correlation is extremely high. It's about 85%. When the market is actually telling us that these two things will diverge. One will go down by 30%, the other one will go up by 12%. My point is that it's never happened before. And I don't think it's going to happen in the future again.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Correct, correct, correct. Yeah, correct. But again, even I, in inflation bull and all that stuff, if we do have $70 oil prices. It's going to be deflationary.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Okay, so what the CPA market tells you that the price level in three years, I don't know the number as of today, but I think it was around 4% when I wrote the report. So a three-year inflation swap was at 4% CPI, meaning that the price level, the consumer price index is going to be about 12% higher in three years than it is now. price level is going to be 12 higher oil prices going to be 30 lower one of these things is not right for me it's it's the oil price that's more wrong but The point is you can buy a contract on both of these things right now and bet on the conversions of these two prices.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“I'm talking level here. You're correct, correct. The inflation is a rate of change. I'm talking the CPI, the actual index.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Can probably, and I think that's the smart way to put an inflation trade without getting whipsawed if something unexpected happens.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Different nature of the futures market for oil and CPI. So for the oil market, the futures market is an inventory management tool, basically. The shape of the future curve gives incentive to producers and refiners to move production back and forth in time. So now we have this very tight market because of the Russian invasion, because of very strong demand, because of OPEC not supplying. So there's a huge premium for spot. delivery and as a result you have a back quarry curve. So that's really what it means. It doesn't mean that the market expects that oil prices are going to fall to $70 in three years that this is the case. It's just reflects that things are tight right now. Conversely, if you get the swap market, it's a pure financial investment. So it does reflect just expectation. So I think that's the reason why this mispricing exists is because the two curves do different things. And as an investor.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Either we'll have $70 oil in 2025 or we'll have 5% inflation, but we cannot have them both if all does fall, the CPI will follow. I mean, if you look at the correlation between oil prices and the CPI, it's extremely high. So, the idea was you go, you buy the cheap stuff, sell the expensive stuff, so you will go long oil in the futures market, three-year-old contract. And then against that, you'd sell an inflation swap for the same tenor, the same maturity. So that way what you're really betting is that, I mean, in my view, both of these things will go up. Oil prices will go up, inflation will go up, but you're really betting on a mispricing between the two. And I think it really speaks to the...”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“But the first one to me is probably the more interesting because it's I can't wrap my head around it. It's very simple. It's the idea is, and it's Does me explain the train the trade is you have this huge backwardation in the ore market, meaning that if you buy oil in six months, it's cheaper than it is today. In 12 months it's even cheaper and so forth. So at the time when I was writing the report, and I don't know how these numbers have changed, but you could buy oil in three years at a 30% discount. go along an all future in 2025 if spot was 100 you could get it at 70 that's that's what the prices was when i wrote the report um now if you did the same thing with a cpi swap um and that's gonna up quite a bit i'm sure the market was pricing you know we'd have about five percent average inflation over the past three years and and what i when i look at these two numbers i one of them has to be wrong”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“To your point about saying, oh, we're not as bad as Brazil, we actually are. I'd say at least Brazil, the Bank of Brazil, has raised its rates to, what, 13%. The US is still at 1.5% and the highest the market is implying we'll get to is 4%. And that's well, you know, that's not even half of what inflation is now. And the U.S., the Fed, is by far the most hawkest central bank in the developed world. ECB way behind the curve, not even trying. Bank of Japan is in La La Land. Their currency is going bananas. I guess let's give some folks some actionable trades. You have five. And by the way, Vincent, I didn't actually introduce you in my introduction. I should have. You're the head of global macro at Stonex. And I think your reports and your writing are my favorite to read. I do read a lot of these reports. I'd say you are a fantastic writer.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“US in the next two years. I mean, this is nowhere in no swap shorts, no yield curve. You cannot find that You look at it objectively, I'm not saying it's going to happen, but I think there's a huge, there's a large probability that it does happen because the policy reaction to this inflationary shock has been pretty much Latin American populist, you know, blame it on foreigners, deny it, call it transitory, and then respond to it by making the problem worse, like, oh, you know, I'm going to tax all companies because it makes too much money or I'm going to give people checks so they can buy more oil because there's an oil shortage. I mean, the level of, I don't know, economic illiteracy that I see Not that different from what you would see in a standard emerging country facing a balance of payment crisis”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“And then inflation keeps happening. And then the government starts announcing that they're going to send checks to people in order to fight the inflation, which we are seeing in the Netherlands. People are getting, I think, 600 euros one-time payment in the US. We're talking about a gas tax holiday in France is a whole inflation. So basically the idea is there's too much inflation. Let's give people money so they can cope with inflation. Or you have some senators that are coming up with price gouging bills and blaming it on speculators. This to me feels very Brazilian or Turkish. So why are we so sure that if we do the exact same thing as the Turks or the Brazilians, we will have a different outcome? Why are we completely still excluding the possibility that we have double digit inflation in the US?”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Worry, it's going to be transitory. Then, when transitory did not work anymore, then they said, oh, it's because of that other foreign actor. That's speculator there is the one who did it. Not me. It's bad actors outside. Then you have finally the central banker comes out with the Ministry of Finance and says, no, no, I'm really committed but doesn't say anything real. Just repeat, or I'm going to defend my currency. And, you know, price stability is very important to me, but doesn't give you anything concrete to, you know.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Yes, tell that to the people who are trying to fill up gas. But yeah, so we had this view that it cannot happen here. But let's say you know nothing about the country that I'm talking about. Nothing at all. I just describe a fictional country and so in this fictional country, the central bank has been, you know, keeping rates at zero for a long time. The government sent stimulus worth 20% of GDP after asking people to stay at home for many months creating Hayvalk in global supply chain and all that stuff. And then, you know, inflation finally happens a year later, as would be expected. But then the central banker in that country told you that inflation actually did not exist and spent a full year denying the reality that inflation, then when that reality became undeniable that central bankers,”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Germany does not have The way we're recording on a day that I think we had 33.5% producer price index increase in Germany two months in a row on June 20th. Yeah, oh, but don't you know, Vincent, don't you know Europe does not have Europe is deflationary because of demographics. Vincent, don't you know this? Come on.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“We have this view that it cannot happen here. Like, okay, now people agree that there is inflation. I feel I'm a lot. I was a lonely voice in the desert a year ago and now I'm, but still, there is the view that inflation is an emerging, it's a Turkish thing. It happens in Brazil or in Peru or serious countries do not have inflation. And it's like an elaboration.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“I'm going to buy now because it's going to be more expensive six months later. I'm going to ask for my big pay raise now. I'm going to ask my contractor, I'm going to delay my payment to my supplier. I'm going to ask, but I'm going to try to invoice faster. And that's how inflationary spiral kick in. And yes, you look at loan growth. It's finally picking up. Credit card usage also increasing. And again, these are things that the Fed cannot control. And typically this is how inflationary spiral develop. I mean, I... I still think”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Lot of Americans still think, oh, when they hear transitory They think that prices are going to normalize. And not even the central bank has fing that. All that is saying is going to keep today's prices. Like, you know, when they said, no, no, no. We're now going back to 2019. Like today's crazy prices are going to be, we're hoping to just keep them where they are. But I think there's this kind of misconception when central bankers talk about we're going to control inflation and we're going to ensure price stability. What people hear is like, oh, this is a weird thing and then it's going to go back to the way it was before. No, no, no. We keep to these prices just no longer increase. So that's anyway. Where was I going? Oh, yes, inflation is inflationary. So at the beginning, you start to like the beginning of inflation, I think you wait for prices to come down. But if it lasts for a year and now it's been a year, pretty much a year of about 3, 4 percent inflation, you start to bake that in and you have the exact opposite reaction, which is, oh, instead of waiting.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“No, I mean, we had this conversation in the last podcast, you know, inflation is inflationary. We talked about velocity and precisely definition. Central bank does not create money, commercial banks do central banks create bank reserves and then banking sector disposes of these bank reserves in whatever based on the demand we really, that's at the end of the day. And yes, we talked about this as a risk that I think that's the psychology of inflation. Again, inflation is inflationary. If you see high prices for a long time, you start changing your behavior. At first, and I think we are right in the middle here At first, you delay. I see it with used cars. Like, oh, well, it's not a good time to buy. Prices are crazy. I'm just going to wait for it. And I still see and feel a lot of that. By the way, I wish...”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Yes, and Vincent, there are a lot of brilliant people who correctly point out, and it took me a while to realize that they were right, that quantitative easing and low rates does not necessarily create inflation. It really only simulates the financial system. And you can put a trillion dollars of bank reserves on JPMorgan's balance sheet, but you can't force them to lend. And they realize that. But what these people don't realize is that taking away the bank reserves of JPMorgan, you can't force JPMorgan to not lend. And bank lending, which is stagnated for over a decade, is off the frickin' charts Tell us about that”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“I agree. I mean, going back to that 08, I mean, remember before that, right? Every meeting for four years. 25 bip to meeting all the way from near zero after 9-11 to 525 at the peak and still So, yeah, you get hikes every meeting from 2004 to late 2007, and then inflation doesn't peak 12 months after the fact. And now here we are. We think that I think that was the, that's the narrative that the... Bolts, I don't like that term. The bulls thing, but whatever. It's like, oh, okay, we're getting a lot of fame now, but it's going to be short, you know, like basically we front-load the hikes, right? We're going to get this huge 75 bips increases, but then it's going to slow. That's again, that's not how it works. Now, maybe it's going to be different. Maybe, but I would like someone to explain to me how that's going to be different”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Deflation for at least six to 12 months. Do you know what I mean? So inflation is baked into the cake. And let's say deflation, a deflation cake is going to take many, many months, perhaps years To put into the oven.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Yeah, I'm just looking at a chart of year over year inflation during the 2000s. And I didn't know this, that the peak was July of 2008 at 5.6% two months before the collapse of Lehman Brothers. That just goes to show how much of a lag it takes for things to happen. Like the financial system was already in great distress a year before the peak of inflation now. So that would mean that the huge financial tightening we've seen, the, you know, some people are very dramatic about the financial tightening about the rise in risk-free rates and the fall in equity prices. I think that it's only been a moderate tightening, to be frank. I think we still have quite ways to go. But that just goes to show that let's say HYG goes to $60 and triple C corporate spreads are trading at 25%.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“And that's what needs to be solved. And I think when I see economists or strategists looking at the closing price of the Nasdaq or the shape of the yield curve or 30-year mortgage rates, these are derivatives upon derivative of inflation. This is the They're not looking, the manifestation of something, but I think what you need to look at is a labor market. You need to get some slack in the labor market. And until that happens, I don't care what the shape of yield curve is, prices are not going to go down.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Now, does that mean that we have to go all the way to 8%? Probably not, but the notion that you can stop 8.5% inflation with a 4% terminal rate. Is not backed by history Anywhere ever. And the third thought that I have going to your, if I had a DOM every time someone told me, you know, the FedFund rates cannot go higher. Not because it's painful that it's not going to happen, like that, you know, the world doesn't care about you feelings. Yes, it will be painful to see, you know, much higher rates. We've seen it already. Doesn't mean that prices are going too slow because the closing price, the NASDAQ is low. To me, again, the problem about disinflation is at this point it's mostly labor market. We have a shortage of workers”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Correct, correct. It's 100 minus three month LIBOR. So what I would point to is that the long end is basically the same. So to me, tells me that transitory is not dead. It's just that we redefine what transitory means. We said it's going to be longer. It's going to be deeper. But at the end of the day, it's going to be transitory. So that narrative hasn't changed. And I think that needs to change, if I'm right about kind of the secular demographic, productivity driven inflation, that Longen needs to move. The other thought I would have on this is... Yeah, 4%, but we have 8.5% inflation. So I cannot think of a single case in history where you got inflation, inflation went out of control, which is where we are today. Inflation is out of control. And then you got back under control without positive real rates.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Very good explanation. So clearly big shift, right? We priced more hike, higher terminal rate. But so the new line is the orange line, the green line is one month ago. Which again, sorry, means a high level.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“And you'd be in a much better position to pay your gas bill. Couple thoughts here. Okay, yes, it's gone up a bit, four percent. I mean, this is the euro dollar curve, which kind of indicates the big shift after last week, the 275 basis point back on the table. So this is the orange line really shows you what you're talking about.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Very risky, which most likely will be proven wrong. But one of the risks you can think of is that inflation does slow in February, March of 2023, and then the Fed declares victory, kind of like reminds me George W. Bush in 2003, takes over Baghdad and then has this mission accomplished banner and it sits on the and declares victory and of course there was not a victory. I think there's a risk that the Fed does the same thing and that the inflation genie is not back in the ball and then it comes back with vengeance in two to three years the exact same white happened in the 70s.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“Episode in the 70s, like the recession of 1974, 1975. So you had the All Sharks. You have the dollar 71, then the All Shock 73. Inflation goes for the roof, then oil prices go down as the oil shock works out, the Fed cuts. Inflation does slow, but it only falls to by memory, I think, around 4%. And then it starts picking back up. And I think that, again, we are really projecting far. And I think one of the hard things, one of the things that's difficult of inflation makes projecting harder because you have a higher uncertainty premium. And that's something you feel if you go to like Argentina or Venezuela or places that have high inflation. People don't talk. They don't say in five years. They don't say in 10 years. Business transaction in five months. So inflation kind of shortened your ability to forecast the future. So here I'm doing something.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT
“A crisis at the Fed. And that's just based on base effect. After that, yeah, you should have very rapid disinflation in starting December to February, December 2022 to February 2023, because this is when we had a huge spike in oil prices following the Russian invasion. So I think that's what the Fed honesty is probably pinning its hopes on is just you just have to wait out and then it's like an air pocket, right? Because the base effect are going to come off of the energy sector. My concern is back then your core is going to be at like 5, you know, 6%, your wages, your rents, all that stuff. I mean, it's already, most of it's actually already there. And I don't think it's going to deflate as quickly as they expect. So I think higher than consensus, higher for longer as well. I think it plays out like the 70s where there were disinfecting.”
2022-06-23 · Forward Guidance · A Profit Recession Is Coming, An End To Inflation Is Not | Vincent Deluard · IDENTIFIED FROM THE TRANSCRIPT