Lead-Lag Live

Julian Brigden on "Trump 2.0" Market Impacts, Cryptocurrency Dynamics, and Avoiding Speculative Bubbles

• Michael A. Gayed, CFA

Share episode

What if a political resurgence could reshape financial landscapes? Join me, Michael Gayed, alongside the seasoned financial strategist Julian Brigden, as we dissect the hypothetical "Trump 2.0" scenario. We tackle its potential ripple effects across growth, equities, fixed income, and the dollar, with a special spotlight on the evolving role of cryptocurrency. Julian, a veteran from Lehman Brothers, HSBC, and the mastermind behind MI2 Partners, brings unique insights into how retail investors, emboldened by the post-COVID market, are challenging the supremacy of institutional giants. 

Together, we unravel the cyclical nature of markets, examining how inexperience often breeds overconfidence and risky ventures. Our conversation draws intriguing parallels between today's market trends and historic bubbles, like the dot-com era, fueled by captivating narratives. Julian and I lay bare the risks associated with speculative fervor and over-leveraging, especially in booming sectors like AI and crypto, while also contemplating the stages of market reaction to potential Trump policies. This discussion serves as a cautionary tale of maintaining vigilance amidst enticing market stories.

Venture further with us as we scrutinize the broader economic implications of tariffs, tax policies, and monopolistic market structures under the Trump administration. We explore the potential downsides of reshoring manufacturing and the inflationary pressures of tariffs on long-term bond yields. From the challenges in the oil market to the global influence of a strong dollar, our dialogue exposes the intricate dance between government policies, market reactions, and economic growth. This episode promises a thorough exploration of these complex dynamics, offering listeners a nuanced understanding of the current financial terrain.

The content in this program is for informational purposes only. You should not construe any information or other material as investment, financial, tax, or other advice. The views expressed by the participants are solely their own. A participant may have taken or recommended any investment position discussed, but may close such position or alter its recommendation at any time without notice. Nothing contained in this program constitutes a solicitation, recommendation, endorsement, or offer to buy or sell any securities or other financial instruments in any jurisdiction. Please consult your own investment or financial advisor for advice related to all investment decisions.

Today's sponsor is Deftform, the simplified form builder you've been waiting for. Stop using overpriced and bloated alternatives. Deftform gives you everything you need to create unlimited forms and collect unlimited responses.

Visit deftform.com and use the code LEADLAG to get 20% off the Lifetime package.

 Sign up to The Lead-Lag Report on Substack and get 30% off the annual subscription today by visiting http://theleadlag.report/leadlaglive.


Support the show

Speaker 1:

So the initial knee-rope reaction was simply an assumption that Trump 2.0 would be a replay of 1.0, would be very positive for growth, would be very positive for equities, would be bearish for fixed income, would be bullish for the dollar, and so on and so forth. The twist this time was the comments on crypto. So we thought that phase would last till about mid-December, which actually was the case, and then subsequently we would enter what we called the confirmation phase. So the confirmation phase you would start to see strong, confidence-based data, soft data, PMIs, this sort of thing, and by and large, that has been the case right. So they would confirm in a gut check that we are moving into an environment of higher growth.

Speaker 2:

I'm excited for this conversation because we're going to get real as far as all the bullshit that's gone on in markets. That's a good way to start a conversation. So, with that said, my name is Michael Guy, a publisher of the Lead Lag Report. Joining me here is Julian Brigden. Julian, I know a lot of people know you from X. They love your accent, but a lot of people don't know who you are. So what is your background? Let's go through the myriad of things that you've done throughout your career, long checkered career, michael.

Speaker 1:

I've been around, I've been doing this thing, oh God Now 30, 36, 36 years. So I started off as a young whippersnapper on the trading desk at Lehman Brothers trading precious metals, did that for a while and then moved to HSBC, traded currencies at HSBC. I had a stint actually for my stints at Drexel Burnham. I think you can see this pattern here. Like Drexel Burnham, lehman Brothers, I've never quite believed in the sanctity and the stability of investment banks and then sort of was in FX for quite some while, ended up running sales for one of the groups there, moved over to the sales side from the trading side and then at some point I moved into the sort of policy consultancy side.

Speaker 1:

I went to work for a group called Medley Global Advisors. Medley was the premier policy research group of its time. I used to charge an awful lot of money it's money I'd love to be able to charge for my service, like a quarter of a million dollars a year by car. Then I went back for a stint back in the markets trading currencies and selling currencies again. Then launched MI2 13, 14 years ago. Went back for a stint back in the markets trading currencies and selling currencies again and then launched MI2 13, 14 years ago and we built this sort of business. It's in organically, very much focused initially on the institutional side and then a few years ago I'd set up a business with Raoul Pal at Real Vision to sort of you know link into the sort of retail side of the business to some degree and that worked well until we decided to go our separate ways. Recently, speaking about retail.

Speaker 2:

retail has driven a lot of the manic flows. I've made the point that I think we are in some kind of a weird selective mania and you can see that based on the trading volume and leverage funds and a lot of the speculative option trading strategies. What did your research tell you about retail being a major driver, unlike the years of old, where it was really more institutional money that was driving things?

Speaker 1:

Yeah, I mean, look, retail always tends to get typically involved at the highs and I think these times, to be fair to people, I think there has been a structural change, michael. I think COVID brought a whole new bunch of investors into the market. I think that is a structural change. I think that's something that institutional money has had to wrap its head around for being overly dismissive, but I would caveat that with also saying that institutional has been involved in a market which, by and large, has been supported, cosseted by policymakers, in a very good investment environment.

Speaker 1:

And when I look at some of the, you know if I try and write and I don't try and write anything that is overly scandalous or aggressive in any of my sort of ex-posts sometimes the pushback you get from people who have been in the, you know been trading, for three, four years, you know privately, I think, displays a degree of inexperience, right, because you know I have lived through cycles where I've seen manias before and there are, to your point, there are elements of that here right now, unquestionably and particularly, you know, this sort of visceral belief that people have, that I think will be tested and I you know and I would suggest to people that you know, you just learn the stuff. That sort of shit that really scares me is when I see people post this sort of never selling, you know, gonna hold it forever, and I'm like I've I've seen those sorts of things and those things drop 80, 90%. I love the, the point about experience.

Speaker 2:

I love the point about experience because, while it's not a panacea to overconfidence, if you're inexperienced, you are much more prone to overconfidence. Right Now, we go back to the idea that the precursor to every crash is leverage. The precursor to leverage is overconfidence. Right.

Speaker 1:

So it is interesting to see how that's playing out.

Speaker 1:

I would also say, if I may add, there's this look when I've gone back and I've looked at bubbles in the past and with the exception of maybe the tulip bubble, I can't quite figure out the rationale fully behind that. I've had people try to explain to me, but I still don't really buy into that. The better the story, the bigger the bubble, the more viable the story, the bigger the bubble. And when you combine it as well with international flows, which say, which was an example we had in the dot-com bubble, where international money was piling into the US, which is certainly the case now or you go back and you look at, say, the late 1800s and the various railway bubbles that we had in Latin America where international money funded those, particularly London-based money in those days, the stories are really compelling and that tends to make the bubble bigger. And I would say that the AI story is compelling, very compelling. The question is are you buying the assets at the right price? That's the only thing you have to ask yourself.

Speaker 2:

Is the story around Trump in that camp as far as how positive he's going to be for the economy and for markets.

Speaker 1:

So, look, we set out, the day after the election, a kind of a three-stage process that we assumed that markets would trade through. The first one was assumption we called it right, so an assumption. We have very, very little data on what either parties were going to actually deliver in terms of concrete policies, so the initial knee-rope reaction was simply an assumption that Trump 2.0 would be a replay of 1.0, would be very positive for growth, would be very positive for equities, would be bearish for fixed income, would be bullish for the dollar, and so on and so forth. The twist this time was the comments on crypto, so we thought that phase would last till about mid-December, which actually was the case, and then, subsequently, we would enter what we called the confirmation phase. So the confirmation phase you would start to see strong, confidence-based data, soft data, pmis, this sort of thing, and, by and large, that has been the case right. So they would confirm in a gut check that we are moving into an environment of higher growth, and that would confirm those kind of initial moves. And then what we said all along, though, was that we were a little concerned about the reality phase and the reality phase. Those risks rise as we approach the inauguration and particularly post the inauguration, with the first 100 days, the release of various executive orders, which we think is going to be a plethora of those, and we were particularly worried by the tariff issue. And I think we remain concerned about the tariff issue. We think the neoliberal crowd who think it's inconceivable for anyone to mess with globalization there's a classic example the other day when we saw that Washington Post article where everyone knee-jerk reaction was, you know, when they said there might be you know it may not be a blanket tariff, was to go whoa. We told you so this is all about negotiation stance and Trump comes out and goes no right, and that's very much our view. We think tariffs are going to be a huge what they call in DC pay for, so a huge part of the revenue raising effort to pay for the extension of the tax cuts and any other tax cuts he manages to push through and, in addition, a structural tool to address industrial policy. We do not. And the other thing is, Mike, we don't really see these as particularly corporate friendly. They are not corporate friendly and I think this is the reality that people misunderstand. They look at Trump 1.0 and they say he was great for stocks, he gave big tax cuts to corporations, but that was never the plan.

Speaker 1:

The plan with the first set of tax cuts and I know this from my policy contacts in 2016, was that they were going to be very targeted. The objective always was to bolster US Inc right To re-strengthen the US economy to-onshore manufacturing. That has obviously employment, wealth implications, but also national security implications, which are very important and, I believe, structurally correct. And the way that the plan was to do that was to offer a carrot, and the carrot was re-onshore all those retained earnings that sit in Ireland and Luxembourg and blah, blah, blah from all these Fortune 500 companies, and if you invested them in plant machinery and employment in the US, you would get tax cut. But there was a condition if and the problem is that taxes is a congressional issue so it went to Congress and the sticky little fingers of the lobbyists get involved and they strip all the conditionality out and so it just becomes a broad-based tax cut. So it basically failed in large part to achieve those objectives. We think this time much more, the attempt is a stick, and the stick is in the form of the tariffs, and the objective is to make it uneconomic for you to manufacture and import and to make it much more attractive, that you re-insure. And if you re-insure, they will.

Speaker 1:

This is aimed at China and Mexico. Certainly, they will suffer in this environment. They have been beneficiaries of offshoring. But who made the decision? It wasn't China and Mexico, it was corporate America, it was the C-suite. It was the C-suite. The C-suite has made themselves wealthy at an unprecedented level of share of GDP Since globalization started in the late 80s. It's tripled. It's gone from sort of. Their share of GDP went from about 2% corporate profits up to about 6% and at the same time, incomes for people as a share of GDP have fallen. And Trump's real agenda is to reorientate that equation. Now. The good news is he's not a socialist, so he doesn't want the overall pie to shrink and he doesn't want to take your share, corporates, of that pie. But going forward, he wants way more share of the pie to go to workers and to strengthen the underlying US economy. And that is not inherently bullish for stocks.

Speaker 1:

Let's play a little game here. Let's say you were making something in China for a dollar. He puts a 50% tariff on it and all of a sudden, let's say that makes it pari-pursuit of manufacturing in the US that it costs you about 50. So you're left with this sort of dilemma Do I keep manufacturing in China, import pay the 50 cents tax, or do I manufacture in China? And then he says well, oh, I'll give you a tax cut equivalent to 15 cents. So suddenly in the US it's costing you $1.35 versus import. So you move to the US in your call, but the product no longer costs a dollar. It costs $1.35. So who pays that $1.35? Now I'm sure a lot of corporate America is going to try and shove that onto the consumer, but some of it's going to go into corporate profits. So I think this assumption that what Trump is doing is just pro, pro, pro stocks is not necessarily true. It's pro-America, but that may not be the same thing.

Speaker 2:

I wonder if that explains why long duration treasuries have been treating as poorly as they have been, as yields have been skyrocketing. Is this the bond market saying take Trump seriously on these tariffs.

Speaker 1:

I think there's an element of that. We've done some work on inflation and we took some very conservative assumptions on tariffs. I think roughly this is a 10% across the board on goods would get you the sort of amount of money that they need to offset some of the other tax cuts, because they need roughly $2.5 trillion over 10 years from tariffs. But that's quite inflationary, Michael. That is quite inflationary, I think. The other thing that we've talked about a lot with our clients is in terms of bonds. It's just the structural negative bond environment in terms of bonds is just the structural negative bond environment. This is a very, very structurally negative bond environment.

Speaker 1:

We are on the record for saying basically that we are structural bond bears. We believe that for the next 20 years absent, which will probably come at some point, but absent policy intervention the trend in bond yields is up and to the right and materially right across the developed world and absent COVID, we would have never made a new low. The low would have been in 2016. So that's led by all sorts of things demographics, de-globalization, shifting pool of, or shrinking pool of, global savings available to buy global fixed income. So if you want a kind of rising global R star right, we're definitely on the record for saying that. But then you have to put in on top of that, in addition to the inflation impact of what Trump's doing, is obviously the unwillingness or inability of any Western government really to address these deficits. And in particular, the US just seems to be one of the few countries that seems to want to continue to run such profligate policies.

Speaker 1:

And in that environment and there's some technical factors as well the setup in the bond market just doesn't lend itself to what's referred to as cash and carry buyers. So you borrow at the front end and you buy long-term yields and you earn that carry. The curve is not steep enough at the moment. So in that environment there just literally are no buyers of the long ends. They are just not there, of the longings right, they are just not there.

Speaker 1:

And the other problem I would say is as well is if we've got central banks which certainly seems to be up until, remarkably, after the election, we have this very passive dovish Fed. I can't trust them in an environment where I'm looking at very pro, conceptually, very pro-growth Trump policies to protect my interest as a bondholder. So why would I take duration risk? Why would I risk going out down the curve and buying the long end. Screw you right, Screw you. So I think there's lots of factors that are contributing to this sell-off, and I think you can call it bond vigilantes, but there's nothing the policymakers are doing to make me feel comfortable if I were trying to invest 30 or 50-year money.

Speaker 2:

But doesn't that imply that we're at a point now where the refinancing crisis really starts to become a serious thing, actually manifest? I mean? A lot of things are refinancing commercial real estate, obviously, and small caps still are languishing because of the hire for longer environment. I mean, at some point, some of these dynamics are going to create credits.

Speaker 1:

Absolutely right, but our view has been very simple. Our view has been very simple. We have, since 2009, played this merry dance between stocks and bonds. It simply hasn't. And so then the bond market has gone. Oh well, I guess it's our job then to tighten financial conditions and sold off again and yields have risen.

Speaker 1:

And I think we're in this game, michael right, where the equity market looks effusive. It doesn't look like it wants to give up the ghost, yet I think it is very vulnerable. I think it's extremely dangerous technical levels. But that leaves the only grown up in the room, the bond market, and that will have to be the disciplinarian, particularly if policymakers are not willing to do the right thing. I mean, I think, look, given the macro setup, right where we've got as I said, we're in that confirmation phase of the post-Trump period We've had some very potentially bullish underlying like PMI forward indicators, some pricing indicators.

Speaker 1:

We just had ISM services prices paid. I'm not running with that. I think there are some potential issues there, but at face value, it looks very inflationary, pro-growth and the equity market still expects it to get rate cuts. Look, what the Fed really should be doing is very simply saying if these forward indicators are correct, then we're done cutting. In fact, we're moving back to an asymmetric or sorry, symmetrical policy stance where this could be it, and if growth and inflation re-accelerate, we may be hiking again, because that's the reality of the situation. If these numbers are correct and the equity market does not drop which is obviously the $64 billion question then bond yields are going to rise until bond investors feel like they're properly compensated, which, to my mind, would be about 75 to 100 basis points higher in 10-year yields.

Speaker 2:

Isn't it real disciplinary in the bond market the junk market, I mean, it's ultimately about credit spreads is where things start to-.

Speaker 1:

Well, the problem, yes, it should, but the issue with credit is credit rightly tends to do badly when you start to enter the recession, michael. Right, because at that point you're looking at high levels of debt amongst those borrowers and, as the economy slows, an increasing inability to service that debt. Right, if you've just got strong growth and strong inflation, which gives you strong nominal GDP, then actually your cash flow accruing to those firms is usually pretty good.

Speaker 2:

What about counteracting forces, disinflationary dynamics that Trump could bring into play? I mean, I think deregulation I would think is disinflationary, but maybe it's not. I want to hear your thoughts on how deregulation, which seems to be a pretty big theme for Trump, plays into all this.

Speaker 1:

It's bloody hard in the US We've got an incredibly monopolistic, oligopolistic market structure. Here's just an example that many people can relate to. So if you have renovated your house, or particularly your kitchen, recently, and particularly if you're doing something high, high end, your wife would have said oh well, I love the Bosch, the Wolf, the Sub-Zero equipment. And you go okay, fine, darling, we'll just go along to the shop and see what sort of deal we can get if we go with Wolf or we go with Miele or whoever the hell you want, depending on the design of your kitchen. Right, with Miele or whoever the hell you want, depending on the design of your kitchen.

Speaker 1:

Now in the US, when you do that, you think, well, I'm going to be spending a shed load of money on these appliances, and you are right. Then you go in there and say so what sort of deal can you do, mick? And the answer is we can't because we have MSRP prices and if we negotiate with you, we will lose our license. Well, that's monopolistic pricing power. I mean, given that there's a bunch of things, you really oligopolistic pricing power and in Europe that's illegal. If you did that in Europe you'd go to bloody jail, right, and you'd get fined as a company and in Europe you can buy all of those appliances on the internet and you can haggle to the nth degree. You can use that example across a myriad of things.

Speaker 1:

Remember the Biden administration getting wound up by the price of beef because the slaughterhouses were taking profit? We're having very, very in many respects, uncompetitive economy in this country because actually we've allowed combinations and we allow, we don't enforce pricing inquiries. So I think it's really quite hard&A proposals that they're making actually will really further strengthen the pricing power of US corporations. The only way you do is you break things up. I'm not sure that I really see that happening. Maybe outside someone like a Google or Facebook the Trump administration that's got it in for some of the liberal tech sector. I just really don't see that. Yeah, I think it's interesting.

Speaker 2:

It's complicated and it's probably going to result in some lumpy out and under performance, whatever is done. I saw some proposal that for every new regulation, trump wants to cut 10 others. That's going to be interesting to see how that impacts margins for certain companies.

Speaker 1:

I mean, the big one that Scott Besson has flagged is obviously oil prices. Right, you know he wants 3 million barrels of new oil. Well, I think it's intriguing, michael, that the only market that doesn't seem to have got the Trump memo is the oil market. And, if anything, if I look at it now, it looks like we're challenging, potentially, a breakout in crude oil prices to the upside, but I'd want to see them go. I'm watching CL1 and I'd like to see it go through sort of let's call it 75 bucks, but it doesn't look to me that that market's got that memo, and I think part of the problem there is.

Speaker 1:

We saw back in sort of 2011, 2012, when money piled into the shell space, that investors got screwed, and this is a tax typical MO.

Speaker 1:

I know a lot of. I lived in Vail for a long time and lots of Texans come in there and you get these great conversations with these oil guys, and the MO was very simple We'll borrow money off investors, we'll screw them, we'll make the money, and I think 2011, 2012, that was the end of that game. And so now investors are demanding returns, and so we've seen the likes of Chevron announce plans to actually cut back investment spending and I think it's going to be very hard for the Trump administration to encourage companies to produce more unless they somehow radically lower the costs. And the costs would be extraordinarily expensive. I mean just to get a one year sort of 20 buck, let's say, equivalent drop in oil prices, which you could do if you boosted production. You worked it out exactly what the numbers would be. But it costs you about $100 billion in a tax incentive to oil companies to lower their costs. Let's say those are extraordinarily expensive steps. I'm not saying they won't do them, but you know expensive steps.

Speaker 2:

I'm not saying they won't do them, but you know, let's take it to the international side and bring currency into this, because the dollar is obviously still been shockingly strong. Some are calling for a top. I don't know if you are or not, but it used to be the case that a strong dollar would cause some real funding strain by international borrowers. I mean, are we at a point now where we're going to see some blowups overseas?

Speaker 1:

I mean, look, yes, you've seen that in the past, right, you know your classic example being the sort of Latin American debt crisis, the Asian crisis, and the reason was, is people have borrowed a shed load of dollars, right, and you know, as the dollar squeezes, you get this classic example of what's referred to as Triffin's dilemma, right, this incompatibility of the policy pursued by the domestic provider of those reserves versus the policy they should be proceeding to underpin or to stabilize the reserve system. I don't think we're quite there yet, don't get me wrong. I think what's driving the dollar now is weight differentials, this perception of this growth trade. I think the big thing is, and that can continue, don't get me wrong. I've just said I think bond yields could be moving 75 to 100 bits of spots higher, but I suspect they'll be moving pretty close to that overseas. So I understand the move, I support the move in the dollar. I could see against the euro move maybe just below par.

Speaker 1:

I am getting concerned about some places, but it's not really a dollar link story and I think the bigger dollar link story is all the money is here, michael, if I look at all the world's money, it's in the US, right? So it's not so much an issue of foreigners' dollar liabilities as foreigners' dollar assets. Foreigners have basically since I mean 2014 particularly, but then accelerating materially since 2020, have funded what we refer to as US exceptionalism, and they funded it by buying our assets. Refer to as US exceptionalism and they funded it by buying our assets. So, essentially, if you look at it from the flip side, the US has been selling off assets. You could call them the family silver, but I'm not sure if I'd call a treasury the family silver. Certainly, nvidia stock is the family silver, so that you and I can go on holiday to Europe and stand on a cliff with 500 other influences in Santorini and take a picture.

Speaker 1:

I mean, that's literally what's been going on, and so the bigger risk is, at some point, that foreigners will either need their money home or the money will just go home because something changes in the setup in the US. Or the money will just go home because something changes in the setup in the US, but it is all. The world's money is here in the dollar at the moment, not the other way around. So I think the bigger structural risk is that that policy reverses. Does it reverse immediately? I suspect not. As I said, I think we probably can push this thing down towards past slightly below, but you've got to be careful in Q1. Q1 is historically the time of the year where the dollar makes the high and low for the year, so just run risk tight.

Speaker 2:

I put out a post using certain expletives around what's going on with China as far as yields there, exact opposite of what we're seeing in the US. What is happening with China Is that sort of a gray swan. It's not a black swan, because you'll see it, but nobody's paying attention to it just yet.

Speaker 1:

as far as negative worldwide implications, I think it's a very similar scenario than we saw in Japan in the 90s. This is a balance sheet recession, if you want to discover about this gentleman called Richard Koop, who was the chief economist for Nomura back then and did some amazing work on this and this is basically a society that's built too much debt and is now having to pay down that debt and so now is focused on cash flow and using that to generate and will not particularly be spending. I mean, in a way, it's a sort of self-enforced austerity by the corporate sector and the consumer, as they do with they built up too much debt and they built up assets at the wrong price, right, and so as those they have to pay down the debt and the asset prices are under pressure. You just have to deal that with trying to basically scrimp and save and maximize your cash flow and pay down your debts as quickly as you can.

Speaker 1:

Look, I think your description of it as a grace one is probably right. I mean, I think, being a communist system, their ability to kind of plug the holes in the dike. Maybe they're working with 12 fingers, not 10. But it is an infinite. It is an infinite, but it's certainly going to be a drag on structural global growth. There's no question it leaves the US kind of the only game in town, but the US has its own problems, as I said. I mean I think it's an incredibly fragile setup when I look at the global economy.

Speaker 2:

If we're looking at the US and we're trying to say to ourselves, okay, these areas of the market should perform the strongest, I think most people automatically go right back to tech. Any thoughts on different sector leadership that could be coming? Any potential here for tech to no longer be the main driver?

Speaker 1:

Conceptually, you should be seeing and you know obviously a lot of people talked about this you should be seeing a rotation into sort of industrials and Russell and so on and so forth. The problem with and I don't mind industrials, but the problem is nothing's cheap. The second problem is that if you're not going to get lower rates and you're stuck in this sort of hire for longer, then it's not great for the Russell and so you're kind of left with those companies that can perform in a high rate environment, and these generally probably are the tech firms. Because you're right to say, michael, that there is a maturity war coming right and it's going to be pretty painful as we move through this year and into next across the whole swathe of commercial real estate. I worry about the private equity space, all sorts of things, and although the private equity boys have been quite clever that they're now lobbying to allow private equity to be trialed, pension funds right, that's their exit. I've stuffed you, you and me, with private equity at the ass high and they get out of their deals that they can't sell to anyone else. But no, in terms of those sectors, look, tech to me just looks very, very extended when you're paying very, very large amounts.

Speaker 1:

I like some of the stuff that I think is cheap. I mean I like precious metals still precious metal miners in particular. I like energy, which I think looks very cheap. Emerging markets look very cheap, but you need to see a couple of things before those rotate positively because even, let's say, I'm right about some of my concerns about the equity market and we end up with a decent correction. If we end up with a decent correction, nothing, nothing does well in that environment, or very few things do well. They do relatively better, but they usually all go down.

Speaker 1:

I love it how? If you talk to a pension fund manager, so I'll beat the index, yeah, but mate, the index was down 20%. I was only down 19. Who cares? You were down 19.

Speaker 1:

I know that's how the industry is set up and I understand why it is the case, but from an investor perspective, that's not how I think of the world. From a personal investment perspective, I don't want to be down 19. So there are times, I think, where you have to be circumspect. And even the things that I love I love gold, I love silver, I love some of these energy stuff, I love some of these emerging markets I just got to be realistic and just sort of say that if I'm really getting increasingly worried that we're going to have a 22 type situation maybe, where you kind of have this bonds and stock selling off together, which stresses the 60-40 portfolio, the sort of risk parity things, then kind of everything gets thrown out with the bathwater, then the only really thing to have in that sort of situation is cash shorts and long vol and that is a scary portfolio.

Speaker 2:

In a lot of ways it's been very profitable but very scary.

Speaker 1:

And he wouldn't do much for my gray hair mate. Exactly exactly.

Speaker 2:

Julian, for those who want to track more of your thoughts, more of your work, where would you point them to?

Speaker 1:

So yeah, we've just launched a new product for the sort of retail space called MacroCapture and you can reach out. You can either find me on Twitter or on X Sorry showing my age there At JulianMI2. You could reach out to support at mitopartnerscom if you want to look that up, and then you can go onto our website. You can find a link which is the MI2 Partners website and find a link to Mac insanely active macro market and, I think, really quite tough market over the next few years. Macro is very important at inflection points. Really it doesn't matter in between, but you really need to understand and have a structure in your head and I think now is one of those times.

Speaker 2:

It's going to be an interesting year. Folks, Everybody make sure you follow Julian Brigham, Appreciate those that watch this live and I'll see you all in the next episode. Thank you, Julian, Appreciate it. Pleasure Michael.

People on this episode

Head Shot

Michael A. Gayed, CFA

Host