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Speaker 1: Hello, and welcomes to what goes up a weekly markets podcast.

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Speaker 1: My name is Mike Reagan. I'm a senior editor at Bloomberg.

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Speaker 1: My colleague Vildata Hirich is off on yet another fabulous vacation.

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Speaker 1: I'm sure we'll hear all about it next week, but

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Speaker 1: this week on the show, Well, for years, shorting bonds

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Speaker 1: was a terrible trade, so bad that one researcher has

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Speaker 1: referred to it as a trade that looked like it

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Speaker 1: would work only when pigs fly. Well, look out above,

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Speaker 1: because anyone who had the conviction to bet against the

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Speaker 1: bull market in bonds has had a great year this year.

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Speaker 1: I suppose we should have asked the hog farmer we

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Speaker 1: had on last week for his take on the flying pigs.

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Speaker 1: But we've got the perfect guests this week to talk

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Speaker 1: about shorting bonds and whether it's not too late to

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Speaker 1: get in on that trade. Her name is Katie Kaminski.

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Speaker 1: She is the chief research strategists and portfolio manager at

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Speaker 1: Alpha Simplex Group. Can you welcome to the show, hihike,

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Speaker 1: Thanks for having me. Why don't we start Katie? Just

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Speaker 1: for those who aren't very familiar with Alpha Simplex, Uh,

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Speaker 1: when you talk a little bit about the firm, Uh,

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Speaker 1: you know sort of what its strategies are, and I

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Speaker 1: know that notion of adaptive markets hypothesis is very important,

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Speaker 1: if you can talk a little bit about that, just

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Speaker 1: to give us sort of the background of where you're

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Speaker 1: coming from. Yes, Alpha Simplex is a quantitative investment manager

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Speaker 1: who focuses on systematic trading strategies. In particular, we apply

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Speaker 1: UM rules based and UM quantitative based approaches to trade

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Speaker 1: in the markets. So in particular we follow the futures

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Speaker 1: markets and we have been are one of our largest

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Speaker 1: strategies as managed futures, which is a trend falling strategy

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Speaker 1: using a pure, really systematic process. So of course trendfling

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Speaker 1: is an exciting strategy because it's easy to explain but

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Speaker 1: is a little complex to implement. So we buy things

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Speaker 1: when they're going up and we sell things that they're

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Speaker 1: going down, and we do it in a way that's

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Speaker 1: very systematic. And so when it comes to thinking about

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Speaker 1: the adapted markets hypothesis, and the idea is that you

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Speaker 1: want to build systems and processes that adapt with markets

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Speaker 1: as they change to find opportunities. And so what that

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Speaker 1: means is that our models are looking at what's working now,

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Speaker 1: not sort of sticking to sort of theory or what

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Speaker 1: makes sense because of some narrative. And that's particularly important now. Um,

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Speaker 1: if you look at a year like this year, I

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Speaker 1: mean really a lot of things that have worked in

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Speaker 1: the past aren't working, and so being able to adapt

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Speaker 1: to that is really important. Yeah. Absolutely, And I know

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Speaker 1: the managed features mutual funds having a tremendous here, it's

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Speaker 1: up like thirty percent or something like that. Is that mainly, um,

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Speaker 1: due to having the right call on Bob Runs or

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Speaker 1: is it? Are there other explanations behind it too? What

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Speaker 1: was the secret secret sauce this year for for having

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Speaker 1: such a good year? So, I wish I could say

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Speaker 1: it was one thing. It's been multiple. One of the

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Speaker 1: best trades this year has been shorting bonds. Another great

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Speaker 1: trade has been being long energies, especially in the first

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Speaker 1: part of the year, and more recently, we've also seen

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Speaker 1: tremendous opportunities in currency markets. As you've seen the US

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Speaker 1: dollar really sort of you know, skyrocket in its in

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Speaker 1: its strength rolled to to other currencies. So what that

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Speaker 1: kind of shows you it's not really sort of a

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Speaker 1: one trick pony it's not one as a class. It's

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Speaker 1: really about adjusting to this current macro environment and using

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Speaker 1: the information that we're seeing in market moves to adjust

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Speaker 1: to positioning, which in many historical context is seems complicated,

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Speaker 1: but actually in this environment makes a lot of sense,

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Speaker 1: especially from a macro view. Absolutely well. I feel like

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Speaker 1: if you had, you know, asked a discretionary macro UH

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Speaker 1: fund manager UM, in what world would you be long

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Speaker 1: both the dollar and oil? I think their head would

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Speaker 1: have exploded. But I guess that kind of gets to

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Speaker 1: the whole notion of adapting with the markets. Yeah, exactly,

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Speaker 1: And I think you brought up the bonds and let's

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Speaker 1: talk about that because that's fun um before, and we

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Speaker 1: actually wrote a paper on shorting bonds recently because it

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Speaker 1: is so sort of out of the scope of most

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Speaker 1: investors that I talked to. If I asked a group

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Speaker 1: of people, how many of you think that rates are

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Speaker 1: going to go up, they'll all raise their hands. But

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Speaker 1: if you ask them how many of you are willing

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Speaker 1: to short bonds or have shorted bonds, nobody does. And

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Speaker 1: that kind of highlights the fact that most of us

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Speaker 1: are used to this idea that we only go long bonds.

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Speaker 1: That bonds always help us. They're sort of like are

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Speaker 1: tried and true safety trade. And so for the sixty

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Speaker 1: forty and the typical investor, this year is sort of

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Speaker 1: left them standing there going, I don't know to do UM,

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Speaker 1: where someone like us who was really looking at what

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Speaker 1: are the strategic tactical opportunities UM in the short run,

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Speaker 1: and that's a fantastic trade, even if it's uncomfortable from

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Speaker 1: sort of a historical perspective. UM, it's a strategy that

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Speaker 1: hasn't worked since So you know, think about that. That's

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Speaker 1: that's a long time. Yeah, absolutely, And so in managed futures,

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Speaker 1: it's this is mostly shirting treasury futures, I imagine was

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Speaker 1: that the main so in the futures markets. What's great

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Speaker 1: is that futures markets have grown substantially throughout the years

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Speaker 1: and now there's a very large range of different futures

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Speaker 1: contracts that you can trade, whether it's the guilt in

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Speaker 1: the UK or U S treasuries or also other government

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Speaker 1: bonds globally. So there's actually a pretty large range of

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Speaker 1: liquid futures contracts out there that many investors can use

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Speaker 1: as a way to take a position short bonds UM

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Speaker 1: as an example, right, And I'm curious, you know how

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Speaker 1: sort of fast reacting trend following can be, because obviously

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Speaker 1: we started the year with bonds doing terrible, yields going

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Speaker 1: up UM. Then there was, you know, an interruption in

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Speaker 1: that yields came back down over the summer quite a bit. UM.

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Speaker 1: Are you able to sort of ride both ends of

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Speaker 1: that trend or is it is it more important what

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Speaker 1: the long term trend is. So treadfully is a pretty

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Speaker 1: adaptive strategy and it's relatively quick in terms of relative

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Speaker 1: positioning to long term investors. But what we saw this

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Speaker 1: year is exactly what you're saying, is that there was

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Speaker 1: different macro themes that were evolving over the course of

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Speaker 1: the year. So in the first quarter we saw inflation

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Speaker 1: rising rates as a theme that manifests itself across the

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Speaker 1: long commodities and short fixed income. This particular trade man

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Speaker 1: sort of shifted to a short bond and also long

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Speaker 1: dollar trade later in the year as commodity started to dissipate,

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Speaker 1: so we saw that sort of positioning and views on

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Speaker 1: commodities moved much more to that recession versus non recession environment.

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Speaker 1: And then in June, we saw sort of the markets

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Speaker 1: made a pivot, as you suggested, where volatility increased, cross

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Speaker 1: asset correlations increased, and sort of a general sentiment that

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Speaker 1: this themes were in some sense consolidating UH came into

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Speaker 1: the market and you started to see sort of a

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Speaker 1: tremendous de grossing of some of those positioning that you

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Speaker 1: saw earlier this year. And then we started to see

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Speaker 1: a pivot this month and last month back to what

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Speaker 1: we saw earlier this year. And I think some of

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Speaker 1: that comes with the fact that the central bankers have

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Speaker 1: remained steady, which has basically said, you know, this pivot

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Speaker 1: towards I think this is over is a little preemptive.

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Speaker 1: I think it's time to wait a little bit to see,

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Speaker 1: you know, how we really do deal with this inflation

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Speaker 1: problem and how we handle things going forward, right, right,

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Speaker 1: And so you'll never try to sort of front run

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Speaker 1: the trend at all. You know, if if you're watching

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Speaker 1: drone pal speak and he says that's it, we're done

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Speaker 1: cutting UH, we're done raising interest rates, um, unless the

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Speaker 1: bond market reacts violently to at you, you're not going

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Speaker 1: to try to trade those remarks at all. I imagine

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Speaker 1: so there's a lot of noise in all of this

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Speaker 1: and you guys, you you know this better than anybody,

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Speaker 1: and that you know one day moves incorporate a lot

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Speaker 1: of noise and a lot of overreaction under reaction, and

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Speaker 1: part of what we try to do is be very

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Speaker 1: systematic and smooth and the way that react to trends

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Speaker 1: over longer horizons, so that you know, you can balance

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Speaker 1: between what is real information what is noise um. And

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Speaker 1: this is very important because over the long term, what

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Speaker 1: you'll see is that we're capturing a lot of these

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Speaker 1: macro themes that do on the margin have a lot

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Speaker 1: of noise um, and that's sort of where we're seeing

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Speaker 1: that we're not trying to sort of pick things based

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Speaker 1: on one data point. We're trying to use a lot

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Speaker 1: of data and use that data to come up with

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Speaker 1: a view on where we should be in the different

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Speaker 1: asset classes over time. Yeah, So what do you think

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Speaker 1: has the short bonds trade sort of run its course

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Speaker 1: for the years? There is there more to be had

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Speaker 1: from it in your opinion? Yes, I do. I think

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Speaker 1: the short bond trade has more legs to run, particularly

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Speaker 1: with the commentary that we saw recently with the fed

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Speaker 1: um in the recent period where they've really kind of

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Speaker 1: hold steady um. The reason is a lot of the

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Speaker 1: core problems that have driven to the point where we

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Speaker 1: are now have yet to be completely solved, and I

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Speaker 1: think we're gonna have to see inflation actually dissipate and

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Speaker 1: we're gonna have to see that we're in a situation

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Speaker 1: where things are much more stable before we can actually

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Speaker 1: call this over um. And so in that sense, I

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Speaker 1: think we could be in a rising rate environment for

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Speaker 1: some period of time, and what we'll see, what we've

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Speaker 1: seen using more longer term studies, is that we're going

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Speaker 1: to be a lot more short in fixed income if

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Speaker 1: we are in a truly secular rising rate environment then

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Speaker 1: we've been in the last forty years. And that's something

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Speaker 1: to kind of think about from an investor's perspective, and that,

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Speaker 1: you know, how do you think about your bond exposure

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Speaker 1: if we have a prolonged rising rate market for bonds? Yeah, yeah, absolutely.

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Speaker 1: I mean, as you said, something no one has really

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Speaker 1: experienced since the early nineties. I guess I think everyone thought,

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Speaker 1: you know, this was it, this is the new normal

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Speaker 1: for the bond market. So you know, on the other

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Speaker 1: side of the pandemic. UM, it seems like you're not

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Speaker 1: expecting a sort of a reversion to the to the

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Speaker 1: pre pandemic world. It's it's going to be a brave

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Speaker 1: new frontier where rising rates are are here to stay.

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Speaker 1: Is that your main thing? I mean, I think what

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Speaker 1: we've seen is that even though the narrative has shifted

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Speaker 1: over time, the core issues related to inflation need to

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Speaker 1: be solved before we can actually call it a win. UM.

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Speaker 1: And I think you see that in the markets, and

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Speaker 1: it's probably what surprising is that there is a lot

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Speaker 1: of hope. I mean, people love things to go back

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Speaker 1: to the way they were. And the truth is is,

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Speaker 1: until we can actually see that inflation is really under

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Speaker 1: control and that real rates have actually you know, gone

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Speaker 1: more positive, UM, it's gonna be hard to imagine that

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Speaker 1: someone can stab their fingers and we'll just go back

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Speaker 1: to the world we're in. And I think for us

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Speaker 1: as tactical traders, this is an interesting environment because tactical

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Speaker 1: strategies and any sort of dynamic approaches haven't worked well

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Speaker 1: until recently, because it's been very much a world where

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Speaker 1: you have this put you have you know, you know,

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Speaker 1: stocks always go up, but if they don't, then it

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Speaker 1: will get better UM. And the same with bonds, like

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Speaker 1: you know, if something goes bad, you've always got your bonds.

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Speaker 1: And I think that investors are really going to have

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Speaker 1: to grapple with the fact that it's a very different

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Speaker 1: world when we add inflation to the problem and when

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Speaker 1: we have to deal with what the impact of rising

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Speaker 1: rates has on just different asset classes and different sectors

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Speaker 1: UM in general. Yeah, you know, it's interesting. I was

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Speaker 1: looking at the Bloomberg. We start getting the survey results

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Speaker 1: trickling in for the CPI report for next week, and

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Speaker 1: the last time I checked, the consensus is for I

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Speaker 1: think month over month UM, you know, negative point one

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Speaker 1: percent a year over year eight percent in cp I,

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Speaker 1: So a little bit, you know, off of the boil

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Speaker 1: to some degree, but I'm guessing that's not mission accomplished

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Speaker 1: as far as you know, whether yields will keep going up.

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Speaker 1: It's still a high number. I mean, the differential is

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Speaker 1: still big, and I think that you're not seeing it

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Speaker 1: in the commodity markets right now, but that's pretty typical,

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Speaker 1: right so you see the commodity markets sometimes lead that

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Speaker 1: process and then inflation is very insidious. It starts to

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Speaker 1: go in different areas. So things like wage inflation and

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Speaker 1: other areas of the economy is where we have to

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Speaker 1: start looking real estates and other areas that aren't measured

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Speaker 1: in some of these core materials. They're the after effects

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Speaker 1: of that UM. And so for our view is when

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Speaker 1: we see inflation numbers back closer to their target of

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Speaker 1: two UM eight versus two is still a really big difference.

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Speaker 1: It's a long way off. But I would imagine, you know,

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Speaker 1: a lower than estimated CPI would still trigger some kind

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Speaker 1: of rally in the bond market. But I would that

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Speaker 1: just be noise, you think, not not anything that would uh,

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Speaker 1: you know, really cause you to change your thinking. No,

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Speaker 1: I'd say that, you know, we saw that this summer,

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Speaker 1: we saw recently. You know, any sign of the good

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Speaker 1: news is bad news. Bad news is good news. Situation

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Speaker 1: where anything that confirmed that things were better was actually

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Speaker 1: a good thing. Things were worse. It's a good thing

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Speaker 1: is maybe they'd stop raising raids UM And so I

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Speaker 1: think that you know, you're going to see that until

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Speaker 1: this kind of dissipates and gets under control. And I

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Speaker 1: think people like to think that things get fixed in

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Speaker 1: a second by one print. I mean that's the way

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Speaker 1: we are, Like, we love hoping and it's a great thing.

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Speaker 1: But I think in terms of understanding financial markets, sometimes

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Speaker 1: we're ready to be hopeful a little quick. Um, yeah,

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Speaker 1: how about equities? Um? You know? Were they shorting equity? Future?

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Speaker 1: Is part of what the fund did this year? Is

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Speaker 1: that part of the success? And sort of where do

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Speaker 1: we stand now? It's been such a choppy year. I mean,

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Speaker 1: long term trend down for the year, but there's been

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Speaker 1: so many little little rallies in the middle of it

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Speaker 1: are not so little, you know. The last one was

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Speaker 1: about how did you navigate through all that? You caught me?

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Speaker 1: I have to be honest, equities have been just super noisy,

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Speaker 1: and we've had almost no equity exposure. Uh. Signals and

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Speaker 1: equities have been really weak and extremely noisy. So what

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Speaker 1: that means is that there has been very very unclear

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Speaker 1: trends and equities this year, despite the fact that they're

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Speaker 1: down quite a bit. As you said, it hasn't ministrate

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Speaker 1: line um and that has been very consistent with the

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Speaker 1: idea that I don't think this is an equity story.

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Speaker 1: I think this story starts with the bond market. And

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Speaker 1: with inflation, equities is a bride product of a situation

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Speaker 1: that we're in. And that's why it's so hard to

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Speaker 1: call um because you know, we're trying what's really the

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Speaker 1: focus is inflation. It is really sort of how do

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Speaker 1: we manage that and how do we manage raising rates

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Speaker 1: and balance sheets? And I think equity is just sort

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Speaker 1: of gone back and forth in the wake of that

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Speaker 1: theme um this year. So it's been very hard to

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Speaker 1: call the equity markets and signals have been very mixed, right, right?

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Speaker 1: And how about the dollar? How how have you played

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Speaker 1: the rising dollar? I know we had a guy from

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Speaker 1: Dynamic Beta, Andrew Beer, who's they have a mant of

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Speaker 1: future c ETF that's done well too. They were very

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Speaker 1: short the end um. Is that something you guys managed

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Speaker 1: to do? So so that has been the biggest surprise

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Speaker 1: to me this year because I tend to be pessimistic

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Speaker 1: on currencies because currencies tend to rebound be somewhat range bound,

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Speaker 1: and as you know, I mean, the dollar has not

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Speaker 1: hit parody with the euro in a long time, and

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Speaker 1: so I think the biggest surprise has been that the

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Speaker 1: dollar strength and we've seen that across the board particularly

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Speaker 1: against the end but also against the Euro and also

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Speaker 1: against other core developed currencies. Just has been really really clear.

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Speaker 1: And this makes a lot of sense sex posts in

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Speaker 1: the sense that the dollar is much better positioned than

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Speaker 1: other regions based on the fight for inflation and sort

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Speaker 1: of how the central bank response has been UM. And

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Speaker 1: so I think that is really coming out in those trends,

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Speaker 1: and that you've seen that the dollar has come ahead

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Speaker 1: as the winner in this environment, um, just as a

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Speaker 1: relative positioning point as opposed to other things. I mean,

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Speaker 1: also adding into the fact that there's just less energy

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Speaker 1: dependence concerns. There are some, but they're not as severe

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Speaker 1: as a Europe. So all of these things added up

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Speaker 1: has really put the dollar in the win um for

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Speaker 1: this year, and you expect that to continue. I mean,

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Speaker 1: it seems like, you know, as long as Europe is

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Speaker 1: struggling to keep the lights on and China's you know,

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Speaker 1: locking down cities again today I saw, um, is that

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Speaker 1: dollar strength just inevitable until these issues are cleared up.

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Speaker 1: It seems to be the case, and signals in the

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Speaker 1: dollar versus other currencies have remained strong and steady despite

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Speaker 1: you know, as I said, I tend to be skeptical

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Speaker 1: in the dollar, UM, just because currencies tend to be

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Speaker 1: a little bit more complicated and more range found. But

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Speaker 1: it is really looking right now going into the winter season,

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Speaker 1: and with the news out of China that the dollar

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Speaker 1: is still very much holding its own UM, despite the

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Speaker 1: fact that it's really come quite a long ways this

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Speaker 1: year already. How about this, you know, we've seen a

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Speaker 1: pretty fierce reversal in oil over the last couple of

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Speaker 1: months to UM, I'm curious if if you've played that

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Speaker 1: at all on the fund or if it's you know,

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Speaker 1: how you see oil fitting in to to all these

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Speaker 1: other things. I mean, as you pointed out, I think

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Speaker 1: that the initial inflation impulse was was mainly from watching

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Speaker 1: the commodities markets UM. And you know now the bond

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Speaker 1: market is sort of forgotten about oil. It seems like

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Speaker 1: it's it's looking at rent and owners equivalent rent and

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Speaker 1: all the other sort of lagging drivers of inflation. How

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Speaker 1: do you see the oil developing for the rest of

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Speaker 1: the years. This downtrend something that will concern you, do

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Speaker 1: you think? So it's interesting you say that because we

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Speaker 1: saw extremely strong signals in oil all the way until

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Speaker 1: the conflict in Ukraine, and then we saw what would

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Speaker 1: be sort of a perfect situation for a trend follower,

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Speaker 1: and that oil volatility exploded, and then obviously oil went

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Speaker 1: way up in value, and that created a lot of noise,

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Speaker 1: which consolidates um your views, UM. And so we've really

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Speaker 1: seen oil stay steady and as a long view, but

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Speaker 1: much more muted UM. And so what I would think

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Speaker 1: about this is that you've typically seen this even if

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Speaker 1: you look in the seventies, during inflation cycles, commodities have

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Speaker 1: sort of up and down periods. Um. We've consolidated an

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Speaker 1: energy but we've seen some you know, but you have

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Speaker 1: to remember it's September, like September and October is kind

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Speaker 1: of in that low period before we know how serious

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Speaker 1: the energy issues are in the winter. And so I

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Speaker 1: think that that sort of to be expected that you're

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Speaker 1: going to see a little lull in energies, but they

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Speaker 1: could come roaring back um easily UM going into the

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Speaker 1: end of the year. Considering sort of that the real

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Speaker 1: problems that we had around white oil prices spiked haven't disappeared. Thus,

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Speaker 1: you know, I would say that there's a good chance

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Speaker 1: and we might see high oil prices again later this

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Speaker 1: year in energy prices in general, UM particularly going into

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Speaker 1: the winter season for north the northern hemisphere. Yeah, and

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Speaker 1: how important is Europe to that story? Do you think?

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Speaker 1: Is that is that the entire story more or less?

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Speaker 1: I mean, I think I think it's gonna be. It's

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Speaker 1: it's so complex, right because you have also demand in

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Speaker 1: China that's part of this as well. That's another factor

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Speaker 1: that's caused UM oil prices to to reduce as well.

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Speaker 1: So I think it is complex. I'm sure that you know,

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Speaker 1: given the issues with sanctions and other issues, there's going

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Speaker 1: to be some issues related to that in the winter time.

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Speaker 1: So that is one thing that is definitely a you know,

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Speaker 1: a tailwind for for energy prices to be a potential

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Speaker 1: problem later this year. But it is complex, like if

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Speaker 1: those ones are complicated, Okay, I know correlations are are

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Speaker 1: super importance to you and and alpha simplex and how

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Speaker 1: you follow trends. What are you know, I'm guessing it's

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Speaker 1: the stock treasuries correlations is the most important. But what

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Speaker 1: else you know, what shifted, uh, what's going to shift back?

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Speaker 1: You know, what sort of the lay of the land

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Speaker 1: with all the correlations you have your eye on and

376
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Speaker 1: markets across asset classes at the moment. So the biggest

377
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Speaker 1: one you hit on, and I'll talk about the others

378
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Speaker 1: in the second is the stock bond correlation. And an

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Speaker 1: interesting point I might make is that if you look

380
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Speaker 1: at rising rate environments, UM, stock bond correlation tends to

381
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Speaker 1: be positive on average and bond volatility is higher. And

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Speaker 1: that's exactly what we've seen this year. So that type

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Speaker 1: of feature where stocks and bonds aren't in the same

384
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Speaker 1: relationship in an inflationary environment, is there, and it's in

385
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Speaker 1: the data. UM. We've seen over certain periods of time,

386
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Speaker 1: particularly in the last month, we started to see that

387
00:21:29,600 --> 00:21:32,960
Speaker 1: correlation in the short run spiking as well. UM. You

388
00:21:32,960 --> 00:21:34,800
Speaker 1: can see it in the sense that stocks and bonds

389
00:21:34,800 --> 00:21:39,480
Speaker 1: are trying to sell off simultaneously. And that's something that

390
00:21:39,640 --> 00:21:42,159
Speaker 1: we are paying attention to, and that's an important factor

391
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Speaker 1: in building a portfolio, because if you count on those correlations,

392
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Speaker 1: you have a very different diversification level than you thought, UM,

393
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Speaker 1: and that's something that people are experiencing this year, is

394
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Speaker 1: that they're not experiencing that diversification that they thought. The

395
00:21:56,720 --> 00:21:59,639
Speaker 1: other correlations that we have seen that are interesting is

396
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Speaker 1: that you've also seen some interesting correlations between fixed income

397
00:22:03,920 --> 00:22:07,600
Speaker 1: and currencies. Obviously, the dollars connection to the rising right

398
00:22:07,680 --> 00:22:11,040
Speaker 1: narrative has also been something that we've been watching. Um

399
00:22:11,080 --> 00:22:14,919
Speaker 1: And you've even seen very different correlations between energies and

400
00:22:15,119 --> 00:22:18,920
Speaker 1: equities this year. So equities and energies are usually positively

401
00:22:18,960 --> 00:22:21,919
Speaker 1: correlated because their risky assets. Look at the period in

402
00:22:22,000 --> 00:22:25,320
Speaker 1: Q one, energies were up, well, equity markets are down.

403
00:22:25,440 --> 00:22:28,159
Speaker 1: You starting to see negative correlation. And this kind of

404
00:22:28,200 --> 00:22:30,840
Speaker 1: goes back to the issue that in this type of environment,

405
00:22:31,359 --> 00:22:34,879
Speaker 1: structural relationships that we often count on can change, and

406
00:22:34,920 --> 00:22:38,280
Speaker 1: it's important to be aware of that because your portfolio

407
00:22:38,320 --> 00:22:40,360
Speaker 1: is going to behave very differently than sort of your

408
00:22:40,440 --> 00:22:45,480
Speaker 1: longer term expectations in these type of environments. Yeah, are

409
00:22:45,480 --> 00:22:48,240
Speaker 1: you able to sort of quantify when they change? You know,

410
00:22:48,400 --> 00:22:51,000
Speaker 1: is it will once it gets into the eighties and

411
00:22:51,080 --> 00:22:54,760
Speaker 1: nineties that that correlation flips, or when treasure yields get

412
00:22:54,760 --> 00:22:58,159
Speaker 1: above a certain level or or rising at a certain speed.

413
00:22:58,760 --> 00:23:02,280
Speaker 1: Um is you know? Is that too wishful thinking to

414
00:23:02,359 --> 00:23:05,200
Speaker 1: think that you can sort of quantify when those relationships

415
00:23:05,600 --> 00:23:09,160
Speaker 1: change or flip. I think it's more over a time horizon,

416
00:23:09,400 --> 00:23:11,879
Speaker 1: so you can see for short periods of time that

417
00:23:12,000 --> 00:23:16,000
Speaker 1: correlations and can be very different from a longer term behavior.

418
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Speaker 1: And you're right, obviously it's going to depend a lot

419
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Speaker 1: on the macro theme. So I mean, if you look

420
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Speaker 1: at the first part of the year, this example I

421
00:23:23,640 --> 00:23:28,160
Speaker 1: gave where energies and equities were, UM, you know, behaving

422
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Speaker 1: differently under the backdrop of inflation being the core driver

423
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Speaker 1: of the markets. UM. Those correlations changed UM. And this

424
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Speaker 1: is something we've seen this year. What is the theme

425
00:23:38,200 --> 00:23:41,440
Speaker 1: that is driving markets this year? It's rising rates and inflation,

426
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Speaker 1: and thus those relationships that we usually think are there

427
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Speaker 1: sometimes disappear UM and they become different. And I think

428
00:23:49,600 --> 00:23:51,760
Speaker 1: that's exactly what we're seeing, is that in their more

429
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Speaker 1: extreme environments, sometimes those correlations can change. I mean you

430
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Speaker 1: brought up as a level of price. For me, it's

431
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Speaker 1: more sort of the extremity, like how extreme the market is.

432
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Speaker 1: And that's something like this UM crisis that we had

433
00:24:05,760 --> 00:24:08,840
Speaker 1: in March, or at least the event that we had

434
00:24:08,920 --> 00:24:12,240
Speaker 1: late February. March was really sort of a supply chain

435
00:24:12,520 --> 00:24:16,080
Speaker 1: issue and an inflation issue at the same time, which

436
00:24:16,200 --> 00:24:19,080
Speaker 1: really had a very different effect on how asset classes

437
00:24:19,240 --> 00:24:23,359
Speaker 1: related to each other. Versus the longer term typical things

438
00:24:23,359 --> 00:24:27,120
Speaker 1: that we would expect. Yeah, yeah, I want to get

439
00:24:27,119 --> 00:24:30,520
Speaker 1: back to the shorting bonds idea. You know, I'm curious

440
00:24:30,560 --> 00:24:32,959
Speaker 1: if you have a number in mind, like a yield

441
00:24:33,200 --> 00:24:35,119
Speaker 1: that we should be bracing for, you know, is it

442
00:24:35,240 --> 00:24:38,240
Speaker 1: four percent? Five percent? Saying the ten year or the

443
00:24:38,320 --> 00:24:42,040
Speaker 1: two year? And to to pile one more question on

444
00:24:42,080 --> 00:24:44,040
Speaker 1: top of that, you know, everyone's sort of bracing for

445
00:24:44,080 --> 00:24:47,720
Speaker 1: a recession, which traditionally would have been bullish for bonds.

446
00:24:47,840 --> 00:24:50,240
Speaker 1: Uh caused everyone to pile back in and bring those

447
00:24:50,320 --> 00:24:53,160
Speaker 1: yields down. I don't get the sense that that's as

448
00:24:53,280 --> 00:24:56,320
Speaker 1: given of a scenario as as it normally would be

449
00:24:56,400 --> 00:24:59,600
Speaker 1: this time, given given the inflation problem. So to talk

450
00:24:59,680 --> 00:25:01,520
Speaker 1: us through those two ideas, you know, what's that sort

451
00:25:01,560 --> 00:25:04,240
Speaker 1: of you know, what what should I steal myself for

452
00:25:04,400 --> 00:25:06,840
Speaker 1: as far as uh, you know, a peak interest rate,

453
00:25:07,000 --> 00:25:09,840
Speaker 1: and whether or not a recession would would actually be

454
00:25:09,920 --> 00:25:13,680
Speaker 1: bullish for bonds or not. So that's where I think

455
00:25:13,840 --> 00:25:16,600
Speaker 1: trend flers have a different view. We think things will

456
00:25:16,640 --> 00:25:19,560
Speaker 1: go as far as the market wants to go. So

457
00:25:19,640 --> 00:25:22,080
Speaker 1: we don't have sort of a target like Okay, it's

458
00:25:22,080 --> 00:25:24,680
Speaker 1: going to get to this level we're done, we think

459
00:25:24,960 --> 00:25:28,240
Speaker 1: that the market is going to continue to go in

460
00:25:28,280 --> 00:25:31,720
Speaker 1: the direction until the problem solved. And so the best

461
00:25:31,720 --> 00:25:33,520
Speaker 1: way to think about that, and that's why I focus

462
00:25:33,560 --> 00:25:37,199
Speaker 1: a lot on the differential between the inflation rate and

463
00:25:37,359 --> 00:25:40,399
Speaker 1: interest rates, because that differential gives you an idea of

464
00:25:40,440 --> 00:25:43,399
Speaker 1: how far they have to go across, and then that

465
00:25:43,560 --> 00:25:45,800
Speaker 1: gives you some sense of like at what point the

466
00:25:45,800 --> 00:25:48,800
Speaker 1: market might sort of say like, okay, this is over um.

467
00:25:48,880 --> 00:25:50,840
Speaker 1: And so I think that's more the way I'm seeing

468
00:25:50,840 --> 00:25:53,040
Speaker 1: it is that we're going to see those rates go

469
00:25:53,160 --> 00:25:56,040
Speaker 1: up until we see that number go down. And the

470
00:25:56,119 --> 00:25:58,960
Speaker 1: scary part is if the inflation number doesn't go down

471
00:25:59,040 --> 00:26:01,280
Speaker 1: fast enough and the it's keep going up to try

472
00:26:01,280 --> 00:26:04,119
Speaker 1: and catch it um. And so I think that's my

473
00:26:04,240 --> 00:26:08,119
Speaker 1: view is more that we could continue to see um

474
00:26:08,480 --> 00:26:11,679
Speaker 1: rates rise, perhaps even farther than people are willing to go.

475
00:26:11,760 --> 00:26:14,600
Speaker 1: And your exactly point is right on. Everyone wants that anchor.

476
00:26:14,680 --> 00:26:16,960
Speaker 1: They want to know like, if it hits there, we're there,

477
00:26:17,160 --> 00:26:21,440
Speaker 1: it's over right, right, But sometimes the market sometimes that's

478
00:26:21,480 --> 00:26:25,160
Speaker 1: not where the market ends up, right, So market could

479
00:26:25,160 --> 00:26:27,240
Speaker 1: have to go farther and that's where you're actually going

480
00:26:27,280 --> 00:26:30,520
Speaker 1: to see a big surprise and a very interesting trade

481
00:26:31,000 --> 00:26:34,480
Speaker 1: in the markets as well. Yeah, and I think your

482
00:26:34,560 --> 00:26:38,640
Speaker 1: your other question was about about whether a recession would

483
00:26:38,720 --> 00:26:40,960
Speaker 1: would cause a bid for bonds or whether this sort

484
00:26:41,000 --> 00:26:44,680
Speaker 1: of stagflation. Hi, Hi, you know, I think you've sort

485
00:26:44,720 --> 00:26:48,159
Speaker 1: of answered it with that uh answering that you know,

486
00:26:49,040 --> 00:26:52,640
Speaker 1: with inflation at eight percent, you know, you can't really

487
00:26:52,640 --> 00:26:55,280
Speaker 1: expect bonds to settle down. I would think even even

488
00:26:55,280 --> 00:26:57,840
Speaker 1: in a recession, if inflation is still that high. So,

489
00:26:58,000 --> 00:27:00,720
Speaker 1: I mean, that's where this year has been so fascinating.

490
00:27:00,840 --> 00:27:03,480
Speaker 1: Is the reason nobody ever wants to short bonds is

491
00:27:03,520 --> 00:27:06,600
Speaker 1: because that's a really dangerous place to be because anytime

492
00:27:06,640 --> 00:27:10,480
Speaker 1: the market sells off, you are in the wrong position. Um,

493
00:27:10,520 --> 00:27:13,639
Speaker 1: but that is not what we've seen recently, And I

494
00:27:13,680 --> 00:27:18,520
Speaker 1: think that shows you that this narrative is not driven

495
00:27:18,600 --> 00:27:21,480
Speaker 1: purely by the recession narrative. It's the inflation narrative is

496
00:27:21,560 --> 00:27:24,560
Speaker 1: number one. And so that's where the summer we did

497
00:27:24,640 --> 00:27:27,040
Speaker 1: start to actually see the recession narrative come in a

498
00:27:27,040 --> 00:27:30,240
Speaker 1: little bit and sort of the bond positioning and bond

499
00:27:30,359 --> 00:27:34,240
Speaker 1: signals started to go more flat and to be less aggressive.

500
00:27:34,680 --> 00:27:38,320
Speaker 1: And so what I've seen historically is that short signals

501
00:27:38,440 --> 00:27:41,440
Speaker 1: are going to be very common when the curve remains

502
00:27:41,480 --> 00:27:44,720
Speaker 1: inverted to flat. But if we start to see a

503
00:27:44,800 --> 00:27:48,800
Speaker 1: recession type trade and of steepening of the curve, then

504
00:27:49,000 --> 00:27:52,040
Speaker 1: we're actually might see long signals again because at some

505
00:27:52,080 --> 00:27:55,399
Speaker 1: point that trade becomes a long trade um. And so

506
00:27:55,440 --> 00:27:57,960
Speaker 1: I think that's where the dynamic approach is so important,

507
00:27:58,440 --> 00:28:00,639
Speaker 1: is that these things are not you know, two or

508
00:28:00,680 --> 00:28:03,760
Speaker 1: three year trades. They're sort of they happen over shorter

509
00:28:03,840 --> 00:28:07,480
Speaker 1: horizons than how many investors think about sort of longer term.

510
00:28:07,520 --> 00:28:14,640
Speaker 1: They're really more tactical type of events than strategic. Yeah,

511
00:28:14,680 --> 00:28:18,080
Speaker 1: you know, could you see a situation where inflation comes

512
00:28:18,119 --> 00:28:20,840
Speaker 1: down enough and fields go up that we're actually looking at,

513
00:28:20,880 --> 00:28:22,800
Speaker 1: you know, positive real ills or is that is that

514
00:28:22,880 --> 00:28:25,400
Speaker 1: crazy talk? I mean, I think we're going to get there.

515
00:28:25,720 --> 00:28:27,800
Speaker 1: I just think it's going to take longer than people

516
00:28:27,880 --> 00:28:31,560
Speaker 1: want it to take. And that's pretty typical, right, And

517
00:28:31,680 --> 00:28:35,480
Speaker 1: so I think that people are easily hopeful and slower

518
00:28:35,520 --> 00:28:39,120
Speaker 1: to deal with sort of challenging information. So I think

519
00:28:39,160 --> 00:28:42,600
Speaker 1: it will take longer than we would like. And thus

520
00:28:42,640 --> 00:28:44,960
Speaker 1: I think the trade will be around for a little

521
00:28:44,960 --> 00:28:47,640
Speaker 1: bit longer unless we overshoot, and then we might end

522
00:28:47,720 --> 00:28:50,280
Speaker 1: up in some cycles as well, which is you know,

523
00:28:50,920 --> 00:28:52,520
Speaker 1: kind of why I say that it could take a

524
00:28:52,520 --> 00:28:57,320
Speaker 1: while because it's not something that's easily solvable and you

525
00:28:57,320 --> 00:29:00,600
Speaker 1: know one month print. Yeah, not a eight line either,

526
00:29:00,640 --> 00:29:03,120
Speaker 1: I guess. And ah okay, I also wanted to ask

527
00:29:03,160 --> 00:29:07,200
Speaker 1: you just about it's not only the drop in bonds

528
00:29:07,240 --> 00:29:09,840
Speaker 1: this year that I think UM has been pretty alarming

529
00:29:09,840 --> 00:29:11,560
Speaker 1: to a lot of people. It's the volatility. You know,

530
00:29:11,640 --> 00:29:15,760
Speaker 1: you'll see you'll see yields moving ten fifteen basis points,

531
00:29:15,840 --> 00:29:18,680
Speaker 1: usually on the upside. Maybe you know it's not as

532
00:29:18,760 --> 00:29:21,120
Speaker 1: much on the down side when when bonds are rallying.

533
00:29:21,600 --> 00:29:25,040
Speaker 1: Does that sort of volatility and rates affect your strategy

534
00:29:25,080 --> 00:29:26,960
Speaker 1: at all? Or is that you know, have you looking

535
00:29:27,000 --> 00:29:29,400
Speaker 1: at your chops to you know that that's the type

536
00:29:29,400 --> 00:29:31,560
Speaker 1: of thing you'd like to see. I mean, for us,

537
00:29:31,800 --> 00:29:34,680
Speaker 1: this is just a relative volatility positioning. I mean, if

538
00:29:34,680 --> 00:29:36,800
Speaker 1: you look at how much ball stocks have and how

539
00:29:36,880 --> 00:29:41,040
Speaker 1: much ball for you know, let's talk about energies have. UM,

540
00:29:41,120 --> 00:29:44,320
Speaker 1: it's really for us just a relative sizing question. UM.

541
00:29:44,360 --> 00:29:48,720
Speaker 1: If bonds are more volatile, you take smaller positions. UM,

542
00:29:48,880 --> 00:29:51,520
Speaker 1: so on our side, it's really something you have to

543
00:29:51,560 --> 00:29:54,719
Speaker 1: measure and you have to account for. But it's something

544
00:29:54,760 --> 00:29:58,280
Speaker 1: that we're set up to do, and it's something that

545
00:29:58,680 --> 00:30:01,000
Speaker 1: like I said before, which talked a little bit about

546
00:30:01,360 --> 00:30:07,000
Speaker 1: asset class correlations of patterns, during rising rate environments, bonds

547
00:30:07,320 --> 00:30:11,520
Speaker 1: have exhibited higher volatility, and that's exactly what we're seeing now.

548
00:30:11,560 --> 00:30:13,560
Speaker 1: So for those of us who are much more on

549
00:30:13,600 --> 00:30:16,160
Speaker 1: the quand side, this is not at all surprising. I

550
00:30:16,200 --> 00:30:19,320
Speaker 1: think it is a new experience for investors who are

551
00:30:19,400 --> 00:30:23,360
Speaker 1: used to thinking about bonds as being global. Um So

552
00:30:23,400 --> 00:30:25,640
Speaker 1: I think for us it's more that's just the function

553
00:30:25,680 --> 00:30:28,320
Speaker 1: of the environment as opposed to sort of something has

554
00:30:28,400 --> 00:30:30,959
Speaker 1: changed or wrong. It's just the way that things are

555
00:30:30,960 --> 00:30:35,480
Speaker 1: going to be. When rates rise, it's disruptive to assets

556
00:30:35,520 --> 00:30:39,560
Speaker 1: that you own that have duration exposure. Yeah. Period. So

557
00:30:39,560 --> 00:30:41,160
Speaker 1: so it's not sort of you know, there's been a

558
00:30:41,200 --> 00:30:43,040
Speaker 1: lot of talk about, well, there's seems to be some

559
00:30:43,080 --> 00:30:46,840
Speaker 1: sort of liquidity issue in the bond market, especially you know,

560
00:30:46,920 --> 00:30:49,520
Speaker 1: after the Dot Frank reforms and all that, with banks,

561
00:30:49,800 --> 00:30:51,880
Speaker 1: you know, committing less less of their balance sheet to

562
00:30:52,080 --> 00:30:55,200
Speaker 1: market making and bonds. But it doesn't sound like necessarily

563
00:30:55,760 --> 00:30:57,920
Speaker 1: you think, at least that's not the main driver. It's

564
00:30:57,960 --> 00:31:01,400
Speaker 1: more just when rates rise, you know, rates get more violent,

565
00:31:01,920 --> 00:31:03,760
Speaker 1: I guess, is the bottom line. I mean, if you

566
00:31:03,800 --> 00:31:06,600
Speaker 1: think about it this way, most risk assets have more

567
00:31:06,680 --> 00:31:10,000
Speaker 1: volatility on the downside. We just we just didn't know

568
00:31:10,080 --> 00:31:14,480
Speaker 1: that bonds had downside, so so I mean that's that's

569
00:31:14,480 --> 00:31:17,640
Speaker 1: a funny way to put it, is that you know assets,

570
00:31:18,280 --> 00:31:22,120
Speaker 1: risk assets have more vol on the downside. Bonds just

571
00:31:22,160 --> 00:31:25,280
Speaker 1: haven't had downside, so now they're having downside and someone

572
00:31:25,320 --> 00:31:28,280
Speaker 1: says something's wrong. It must be liquidity, and that's where

573
00:31:28,280 --> 00:31:30,240
Speaker 1: I say, I don't think so. I think it's just

574
00:31:30,320 --> 00:31:33,040
Speaker 1: the fact that, you know, when rates rise, it's bad

575
00:31:33,080 --> 00:31:37,000
Speaker 1: for cash flows that have duration exposure period and that

576
00:31:37,360 --> 00:31:41,240
Speaker 1: has more volatility because it's a downside volatility. Yeah, that

577
00:31:41,280 --> 00:31:43,640
Speaker 1: makes sense. It's the old take the stairs up in

578
00:31:43,680 --> 00:31:46,880
Speaker 1: the elevator down, I guess type of situation. We thought

579
00:31:46,880 --> 00:31:50,880
Speaker 1: that was only for equity markets. Maybe maybe maybe the

580
00:31:50,880 --> 00:31:53,200
Speaker 1: same for treasuries. If I had to boil it down

581
00:31:53,200 --> 00:31:56,880
Speaker 1: to a cliche, which I sort of have to do

582
00:31:56,920 --> 00:32:15,560
Speaker 1: as a journalist, I guess this after came Kenny, what else?

583
00:32:15,760 --> 00:32:18,480
Speaker 1: What else should we know about how to think about

584
00:32:18,480 --> 00:32:20,680
Speaker 1: the markets? For the rest here, What am I messing here?

585
00:32:20,720 --> 00:32:23,680
Speaker 1: What's some sort of top of mind for you? And

586
00:32:23,760 --> 00:32:27,080
Speaker 1: I think the thing for me that I have have

587
00:32:27,320 --> 00:32:29,520
Speaker 1: stressed with many of the clients that we talked to

588
00:32:29,560 --> 00:32:33,000
Speaker 1: in Investors is like, if we're in a different regime,

589
00:32:33,360 --> 00:32:36,560
Speaker 1: you have to think differently as the class properties have

590
00:32:36,840 --> 00:32:40,040
Speaker 1: changed in an inflation environment, and then you need to

591
00:32:40,120 --> 00:32:43,720
Speaker 1: just accept that and try and see what is there

592
00:32:43,880 --> 00:32:45,680
Speaker 1: for you to do in that environment? How do you

593
00:32:45,720 --> 00:32:50,120
Speaker 1: protect yourself against um inflation and other issues as opposed

594
00:32:50,160 --> 00:32:53,040
Speaker 1: to just pretend it's not here um. And that's why

595
00:32:53,040 --> 00:32:55,760
Speaker 1: I think so many people want to just go away quickly,

596
00:32:55,880 --> 00:32:58,240
Speaker 1: because then they don't have to really sort of change

597
00:32:58,760 --> 00:33:01,719
Speaker 1: the way they invest. And so I think that's probably

598
00:33:01,760 --> 00:33:04,600
Speaker 1: the best lesson is to say, Okay, this is a

599
00:33:04,600 --> 00:33:08,640
Speaker 1: different macro environment and we're going to see some interesting trends.

600
00:33:09,200 --> 00:33:11,600
Speaker 1: I think for us, the biggest one to watch this

601
00:33:11,680 --> 00:33:13,760
Speaker 1: fall is going to be what happens to the energy

602
00:33:13,840 --> 00:33:17,080
Speaker 1: complex and what happens to bonds um And if we

603
00:33:17,160 --> 00:33:20,360
Speaker 1: do actually have a recession, what does that mean? How

604
00:33:20,440 --> 00:33:24,000
Speaker 1: deep is that recession? Is this something that that is

605
00:33:24,040 --> 00:33:26,920
Speaker 1: going to be sort of a moderate one which we

606
00:33:26,920 --> 00:33:29,360
Speaker 1: can wait out but just takes a while, or is

607
00:33:29,400 --> 00:33:31,719
Speaker 1: it going to be something that's more drastic. I think

608
00:33:31,800 --> 00:33:37,239
Speaker 1: that's what we'll be watching, probably like anybody else. Well,

609
00:33:37,280 --> 00:33:39,280
Speaker 1: and it doesn't you know, I correct me if I'm wrong,

610
00:33:39,280 --> 00:33:42,040
Speaker 1: But it doesn't sound like you think this new regime

611
00:33:42,040 --> 00:33:44,960
Speaker 1: we're in is is transitory to use a dirty were

612
00:33:45,080 --> 00:33:47,680
Speaker 1: these days. This is a new, a new sort of

613
00:33:47,680 --> 00:33:50,600
Speaker 1: secular thing we're gonna be dealing with for several years.

614
00:33:50,640 --> 00:33:54,040
Speaker 1: I guess I think I love the point transitory when

615
00:33:54,040 --> 00:33:56,000
Speaker 1: people are talking about it, because we've never thought it

616
00:33:56,040 --> 00:33:59,640
Speaker 1: was transitory. I don't think we ever did. UM the

617
00:33:59,760 --> 00:34:02,600
Speaker 1: reason and as we were watching the commodity markets and

618
00:34:02,640 --> 00:34:06,800
Speaker 1: the movements in those markets were you know, just unprecedented,

619
00:34:07,320 --> 00:34:09,719
Speaker 1: and that is sort of a good worrying signal to

620
00:34:10,000 --> 00:34:13,240
Speaker 1: any sort of crisis event. I find that these commodity

621
00:34:13,280 --> 00:34:15,759
Speaker 1: markets really give you a good barometer of where we

622
00:34:15,880 --> 00:34:18,759
Speaker 1: might be going. And we've seen short signals in the

623
00:34:18,760 --> 00:34:22,360
Speaker 1: commodity markets recently that to me is a recession trade.

624
00:34:22,760 --> 00:34:25,319
Speaker 1: That is a you know, a risk off trade. And

625
00:34:25,360 --> 00:34:28,960
Speaker 1: so that's why I'm focusing on what might happen deputy

626
00:34:29,000 --> 00:34:32,480
Speaker 1: markets following UM in the next couple of months. So

627
00:34:32,520 --> 00:34:35,719
Speaker 1: I'd say transitory is definitely something that that we never

628
00:34:35,920 --> 00:34:38,320
Speaker 1: were really thinking and I think people stopped talking about

629
00:34:38,320 --> 00:34:46,920
Speaker 1: that anyways. Yeah. So well that's interesting though, because you know, sometimes,

630
00:34:47,200 --> 00:34:49,239
Speaker 1: especially the oil market, it feels like a risk on,

631
00:34:49,480 --> 00:34:51,960
Speaker 1: risk off type of market. Other times that's you know,

632
00:34:52,320 --> 00:34:55,840
Speaker 1: we're supplied to demand dynamics, but um, you know, in

633
00:34:55,920 --> 00:34:58,280
Speaker 1: the supply chain issues. You know, when we saw negative

634
00:34:58,280 --> 00:35:02,080
Speaker 1: oil prices during the pandemic, um, it seemed obvious to

635
00:35:02,120 --> 00:35:07,120
Speaker 1: me that you know, uh, drilling in exploration companies were

636
00:35:07,120 --> 00:35:10,280
Speaker 1: not going to start spending a lot of their capital

637
00:35:10,360 --> 00:35:14,160
Speaker 1: on on making new investments and that sort of thing. So, um,

638
00:35:14,239 --> 00:35:17,200
Speaker 1: you're reading it as clearly a risk off signal at

639
00:35:17,239 --> 00:35:20,399
Speaker 1: the moment. Yeah, at least for now, we've had more

640
00:35:20,480 --> 00:35:23,600
Speaker 1: negative signals. You've seen it, particularly in the base metals

641
00:35:23,680 --> 00:35:26,799
Speaker 1: more than the energies. Um. And that is sort of

642
00:35:26,960 --> 00:35:30,200
Speaker 1: makes sense because commodities were the first part of the

643
00:35:30,239 --> 00:35:33,640
Speaker 1: cycle and so but if you look at the seventies,

644
00:35:33,760 --> 00:35:35,640
Speaker 1: let's just give that as an example period where we

645
00:35:35,680 --> 00:35:39,040
Speaker 1: have high inflation rising rates. There were actually multiple waves

646
00:35:39,080 --> 00:35:43,040
Speaker 1: of inflation and there are also multiple waves of energy prices.

647
00:35:43,360 --> 00:35:45,880
Speaker 1: So I think that's something that I'm preparing myself for,

648
00:35:46,120 --> 00:35:51,279
Speaker 1: and I think people should be prepared for, because overshooting

649
00:35:51,280 --> 00:35:55,120
Speaker 1: and undershooting is sort of a phenomenon in all markets,

650
00:35:55,480 --> 00:35:58,440
Speaker 1: not just equities um, and so I think that's something

651
00:35:58,480 --> 00:36:00,680
Speaker 1: that we haven't really talked about for a long time,

652
00:36:00,680 --> 00:36:04,320
Speaker 1: But we can easily have some cycles or supercycles coming

653
00:36:04,400 --> 00:36:07,800
Speaker 1: in the commodity sector just as a function of demand

654
00:36:08,320 --> 00:36:12,399
Speaker 1: destruction and supply chain disruption going back and forth. So

655
00:36:12,560 --> 00:36:15,080
Speaker 1: it's definitely an interesting place to be looking at what's

656
00:36:15,080 --> 00:36:19,160
Speaker 1: going on there um going forward? How about gold? Does

657
00:36:19,200 --> 00:36:22,440
Speaker 1: gold makes ever make sense to for one thing, or

658
00:36:22,480 --> 00:36:24,719
Speaker 1: as a trend follower, or I mean maybe as a

659
00:36:24,760 --> 00:36:26,960
Speaker 1: trend follower it makes more sense than the rest of

660
00:36:27,040 --> 00:36:28,920
Speaker 1: us trying to figure out sort of what the narrative

661
00:36:28,960 --> 00:36:32,000
Speaker 1: behind gold is. You know, uh, for one thing, you know,

662
00:36:32,280 --> 00:36:35,000
Speaker 1: this high inflationary environment, you would expect it to do well.

663
00:36:35,040 --> 00:36:38,120
Speaker 1: But then again we have a super strong dollar. So

664
00:36:38,520 --> 00:36:40,120
Speaker 1: is it a matter of those two are just canceling

665
00:36:40,160 --> 00:36:42,360
Speaker 1: each other out? Do you think? Yeah? It's been interesting

666
00:36:42,400 --> 00:36:46,520
Speaker 1: because the precious metal complex in particular has been not

667
00:36:46,840 --> 00:36:50,680
Speaker 1: that reactive to the inflation narrative, which makes sense in

668
00:36:50,719 --> 00:36:54,359
Speaker 1: some sense that they're kind of a fixed supply um

669
00:36:54,400 --> 00:36:57,319
Speaker 1: and less affected by sort of weather and sort of

670
00:36:57,440 --> 00:37:01,040
Speaker 1: supply chains and things like this. But where recently gold

671
00:37:01,080 --> 00:37:04,520
Speaker 1: has been much more short in terms of its its signals.

672
00:37:04,600 --> 00:37:07,600
Speaker 1: And I think that is always complicated because it has

673
00:37:07,680 --> 00:37:10,160
Speaker 1: some to do with the dollar, but also has to

674
00:37:10,200 --> 00:37:12,160
Speaker 1: do with interest rates and sort of the real rate.

675
00:37:12,560 --> 00:37:15,000
Speaker 1: So that's that's been a tricky one, to be honest

676
00:37:15,040 --> 00:37:17,920
Speaker 1: with you. But it has definitely been a short signal

677
00:37:17,960 --> 00:37:20,719
Speaker 1: more recently, So we'll see maybe if the dollar comes off,

678
00:37:21,120 --> 00:37:25,040
Speaker 1: might see some resurgence there. Yeah, And what are some

679
00:37:25,440 --> 00:37:28,520
Speaker 1: of the signals you actually react to? Is it you know,

680
00:37:29,560 --> 00:37:32,399
Speaker 1: things like moving averages? Is it you know month over

681
00:37:32,520 --> 00:37:35,560
Speaker 1: month or trailing thirty day type of moves all the above.

682
00:37:35,640 --> 00:37:37,520
Speaker 1: What what are some of the sort of most important

683
00:37:37,520 --> 00:37:39,960
Speaker 1: signals for you as a trend follower. So we use

684
00:37:40,000 --> 00:37:44,720
Speaker 1: a wide range of different methods to to measure where

685
00:37:44,800 --> 00:37:47,640
Speaker 1: markets are moving, and it could be something as simple,

686
00:37:48,000 --> 00:37:50,680
Speaker 1: you know, in explanation as a moving average, or could

687
00:37:50,719 --> 00:37:54,399
Speaker 1: also be um other types of filtering techniques that try

688
00:37:54,480 --> 00:38:00,600
Speaker 1: to understand the direction of prices. And I think sometimes

689
00:38:00,600 --> 00:38:04,880
Speaker 1: for fundamental investors it's kind of seem strange because you know,

690
00:38:04,960 --> 00:38:08,400
Speaker 1: you're following the prices. But to me, what it means

691
00:38:08,480 --> 00:38:11,759
Speaker 1: is that in particularly an environments where we're not sure

692
00:38:11,800 --> 00:38:15,360
Speaker 1: what's happening, oftentimes the market has a lot of information.

693
00:38:15,520 --> 00:38:19,680
Speaker 1: It's aggregating all of the views, and when people make decisions,

694
00:38:19,680 --> 00:38:22,640
Speaker 1: they incorporate that information. And so what we're doing is

695
00:38:22,800 --> 00:38:26,360
Speaker 1: following the market as what the market is doing, not

696
00:38:26,440 --> 00:38:29,319
Speaker 1: trying to determine what the market shouldn't do. And that's

697
00:38:29,360 --> 00:38:33,759
Speaker 1: why this environment in particular is good because none of

698
00:38:33,880 --> 00:38:37,440
Speaker 1: us as one individual know what the market should do really,

699
00:38:38,040 --> 00:38:40,080
Speaker 1: or even if we think we do, it's a hard

700
00:38:40,160 --> 00:38:42,520
Speaker 1: to it's a it's a it's a tall order to

701
00:38:42,560 --> 00:38:44,400
Speaker 1: think that any one of us is going to be

702
00:38:44,440 --> 00:38:47,600
Speaker 1: able to determine that. And so I think our strategies

703
00:38:47,640 --> 00:38:53,040
Speaker 1: really complement more fundamental approaches because it's those moments where

704
00:38:53,040 --> 00:38:56,840
Speaker 1: it's really difficult that it's actually good to try and follow,

705
00:38:56,840 --> 00:39:01,520
Speaker 1: where the prevailing trends are us opposed to sort of saying, well,

706
00:39:01,560 --> 00:39:05,560
Speaker 1: you know, rates should be four point five. Well, even

707
00:39:05,560 --> 00:39:08,279
Speaker 1: if I think they should, that doesn't mean that they're

708
00:39:08,280 --> 00:39:10,480
Speaker 1: going to And I think that's kind of how I

709
00:39:10,520 --> 00:39:13,200
Speaker 1: think about it. Well, and it's you know, it's been

710
00:39:13,239 --> 00:39:15,680
Speaker 1: the type of year where I think fundamental investors have

711
00:39:15,760 --> 00:39:18,960
Speaker 1: been pulling their hair out trying to you know, reconcile

712
00:39:19,040 --> 00:39:20,959
Speaker 1: all these issues, whereas you know, you're like, I'm gonna

713
00:39:21,040 --> 00:39:23,360
Speaker 1: ride the bus this direction until it turns around, and

714
00:39:23,360 --> 00:39:25,719
Speaker 1: then I'm gonna ride it the other way. And uh,

715
00:39:25,920 --> 00:39:28,040
Speaker 1: you know, I'm not gonna ask too many questions about

716
00:39:28,080 --> 00:39:30,520
Speaker 1: who's driving the bus. I'm just topping on. I mean,

717
00:39:30,560 --> 00:39:32,919
Speaker 1: it's it's kind of as simple as that in a way. Yeah,

718
00:39:32,920 --> 00:39:36,600
Speaker 1: and it's it works really really well when it's really difficult,

719
00:39:37,320 --> 00:39:39,279
Speaker 1: and that's I mean, that sort of makes sense the

720
00:39:39,360 --> 00:39:43,080
Speaker 1: two thousand and eight environments March this year. And it's

721
00:39:43,200 --> 00:39:46,040
Speaker 1: nice because we have a plan, we have a process,

722
00:39:46,520 --> 00:39:50,400
Speaker 1: we follow the plan, we follow the process, and the

723
00:39:50,440 --> 00:39:52,480
Speaker 1: only times that are hard for us is when nothing's

724
00:39:52,520 --> 00:39:56,920
Speaker 1: really happening, or if they're sort of v shaped, you know,

725
00:39:57,000 --> 00:39:59,279
Speaker 1: recoveries or things like that, which is sort of just

726
00:39:59,280 --> 00:40:01,520
Speaker 1: shocks to the market that those are harder for us

727
00:40:01,640 --> 00:40:04,160
Speaker 1: because it's hard to figure out how to handle that

728
00:40:04,239 --> 00:40:10,240
Speaker 1: with data. Um, but big secular macro themes that nobody

729
00:40:10,320 --> 00:40:15,880
Speaker 1: likes are good. So yeah, yeah, well it's uh, congratulations

730
00:40:15,920 --> 00:40:18,040
Speaker 1: on a heck of a year for the MANTAGE Tutures Fund.

731
00:40:18,040 --> 00:40:20,200
Speaker 1: I mean it must I'm assuming it's the best year.

732
00:40:20,680 --> 00:40:22,000
Speaker 1: I haven't looked it up. It must be the best

733
00:40:22,080 --> 00:40:25,000
Speaker 1: year in the fund's history. And people beating a path

734
00:40:25,040 --> 00:40:28,400
Speaker 1: to your door, phone ringing off the hook. Well, I

735
00:40:28,440 --> 00:40:31,719
Speaker 1: think it's nice because people are trying to find solutions

736
00:40:31,920 --> 00:40:35,920
Speaker 1: in a hard environment, and they're realizing that they need

737
00:40:35,960 --> 00:40:37,799
Speaker 1: to be a little bit more tactical and a little

738
00:40:37,800 --> 00:40:41,680
Speaker 1: bit more dynamic, and so they're you know, asking us

739
00:40:41,760 --> 00:40:44,280
Speaker 1: questions and trying to understand, like what do we do

740
00:40:44,480 --> 00:40:48,200
Speaker 1: if this keeps going and it changes um And so

741
00:40:48,239 --> 00:40:50,600
Speaker 1: I'd say that it's been one of the better years

742
00:40:50,600 --> 00:40:54,080
Speaker 1: for managed teachers in a while. But managed tuchers also

743
00:40:54,120 --> 00:40:57,440
Speaker 1: has done well in other very disruptive environments, like two

744
00:40:57,440 --> 00:41:00,520
Speaker 1: thousand and eight and also two thousand four teen when

745
00:41:00,520 --> 00:41:03,399
Speaker 1: we had some major energy events. I mean it wasn't

746
00:41:03,400 --> 00:41:05,960
Speaker 1: an equity event, but it was definitely an energy situation.

747
00:41:06,480 --> 00:41:10,640
Speaker 1: So this type of disruptive and macro change, I've been

748
00:41:10,680 --> 00:41:13,960
Speaker 1: waiting for bond you know, the bond bearer market for

749
00:41:13,960 --> 00:41:17,200
Speaker 1: for like a decade, so so it's been very interesting

750
00:41:17,200 --> 00:41:22,239
Speaker 1: this year to watch that actually happened. I guess your

751
00:41:22,360 --> 00:41:26,280
Speaker 1: nightmare is just quiet, range bound markets, everything trading sideways.

752
00:41:26,360 --> 00:41:28,799
Speaker 1: That it's big, big years like this, regardless of the

753
00:41:28,800 --> 00:41:31,279
Speaker 1: direction or what you dream about. I guess, yeah, we

754
00:41:31,719 --> 00:41:34,800
Speaker 1: do well when things are uncomfortable. So if things are comfortable,

755
00:41:35,040 --> 00:41:39,280
Speaker 1: that's actually not good. So it's really sort of environments

756
00:41:39,320 --> 00:41:42,279
Speaker 1: where there's nothing really happening and sort of things are

757
00:41:43,360 --> 00:41:47,239
Speaker 1: very sort of range bound and there's no directional volatility.

758
00:41:48,120 --> 00:41:50,600
Speaker 1: That's not a great environment because you're looking for trends

759
00:41:50,680 --> 00:41:53,920
Speaker 1: and there aren't any. Um. What's good for us is

760
00:41:53,960 --> 00:41:57,440
Speaker 1: that if you trade multiple asset classes, there's usually something

761
00:41:57,440 --> 00:41:58,880
Speaker 1: going on most of the time. I was going to

762
00:41:58,960 --> 00:42:01,879
Speaker 1: say that the futures market is so wide open there's

763
00:42:01,880 --> 00:42:04,759
Speaker 1: always something to uh, although I guess you don't want

764
00:42:04,760 --> 00:42:08,120
Speaker 1: to get too esoteric, you know, palm oil futures or

765
00:42:08,160 --> 00:42:10,440
Speaker 1: something like that, or you know, you stick with the

766
00:42:10,480 --> 00:42:14,759
Speaker 1: main big liquid futures contracts. I would imagine, yes, I mean,

767
00:42:14,760 --> 00:42:18,160
Speaker 1: because liquidity is an important part about being dynamic. I mean,

768
00:42:18,719 --> 00:42:21,600
Speaker 1: if you're going to trade a wide range of different

769
00:42:21,600 --> 00:42:24,719
Speaker 1: asset classes at a fast you know, it's sort of

770
00:42:24,760 --> 00:42:28,759
Speaker 1: a regular basis, it's important to have that liquidity. UM

771
00:42:28,800 --> 00:42:31,000
Speaker 1: two thousand and eight was a perfect example of that,

772
00:42:31,160 --> 00:42:34,520
Speaker 1: and even you know, as you look at COVID, futures

773
00:42:34,560 --> 00:42:38,239
Speaker 1: markets were functioning very well. Um the liquidity is there

774
00:42:39,160 --> 00:42:43,239
Speaker 1: versus cash markets, where you know you're sometimes OTC or

775
00:42:43,440 --> 00:42:46,800
Speaker 1: doing more complex things. So I think futures market is

776
00:42:46,840 --> 00:42:51,840
Speaker 1: a great way to get risk exposure to different asset classes,

777
00:42:52,080 --> 00:42:55,560
Speaker 1: either long or short over time. And what we've seen

778
00:42:55,560 --> 00:42:58,520
Speaker 1: in the last three years, sometimes it's good to be

779
00:42:58,560 --> 00:43:02,200
Speaker 1: short energy, as you point out, Sometimes it's good to

780
00:43:02,200 --> 00:43:04,880
Speaker 1: be long, Sometimes it's good to be long bond. Sometimes

781
00:43:04,920 --> 00:43:07,479
Speaker 1: it's good to be shut um, and that's gonna vary

782
00:43:07,560 --> 00:43:12,920
Speaker 1: depending on what the prevailing market. Themes are fascinating stuff.

783
00:43:13,120 --> 00:43:16,880
Speaker 1: Katherine Kaminsky, she's the chief research strategist and a portfolio

784
00:43:16,920 --> 00:43:20,480
Speaker 1: manager at Alpha Simplex Group. But Katie, I can't let

785
00:43:20,480 --> 00:43:23,000
Speaker 1: you go until I hear the craziest thing you saw

786
00:43:23,239 --> 00:43:26,520
Speaker 1: in markets this week. Hopefully it's something good. I gotta

787
00:43:26,560 --> 00:43:30,399
Speaker 1: I have high hopes for you. Oh hard one. I mean,

788
00:43:30,440 --> 00:43:33,640
Speaker 1: I think the craziest thing we've seen and we continue

789
00:43:33,680 --> 00:43:37,600
Speaker 1: to see, it's just how incredibly week the yen is

790
00:43:37,840 --> 00:43:41,560
Speaker 1: versus the dollar, and we keep getting questions like, at

791
00:43:41,600 --> 00:43:44,560
Speaker 1: what point are they going to do something? And I

792
00:43:44,600 --> 00:43:46,960
Speaker 1: don't know. I mean that to me is I think

793
00:43:47,000 --> 00:43:51,359
Speaker 1: the craziest is that, um how you know, how far

794
00:43:51,440 --> 00:43:53,640
Speaker 1: can that go? I think that's probably the craziest thing

795
00:43:53,640 --> 00:43:55,840
Speaker 1: you've seen out there. So I wish I had some

796
00:43:55,920 --> 00:43:58,520
Speaker 1: leak more crazy than that. That's good and I think,

797
00:43:58,600 --> 00:44:00,799
Speaker 1: I mean, I think that's been one of the one

798
00:44:00,840 --> 00:44:02,920
Speaker 1: of the most important stories of the year. And talk

799
00:44:02,960 --> 00:44:06,000
Speaker 1: about a market where people have grown complacent in the thinking,

800
00:44:06,040 --> 00:44:09,680
Speaker 1: you know, nothing's ever going to change, and uh, you know,

801
00:44:09,960 --> 00:44:12,160
Speaker 1: well maybe it hasn't as much as they'd like, but

802
00:44:12,840 --> 00:44:16,600
Speaker 1: it's been uh in general, it's been fascinating to see,

803
00:44:16,960 --> 00:44:19,320
Speaker 1: you know, I worked with a lot of former f

804
00:44:19,600 --> 00:44:22,080
Speaker 1: X traders who you know, those markets have gotten so

805
00:44:22,160 --> 00:44:25,640
Speaker 1: boring for so long. Uh that this is you know,

806
00:44:25,680 --> 00:44:28,279
Speaker 1: to see them come back to life in this this

807
00:44:28,360 --> 00:44:30,319
Speaker 1: is why he is amazing. Well. And I also think

808
00:44:30,560 --> 00:44:34,439
Speaker 1: the dollar going below parody and beating out the euro,

809
00:44:34,560 --> 00:44:37,439
Speaker 1: that's another crazy thing. I did not expect that. I mean,

810
00:44:37,480 --> 00:44:40,080
Speaker 1: I think earlier this summer, like I told you, I

811
00:44:40,080 --> 00:44:42,680
Speaker 1: thought that was going to revert and because it always

812
00:44:42,680 --> 00:44:46,279
Speaker 1: does um, but it didn't, and that just shows you, like,

813
00:44:46,480 --> 00:44:49,520
Speaker 1: the trend sometimes goes longer than you think, and that's

814
00:44:49,640 --> 00:44:52,759
Speaker 1: usually what surprises me is when it goes farther than

815
00:44:52,800 --> 00:44:57,560
Speaker 1: I would expect. Yep, absolutely, well, my crazy thing is

816
00:44:57,560 --> 00:44:59,560
Speaker 1: is an honor of you and your short bond trade.

817
00:44:59,760 --> 00:45:03,080
Speaker 1: You know, earlier the year, when when you know, fixed

818
00:45:03,080 --> 00:45:06,000
Speaker 1: income was really starting to look shaky. I remember having

819
00:45:06,000 --> 00:45:09,200
Speaker 1: a discussion with someone at work about well, someone had said, well,

820
00:45:09,840 --> 00:45:12,799
Speaker 1: predicted a bear market in bonds, and we were all like, well,

821
00:45:12,840 --> 00:45:15,279
Speaker 1: what does that mean? You know, in stocks it's a

822
00:45:15,320 --> 00:45:18,319
Speaker 1: twenty percent drop. You know, you can argue about intra

823
00:45:18,400 --> 00:45:21,680
Speaker 1: day versus closing, but in general everyone agrees you're in

824
00:45:21,680 --> 00:45:24,880
Speaker 1: a bear market. I don't think anyone ever really thought

825
00:45:25,200 --> 00:45:28,319
Speaker 1: we'd see a twenty percent drop in bonds, but we

826
00:45:28,400 --> 00:45:31,160
Speaker 1: had the headline just a few days ago, the Bloomberg

827
00:45:31,160 --> 00:45:36,239
Speaker 1: Aggregate Index down from its peak, which to me is

828
00:45:36,320 --> 00:45:38,720
Speaker 1: kind of it's kind of mind blowing in a way.

829
00:45:38,920 --> 00:45:41,000
Speaker 1: I think like, if you were to, you know, remove

830
00:45:41,040 --> 00:45:44,800
Speaker 1: yourself from this situation, and I were to tell you, Katie, uh,

831
00:45:44,840 --> 00:45:47,880
Speaker 1: what's the world look like when the Bloomberg GAG index

832
00:45:48,040 --> 00:45:52,160
Speaker 1: is down? I wish they could be a scarier scenario

833
00:45:52,239 --> 00:45:54,200
Speaker 1: than we're in. You know, I'd expect a lot of

834
00:45:54,200 --> 00:45:57,040
Speaker 1: bankruptcies on the corporate side and a lot of governments

835
00:45:57,120 --> 00:46:01,960
Speaker 1: just you know reeling, you know, for for shrop in

836
00:46:01,960 --> 00:46:06,560
Speaker 1: in uh, you know, global bonds. I don't know, it

837
00:46:06,600 --> 00:46:09,319
Speaker 1: seems like it could have been worse. I feel like

838
00:46:09,320 --> 00:46:12,960
Speaker 1: we could be dealing with an uglier environment than we are. Well.

839
00:46:13,000 --> 00:46:16,840
Speaker 1: I think the challenge of bonds is bonds hurt from

840
00:46:17,120 --> 00:46:19,759
Speaker 1: rates going up for what you already own. But it's

841
00:46:19,760 --> 00:46:23,520
Speaker 1: actually a positive thing in some sense for having positive yield.

842
00:46:23,680 --> 00:46:26,600
Speaker 1: So it is a little complicated with bonds versus stocks, right,

843
00:46:26,640 --> 00:46:27,920
Speaker 1: I mean, I guess you could say the same thing

844
00:46:27,960 --> 00:46:32,600
Speaker 1: for equities. When equities are down, that means they're cheaper, right, Um,

845
00:46:32,719 --> 00:46:35,080
Speaker 1: I would say that to me, It's not at all

846
00:46:35,120 --> 00:46:39,080
Speaker 1: surprising if you look at historical trendsit bonds. We've been

847
00:46:39,080 --> 00:46:44,320
Speaker 1: in a very very artificial, very very long sustained um

848
00:46:44,480 --> 00:46:47,120
Speaker 1: bull market for bonds, and maybe the bull market and

849
00:46:47,160 --> 00:46:50,239
Speaker 1: bear markets are much much longer than what we experience

850
00:46:50,280 --> 00:46:53,080
Speaker 1: in equities, and so for those of us in the industry,

851
00:46:53,200 --> 00:46:56,759
Speaker 1: forty years it's a long time to wait for something, um.

852
00:46:56,800 --> 00:46:59,400
Speaker 1: But if you do look at historical data, you actually

853
00:46:59,480 --> 00:47:02,239
Speaker 1: will see that there are a lot of periods, and

854
00:47:02,320 --> 00:47:04,399
Speaker 1: I think i'll give you a stat on this. During

855
00:47:04,440 --> 00:47:07,480
Speaker 1: a falling rate environment, we're probably going to see short

856
00:47:07,520 --> 00:47:10,719
Speaker 1: signals only twenties something percent of the time. And in

857
00:47:10,800 --> 00:47:14,520
Speaker 1: a rising rate environment, we historically, especially the seventies, you

858
00:47:14,560 --> 00:47:17,480
Speaker 1: see it's sixty percent of the time. So this type

859
00:47:17,520 --> 00:47:22,759
Speaker 1: of environment, even though higher rates is good for future investments,

860
00:47:23,280 --> 00:47:27,000
Speaker 1: but what it hurts is it hurts investments you have now, UM.

861
00:47:27,040 --> 00:47:29,040
Speaker 1: And I think that's where to me, it's not at

862
00:47:29,080 --> 00:47:32,640
Speaker 1: all surprising from sort of an empirical perspective that we

863
00:47:32,680 --> 00:47:34,600
Speaker 1: can have an environment like that. I guess most of

864
00:47:34,640 --> 00:47:38,160
Speaker 1: us don't remember environment like the seventies were interest rates

865
00:47:38,200 --> 00:47:41,360
Speaker 1: went that high, but they could. I mean, it doesn't

866
00:47:41,400 --> 00:47:43,640
Speaker 1: look like it now, but you know, like I said,

867
00:47:43,680 --> 00:47:47,439
Speaker 1: it always goes far as they think, yeah, yeah, so

868
00:47:47,480 --> 00:47:49,680
Speaker 1: that that's not off the table. You think that type

869
00:47:49,760 --> 00:47:53,120
Speaker 1: of eighties type of interest rates point, I hope not

870
00:47:53,640 --> 00:48:00,399
Speaker 1: like that. That's that's pretty far. That's a big let's not.

871
00:48:00,880 --> 00:48:03,960
Speaker 1: I think I don't think so. UM. I think we're

872
00:48:04,040 --> 00:48:06,600
Speaker 1: much more inclined to have it extend further than we

873
00:48:06,600 --> 00:48:09,879
Speaker 1: would think. But I think that is a big move.

874
00:48:09,960 --> 00:48:13,279
Speaker 1: I mean, that's a much much larger variation than what

875
00:48:13,320 --> 00:48:15,279
Speaker 1: we have now. But you know, I think we just

876
00:48:15,320 --> 00:48:19,279
Speaker 1: have to watch that and see how markets react. My

877
00:48:19,360 --> 00:48:22,440
Speaker 1: guesses is probably much more in a range that seems reasonable.

878
00:48:22,760 --> 00:48:26,239
Speaker 1: Of course, those started from higher levels as well, right, Yeah,

879
00:48:27,320 --> 00:48:30,680
Speaker 1: especially if they know that we're really talking about when,

880
00:48:30,680 --> 00:48:32,560
Speaker 1: when and if the Fed ever pivots, you know, if

881
00:48:32,600 --> 00:48:35,080
Speaker 1: the unemployment rate starts going up and that you know,

882
00:48:35,200 --> 00:48:38,840
Speaker 1: employment mandate is you know, back on center stage. I

883
00:48:38,880 --> 00:48:41,160
Speaker 1: guess uh, you know, it's hard to imagine them letting

884
00:48:41,160 --> 00:48:46,560
Speaker 1: it get that out of control, but who knows. Get

885
00:48:46,560 --> 00:48:52,719
Speaker 1: your back one and if update next step. Katie Kamitsky

886
00:48:52,800 --> 00:48:55,359
Speaker 1: of Alpha Simplex Groups. Such a pleasure to catch up

887
00:48:55,400 --> 00:49:00,319
Speaker 1: with you. Congratulations on a great year. Thanks for having me, Mike. Yeah,

888
00:49:07,400 --> 00:49:09,440
Speaker 1: what goes up? We'll be back next week. And so

889
00:49:09,560 --> 00:49:11,840
Speaker 1: then you can find us on the Bloomberg Terminal website

890
00:49:11,880 --> 00:49:15,279
Speaker 1: and app or wherever you get your podcasts. We love

891
00:49:15,280 --> 00:49:17,080
Speaker 1: it if you took the time to rate and review

892
00:49:17,120 --> 00:49:20,160
Speaker 1: the show on Apple Podcasts, so more listeners can find us.

893
00:49:20,760 --> 00:49:22,960
Speaker 1: And you can find us on Twitter follow me at

894
00:49:23,000 --> 00:49:27,400
Speaker 1: reag Anonymous Bill, Donna hierarch Is at Bildonna Hirach. You

895
00:49:27,440 --> 00:49:32,080
Speaker 1: can also follow Bloomberg Podcasts at Podcasts. What Goes Up

896
00:49:32,120 --> 00:49:34,880
Speaker 1: is produced by Stacy Wong. Thanks for listening, See you

897
00:49:34,920 --> 00:49:35,319
Speaker 1: next time.