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Month: February 2023

Yes, the Fed Can Still Engineer a ‘Soft Landing’: Callie Cox, eToro (Szn 5, Ep. 5)

Published February 21, 2023

A short clip of actionable highlights from this podcast episode was distributed to premium subscribers on Feb. 9 — almost one week ago at the time of this writing. The full podcast episode followed a day after that. To become a premium subscriber and take advantage of this and a host of other benefits (and avoid annoying ads and announcements), visit our Supercast or Substack and sign up!

Callie Cox of eToro joins the podcast to discuss her view that the Federal Reserve can engineer a ‘soft landing’ — defeating inflation while not tipping the US economy into a recession.

Content Highlights

  • It’s hard to see how the Fed will be able to combat inflation without breaking things in the economy, but this is the guest’s view (3:00);
  • This view is partly based on the job market (4:06);
  • Inflation is the major risk to the ‘soft landing’ thesis. But there are encouraging signs (6:00);
  • Still, there is a chance investors are underestimating the chances of higher interest rates from the Fed (8:08);
  • Ultimately, investors are discounting the global economy’s strength (9:21);
  • Technology has been harder hit than other sectors of the economy, which may bring second-order effects especially locally. But nationally, initial jobless claims are still low (13:57);
  • The US consumer has been a particular strong point. No reason for that to stop (15:53);
  • Background on the guest (20:12);
  • Views on cryptocurrency (24:48);
  • The concept of decentralized finance, or DeFi: not just a fool’s errand (26:43);
  • Does the VIX still matter? Maybe, but there are better options to gauge volatility (31:14).

More on Callie Cox

Quick Video Highlight From Our YouTube Channel

MoreYes, the Fed Can Still Engineer a ‘Soft Landing’: Callie Cox, eToro (Szn 5, Ep. 5)
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The Future of Technology Investing is Hardware, not Software (Szn 5, Ep. 4)

Published February 14, 2023

With Robert Cote, Cote Capital

Robert Cote, principal at Cote Capital Management, joins the podcast to discuss his model of technology investing, how it’s different than venture capital, and which areas of new technology that he is most excited about.

Content Highlights

  • The last 20 years have seen venture capital focus on software companies, almost to the exclusion of anything else. Therein lies the opportunity (1:09);
  • Hardware has been overlooked and can become the focus of technology investors again. One example is manufacturing (6:39);
  • Use of nanocarbon has created one specific advancement in the area of solar technology (8:50);
  • Unfortunately, this technology is not investable through public markets (12:22);
  • Another example: textiles, specifically textile recycling (17:08);
  • Background on the guest and his investment process (22:56);
  • There is transportation-related innovation as well. No, not self-driving cars (36:31);
  • Something from the realm of augmented reality: X-ray technology for surgery (38:57):
  • Finally, what about crypto currencies? (43:18).

More on Robert Cote

MoreThe Future of Technology Investing is Hardware, not Software (Szn 5, Ep. 4)
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The New Narrative, a lot like the Old Narrative

Published February 13, 2023

Concerns about inflation and Fed rate hikes are front and center again as focus turns to January’s CPI print…

The following is an amended version of the Feb. 13 Daily Contrarian. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. To subscribe, visit our Substack or Supercast.

It’s a big week with the Consumer Price Index supplying a fresh inflation reading Tuesday.

Last week wasn’t great for stocks. In fact, it was the worst week of the year so far. Inflation was one persistent theme to emerge from earnings, which from the looks of it is getting investors to rethink the narrative that the Fed can start cutting rates later this year.

In reality that narrative was foolish to begin with. More importantly, it wasn’t due to any tangible comments by Fed officials — some off-the-cuff hints by Powell that probably weren’t even intended as such were enough to get investors to pile into risk assets, however temporarily.

So apparently the narrative has shifted again, from ‘soft landing’ to ‘higher for longer.’ From ‘don’t fight the tape’ to ‘don’t fight the Fed.’ Which means this meme can safely be unearthed again:

Don't Fight the Med MaryJane meme

Reality Check

This latest market activity is a bit of a relief to those of us who were questioning our sanity coming in to last week. Markets can stay irrational for awhile (longer than we can stay solvent, as the saying goes) but maybe this latest bout of bullish irrationality just wasn’t long for this world to begin with.

Two things we’ve been pointing out the whole way: 1) the Fed record of engineering soft landings is not good, and 2) there is a lag effect between when the Fed sets interest rates and when these are felt in the real economy.

This doesn’t make for a particularly constructive environment for risk allocation and makes the January rally look like a dead cat bounce.

Now that that’s settled, we can consider all the ways that it’s wrong. Have at it.

Podcast Excerpt

Quick highlight from today’s podcast (available in its entirety for premium subscribers) courtesy of our YouTube channel:

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