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Tag: Federal Reserve

Watch for the Bounce in Equities: Brent Kochuba, Spot Gamma (Szn 4, Ep 7)

Published March 10, 2022

Brent Kochuba of Spot Gamma joins the podcast to discuss his view that there will likely be an equities rally into the March 18 options expiration.

This podcast was recorded Wednesday afternoon, March 9, 2022, and made available to premium subscribers that same day. Become a premium subscriber today by visiting Contrarian.Supercast.com or our Substack. There are many benefits beyond getting podcasts a few days (or more) early and not having to deal with annoying ads or announcements.

Content Highlights

  • Stocks have been selling off with the Nasdaq now officially in a bear market. But the guest is short-term bullish for reasons that can be traced to market makers hedging counterparty risk (2:39);
  • What about all the uncertainty with Russia-Ukraine? (5:57);
  • Stocks are up since the start of the Russian invasion on Feb. 24, likely because markets were hedged going in due to Fed tightening concerns (9:28);
  • What to make of the March 9 rally? A brief primer on gamma, vanna, and charm aka delta decay (11:02);
  • Similar gamma squeezes caused rallies in the past around options expiry (15:20);
  • Background on the guest (21:31);
  • The hedges investors have put on ahead of the FOMC meeting next week should lead to more risk-off. The lower bound for the S&P 500 is 4,100 (24:36);
  • Recent days have seen a change in options flow: Nvidia (NVDA) and crypto names such as Coinbase (COIN) have benefited along with Amazon (AMZN) and the Financial Select Sector SPDR ETF (XLF) (26:50);
  • Liquidity is important and recent months have seen some of it leave the system (30:06).

More Information on the Guest

Video Highlights

MoreWatch for the Bounce in Equities: Brent Kochuba, Spot Gamma (Szn 4, Ep 7)
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Szn 4, Ep 6: The ‘Bad Times Are Already Here,’ With Acquirers Funds’ Tobias Carlisle

Published March 2, 2022

Tobias Carlisle of Acquirers Funds rejoins the podcast to discuss the stock market’s latest dramatic reversal, this time over Russia’s invasion of Ukraine, and why investors may be a bit too bullish at present…

Content Highlights

  • How to take the huge reversal last week with Russia-Ukraine? (3:11)
  • Every war starts with “the boys will be home by Christmas,” but most tend to drag on longer than anticipated. Sometimes a lot longer… (5:13);
  • Growth stocks have been in correction territory for some time. Are they in a bear market? Probably… (8:52);
  • The interest rate cycle has not started tightening but inflation has the Fed caught between a rock and a hard place (15:53);
  • Energy and energy stocks are still cheap. Then there are defense contractors. Lockheed Martin (LMT) has benefited from Russia-Ukraine and Carlisle is a holder… (21:25);
  • Facebook aka Meta (FB) is also cheap (23:20);
  • Non-fungible tokens, or NFTs: Dead as Disco (30:12);
  • The aim of investing is to survive the bad times and they are “probably here” (37:18).

More From the Guest

MoreSzn 4, Ep 6: The ‘Bad Times Are Already Here,’ With Acquirers Funds’ Tobias Carlisle
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Szn 4, Ep. 1: Barry Knapp on Uncertainty Shocks, Inflation, Economic Growth, and What Else to Expect in 2022

Published January 7, 2022

Barry Knapp of Ironsides Macroeconomics rejoins the podcast to discuss his 2022 outlook for the economy and markets. He is broadly optimistic on the former, but less enthusiastic about the latter — at least in the first half of the year — with strong possibility of ‘uncertainty shocks,’ especially around Fed events (sound familiar?) There is also some interesting discussion around interest rates, inflation, and China, among others.

Content Highlights

(Spotify users can link to the start of the section by clicking on the timestamp)

  • A lot has changed in a year, though probably nothing quite as much as the inflation outlook (3:04);
  • Markets and economics should diverge significantly in the first half of the year (4:51);
  • The Federal Reserve is due to embark on a rate-tightening cycle, which should be negative for markets but will be net-neutral, or perhaps even positive for the economy (8:00);
  • Inflation is running hot, but the guest has done some deep research on similar historical epochs and finds the concern less pressing than most (17:20);
  • The key level for inflation is 4% — if the CPI exceeds it consistently there could be trouble. Link to the Fed paper referenced here (21:33);
  • Still, there is a strong possibility for ‘uncertainty shocks’ in the first half of the year (29:52);
  • Finally, China: Reasons to be bearish. Very bearish (34:58).

More Information on the Guest

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MoreSzn 4, Ep. 1: Barry Knapp on Uncertainty Shocks, Inflation, Economic Growth, and What Else to Expect in 2022
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