Ex Co-Head of Macro at Bridgewater (joined in 1998, left 2023) Cyclical macro. Very interested in random micro. Investor. Brazilian-ish. Introvert/lurker.
Ridgefield, CT
Joined November 2014
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Agree on the above. Broad index puts seem like the clearest bet to me. Have been early/wrong so far. Really appealing if you have a basket of equities you like. Concentrate on idiosyncratic exposure vs. market risk premiums.
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Ignoring this because you cant back test seems... bad? Lots of examples of these judgement calls going well or poorly. It's hard. I weight this heavily. I think owning US equity premium here is... unwise. But then again I err on the side of not being systematic and not doing beta
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@AahanPrometheus having a systematic forward looking view that risk premiums due to populism, debt levels, and AI is... hard. You can measure these things, kinda. But they won't back test well. You can see what is discounted. And it is very strong growth and average risks.
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Dude we cancelled that trade because I felt sorry for you after you were down at first. But you were spiritually right. Absolutely! Let me know when you are around.
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Priced in to continue. Very cheap to fade. Has it worked for me? Has it worked for anyone? Nah. Spx calls and puts.
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Bad trades. 6 years ago, I bet my 10-year-old nephew a Tesla if $TSLA traded higher on his 16th birthday. I was spiritually right but lost handily. My sister vetoed the payout, so we parlayed the loss: if SpaceX is up when he turns 22, I’ll buy him a used Russian rocket.
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Jason Rotenberg retweeted
I guess the question is. If your goal was to durably bring inflation back to target and you were able to use all of the Fed tools with no restraint or oversight how would you accomplish your goal.
Here's what I would do.
I would sell 50bn of Treasuries and 50BN of MBS monthly and use the proceeds to purchase bills. If the Treasury cut 10's -30's issuance or increased buybacks I would increase my selling bond for bond. My goal would be to crush the asset market and increase the cost of corporate funding.
I would maintain short rates at about current levels because they are less effective to achieve my goal.
Margins at secular highs. Pull-forward accounting are most of recent+analyst. Cyclically boosted. Domestic and foreign politicians get a slice? Top 5 most expensive market ever. I can math out a 5% real long-term return, but would would guess negative. Return-free risk.
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Not really. It's 20-30 is the part of the curve they can most easily push around. Short-term mkt action looks wrong. Plus reduces a bit my overall oil beta.
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I'd go as far as saying that the market action recently testing the treasury is likely wrong. I'd guess the Fed would raise rates in the world (but not do QT). Small positions in the 30yr (long calls). I like UK/Canadian longs at the short end. jasonrotenberg.substack.com/…
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10 Trump takens per 1 Open AI share. This way everyone has a stake in America. In all seriousness there are plenty of examples of countries owning golden shares, seats on the board etc. It's not what you would want if your goal is to optimize. But it can be regulation-like.
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Do you have a view on the Treasury reaction function here? I.e. what would happen for them to act again say next week? Do they wait for the quarterly review? Do I think of this as a BOJ style intervention regime where they may come in at any time to scare the shorts?
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The vol pricing is extremely. I.e. what you are saying is more than fully discounted, no? Sometimes things happen.
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Updated deep-dive on US inflation. Wage growth has been somewhat tame, but that is probably a lagging measure of the recent cyclical upswing. Inflation looks more of a problem now late last year. 3% inflation isn’t an emergency, but a monetary diet is long overdue. Policy is too easy, contributing to an acceleration that makes it more likely that inflation stays sticky or rises from here.
Core services: Demand has increased, employment has accelerated, and businesses have successfully passed price increases to consumers. The primary disinflationary factor is the surprising upside in AI capabilities, but it is far from clear that significant disinflationary effects are imminent.
Core goods: While recent inceases are partly a function of last year’s tariff increases, more importantly, the inflation dynamics of hyper-globalization were, at a minimum, undergoing a reversal. China’s industrial policy push, is if anything likely to consolidate a developed world backlash. These secular forces remain unchanged; in fact, global supply chains have experienced, and continue to experience, another major disruption, further underscoring the need to rethink trade routes and supply chains. This points to an inflationary environment.
Housing: It is currently at 3.2%, representing the sole area that has seen some cooling. On the rental side, higher wage growth compared to the COVID period and less negative supply-demand dynamics should support solid increases. We are a bit further along in the rental supply rebalancing. Home prices, though not part of measured inflation, are also buoyed by rising wages, increasing wealth (supporting down payments), and mortgage rates that have remained relatively stable over the past five years. Affordability is a constraint, and home prices may face pressure if rates rise and equity prices fall. But that is not where we are. For now the direction of travel looks to be for stabilization.
