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Season 3, Episode 17: Don’t Fear Inflation, the Fed is Right, 10-Year Yields to Drop to 0.5%

With Alfonso Peccatiello, The Macro Compass

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Alfonso Peccatiello joins the podcast to discuss his contrarian views on inflation, bond yields, and interest rates.

The guest doesn’t buy the inflation narrative entirely, believing credit creation has peaked. We are likely to see negative economic surprises and drawdowns in risk assets starting in the fourth quarter. The yield on 10-year bonds should peak at 0.5% due to a ‘Eurofication’ of the U.S. yield curve.

Content Highlights:

  • Why concerns about inflation are misguided (1:54);
  • The Fed is right. Inflation is transitory (6:37);
  • Demand for bank loans is “terrible,” despite extremely low yields (13:54);
  • Why do bond yields continue to drop? (18:16);
  • The bond market is saying growth and credit creation has peaked (23:24);
  • Why central banks’ digital currency experiments are potentially a game-changer (27:49);
  • Background on the guest (33:04);
  • The ‘four quadrant’ approach to macro investing and where we are right now (36:26);
  • The Fed tightening cycle should start in late 2022 and peak around 0.75% (47:50);
  • How low do we go on the 10-year this cycle? (57:00)

More Information on the Guest:

Not intended as investment advice.

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Season 3, Episode 16: Merger Arbitrage and Why to Not Fear The Antitrust Boogeyman

With Deepak Gurnani, Versor Investments

Deepak Gurnani, managing partner of Versor Investments, joins the podcast to discuss merger arbitrage investing. 

Merger arb is the rare strategy that can (really!) consistently produce non-correlated returns. But it isn’t easy to execute. Gurnani provides some information around what has worked for his firm and things to look for for those wishing to get involved with the strategy.

Not intended as investment advice.

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Season 3, Episode 15: Colin Lancaster is Fed Up!

The macro trader discusses his book and what to make of central bank policies.

Colin Lancaster, global head of macro/fixed income at Schonfeld Strategic Partner Fund, joins the podcast to discuss his book Fed Up! Success, Excess and Crisis Through the Eyes of a Hedge Fund Macro Trader.

The book spans the period from October 2019 to June 2020 and includes the height of the coronavirus crisis. This features heavily into the conversation. We also discuss the Federal Reserve and his view of current markets.

Content Highlights:
(Spotify users can click on the timestamp to link to the segment directly)
  • What went into him writing the book? What was the impetus? (3:50);
  • Macro investing and the need to be a diversifier and disaster hedge (7:38);
  • What is he most concerned about right now in markets? (12:07);
  • What does an investor do in this market, especially with the Fed continuing to hold rates near zero? (14:30);
  • The Fed’s experiment is “dangerous” and the central bank has “very little credibility” when it comes to inflation (18:55);
  • Background on the guest (23:49);
  • The Fed’s role in creating and fostering wealth inequality is significant, despite its good intentions (27:48);
  • How to go about fixing this? Does the Fed perhaps have too much autonomy? (31:30);
  • The book is technically a novel and has quite a few characters. Are these fictional or based on real people? (36:28);
  • Alternative data; some ideas of what to look for (40:35).
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