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Season 2, Episode 19: Picking Spots in Volatility, Interest Rate Markets, With Chris Nicholson

Published June 16, 2020

Hedge fund portfolio manager Chris Nicholson joins the podcast to discuss his outlook on volatility, interest rates, and other markets.

Forecasting these assets has become increasingly problematic in recent years, but there are a few things Nicholson looks to in an effort to identify opportunities for arbitrage.

Content:

U.S. equity prices are determined largely by two axes (3:40);
Inflation expectations have been, well, inflated. This speaks for the relative value of certain bonds (7:03);
What drives inflation anyway? (11:38);
Where to look in currencies (19:05);
Nicholson’s Number One recommendation for investors: take the cheap borrow. Where to put it is the question (21:40);
Sometimes being contrarian is not the smart move. This may be one of those times, at least in FX markets (23:38);
China and the yuan versus the Japanese yen (29:24);
Equity markets in the U.S. and Japan (33:06);
The portfolio manager’s concern about a second wave of COVID (35:40);
Other issues that could be catalysts in 2020 (40:39);
How to trade these views (46:18);

For more information on the guest:

Twitter: @2Christopher
LinkedIn: ChrisNicholson

Not intended as investment advice

Season 2, Episode 12, Transcribed: The Next Stage of the ‘Market Melt-Up’ With David Hunter

Published May 6, 2020

Nathaniel E. Baker 0:36
David Hunter, Chief macro strategist at contrarian macro advisors. You were on the show last summer in August if memory serves, and you told listeners about your idea that there would be a dramatic melt up that would be caused by central bank liquidity, injections and other measures. And anybody who’s been paying attention to markets in the last couple of weeks, could reasonably point out that this is exactly what’s happened here with the Fed, and other central banks, mainly the Fed, stepping in to combat the coronavirus impact, and unleashing all kinds of liquidity. So, I guess that would be the first question for you is where we stand with this. And if this is indeed the start of this melt up?

David Hunter 1:37
Sure. Yeah, I think this is definitely the start of what I think will eventually become a parabolic melt up into a secular top. And in all honesty, when we talked last, I guess, late August, I didn’t anticipate the coronavirus by any means and didn’t anticipate that we’d get down under 2200 on the S&P, I thought we might in fact in January, February, March. I was talking about January, February, early March, I was talking about a correction back to 3000, maybe 2900. But I certainly didn’t see the the cascade that we we got. So, you know, the coronavirus certainly affected the path. But my target of 4000 plus on the S&P, which I had last summer is still my target today. We had another leg down. It took us down to a deeper bottom. But I think it didn’t change the fact that we are going to have this final melt up into a secular top, a top that I expect to be the high watermark for decades to come.

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Season 2, Episode 12: Market ‘Melt Up’ Will Continue Until Late Summer Before Onset of ‘Deflationary Bust’

Published April 14, 2020

With David Hunter of Contrarian Macro Advisors

David Hunter, chief macro strategist at Contrarian Macro Advisors, has for some time predicted a final “melt up” stage of the market cycle before markets crash.

This stage is now underway as markets recover from an initial sell-off caused by the coronavirus (which Hunter admits he did not and could not have predicted).

What comes next is a “secular top that I expect to be the high-water mark for decades to come,” he says. After markets peak around late summer, a “global deflationary bust” will ensue, with as much as 80% downside for equities.

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Content:

Target of 4,000 for the S&P as part of “the final melt up” (2:23)
The downside target. Forget the “retest narrative” in the short term (10:39). Markets should drop by 80% from the top (11:58)
Unprecedented leverage doesn’t leave policymakers much time (14:09)
Background on David: 47 years in financial markets (18:46)
The current crisis in historical context (26:35)
Deflation allows for liquidity injections. Until it creates inflation (32:01)
Discussing the potential political and social fallout from the coming economic crisis (36:12)
How deflation will eventually turn to inflation (40:20)
Discussion of the U.S. dollar’s reserve currency status (45:56)
Bullish outlook for gold and silver (51:37)

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