Press "Enter" to skip to content

Tag: recession

Risks Point to Downside in 2024 (Szn 5, Epsd 29)Contrarian Investor Podcast Season 5, Episode 29 feat Kyrill Asatur, Centerfin

Risks Point to Downside in 2024 (Szn 5, Epsd 29)

Published December 27, 2023

With Kyrill Asatur, Centerfin

This podcast episode was recorded Dec. 20, 2023 and made available exclusively — without ads or announcements — for premium subscribers that same day. This is just one of the benefits of becoming a premium subscriber. The others are detailed on our Supercast or Substack pages.

Kyrill Asatur, co-founder and CEO of Centerfin, re-joins the podcast to discuss his views going into 2024 and the likelihood there won’t be a ‘soft landing’ for the economy next year.

Content Highlights

  • Consensus estimates for 2024 are going to be wrong, just like they were for this year and every year before it (2:12);
  • Coming in to this year the banking sector was a concern, though as it turned out for the wrong reasons (4:39);
  • The catalyst for the reversal this fall and the new, dovish Fed (7:26);
  • The contrarian call is that they’re won’t be a soft landing — or a stock market crash (11:44);
  • Possible explanation for the ‘Fed pivot’ (16:48);
  • How the guest is allocating assets going into 2024 (23:56);
  • Artificial Intelligence (AI) discussion (29:02).

More on the Guest

This podcast is for informational purposes only. Nothing here is intended as investment advice. Do your own research, make your own decisions.

Leave a Comment
Short-Term Treasuries: The Place to Be (Szn 5, Episode 28)Podcast episode cover art feat Jared Dillian, Daily Dirt Nap

Short-Term Treasuries: The Place to Be (Szn 5, Episode 28)

Published December 5, 2023

Feat Jared Dillian, Daily Dirt Nap

This podcast episode was recorded Nov. 29, 2023 and made available to premium subscribers the following day. To become a premium subscriber, sign up through our Substack or Supercast.

Jared Dillian of the Daily Dirt Nap joins the podcast to discuss his bullish views on short-term Treasuries and less optimistic outlook for the US economy. He also discusses his work as an author and views on disparate issues facing society. 

Note: The podcast episode contains some mature language.

Content Highlights

  • The ‘soft landing’ scenario appears to have become the base case. Dillian doesn’t quite buy that (1:37);
  • To be bullish on short-term Treasuries one needs to believe the Fed is going to cut rates. That is imminent (4:26);
  • Addressing the inflation bogeyman. The risk has maybe receded over the short term, but what about a return over the medium term? There is historical precedent for this from the last time inflation was a serious force in the US… (9:37);
  • Background on the guest and a broad discussion of his time at Lehman Brothers (including its downfall), working on Wall Street, career paths, education, and more…(15:48)

More About the Guest

Mention this podcast for a generous discount on the Daily Dirt Nap!

Leave a Comment
Fed Fears Show Signs of PeakJerome Powell quote from Sept. 20, 2023 press conference: "We want to see convincing evidence really that we have reached the appropriate level"

Fed Fears Show Signs of Peak

Published September 21, 2023

The following is an amended version of the Sept. 21 Daily Contrarian. This briefing and accompanying podcast are released to premium subscribers each market day morning by 0700. 

The Federal Reserve yesterday kept its key interest rate unchanged as expected but made enough noise about “higher for longer” to scare investors. Stocks and bonds sold off.

chart of 2-year yield on Sept. 21, 2023

In the case of 2-year bonds, yields spiked to a level not seen since 2006 (see chart on left).

So clearly the market was not prepared for this hawkish language from the Fed. Meanwhile, all Powell really did is just reiterate what the inflation data is telling us, which is that there is more work to do before monetary policy can be loosened. Yes, the dot-plots did move a bit, but that just tells us how FOMC members feel right now. New data can and will change their views.

The Opportunity

Whether they’re justified or not, there is a sense now that maybe Fed fears have reached a bit of a fevered pitch. Just look at the headline in today’s Wall Street Journal: “Higher Interest Rates Not Just for Longer, but Maybe Forever.”

WSJ headline: Higher Interest Rates Not Just for Longer, but Maybe Forever

Ignoring for a minute that “forever” is a pretty long time, this take conveniently forgets that we’re talking about the same Powell Fed that flooded the system with liquidity during Covid and then kept rates too low for too long. The Fed may have to keep raising rates now (thanks to its own doing), but there is no way in hell this continues “forever.”

This is the kind of language you look for to indicate a turning point. And if fears of Fed are indeed at a peak, then fear of fixed income — specifically short-term bonds — could be at a peak as well. And that could be a buying opportunity for bonds. At some point the economy will slow, inflation will ease, and the Fed will cut rates. Then investors will pour money into bonds as they abandon the riskiness of the equity market. We aren’t there yet. But we’re a day closer.

The only way the Fed doesn’t eventually pivot is if we get stagflation. And even then: That will just force the Fed to choose between protecting purchasing power (price stability) and sending the global economy flying off a cliff or flooding the market with liquidity again to spur economic growth. If you’ve been paying attention to the Fed these last 30 years it will be pretty obvious what path it chooses — especially if it’s faced with this conundrum during an election year.

Here’s short audio where the host gets into this a little bit:

Leave a Comment