Not investment advice, views my own, generalist global l/s, cross cap structure. also, not going to have a US recession. #OGHedgefunding
Joined December 2022
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For the last 9 months I have pushed back on idea of US recession. I still think we are in for soft/No landing. Tell me why everything isn’t Rainbows and sunshine from here?
It seems to me at the moment the biggest problem with the market is “the buyside bogey”
Why are all of you indulging all these sellside guys, just so they can shake you out of your positions?
At this point I assume the spec sales guys are just making up numbers
Seeing lots of people make the “it feels like this historical quarter” comparisons
I’ll throw my hat in the ring.
Current setup feels most like Q4 ‘23 to me. We get Iran resolution, market rips violently.
50/50 we get a resolution, 🤞
On AI credit spreads, two things I think worth keeping in mind:
1. GS has been pumping this short for the last two weeks. I assume other banks are as well. Be careful using it as an indicator as I assume like most things ai it is probably getting crowded and likely to be
The equation for EVA is ROIC > WACC = value created. If the hyperscalers are borrowing at 5-7% but generating a >20% ROIC, then classical corporate finance would tell you they are underinvesting and they should be borrowing more to grow fast even at a lower return
Serious thought. What is the chance Trump isn’t negotiating because he is playing chicken with the Fed, and he isn’t gonna budge until we get emergency 50 bps cut?
Two observations:
1. The “Marin tariff construct paper” was predicated on USD strengthening as tariffs were rolled out. That did not work today. If it continues, it is either worse for the consumer or way worse for the importing company
And
I think the last 3-4 week has been effectively a “vol shock” somewhat akin to what we saw in Aug last year. Almost all of the selling has been mechanical and I think was triggered by said vol shock. If I had to bet, I think much of it now rewinds upward, much like last Aug
My understanding is, for basically the first time this year, there is no “gamma wall” at the moment. So there is a window now where the market can actually move. Given the degrossing over the last few weeks I think we are going to move up +5% pretty quick.
Vol person correct me
So about 4 weeks ago, our book stopped working. This was notable as we basically could do no wrong this year, so when it stopped working I went looking for a rationale. At first it felt like a pod was getting unwound, ha ha, as our best but prob most crowded longs got extra hit
Benchmarks for pricing will turn out to be a mirage when the market starts functioning again. And just like there is a feeding frenzy now in the market, there will be a buyers strike when things turn back on as people will “wait for a lower price.”