1 00:00:10,080 --> 00:00:13,720 Speaker 1: Hello, and welcome to another edition of the Odd Lots Podcast. 2 00:00:13,800 --> 00:00:17,959 Speaker 1: I'm Tracy Alloway and I'm Joe Wisnal So, Joe, I 3 00:00:18,040 --> 00:00:22,040 Speaker 1: have a little bit of a confession to make. Okay, 4 00:00:22,079 --> 00:00:25,840 Speaker 1: I'm listening. Okay, I'm glad you're taking it seriously. That 5 00:00:25,880 --> 00:00:29,400 Speaker 1: makes me feel that wasn't facetious. I'm listening. I want 6 00:00:29,400 --> 00:00:32,320 Speaker 1: to know what it is. Yeah, Okay. So I know 7 00:00:32,479 --> 00:00:35,200 Speaker 1: I'm supposed to be covering and writing about markets, but 8 00:00:35,400 --> 00:00:39,960 Speaker 1: there is one market that I actually really dislike covering 9 00:00:40,040 --> 00:00:44,800 Speaker 1: and writing about. That's interesting. I actually don't Sometimes I 10 00:00:44,800 --> 00:00:47,880 Speaker 1: can guess where you're going with things, but in this case, 11 00:00:48,000 --> 00:00:49,640 Speaker 1: I actually didn't know there was an area of the 12 00:00:49,680 --> 00:00:54,280 Speaker 1: market you didn't like. Good, Okay, me feigning enthusiasm has 13 00:00:54,320 --> 00:00:59,080 Speaker 1: been working. The market is the currency market, the FX market. Yeah. 14 00:00:59,200 --> 00:01:02,120 Speaker 1: And the reason I find it so frustrating, I guess 15 00:01:02,120 --> 00:01:05,680 Speaker 1: from an analytical or a news writing perspective is whenever 16 00:01:05,959 --> 00:01:10,080 Speaker 1: anything is happening, like the dollar is gaining or sterling 17 00:01:10,200 --> 00:01:15,880 Speaker 1: is falling, everyone starts to point out that it's relative, like, oh, 18 00:01:15,920 --> 00:01:19,560 Speaker 1: the dollar is only up against the euro and sterling 19 00:01:19,640 --> 00:01:23,200 Speaker 1: is only down against the Japanese yen, and It just 20 00:01:23,280 --> 00:01:26,319 Speaker 1: drives me crazy because I find it so difficult to 21 00:01:26,480 --> 00:01:30,800 Speaker 1: pinpoint individual trends that might be affecting currencies when everyone 22 00:01:30,880 --> 00:01:34,600 Speaker 1: views it through this prism of relativity. That's so funny 23 00:01:34,600 --> 00:01:37,600 Speaker 1: because I really like currencies and I really like covering it, 24 00:01:37,680 --> 00:01:39,959 Speaker 1: and I like it for the exact same reason, because 25 00:01:40,040 --> 00:01:42,960 Speaker 1: I see it as like this puzzle of trying to 26 00:01:43,160 --> 00:01:46,440 Speaker 1: isolate out what's really going on. So you can say, Okay, 27 00:01:46,680 --> 00:01:50,320 Speaker 1: the Euro is rallying, but it's not rallying against the dollar, 28 00:01:51,080 --> 00:01:53,640 Speaker 1: and it is railing against the pound, but it's sort 29 00:01:53,680 --> 00:01:56,720 Speaker 1: of rout flat against the end. And so what I 30 00:01:56,800 --> 00:01:59,800 Speaker 1: like about is precisely this reason that it leads to 31 00:01:59,840 --> 00:02:02,720 Speaker 1: the sort of like sort of like impure deductive reasoning 32 00:02:02,720 --> 00:02:05,280 Speaker 1: where you look at all the different relationships and then 33 00:02:05,320 --> 00:02:08,000 Speaker 1: you can sort of isolate, Okay, what is the variable 34 00:02:08,040 --> 00:02:09,800 Speaker 1: the Troy moving? And I sort of see it like 35 00:02:09,840 --> 00:02:13,280 Speaker 1: a puzzle. But you know, I say, I never knew 36 00:02:13,280 --> 00:02:17,480 Speaker 1: this about you before, that one man's trash is another 37 00:02:17,480 --> 00:02:19,680 Speaker 1: man's treasure. I guess, um, Well, look, I think I 38 00:02:19,720 --> 00:02:23,600 Speaker 1: have a way to make us both happy on this episode. 39 00:02:23,600 --> 00:02:26,840 Speaker 1: Then we're going to talk about the currency market, and 40 00:02:27,280 --> 00:02:29,680 Speaker 1: I'm personally going to try to get a better handle 41 00:02:29,720 --> 00:02:32,240 Speaker 1: on it, and I guess you are going to revel 42 00:02:32,440 --> 00:02:36,400 Speaker 1: in the intellectual puzzle nous of it all, So it'll 43 00:02:36,440 --> 00:02:38,960 Speaker 1: be fun for both of us. And to be fair, 44 00:02:39,120 --> 00:02:41,200 Speaker 1: there's a lot I want to know too, because I 45 00:02:41,240 --> 00:02:43,320 Speaker 1: think I have some idea and I like this sort 46 00:02:43,320 --> 00:02:46,080 Speaker 1: of all the relativity and the zero sumness of it all. 47 00:02:46,360 --> 00:02:48,440 Speaker 1: But I have to admit that, like, I don't really 48 00:02:48,600 --> 00:02:52,720 Speaker 1: know how someone a currency trader just sort of looks 49 00:02:52,760 --> 00:02:56,040 Speaker 1: at the world and starts to figure out what to 50 00:02:56,120 --> 00:02:58,480 Speaker 1: buy and what to sell. So even though I'm into it, 51 00:02:58,600 --> 00:03:01,320 Speaker 1: I kind of feel like I'm starting from scratch in 52 00:03:01,400 --> 00:03:04,320 Speaker 1: terms of really understanding it. Well, you're in luck because 53 00:03:04,320 --> 00:03:16,800 Speaker 1: we have a currency trader. Without further ado, then let's 54 00:03:16,840 --> 00:03:21,000 Speaker 1: bring on our guest for this episode. It is Ken Vexler, 55 00:03:21,240 --> 00:03:24,920 Speaker 1: the c i O of Acumen Management. Ken, thanks for 56 00:03:24,960 --> 00:03:27,359 Speaker 1: coming on, Thank you guys, good to be here. Did 57 00:03:27,400 --> 00:03:32,400 Speaker 1: I upset you with my intro or no? No, it 58 00:03:32,440 --> 00:03:34,359 Speaker 1: was Actually it was quite interesting listening to the two 59 00:03:34,720 --> 00:03:37,520 Speaker 1: back and forth on that because it's exactly that I mean, 60 00:03:37,520 --> 00:03:41,920 Speaker 1: it's it's a double edged sword, so in very rare instances, 61 00:03:42,280 --> 00:03:45,920 Speaker 1: is the currency market about absolutes, and in those instances 62 00:03:46,400 --> 00:03:48,560 Speaker 1: you're either along for the ride or you're chasing the 63 00:03:48,560 --> 00:03:51,520 Speaker 1: train that's already left. Um so. And on the other hand, 64 00:03:51,560 --> 00:03:54,160 Speaker 1: it's it's, as Joe pointed out, it is a puzzle, 65 00:03:54,240 --> 00:03:56,680 Speaker 1: and frankly, sometimes it's a puzzle where you just want 66 00:03:56,680 --> 00:03:58,120 Speaker 1: to pick it up and throw it off the table 67 00:03:58,560 --> 00:04:01,520 Speaker 1: and start all over again. But yeah, I mean, no, 68 00:04:01,920 --> 00:04:05,640 Speaker 1: you haven't upset me. So Ken, what is it? You know? 69 00:04:05,680 --> 00:04:07,560 Speaker 1: What is it that you do? I mean, I wanna 70 00:04:07,680 --> 00:04:09,720 Speaker 1: in a little bit, I want to talk about the 71 00:04:09,760 --> 00:04:14,160 Speaker 1: state of the currency markets over are currently and what 72 00:04:14,440 --> 00:04:17,000 Speaker 1: how different currencies are doing. But in terms of what 73 00:04:17,080 --> 00:04:19,599 Speaker 1: you do on a day to day basis, how do 74 00:04:19,640 --> 00:04:25,640 Speaker 1: you begin the process of identifying potential trades? Look, I 75 00:04:25,680 --> 00:04:28,320 Speaker 1: suppose in based terms, it's an ongoing process and one 76 00:04:28,360 --> 00:04:30,640 Speaker 1: that has been ongoing for well as long as I've 77 00:04:30,640 --> 00:04:32,800 Speaker 1: been in the market, which is near on twenty two ideas, 78 00:04:33,400 --> 00:04:36,760 Speaker 1: And it's a function of I mean, look, obviously different 79 00:04:36,800 --> 00:04:38,720 Speaker 1: people approach it in different ways. But for me, for 80 00:04:38,760 --> 00:04:42,279 Speaker 1: me personally, it's it's all about price section. It's all 81 00:04:42,320 --> 00:04:47,760 Speaker 1: about understanding fundamental macroeconomic drivers and movers and as as 82 00:04:47,880 --> 00:04:50,880 Speaker 1: Nathin as cliche as that sounds on the price side 83 00:04:50,880 --> 00:04:53,120 Speaker 1: of things, it literally means being set in front of 84 00:04:53,160 --> 00:04:56,599 Speaker 1: a machine, in this instance to Bloomberg and just watching 85 00:04:56,640 --> 00:04:59,160 Speaker 1: things tick for tick, keeping an understanding or an eye 86 00:04:59,200 --> 00:05:03,400 Speaker 1: on data that's coming out, headlines and the reaction function 87 00:05:03,480 --> 00:05:07,320 Speaker 1: of the prices of various crosses to that very news. Now, 88 00:05:07,440 --> 00:05:10,880 Speaker 1: does something react positively, negatively? Does it react at all? 89 00:05:11,400 --> 00:05:13,240 Speaker 1: How does it react? What does it do? What are 90 00:05:13,279 --> 00:05:16,040 Speaker 1: the points or the price points that it then travels 91 00:05:16,040 --> 00:05:18,240 Speaker 1: to on the back of the news, How long if 92 00:05:18,240 --> 00:05:22,400 Speaker 1: it all, does it revert once that news flash supposedly 93 00:05:22,480 --> 00:05:26,000 Speaker 1: or data point has passed. So that and that's something 94 00:05:26,040 --> 00:05:29,120 Speaker 1: that you know. That's that's memory training. That's a case 95 00:05:29,160 --> 00:05:32,920 Speaker 1: of understanding or remembering that certain levels makes sense at 96 00:05:32,960 --> 00:05:38,280 Speaker 1: certain times, and invariably the market will revert to those levels. 97 00:05:38,360 --> 00:05:39,880 Speaker 1: And it's then a case of what does it do 98 00:05:40,040 --> 00:05:41,880 Speaker 1: once it gets there and why did it get there 99 00:05:41,880 --> 00:05:43,800 Speaker 1: in the first place. Was it a piece of news, 100 00:05:43,800 --> 00:05:47,560 Speaker 1: a data point, better, worse, etcetera. So my day revolves 101 00:05:47,600 --> 00:05:50,320 Speaker 1: around understanding what if anything is out on the data 102 00:05:50,880 --> 00:05:54,559 Speaker 1: slate on any given day, what the previous data points 103 00:05:54,560 --> 00:05:57,960 Speaker 1: and the sid that particular data series look like what's 104 00:05:58,000 --> 00:06:00,920 Speaker 1: expected by the market. And also and this, and this 105 00:06:01,000 --> 00:06:03,719 Speaker 1: is a bit that you never really get a firm 106 00:06:03,960 --> 00:06:06,839 Speaker 1: grasp of because there's no real metric by which to 107 00:06:06,880 --> 00:06:09,720 Speaker 1: gauge it. It's a case of understanding how the market 108 00:06:10,320 --> 00:06:14,120 Speaker 1: is positioned, understanding what the what the predominant narrative is, 109 00:06:14,640 --> 00:06:17,920 Speaker 1: how the market has potential positioned itself around that narrative 110 00:06:17,960 --> 00:06:20,160 Speaker 1: as a brought in to that narrative as it is 111 00:06:20,200 --> 00:06:23,560 Speaker 1: it excessively long, excessively short? Is there a squeeze it's 112 00:06:23,600 --> 00:06:26,400 Speaker 1: likely to come when things reverse? And what could cause 113 00:06:26,400 --> 00:06:30,040 Speaker 1: that squeeze and the like. So it's it's all encompassing 114 00:06:30,200 --> 00:06:32,800 Speaker 1: um and there's no you know, there's no set template 115 00:06:32,880 --> 00:06:34,960 Speaker 1: to say, okay, well you do a B and C 116 00:06:35,520 --> 00:06:38,000 Speaker 1: and therefore x, y and z will come to fruition. 117 00:06:38,320 --> 00:06:40,960 Speaker 1: There's a lot going on, a lot of moving parts. 118 00:06:41,000 --> 00:06:44,680 Speaker 1: So how do you actually keep track of those moving 119 00:06:44,800 --> 00:06:48,160 Speaker 1: parts and form your thesis once you catch on to 120 00:06:48,320 --> 00:06:51,480 Speaker 1: a sort of fundamental macro trend, like, can you give 121 00:06:51,560 --> 00:06:56,840 Speaker 1: us an example using a real world event? Sure, I 122 00:06:56,880 --> 00:07:00,440 Speaker 1: suppose the best example would be in its It's fairly 123 00:07:00,480 --> 00:07:03,440 Speaker 1: prominent obviously based on what certainly this country is going 124 00:07:03,440 --> 00:07:06,359 Speaker 1: through in the last eight and odd months would be Brexit. 125 00:07:06,560 --> 00:07:09,160 Speaker 1: So at the very beginning, if not actually the tail 126 00:07:09,279 --> 00:07:14,000 Speaker 1: end of twenty fifteen and suddenly beginning of um, obviously 127 00:07:14,080 --> 00:07:16,320 Speaker 1: we knew that there was there was a hint that 128 00:07:16,320 --> 00:07:18,840 Speaker 1: there would be a referendum announced and and all the 129 00:07:18,880 --> 00:07:21,840 Speaker 1: implications thereof, but it was only sort of in the 130 00:07:21,840 --> 00:07:25,239 Speaker 1: early parts of December where for one of one reason 131 00:07:25,320 --> 00:07:27,840 Speaker 1: or another, the market started picking up and there were 132 00:07:27,840 --> 00:07:31,120 Speaker 1: headlines coming out of a specific date for the referendum, 133 00:07:31,160 --> 00:07:33,120 Speaker 1: not just the fact that conceptually there would be one, 134 00:07:33,400 --> 00:07:36,520 Speaker 1: but there was a date outlined and you know, any 135 00:07:36,520 --> 00:07:39,600 Speaker 1: minute now would be announced as a consequence UM. And 136 00:07:39,640 --> 00:07:42,520 Speaker 1: at that point it sort of dawned upon me that 137 00:07:42,960 --> 00:07:45,200 Speaker 1: while in the back of people's minds there might be 138 00:07:45,240 --> 00:07:48,560 Speaker 1: the idea that a referendum might be held and and 139 00:07:48,640 --> 00:07:51,080 Speaker 1: you know, whatever ensues on the back of that, no 140 00:07:51,120 --> 00:07:53,760 Speaker 1: one had actually started thinking about it. And for me, 141 00:07:53,840 --> 00:07:55,640 Speaker 1: the trigger point was that all of a sudden, out 142 00:07:55,680 --> 00:07:58,200 Speaker 1: of literally out of left field, there was now a 143 00:07:58,360 --> 00:08:00,800 Speaker 1: firm date as to when that, for random was held. 144 00:08:01,120 --> 00:08:03,960 Speaker 1: At that point there was no real bias in terms 145 00:08:03,960 --> 00:08:07,200 Speaker 1: of positioning for the sterling bit net long or net short. 146 00:08:07,640 --> 00:08:11,280 Speaker 1: The year was winding down, Um, the Scottish referendum was 147 00:08:11,440 --> 00:08:14,600 Speaker 1: relatively fresh in people's minds still, and there was there 148 00:08:14,640 --> 00:08:17,480 Speaker 1: was a fair bit of sort of complacency about it. 149 00:08:17,520 --> 00:08:19,000 Speaker 1: But for me it was a case it will hang 150 00:08:19,040 --> 00:08:21,720 Speaker 1: on all of a sudden. We're about two weeks Christmas 151 00:08:21,720 --> 00:08:24,280 Speaker 1: and they're talking about a specific date. So that got 152 00:08:24,320 --> 00:08:27,600 Speaker 1: me to start thinking about, you know what, what could 153 00:08:27,640 --> 00:08:30,600 Speaker 1: this mean for Sterling? How is the market position, if 154 00:08:30,640 --> 00:08:32,800 Speaker 1: at all, and more to the point, how would I 155 00:08:32,840 --> 00:08:35,480 Speaker 1: like to best express that view in the in the 156 00:08:35,520 --> 00:08:38,960 Speaker 1: coming what ended up being six months before the actual referendum, 157 00:08:39,080 --> 00:08:41,080 Speaker 1: so to that end, and this is where sort of 158 00:08:41,400 --> 00:08:46,360 Speaker 1: the relativism of f X trading comes to play. Um, 159 00:08:46,400 --> 00:08:49,760 Speaker 1: I started looking around for Okay, well, my base case 160 00:08:50,000 --> 00:08:52,240 Speaker 1: is that it will be a close run thing. When 161 00:08:52,240 --> 00:08:55,440 Speaker 1: the referendum does come to play, people are or the 162 00:08:55,440 --> 00:08:57,200 Speaker 1: market is probably not going to really be able to 163 00:08:57,280 --> 00:09:01,000 Speaker 1: price it too accurately, as it were, and so there's 164 00:09:01,000 --> 00:09:03,480 Speaker 1: going to be a fair bit of tail hedging both 165 00:09:03,520 --> 00:09:06,960 Speaker 1: sides of the equation. But on net, just the sheer 166 00:09:07,040 --> 00:09:10,640 Speaker 1: nature of political uncertainty, and as the rhetoric and as 167 00:09:10,679 --> 00:09:13,240 Speaker 1: the noise and whatever else got louder as we got 168 00:09:13,240 --> 00:09:16,240 Speaker 1: ever closer to the actual referendum. All of that would 169 00:09:16,600 --> 00:09:19,199 Speaker 1: just by definition be sterling negative, no matter what the 170 00:09:19,240 --> 00:09:21,600 Speaker 1: outcome of the referendum was going to be. So with 171 00:09:21,679 --> 00:09:24,559 Speaker 1: that as my base case, that there would be some 172 00:09:24,720 --> 00:09:27,760 Speaker 1: sterling negativity creeping into the market as we got closer, 173 00:09:28,080 --> 00:09:31,080 Speaker 1: it was then a case of finding what to best 174 00:09:31,160 --> 00:09:35,320 Speaker 1: express that negativity against. For me personally, unless I've got 175 00:09:35,320 --> 00:09:38,400 Speaker 1: an outright view on the US dollar, I don't like 176 00:09:38,520 --> 00:09:41,240 Speaker 1: to trade a leg against it. I always look for 177 00:09:41,559 --> 00:09:43,880 Speaker 1: something else because the dollar, by nature, there's a lot 178 00:09:43,880 --> 00:09:46,480 Speaker 1: of noises. It's got its own stories. It's the global 179 00:09:46,559 --> 00:09:48,880 Speaker 1: reserve currency, and there's a lot that goes into place. 180 00:09:48,880 --> 00:09:50,760 Speaker 1: So you might be right on the first leg, but 181 00:09:50,880 --> 00:09:53,319 Speaker 1: you might not get a chance to express it particularly 182 00:09:53,320 --> 00:09:55,760 Speaker 1: well because of all the associated noise. So I was 183 00:09:55,800 --> 00:09:59,520 Speaker 1: looking at other stuff and I came across the Aussie. 184 00:09:59,800 --> 00:10:03,839 Speaker 1: So for me, the trade became selling Sterling and buying AUSSI. Now, 185 00:10:03,840 --> 00:10:05,920 Speaker 1: the reason the Aussie was of interest to me was 186 00:10:05,960 --> 00:10:08,480 Speaker 1: because it was pretty much in a sweet spot. It 187 00:10:08,520 --> 00:10:12,040 Speaker 1: was trading around sort of the I think seventy three 188 00:10:12,120 --> 00:10:16,520 Speaker 1: seventy four mark against the greenback, and for me, fair 189 00:10:16,600 --> 00:10:19,880 Speaker 1: value if such a concept even exists anymore. INFX for 190 00:10:19,920 --> 00:10:22,040 Speaker 1: the Aussie was around the seventy five marks, So for me, 191 00:10:22,720 --> 00:10:24,560 Speaker 1: the Aussie still had a bit of room to strengthen 192 00:10:24,640 --> 00:10:29,080 Speaker 1: and at the very least had no real cause to weaken, 193 00:10:29,320 --> 00:10:32,280 Speaker 1: you know, much beyond where it was, so it would 194 00:10:32,280 --> 00:10:35,640 Speaker 1: be my rock, as it were, versus a currency, the Sterling, 195 00:10:35,679 --> 00:10:38,280 Speaker 1: which I saw had a lot of room to depreciate 196 00:10:38,280 --> 00:10:40,560 Speaker 1: in the coming months. So as a consequence, I looked 197 00:10:40,600 --> 00:10:43,880 Speaker 1: to sell the Sterling against the Aussie and a trade 198 00:10:44,240 --> 00:10:47,440 Speaker 1: or a position that I thought it would take honestly 199 00:10:47,960 --> 00:10:51,480 Speaker 1: north of about two months to materialize. The vast majority 200 00:10:51,520 --> 00:10:54,120 Speaker 1: of what I had initially projected as a potential move 201 00:10:54,200 --> 00:10:57,400 Speaker 1: for it had pretty much come to fruition by either 202 00:10:57,440 --> 00:10:59,839 Speaker 1: the first of the second week of February, because the 203 00:11:00,120 --> 00:11:03,920 Speaker 1: initial flashpoints of the thesis that no one had really 204 00:11:03,960 --> 00:11:10,439 Speaker 1: been talking about Brexit or whatever the implications or the referendum, 205 00:11:10,800 --> 00:11:13,160 Speaker 1: All of a sudden in the tail end of January 206 00:11:13,400 --> 00:11:16,320 Speaker 1: the date was firmly announced, and everything that sort of 207 00:11:16,720 --> 00:11:19,680 Speaker 1: kicked off from there started to really weigh down on 208 00:11:19,840 --> 00:11:22,600 Speaker 1: the on the Sterling. The odds you appreciated a little bit, 209 00:11:22,600 --> 00:11:24,480 Speaker 1: which obviously gave the whole thing a bit of a kick. 210 00:11:25,040 --> 00:11:27,040 Speaker 1: And then from there it was just one way traffic. 211 00:11:27,360 --> 00:11:30,040 Speaker 1: But then as we got closer to the referendum, and 212 00:11:30,080 --> 00:11:34,920 Speaker 1: suddenly post fact, Tracy, your your notion of relative versus 213 00:11:34,960 --> 00:11:38,439 Speaker 1: absolute came there because I mean, the Sterling just got 214 00:11:38,440 --> 00:11:41,400 Speaker 1: hammered against literally everything on the planet. So that was, 215 00:11:41,440 --> 00:11:44,120 Speaker 1: you know, in absolute terms. But as far as a 216 00:11:44,200 --> 00:11:47,480 Speaker 1: real world example of you know, how my sort of 217 00:11:47,480 --> 00:11:49,760 Speaker 1: mind works, as far as looking for stuff, that's probably 218 00:11:50,200 --> 00:11:52,480 Speaker 1: you know, the best example I can come to at 219 00:11:52,480 --> 00:11:55,480 Speaker 1: the moment. I love that example. You know, it's sort 220 00:11:55,480 --> 00:11:58,720 Speaker 1: of speaking to this question of isolating the trade you 221 00:11:58,760 --> 00:12:00,400 Speaker 1: want to make, and I thought that was a very 222 00:12:00,400 --> 00:12:03,560 Speaker 1: important idea, that sort of choosing getting both legs of 223 00:12:03,559 --> 00:12:05,920 Speaker 1: the trade right. And so you know, you could get 224 00:12:05,920 --> 00:12:08,400 Speaker 1: it right again on the sterling side. But if something, 225 00:12:08,480 --> 00:12:10,679 Speaker 1: you know, if the dollar had strengthened. Of course, we 226 00:12:10,720 --> 00:12:13,400 Speaker 1: had our own election in twenty sixteen, so you don't 227 00:12:13,440 --> 00:12:15,280 Speaker 1: really know what's going to happen there. I think that's 228 00:12:15,280 --> 00:12:20,560 Speaker 1: a crucial thing that really differentiates effects trading from anything else. Now, 229 00:12:20,640 --> 00:12:24,280 Speaker 1: something else you said in the intro was really interesting 230 00:12:24,280 --> 00:12:26,480 Speaker 1: to me, where you sort of like talk about the 231 00:12:26,559 --> 00:12:31,800 Speaker 1: market's memory of how a specific currency tends to react 232 00:12:31,840 --> 00:12:35,520 Speaker 1: to different headlines or data points in which when it reverses. 233 00:12:35,640 --> 00:12:38,400 Speaker 1: And one thing that we've really seen a lot. I mean, 234 00:12:38,400 --> 00:12:42,160 Speaker 1: there's just been tons of sterling headlines for the last 235 00:12:42,360 --> 00:12:44,320 Speaker 1: year and a half or I guess, you know, since 236 00:12:44,360 --> 00:12:49,559 Speaker 1: since late Sometimes it's an economic data point. Sometimes it's 237 00:12:49,559 --> 00:12:54,120 Speaker 1: a headline with something going on in Theresa May's government something, 238 00:12:54,240 --> 00:12:57,719 Speaker 1: sometimes you know something. Sometimes it's something specific about the negotiations. 239 00:12:58,160 --> 00:13:01,480 Speaker 1: Are there are things that you've seen in since, you know, 240 00:13:01,880 --> 00:13:05,720 Speaker 1: in this whole Sterling saga that you've like internalized and 241 00:13:05,760 --> 00:13:08,679 Speaker 1: really gotten to have a good understanding of. Okay, it's 242 00:13:08,800 --> 00:13:12,079 Speaker 1: this type of headline, it's this type of news. This 243 00:13:12,200 --> 00:13:15,520 Speaker 1: is how the market has historically reacted to this type 244 00:13:15,520 --> 00:13:18,439 Speaker 1: of thing. Yeah, I suppose from a from a market 245 00:13:18,440 --> 00:13:22,200 Speaker 1: reaction standpoint, the my my take on it was first 246 00:13:22,240 --> 00:13:25,200 Speaker 1: and foremost against price levels. And that comes down to 247 00:13:26,160 --> 00:13:28,920 Speaker 1: for many, you know, technical analysis. Suppose for me, I 248 00:13:29,600 --> 00:13:32,920 Speaker 1: don't derive technical analysis as so many do. For me, 249 00:13:33,160 --> 00:13:36,280 Speaker 1: looking at a chart, taking all the indicators out, it's 250 00:13:36,440 --> 00:13:38,280 Speaker 1: it's just the way my brain works, it's a nice, 251 00:13:38,320 --> 00:13:41,520 Speaker 1: lovely graphical representation of what price has done. If I 252 00:13:41,559 --> 00:13:43,960 Speaker 1: want to drill down and think about why it's done that, 253 00:13:43,960 --> 00:13:46,320 Speaker 1: that's a different story. But for me, it just paints 254 00:13:46,520 --> 00:13:48,440 Speaker 1: a neat picture that I can sort of refer back to. 255 00:13:48,880 --> 00:13:51,320 Speaker 1: The market tends to remember, and it's it's sort of 256 00:13:51,320 --> 00:13:56,960 Speaker 1: behavioral psychology. Market and its participants have anchor points. The 257 00:13:57,280 --> 00:14:00,600 Speaker 1: charts for any given currency or currency pair will give 258 00:14:00,640 --> 00:14:03,320 Speaker 1: you those anchor points beautifully because you look at it 259 00:14:03,320 --> 00:14:05,720 Speaker 1: and go, okay, well, I can see that the market's 260 00:14:05,760 --> 00:14:08,840 Speaker 1: gone there there there, there's an increased likelihood that will 261 00:14:08,880 --> 00:14:11,880 Speaker 1: revert at some point to those levels. To your question 262 00:14:11,920 --> 00:14:15,800 Speaker 1: with regard how the markets reacted to various headlines and 263 00:14:15,880 --> 00:14:19,440 Speaker 1: data points or whatever else what we've seen post I 264 00:14:19,480 --> 00:14:24,359 Speaker 1: suppose after after the initial dusted settled and post referendum, 265 00:14:24,360 --> 00:14:26,360 Speaker 1: and we sort of market came to terms with the 266 00:14:26,400 --> 00:14:29,200 Speaker 1: fact that okay, this is now the new reality. All 267 00:14:29,240 --> 00:14:32,960 Speaker 1: the political stuff it's been our go and al go warfare. 268 00:14:33,560 --> 00:14:37,760 Speaker 1: I think human human traders haven't really and because frankly, 269 00:14:37,800 --> 00:14:40,320 Speaker 1: it's not their fault, it's not our fault. There's not 270 00:14:40,560 --> 00:14:44,200 Speaker 1: enough you know, substance in any of these headlines or 271 00:14:44,240 --> 00:14:47,000 Speaker 1: any progress in any of these negotiations that we've seen 272 00:14:47,040 --> 00:14:50,960 Speaker 1: so far to disseminate any real value and form a 273 00:14:50,960 --> 00:14:52,680 Speaker 1: firm view that it's going to be a soft Brexit, 274 00:14:52,920 --> 00:14:55,560 Speaker 1: heart Brexit, it's going to be a transition period of 275 00:14:55,600 --> 00:14:58,640 Speaker 1: two years, one year, what does it mean post fact, etcetera. 276 00:14:58,680 --> 00:15:02,680 Speaker 1: What's the bill going to be? So the headlines ironically 277 00:15:02,880 --> 00:15:06,760 Speaker 1: have have only sought to confuse rather than give clarity. 278 00:15:07,200 --> 00:15:09,600 Speaker 1: And as far as the economic data points, it's been 279 00:15:09,600 --> 00:15:13,520 Speaker 1: a mixed bag because the prevailing narratives straight after the 280 00:15:13,560 --> 00:15:16,360 Speaker 1: referendument and the decision was well, it's all going to 281 00:15:16,400 --> 00:15:18,880 Speaker 1: hell in a hand but handbasket, and the data is 282 00:15:18,880 --> 00:15:22,800 Speaker 1: going to turn incredibly negative and increasingly so as time 283 00:15:22,880 --> 00:15:25,960 Speaker 1: wears on. The caveat to that, of course, is we 284 00:15:26,040 --> 00:15:30,680 Speaker 1: haven't left. Brexit hasn't actually technically happened, so as Marcus 285 00:15:30,760 --> 00:15:34,920 Speaker 1: generally tend to do there, they're perpetually optimistic. So spending 286 00:15:35,000 --> 00:15:38,760 Speaker 1: has carried on as per Admittedly that's been at the 287 00:15:38,760 --> 00:15:43,120 Speaker 1: cost of higher credit um and and so credit lines 288 00:15:43,160 --> 00:15:46,920 Speaker 1: have been overdrawn largely. There's been some decrease in business 289 00:15:46,920 --> 00:15:50,120 Speaker 1: done because of the uncertainty of what it means once 290 00:15:50,520 --> 00:15:53,680 Speaker 1: once we're out. So the market as a whole, with 291 00:15:53,800 --> 00:15:58,560 Speaker 1: regardless sterling, has been more about positioning than reacting to 292 00:15:58,720 --> 00:16:01,640 Speaker 1: headlines or even data point for that part. And so 293 00:16:01,960 --> 00:16:03,920 Speaker 1: I mean case in point was just the most recent 294 00:16:04,000 --> 00:16:07,440 Speaker 1: Bank of England meeting where we heard well in advance 295 00:16:08,160 --> 00:16:09,800 Speaker 1: the fact that the Bank of England was just hell 296 00:16:09,880 --> 00:16:13,200 Speaker 1: bent on raising rates. Now, within three or four days 297 00:16:13,280 --> 00:16:15,720 Speaker 1: of that retric coming out of the Bank of England, 298 00:16:16,160 --> 00:16:18,600 Speaker 1: the market went from around one nine in cable through 299 00:16:18,640 --> 00:16:21,080 Speaker 1: to about one thirty six. So the market had priced 300 00:16:21,080 --> 00:16:24,280 Speaker 1: it immediately, went long and was sitting well and truly long. 301 00:16:24,560 --> 00:16:26,560 Speaker 1: So by the time the decision came around and the 302 00:16:26,600 --> 00:16:31,040 Speaker 1: actual rates were hiked, the market sold off because there 303 00:16:31,080 --> 00:16:35,360 Speaker 1: was there was nothing more that they could buy, you know, 304 00:16:35,440 --> 00:16:38,560 Speaker 1: buy on nothing remotely interesting came out of the Bank 305 00:16:38,600 --> 00:16:40,840 Speaker 1: of England to suggest that there were more hikes to come, 306 00:16:40,880 --> 00:16:42,720 Speaker 1: that they were positive on the outlook for the economy 307 00:16:42,720 --> 00:16:44,840 Speaker 1: and the like. So there's a lot to be said 308 00:16:44,880 --> 00:16:48,600 Speaker 1: for positioning going into and in and around the data 309 00:16:48,640 --> 00:16:52,240 Speaker 1: points or even headlines, and a lot of that is 310 00:16:52,320 --> 00:16:55,400 Speaker 1: narrative focused, and whether the markets buying into a narrative 311 00:16:55,480 --> 00:17:08,920 Speaker 1: or not. Ken, I want to ask you about the 312 00:17:08,920 --> 00:17:11,560 Speaker 1: the altgo point that you just brought up, but before 313 00:17:11,560 --> 00:17:14,159 Speaker 1: I do, one more question related to the Bank of 314 00:17:14,200 --> 00:17:18,520 Speaker 1: England stuff and more broadly brexit. Um. You know, obviously, 315 00:17:18,560 --> 00:17:20,320 Speaker 1: the FX market is where we see a lot of 316 00:17:20,359 --> 00:17:23,359 Speaker 1: politics playing out. A lot of people have been pointing 317 00:17:23,359 --> 00:17:27,440 Speaker 1: out that in certain developed markets now in terms of politics, 318 00:17:27,440 --> 00:17:32,320 Speaker 1: they're looking a lot more like some of the developing markets. 319 00:17:32,359 --> 00:17:36,000 Speaker 1: So I'm just wondering from an FX perspective, does it 320 00:17:36,119 --> 00:17:38,399 Speaker 1: look like that when you look at d M currencies. 321 00:17:38,480 --> 00:17:41,920 Speaker 1: Are developed market currencies acting more like e M now? 322 00:17:42,080 --> 00:17:45,200 Speaker 1: And you know, I'm thinking about that BOE example for instance, 323 00:17:45,560 --> 00:17:48,960 Speaker 1: it's very emerging market when you raise rates and see 324 00:17:48,960 --> 00:17:53,360 Speaker 1: your currency actually fall right, Yeah, exactly, And I mean 325 00:17:53,840 --> 00:17:56,080 Speaker 1: look to your point, I think if if we are 326 00:17:56,119 --> 00:17:58,600 Speaker 1: seeing it anywhere, I'd argue that it's predominantly here in 327 00:17:58,600 --> 00:18:02,639 Speaker 1: the UK. Other other currencies and other sort of G 328 00:18:02,760 --> 00:18:05,760 Speaker 1: seven G ten currencies probably aren't experiencing the same level 329 00:18:06,280 --> 00:18:09,359 Speaker 1: of Yeah, e mffication if you want to call it that. 330 00:18:09,800 --> 00:18:13,560 Speaker 1: And here, yeah, I mean, you've got an overriding an 331 00:18:13,640 --> 00:18:19,120 Speaker 1: ongoing political uncertainty that's driving all manner of economic facets 332 00:18:19,200 --> 00:18:21,400 Speaker 1: and and therefore also the Bank of England and their 333 00:18:21,440 --> 00:18:26,080 Speaker 1: decision process. So the consequence, if anywhere, it's predominantly probably 334 00:18:26,080 --> 00:18:28,600 Speaker 1: in the UK more than most other nations. I mean, 335 00:18:28,920 --> 00:18:31,000 Speaker 1: you know, you can argue about what's going on in 336 00:18:31,040 --> 00:18:33,560 Speaker 1: the US and the like, but you'd be hard pressed 337 00:18:33,560 --> 00:18:36,359 Speaker 1: to sort of draw a parallel to that to to 338 00:18:36,480 --> 00:18:39,440 Speaker 1: any sort of e m at the moment. But let's 339 00:18:39,480 --> 00:18:43,119 Speaker 1: talk about the US for a second. So you know, 340 00:18:43,160 --> 00:18:47,760 Speaker 1: when people talk about fair values for currencies, there are 341 00:18:47,840 --> 00:18:52,440 Speaker 1: various approaches that people take, and purchasing power parity across countries, 342 00:18:53,280 --> 00:18:56,760 Speaker 1: interest rates spread, so in theory, a country with higher 343 00:18:56,760 --> 00:19:01,480 Speaker 1: interest rates should encourage currency appreciation. You can look at 344 00:19:01,680 --> 00:19:04,720 Speaker 1: the relationship of the rates between two countries and the 345 00:19:04,760 --> 00:19:08,560 Speaker 1: historical currency pair and so forth. But there is just 346 00:19:08,600 --> 00:19:11,440 Speaker 1: a ton of politics news and one of the recurring 347 00:19:11,560 --> 00:19:15,399 Speaker 1: themes in every market we cover is this sort of 348 00:19:15,480 --> 00:19:19,280 Speaker 1: discussion about when politics matters and when it doesn't. And 349 00:19:19,320 --> 00:19:21,720 Speaker 1: it does seem like there's you know, everyone's lives are 350 00:19:21,720 --> 00:19:24,879 Speaker 1: just consumed by the politics headlines. You obviously experience it 351 00:19:24,920 --> 00:19:26,840 Speaker 1: in the UK, but I would say it might even 352 00:19:26,840 --> 00:19:30,120 Speaker 1: be more so in the US, where you know, our 353 00:19:30,119 --> 00:19:35,560 Speaker 1: president makes major headlines daily. Has this changed the game 354 00:19:35,840 --> 00:19:37,760 Speaker 1: or is it the kind of thing where the trick 355 00:19:37,960 --> 00:19:40,680 Speaker 1: is to just focus on the stuff that works and 356 00:19:40,880 --> 00:19:44,200 Speaker 1: to tune politics out. It's not that it's changed the game, 357 00:19:44,240 --> 00:19:47,440 Speaker 1: because I mean, ultimately, politics have been around for well 358 00:19:47,480 --> 00:19:50,320 Speaker 1: as long as markets and curetcies have been around. It's 359 00:19:50,359 --> 00:19:53,960 Speaker 1: just that in racent times we've seen the noise that 360 00:19:54,080 --> 00:19:57,159 Speaker 1: emanates from the political sphere become I allowed. Now, that 361 00:19:57,240 --> 00:19:59,520 Speaker 1: doesn't mean that there's any more substance. It's just means 362 00:19:59,520 --> 00:20:03,119 Speaker 1: that there's that signal is a lot louder as a consequence, 363 00:20:03,160 --> 00:20:06,240 Speaker 1: it just means, at least for me, drowning a lot 364 00:20:06,280 --> 00:20:09,240 Speaker 1: of that out, not not disregarding it entirely, obviously keeping 365 00:20:09,240 --> 00:20:14,000 Speaker 1: abreast of the developments and the implications of those developments, 366 00:20:14,040 --> 00:20:20,040 Speaker 1: but also not necessarily buying wholeheartedly into into those headlines, 367 00:20:20,040 --> 00:20:21,920 Speaker 1: because I mean, you know, we saw during the euro 368 00:20:22,000 --> 00:20:24,600 Speaker 1: crisis way back when that you know, you would have 369 00:20:24,800 --> 00:20:27,880 Speaker 1: a headline come out and then literally thirty minutes later 370 00:20:28,320 --> 00:20:31,679 Speaker 1: a headline coming out refuting that from the same source, 371 00:20:31,800 --> 00:20:34,679 Speaker 1: and and so on and so forth, and that for 372 00:20:34,760 --> 00:20:37,240 Speaker 1: me personally still burns fairly bryant in the memory. And 373 00:20:37,280 --> 00:20:40,680 Speaker 1: also it lends itself to to me believing that, Yeah, 374 00:20:40,720 --> 00:20:42,359 Speaker 1: there's just a lot of noise. So if you start 375 00:20:42,359 --> 00:20:44,800 Speaker 1: buying into all of that, you're only going to end 376 00:20:44,880 --> 00:20:47,359 Speaker 1: up running around in circles and not really get to 377 00:20:47,359 --> 00:20:50,679 Speaker 1: the bottom of forming a view, a thesis or you know, 378 00:20:51,040 --> 00:20:53,879 Speaker 1: or anything tangible on the back of it. Okay, so 379 00:20:53,920 --> 00:20:55,600 Speaker 1: there's a lot more noise than there used to be 380 00:20:55,640 --> 00:20:59,160 Speaker 1: in terms of actual news flow. What about the market 381 00:20:59,320 --> 00:21:04,720 Speaker 1: structure itself? How has the world of effects trading actually 382 00:21:04,800 --> 00:21:09,320 Speaker 1: changed during your career. You mentioned, of course algorithms UM 383 00:21:09,520 --> 00:21:14,159 Speaker 1: lots of handwringing over high frequency trading in equities, but 384 00:21:14,240 --> 00:21:17,120 Speaker 1: of course there have been some noises about h FT 385 00:21:17,320 --> 00:21:21,760 Speaker 1: and machines in effects as well. Yeah, I mean, look 386 00:21:22,080 --> 00:21:24,440 Speaker 1: how it's changed over my career. I mean where it's 387 00:21:24,520 --> 00:21:27,399 Speaker 1: changed massively obviously, so we won't go back into ancient history. 388 00:21:27,480 --> 00:21:30,320 Speaker 1: But look, I suppose in recent years what I've personally 389 00:21:30,400 --> 00:21:34,239 Speaker 1: noticed is a real death of liquidity UM, and a 390 00:21:34,240 --> 00:21:38,800 Speaker 1: lot of that stems around bank prop desks and money 391 00:21:38,880 --> 00:21:44,800 Speaker 1: made market makers rather being shut down or limits significantly decreased. 392 00:21:44,840 --> 00:21:46,760 Speaker 1: A lot of a lot of the banks that were 393 00:21:47,240 --> 00:21:49,720 Speaker 1: large providers of liquidity, as well as some of the 394 00:21:50,560 --> 00:21:54,000 Speaker 1: larger hedge funds because ultimately they also were a source 395 00:21:54,000 --> 00:21:58,199 Speaker 1: of liquidity, have either turned into family offices or perhaps 396 00:21:58,240 --> 00:22:02,480 Speaker 1: shut down reverted clients funds. The banks have internalized a 397 00:22:02,520 --> 00:22:05,119 Speaker 1: lot of their flows, so there are no more prompt desks, 398 00:22:05,119 --> 00:22:08,480 Speaker 1: so there are no more real market makers as it were, 399 00:22:08,600 --> 00:22:10,760 Speaker 1: as I was back in the day, and a lot 400 00:22:10,800 --> 00:22:14,080 Speaker 1: of it is just driven by quoting a price, getting 401 00:22:14,119 --> 00:22:17,040 Speaker 1: the deal, and then backing it out immediately. So if 402 00:22:17,080 --> 00:22:19,680 Speaker 1: you're not as a bank or even say a hedge 403 00:22:19,680 --> 00:22:23,159 Speaker 1: fund or whoever it may be prepared to actively go 404 00:22:23,200 --> 00:22:25,239 Speaker 1: into the market and hang out a price, get hit 405 00:22:25,320 --> 00:22:28,600 Speaker 1: on that price, and then deal with the consequences, then 406 00:22:28,680 --> 00:22:33,560 Speaker 1: you're you're decreasing the liquidity pool and you are really 407 00:22:33,600 --> 00:22:37,439 Speaker 1: taking something away from the market. As a consequence, vol 408 00:22:37,840 --> 00:22:42,119 Speaker 1: is incredibly depressed. Um. It was interesting actually the beginning 409 00:22:42,160 --> 00:22:45,320 Speaker 1: of this year, probably the first certainly the first few weeks, 410 00:22:45,320 --> 00:22:47,760 Speaker 1: but actually maybe even the first couple of months, I 411 00:22:48,320 --> 00:22:51,160 Speaker 1: had stumbled across something that was quite interesting that intra 412 00:22:51,280 --> 00:22:54,600 Speaker 1: day realized voal on say the G seven G Tenpez 413 00:22:55,040 --> 00:22:58,720 Speaker 1: was trading with probably anything north of about a fourteen handle. 414 00:22:59,600 --> 00:23:03,679 Speaker 1: Real eised or rather implied weekly vol was south of 415 00:23:03,720 --> 00:23:06,600 Speaker 1: about an eight handle. So basically you'd have these intra 416 00:23:06,720 --> 00:23:09,119 Speaker 1: day spikes and god knows what else, probably a lot 417 00:23:09,160 --> 00:23:11,359 Speaker 1: a lot of it caused by like a liquidity. But 418 00:23:11,400 --> 00:23:12,560 Speaker 1: then if you look at it at the end of 419 00:23:12,600 --> 00:23:15,600 Speaker 1: the week, you pretty much started where or rather you 420 00:23:15,680 --> 00:23:19,720 Speaker 1: finished where you started. So that makes things very messy. 421 00:23:19,880 --> 00:23:23,359 Speaker 1: That messes with the minds of people like me in 422 00:23:23,440 --> 00:23:26,840 Speaker 1: terms of how to position, how to deploy risk, where 423 00:23:26,840 --> 00:23:29,280 Speaker 1: to put stops, and how to size in and out 424 00:23:29,320 --> 00:23:32,280 Speaker 1: of trade. So that that really has made things, i 425 00:23:32,320 --> 00:23:35,440 Speaker 1: suppose interesting, the polite way to put it, it's certainly 426 00:23:35,440 --> 00:23:38,639 Speaker 1: a lot more difficult and has changed the playing field 427 00:23:38,680 --> 00:23:40,760 Speaker 1: if if you will, does that speak to what you 428 00:23:40,800 --> 00:23:44,680 Speaker 1: were saying earlier about the prevalence of noise? Yeah, very much, so, 429 00:23:45,000 --> 00:23:48,440 Speaker 1: very much so, because if I'm set there as as 430 00:23:48,640 --> 00:23:51,960 Speaker 1: we spoke about earlier earlier, rather short of sterling Ozzy, 431 00:23:52,000 --> 00:23:54,920 Speaker 1: and all of a sudden headline comes out that will 432 00:23:55,040 --> 00:23:57,600 Speaker 1: know the referendums off or things are going to be 433 00:23:57,720 --> 00:24:00,680 Speaker 1: rosy or whatever, And yet inherently you know that that's 434 00:24:00,800 --> 00:24:04,000 Speaker 1: just nonsense, and the market spikes, Well, you're either carry 435 00:24:04,000 --> 00:24:06,560 Speaker 1: it out on that spike even though forty minutes later 436 00:24:06,560 --> 00:24:09,000 Speaker 1: it's going to reverse, or you just, you know, have 437 00:24:09,119 --> 00:24:11,800 Speaker 1: to hold your metal and think, Okay, well this this 438 00:24:11,960 --> 00:24:15,120 Speaker 1: is just noise, and you know, so some truth will 439 00:24:15,200 --> 00:24:17,600 Speaker 1: come out of it within the next X amount of 440 00:24:17,600 --> 00:24:20,480 Speaker 1: time and things will revert. So yeah, I mean it 441 00:24:21,080 --> 00:24:23,560 Speaker 1: really it makes things more interesting. Let's put it that way. 442 00:24:24,040 --> 00:24:26,679 Speaker 1: Can I have I have a question. I feel kind 443 00:24:26,680 --> 00:24:30,439 Speaker 1: of bad asking it, so forgive me in advance, but 444 00:24:30,480 --> 00:24:35,320 Speaker 1: I have to bitcoin. I would like I would like 445 00:24:35,359 --> 00:24:41,679 Speaker 1: a currency traders take on bitcoin. Yeah, let me I suppose. 446 00:24:41,720 --> 00:24:45,040 Speaker 1: Let me preface my answer with telling you this, I'm old, 447 00:24:45,359 --> 00:24:47,960 Speaker 1: and I've been at this for a very long time 448 00:24:48,600 --> 00:24:51,600 Speaker 1: and answ you know your previous questions. How things change. 449 00:24:52,040 --> 00:24:55,919 Speaker 1: There's now something called bitcoin and cryptocurrency and stuff like 450 00:24:55,960 --> 00:25:00,600 Speaker 1: that and hashtags and I don't know. I I mean, 451 00:25:00,600 --> 00:25:02,840 Speaker 1: that's the honest answer. I don't know. I don't have 452 00:25:03,080 --> 00:25:08,240 Speaker 1: enough of a I suppose, just an inherent curiosity to 453 00:25:08,359 --> 00:25:11,160 Speaker 1: find out more than I already know, which is nothing. 454 00:25:11,520 --> 00:25:16,160 Speaker 1: And as a consequence, my interest levels in exploring this. Yeah, 455 00:25:16,240 --> 00:25:18,200 Speaker 1: I mean, they're a virging on negative to be honest, 456 00:25:18,640 --> 00:25:22,000 Speaker 1: I respect that answer because I feel like everyone these 457 00:25:22,080 --> 00:25:25,159 Speaker 1: days has to have some really strongly held view. Um 458 00:25:25,200 --> 00:25:29,800 Speaker 1: here's my question. So we know what a success in 459 00:25:29,960 --> 00:25:33,720 Speaker 1: theory looks like for a stock manager, and most of 460 00:25:33,720 --> 00:25:35,680 Speaker 1: them want to beat the S and P five hundred 461 00:25:35,880 --> 00:25:39,400 Speaker 1: or some index or maybe a hedge fund. Their goal 462 00:25:39,680 --> 00:25:43,280 Speaker 1: is to provide some you know, risk adjusted return that 463 00:25:43,320 --> 00:25:46,800 Speaker 1: looks really good over a complete cycle or whatever. What 464 00:25:47,000 --> 00:25:54,040 Speaker 1: defines success for a currency trader like yourself? Good question. Um, yeah, Look, 465 00:25:54,119 --> 00:25:57,000 Speaker 1: ultimately we're all in a you know, irrespective of the 466 00:25:57,040 --> 00:26:00,280 Speaker 1: underlying instrument, We're all in it to make money generates 467 00:26:00,280 --> 00:26:03,960 Speaker 1: for clients and the like. So ultimately, the higher, the 468 00:26:04,000 --> 00:26:06,640 Speaker 1: better the alpha, the better the result, and the more 469 00:26:06,680 --> 00:26:11,359 Speaker 1: satisfied you become for me. And this sort of also 470 00:26:11,400 --> 00:26:14,520 Speaker 1: goes back to what we initially started speaking about in 471 00:26:14,640 --> 00:26:19,720 Speaker 1: terms of relative trades or the relativity of effex. I 472 00:26:19,760 --> 00:26:23,359 Speaker 1: deliberately try and find legs to trade against it will 473 00:26:24,440 --> 00:26:26,160 Speaker 1: allow me to sleep at night. Now I don't get 474 00:26:26,200 --> 00:26:28,040 Speaker 1: much sleep at night as it is, and and it's 475 00:26:28,080 --> 00:26:29,520 Speaker 1: a little bit more than it used to be. But 476 00:26:30,000 --> 00:26:32,600 Speaker 1: what I mean by that is that I look for 477 00:26:32,920 --> 00:26:37,480 Speaker 1: volatility adjusted returns. So I will look to pick what 478 00:26:37,640 --> 00:26:40,800 Speaker 1: is conceivably, say a boring leg to express a view against, 479 00:26:41,119 --> 00:26:44,200 Speaker 1: as opposed to something that within three hours might generate 480 00:26:44,880 --> 00:26:48,879 Speaker 1: an outsized three four or five seven percent return, but 481 00:26:49,040 --> 00:26:51,960 Speaker 1: over you know, instead, I'd look for something that over 482 00:26:52,600 --> 00:26:55,000 Speaker 1: two months will give me the same. But it just 483 00:26:55,040 --> 00:26:58,639 Speaker 1: means that I'm not exposing myself to just inane market 484 00:26:58,720 --> 00:27:02,040 Speaker 1: movements because you know, the North Korea decides to launch 485 00:27:02,040 --> 00:27:05,360 Speaker 1: a nuke or or whatever it may be. So yeah, 486 00:27:05,440 --> 00:27:07,960 Speaker 1: I mean that's for me, that's how I'm as a 487 00:27:08,119 --> 00:27:10,760 Speaker 1: first and foremost you know, alpha generation. Secondly, if I 488 00:27:10,800 --> 00:27:16,680 Speaker 1: can generate volatility adjusted or just smoothed returns. The other 489 00:27:16,720 --> 00:27:18,080 Speaker 1: side of it is, of course, if you look at 490 00:27:18,280 --> 00:27:23,840 Speaker 1: which I do regularly, the Parker Global Index, that's just nonsense. 491 00:27:23,880 --> 00:27:27,159 Speaker 1: I mean, FX dedicated funds, you know, all what seven 492 00:27:27,160 --> 00:27:30,520 Speaker 1: of them that even exist anymore these days are returning 493 00:27:30,600 --> 00:27:34,200 Speaker 1: maybe north on a good year, maybe north of about 494 00:27:34,200 --> 00:27:38,080 Speaker 1: two and a half percent um, And that's that's that's 495 00:27:38,080 --> 00:27:41,160 Speaker 1: not amazing really, especially when you look at obviously everything 496 00:27:41,160 --> 00:27:43,760 Speaker 1: else that's going on, not not least to which the SNP. 497 00:27:44,480 --> 00:27:47,640 Speaker 1: But again, it's all about choosing what your benchmark is 498 00:27:47,760 --> 00:27:52,359 Speaker 1: and and how you deem success to look like. Alright, 499 00:27:52,560 --> 00:27:56,040 Speaker 1: Ken vexlor Ce, io of Acumen Management, thanks so much 500 00:27:56,040 --> 00:28:11,880 Speaker 1: for joining us. Bene pleasure. Thank you so Joe. Amazingly 501 00:28:12,119 --> 00:28:14,480 Speaker 1: After that, I feel I feel a little bit better 502 00:28:14,520 --> 00:28:17,440 Speaker 1: about currencies. So are you gonna Are you going to 503 00:28:17,560 --> 00:28:21,480 Speaker 1: approach currency stories with enthusiasm now or do you still 504 00:28:21,560 --> 00:28:25,399 Speaker 1: retain your skepticism? How about this? I'll give it a try. 505 00:28:25,880 --> 00:28:28,440 Speaker 1: I will try. But the first person who tells me 506 00:28:28,560 --> 00:28:33,120 Speaker 1: that my story about sterling is actually about um sterling 507 00:28:33,240 --> 00:28:37,040 Speaker 1: against yen or something else is going to be in trouble. 508 00:28:37,640 --> 00:28:39,600 Speaker 1: They're going to be on your wrong side. They're gonna 509 00:28:39,680 --> 00:28:42,880 Speaker 1: get it. I thought that was incredibly useful, the whole 510 00:28:43,080 --> 00:28:46,960 Speaker 1: currency frame or the sterling framework that he used, and 511 00:28:47,080 --> 00:28:50,320 Speaker 1: you know, thinking about from event okay, we get this 512 00:28:50,600 --> 00:28:54,520 Speaker 1: announcement of a referendum to then start okay, well we 513 00:28:54,560 --> 00:28:57,640 Speaker 1: need to express a view, and then well what is 514 00:28:57,680 --> 00:29:00,680 Speaker 1: the currency against which you have to express that view. 515 00:29:01,000 --> 00:29:03,440 Speaker 1: I found that to be a very sort of refreshing 516 00:29:04,200 --> 00:29:07,080 Speaker 1: explanation of how you go about, you know, just beginning 517 00:29:07,080 --> 00:29:09,960 Speaker 1: to think about a trade. Yeah, and to your earlier point, 518 00:29:10,040 --> 00:29:13,720 Speaker 1: it does sound like a really interesting intellectual exercise to 519 00:29:13,760 --> 00:29:17,320 Speaker 1: try to identify that other currency to trade against. The 520 00:29:17,360 --> 00:29:20,360 Speaker 1: other thing I liked was the idea of, you know, 521 00:29:20,640 --> 00:29:24,440 Speaker 1: currencies eventually reverting to a sort of longer term trend, 522 00:29:24,600 --> 00:29:28,240 Speaker 1: that there's some sort of anchor out there that can 523 00:29:28,280 --> 00:29:32,040 Speaker 1: help you make sense of the world. I think that's 524 00:29:32,120 --> 00:29:35,000 Speaker 1: useful for me, especially because when I think FX, I think, 525 00:29:35,080 --> 00:29:38,920 Speaker 1: you know, even though volatility is quite low by historical standards, 526 00:29:39,000 --> 00:29:41,360 Speaker 1: it's still a pretty volatile asset, and things tend to 527 00:29:41,440 --> 00:29:44,320 Speaker 1: jump around, at least in the short term. Yeah, and 528 00:29:44,360 --> 00:29:47,600 Speaker 1: that was particularly interesting, and I hadn't realized that until 529 00:29:47,640 --> 00:29:51,880 Speaker 1: he said it, about the gap between intra day volatility 530 00:29:52,320 --> 00:29:56,480 Speaker 1: and slightly longer term volatility. And so the idea that, yeah, 531 00:29:56,480 --> 00:29:59,680 Speaker 1: if you look at a big picture chart, volatility looks dormant, 532 00:30:00,080 --> 00:30:02,640 Speaker 1: but then you get these days where some headline causes 533 00:30:02,680 --> 00:30:04,800 Speaker 1: the currency to whip saw and you might not be 534 00:30:04,840 --> 00:30:07,560 Speaker 1: able to hold your trade even a few more days. 535 00:30:07,560 --> 00:30:10,760 Speaker 1: You might just get totally taken out of it. And 536 00:30:11,000 --> 00:30:14,920 Speaker 1: that's that that being an interesting expression of the times, 537 00:30:15,000 --> 00:30:17,680 Speaker 1: which we certainly in all of the markets we cover 538 00:30:17,760 --> 00:30:20,520 Speaker 1: on a day to day basis, were always marveling at 539 00:30:20,520 --> 00:30:23,360 Speaker 1: the gap between the headlines that are out there which 540 00:30:23,400 --> 00:30:27,040 Speaker 1: seemed quite provocative and the lack of volatility, and how 541 00:30:27,080 --> 00:30:30,280 Speaker 1: at least in the currency market that sort of disparity 542 00:30:30,320 --> 00:30:32,560 Speaker 1: really shows up in the data. Yeah, so at least 543 00:30:32,600 --> 00:30:35,240 Speaker 1: the currency market is kind of behaving as one might 544 00:30:35,360 --> 00:30:38,200 Speaker 1: expect it to for brief periods of time, and then 545 00:30:38,200 --> 00:30:40,640 Speaker 1: it goes back to not mattering any Yeah, that's the 546 00:30:40,680 --> 00:30:44,239 Speaker 1: caveat all. Right, Well, this has been another edition of 547 00:30:44,280 --> 00:30:47,520 Speaker 1: the Odd Lots Podcast. I'm Tracy Alloway. You can follow 548 00:30:47,520 --> 00:30:50,800 Speaker 1: me at Tracy Alloway and I'm Joe Why Isn't Thal? 549 00:30:50,880 --> 00:30:54,440 Speaker 1: You could follow me on Twitter at the Stalwart and 550 00:30:54,520 --> 00:30:58,360 Speaker 1: you can follow Ken on Twitter at Ken Vexler. But 551 00:30:58,520 --> 00:31:02,400 Speaker 1: a we should warn you. He might use profanity, be 552 00:31:02,800 --> 00:31:05,680 Speaker 1: he might use slang that you're gonna have to use 553 00:31:05,720 --> 00:31:08,680 Speaker 1: a dictionary to look up and see. His Twitter account 554 00:31:08,760 --> 00:31:11,320 Speaker 1: is locked, so if you try to follow him, it's 555 00:31:11,360 --> 00:31:13,240 Speaker 1: just a roll of the dice weather he'll let you, 556 00:31:13,280 --> 00:31:15,520 Speaker 1: but hopefully he does because he's great on Twitter. So 557 00:31:15,680 --> 00:31:17,880 Speaker 1: check him out. It's worth it. It's worth it for 558 00:31:18,000 --> 00:31:21,880 Speaker 1: the it's worth Ittorian insults alone. Give it a shot, 559 00:31:22,360 --> 00:31:26,120 Speaker 1: and don't forget to follow our producer Sarah Patterson on 560 00:31:26,160 --> 00:31:29,800 Speaker 1: Twitter at Sarah patt With two Teas, Thanks for listening,