Macro Blowups Everywhere - What Now?

The macro trading floor. With me, Alfonso Piccatello, founder of the Macrocombas, and former head of investments at the large European bank. And I am Brent Donnelly, president of Spectre Markets. I've been a portfolio manager, day trader, and market maker at the biggest commercial and investment banks in the United States. I'm also the author of Alpha Trader and the Art of Currency Trading. If you want to know what's going on in markets and where they're going, you found the right podcast. Hi, everybody. Welcome back to the macro trading floor. Brent is back. And so we are back. And holy crap, what's going on out there, it's pretty messy. I just got a ping that says that French bonds are trading 150 basis bonds of our Germany, which is the same, that the peak of the 2012 crisis, when we're talking about whether Italy or Greece or Ireland or Spain would default. The bond market is putting up quite a show, not only in Europe, but also in the US. The dollar is unstoppable, emerging market territory, just taking the dungeon to fade. I can go on and on, Brent. So why don't we just talk about each of these topics or at least tackle one by one? Sure. So I think in the last podcast, someone reminded me yesterday because someone pinged me and said, hey, dude, where's the podcast? And he said, you guys mentioned last time, if something interesting happens, you'll be back with another podcast. So I guess here we are, something interesting is happening. And right before we hit record, I was saying to Alff, it's interesting with the bond market because there's no single explanation that's very satisfying. There's kind of the Yardini school, which is that growth is, and I think Alff, the Alff school too, I think if I'm not correct, or if I'm not mistaken, that nominal growth is 6%, so yields can be 6%, which is like a pretty good heuristic. And so this is normalization after the great stagnation. And nothing is all that alarming. And I mean, if you look at equities in crypto and things like that, you might come to that conclusion pretty reasonably. But then you also have massive primary deficits, which were not the case in the 90s. So then you could justify even higher rates. And then you have massive demand for capital for hyperscalers, which again, is similar to the 90s where there was massive issuance to pay for optical fiber and all that kind of stuff. So, and then this week you have a French budget worry, which I think was kind of predictable, but the timing wasn't that predictable because I think the more likely timing would have been into the election when people start freaking out about potential, whatever, not read a nomination, but all those kind of crazy right-wing kind of risks or right-wing approaches to the euro. And instead, we're getting it in October. So you have a lot of things all working at the same time. And the weird thing though is that headline inflation actually is, you know, annualizing, I'm an absolute hater of three month annualized because it's the number that Hawks use when it's high and does use when it's low. And three month annualized has been to two percent, four times in this cycle and year over year never went below two and a half. So I'm not a big believer in it, but especially when oil is up around a hundred. But still you do have pretty low inflation, low inflation expectations, and then absolutely skyrocketing real yields. And I mean, the temptation to fade it in the PA and in the trading book has been strong and I think a lot of people have lost money doing it. Where are you at now for bonds? How? I guess I can't just say bonds because, you know, of course, being long oats in France is completely different from being long US two years or something, but what are you thinking? Let me start from the US. So in this podcast, I explain why how out one of my frameworks to track the central bank monetary policy standards is to look at co-inflation, the excess above targets co-inflation, and then to look at the one year forward rate communicated by the central bank to the market, and compare that to neutral. A bit of a tailored approach where you say inflation is run on the 100-bit point above target, my forward rate should be a hundred-bit point above what we consider to be neutral. The United States has been, by this metric, a lose central bank for the better part of the last 14 years, except for 2022 for a very brief horizon. So the fact that there's a long history of being behind the curve and guess what the inflation has been above targets of five and a half years now. That's where it's going to be, now, I was in the camp that Ray said, let's say yields could go higher or at a better upside, skewed and a downside skew in terms of yields, but the move has been crazy. I mean, you have had the central bank communicating the fighter stance, this should count down long and ball, and it hasn't, plus you have the best and buyback put or option out there that also should have helped down the long and ball and it didn't, then it left me trying to explain why the feather reserve moving for the first time in 12 years were more neutral stance in the front end, plus setting best and puts by a buyback hasn't stopped the long end from moving higher. For reference, a 30-year yield of swaps has moved higher by two and a half standard deviations over the last two weeks, it's a pretty big move. Looking into it, Brent, I came across my friends running mortgage back security positions, MBS. So, this is not the first time that such a thing happens, and anecdotically in the street, there have been rumors that a couple of people running and large MBS risk at Edge Fund are having a problem. So, that seems to have exacerbated the move in the long end, and I think it is technical but it is very important to explain, because generally speaking after such blow-ups, there is a better chance that things stabilize rather than get worse at this point. So, the story of MBS works as such. You are long mortgage back security, which is basically a 16-com instrument with an underlying pool of mortgages. When you are longer 16-com instrument, you're long direction. The problem with MBS is that to estimate your duration, you have to understand what is the prepayment profile of Americans. Americans can decide to prepay faster or slower their mortgages over time, which is the collateral of your 16-com instrument, and you as an investor, they are going to make some assumptions. The general assumption, Brent, which is rational is that if interest rate go up, people are going to prepay more slowly. So, that makes sense, which means the duration of your bond of your MBS is going to get longer. So, this creates a phenomenon called negative convexity in these instruments, which basically means that if interest rates go up, you are long 16-com, so you're ready to lose money, but on top of that, your duration goes up too, because people are less likely to prepay now. So, you are losing money on your desktop, and also your duration is getting longer. So, you are losing money in a very convex fashion. So, this is not written any ground. This is a property of MBS, everybody's aware of it. But, what's going on right now is that, in my opinion, multi-strategy hedge funds that weigh too much capital, see, for example, millennium, apparently raised $30 billion on that they can deploy over time, and so they seem to be happy to take larger risks in relatively concentrated strategies, such as MBS risk premium or risk harvesting, which means those the ends are intent to rise to just go after it and trade bigger and take more risks. And if you have a negative competitive property in your instrument, don't hedge it, because why would you? And this seems to be one of the reasons behind the big moving along again, because imagine you're long this instrument, and then you're effectively, you are shorty bond put, that's what you are, and you don't buy bond puts to hedge anything, and then you start going higher, what is your only alternative there is to sell bonds to the market to try and hedge your delta, but you are in a situation where you are just compounding the negative impact on the market, which makes itself worse, until you're effectively blow up. Sorry, but I think these help explaining some of the moving along, and yeah, I mean, in that makes sense. And I think if you look at dollar max, the blow up there is kind of a bit of a similar situation where people were selling vol, they were long pesos, but then also selling top side in dollar max in order to enhance the yield. That sort of enhanced yield thing is similar to mortgage convexity where you're kind of double screwed when it goes, when it goes against you, and we've seen that in dollar max as well. And I think that all kind of flows from a theme that we were discussing in July and August, which was just the dominance of carry overall in markets. And I mean, even as a short term trader, that's primarily directional. I was doing some short ball and loan carry stuff in the summer as well, because that was the only game in town, and for certain things like Mexico, which has been a high sharp for a couple of years, the high sharps tend to attract more and more capital until the sharp gets obliterated back down to zero, which is what happened now. And I guess one big takeaway from all of that though is that if that's the correct model for the last whatever 25 basis points in yields, or 20 basis points in yields, and the us. two percent in dollar max, it's equally likely to go the other way because all that short gamma one way ends up being short gamma the other way because then at some point everyone gets over hedged and then you know if yields go back to 5%, the duration comes back in prepayments start and then those you know people that were under hedged magically are now over hedged and then you have the conditions for a move back lower and yields again and I guess the question for me is because like I love fading things like this I love trying to find like the tippy-top in yields and whatever currencies and all that kind of stuff is and the reason I've kind of mostly been staying away from this is that I don't really understand what I'm looking for if I'm long bonds I guess the obvious thing would be weak US economic data but it feels like there's just so many factors and so many things going on that like the other I think in if you zoom way way in this week it is a great microcosm of that because core PCE came in pretty unambiguously weak I would say and you know Eurodollar went from 40 given to 80 bid and then France bonds started leaking and then US bonds just started leaking and you know all the sudden euros 1% lower and euro Swiss is 2% lower and despite a double outcome from core PCE so you know you're cheering for weak data because you're long bonds and then you get the weak data and then French bonds start collapsing and you kind of would be sitting here if you're a US bond trader going okay well I don't even know what am I cheering for here like a good French budget so that I can be long US tens it when it starts getting convoluted like that I don't like those trades because I don't understand the framework of of what the catalysts are and how I'm going to make money in the short run because a lot of times for me making money in the short run involves understanding the catalysts or an understanding like the current equilibrium appears to be wrong you know or 70 30 chance it's wrong because of XYZ and when you have like a list of seven different reasons that bonds are weak it's so difficult to to say okay well if you know there's a deal with Iran maybe that'll help like yes I guess it might help for a bit but I don't know it's just it to me it's a bit of a mess from a directional short term trading I can see for pension funds and longer term trading like the attraction to scale into fixed income just because you feel like at some point you know the carry or the coupon is big enough that it justifies it gives you a margin of safety but as a short term trader like I said I find it very hard to really even say okay if this happens I'm going to be long bonds because I don't even know what this would be it's always good to check over biases right I mean at some point we can't find the reason to be long bonds perhaps we're getting to buy brands right perhaps there is a reason so let me let me put out a few because I'm adding the same look at hold on you know one thing that I just thought when you say that is like maybe the reasonable question is why not just be short bonds but anyways uh the same thing applies I so go ahead now well so um the first thing that comes to mind is that if I try to look at the forward distribution of code inflation and the current state of the labor market and the current state of upcoming fiscal impulse I can hardly see runaway inflation now this is a thing that I've been saying for a while doesn't mean that inflation has to go back to two percent but I can't see going to four okay so that's one argument and actually let me update this because I've been using this for a bit so before I say your wrong number let me actually look it up yeah if I look at the distribution of probabilities for Fed funds 12 months from now the median outcome according to market is that the Federer Reserve will raise rate four more times in the next 12 months and the market implied probability at the Federer Reserve will raise six times or more is 25 percent now there are eight meetings in a year and six times would bring rates to a higher level Fed funds to a higher level than 2022 well we were really fighting runaway inflation so uh what is 25 or 30 percent of the probability for that brand in my opinion it's pretty high I mean that's a tale that is unlikely to realize if you ask me 30 percent is not as more probability four median hikes in a year means every quarter the Federer Reserve has to go and that is fully appreciated by the market so that's the state of what's probably been to there right if you are short bond here you have to beat those forwards and you have to somehow even assume that the tail of the Fed hiking to higher rate than 2022 that's probably higher than 30 percent in the bar is pretty high run in the bar is pretty high to be short bonds now let's talk about the bar to be long bonds from here how do you make money well along the road you make money if it becomes a part of the Federer Reserve isn't hiking at every meetings I guess so that's a way to make money but you're going to be making a small amount of money so you're going to be cutting the right tail right you you might sell food spread in bonds to monetize that but it's a I can I say small P&L with the relative high likelihood of making that happen the second way to have a small P&L with relatively high likelihood of making it happen is carry because if you look at 10 year yields at 525 or front end you go along now you have a decent carrying of all compressive volatility of this asset you have an entry point which is a carry divided by ball of about 0.3 units so for each unit of both you get 0.3 P&L coming only from carrying around in bonds that is make me very excited to go along bonds well not really but it is a it happens the bar to be short if you know if that's what I'm trying to say basically if I had to choose with this type of pricing this type of technicals and this type of carry divided by ball I'd rather be longer than short if you ask me really to do this to be in order to be very long bonds you need fundamental reasons and the fundamental reasons are we're going to get a fiscal tightening in the United States the federal reserve is going to turn openly dovish there's going to be material disinflation and now can you see all of this happening not really neither fiscal tightening in the US and major disinflation those are hard things to achieve so I think if you ask me we're left with I don't want to short here because it's negative carrying a role it's bad technicals it's a very hawkish distribution of odds going forward and I think the bar is pretty high to the short one here I guess the question for me is and again I know it's a bit of a time frame mismatch but if you're long bonds where do you stop out like let's say intense um how do you risk manage it or or do you think it like because it doesn't necessarily sound like it's a trade you want to have in options so how do you or do you just keep it small enough that you can run it to five and a half for something like that yeah so five and a half is the weekly top of 2000 and one I think it's a pretty decent reference which you bridge file in a half then it's a bit like always these which we hadn't talked about but now that you have breached one six-wheeler Germany you open a chart of funds versus Germany it's wide open I mean like good luck figuring out what is the level like which funds should trade you know or at least what's next next year's distance so I would say to go a long year technically you can put a stop at 50 until you look if it goes there that was probably wrong but that stop is pretty tight in both terms I mean with recent ball it doesn't take a lot to move 25 bases going to be honest so if you're a short-term trader I think it's a fair way to do this if you're a long term oriented investor and actually in my opinion one of the best ways to be long fixed income now is to sell put spreads in in silver because again you're getting paid 30% or one make one or lose three which is negative skill but that's not a bad word you will I will learn and I learned over time that if you make a trade which is make one or lose three as long as your loss is kept and a longer expected value is positive there is no fault in being long something at pace one on loses three as long as your hit rate is pretty high and here at least I can't see the feather if they're bringing rates higher than 2022 in a short time horizon so maybe that's the best way just sell the hockey spale yeah that makes sense and then you're probably selling a pretty elevated ball as well now let's just change gears here for a second one of the most interesting things to me and to a lot of people it's making some people angry and some people to some people I think it seems obvious and to some people it's making them angry but stocks are not going down and you know the simple the simplistic description of what's going on is like does a bad budget in France mean that meta's earnings are going to be worse on the AI capex build out like obviously not and that's kind of like a simple bull cases that all this stuff that's going on really doesn't matter that much however there has to be a point at which tightening financial conditions make a difference when all these companies are in negative cash free free cash flow and are issuing and obviously the issuance is getting more and more expensive each time that they do it and you know you saw with the paramount issuance. And that's one thing that's one of those structural things that's kind of untradable but every single day there's another 30 billion 50 billion I think it was 60 billion for paramount. There's a lot of issuance and you know a lot of that stuff is instantly underwater almost all of its instantly underwater because pods have been going down. So is there a point at which you worry about equities or is it better to to keep the frame of or the framework of does it affect earnings in the US if no buy stocks or or do you think the markets on drugs. So the forward return distribution of equities has a big drift the right because earnings have been growing the freaking 20 something percent a year so that makes it very hard for anyone to say I'm going to go short this thing because all of a sudden you have a big drift against you to be right and that is the first assumption you should check. Right right right ratio has been going down not up so what about forward earnings like what to do that and now if you're looking at equal weight SMB then you're looking at roughly the broad US economy for earnings if you're looking at SMB for the earnings you're looking at AI for the earnings. So I wish you the best of luck on AI for the earnings I have no clue to be honest I'm not the right person to ask this question to somewhere between zero and infinity. But the forward earnings of the equal weight SMB so the mid and US company is pretty well correlated with nominal growth right and nominal growth in the US has been growing at five and a half to six percent. And by any of my metrics is going to reasonably go around five to six percent going forward so I don't have a big reason to believe that forward nominal growth for the mid and US top should be pretty bad. Then that makes the bar to be short pretty high because the other way to be short equity is if earnings don't disappoint too much is this valuation tank aggressively and valuations in equity is only time aggressively is there is a big macro balance namely is the federal reserve girl go very much ahead of the curve is inflation going to you know explode on the upside is a recession coming basically we have to under the tail right and I just said that this they want to sell the hockey special product in the market so I don't believe that those days are going to realize which makes me a boring long strong person I think. Well and I guess one thing like a mistake in my premise initially is to describe the stock market as a monolithic you know thing and you know Russell's gone from thirty one hundred to twenty eight hundred at the same time as Nazx and pretty much at the all time highs so there has been an impact on small caps which makes sense like housing and things like that have been hit by rates if you look at jumbo mortgages have gone from six six to seven three or something like that in a very short time so. There it's not like the market has completely ignored the rise and rates financials have been have been trading pretty poorly as well so. The real question is just like at the index level is there any reason to be short and I just don't really think so either I mean if anything we just got through the worst seasonal period. And now we're into like the safer seasonal part especially in midterm years although I think most people still remember. 2018 and 2022 were both midterm years and they weren't great times to to have hold beholding stocks especially Christmas Eve of 2018 I don't know if everyone remembers that one but. Yeah that was pretty bad yet so but I think it is interesting how frustrated people are getting with with stocks and then if you look at other measures of liquidity like crypto and gold and silver. I mean they're not trading like crypto is trading amazing but gold and silver aren't trading great but you know they're not really trading like there's been a massive tightening and financial conditions so I think. You have to look at the overall universe of assets and say that strong nominal growth is a big part of what's going on and you know that is. Something that would justify higher yields and it's interesting because all the headlines are like highest since 1994 highest since 1997 like stocks 5x after those yield rises in the early 90s or mid 90s like yields went up like crazy and 94 95 96. And then you know Nasdaq 5x after that so it's there's no rule that says yields at the X year high means that stocks have to go down it's it's a very tricky game to play and you you know there's a lot of people now using. Look backs that kind of show like okay if tens go up 30 or 40 or 50 basis points seems to be around the range then that's when it starts to matter for equities but. I feel like that's a little bit like the if the yield curve inverts you'll get a recession it's like I don't know it feels like it worked a couple times but if you look at the volatility of bonds it's gone bond volatility has gone up but it's absolutely nothing like say 2022 so. I guess we're coming to the same conclusion we can probably move on is that it's just hard work being short stocks and and actually Russell's probably a great play if you think that yield stabilize and I don't know if I do but i'm just saying that that's where there's probably some value in what about effects you have any strong views and effects. I was about to ask you what you think which stage are we in the in the dollar move especially before we go there a few words about front which is another very hot topic here yeah and as an Italian I have to have an opinion on front and it has to be negative none actually. Okay so what should I say about front the elections coming in April lapen is leading in the polls and leading on polymarket it's very polarized it's the lapen core that I'm shown so very very polarized far less far right type of candidate that seem to be making it to the final. There is a centers coming at it so what's it is not doing very well to use a euphemism here and now the story goes like this balance on the far less coming it is putting up some very creative financial engineering plans are basically not paying creditors and you know defaulting of that you know some very creative stuff very scary stuff or non-consensus stuff and lapen has to option to either play. Extreme on the other side of things as well and basically doesn't make any comment on fiscal the strain nothing at all or she plays a so called meloni card which basically focuses at platform on other social issues go them like that and when it comes to fiscal is actually the guardian of safety in France basically applies a type system if I put everything on a game theory approach. The market is freaking out because le corneaux which is the current prime minister has proposed the budget which is actually pretty decent it's about 50 billion of savings and a reduction in primary that's the relative the aggressive one. But the market doesn't believe brand that is going to get passed in parliament I mean at the moment both the far less than the far right need to somehow agree to this budget to be passed through. The game changer in my opinion can be lapen if I were her in order to secure a winner the election I would have to sympathize with the centers voters the people who are voting for her because they don't agree with the social issue but. I faced with the incentive of voting the far less lunatic guy they'd rather vote for her is for fiscal stance and a economic stand is acceptable so basically that's in my opinion what's is a political lapen and in order for lapen to convince people she has to come through with a meloni fiscal stance which is a conservative one yesterday for the first time she said that she's very open to proposing the so called golden rule which is a rule in the constitution that would prohibit any future government from breaching the three percent. There is an emerging market like a stance it's a very very strong fiscal commitment to put in the constitution she need the referendum but I believe she's moving in roughly the right direction for the fiscal conservatism. And now the lib elitmost test is what does she do about the current budget because in October the budget will be discussed in the French parliament and if she votes for the fiscal tightening then the market knows that she's serious about it. So I think the market does need to show her two colors about fiscal and I think it starts to look very interesting my only problem is. She has declared that just that overnight and the market does not care a tiny bit and even today we're widely spread so I see your typical textbook bad news bad action still. So I don't good news in the sense that she has communicated willingness for fiscal restraint and the market doesn't care which makes me very reluctant being long yet I think the ultimate solution to be into your ease for her to show. Her fiscal restraint because that's how she's in the election. Therefore that's how you want to be longer it is because you end up with a relatively trendy president but ultimately she doesn't do much about fiscal which is fine which is fine. was to be screen that can be harvested at that point? Yeah, and I guess OATs are probably getting caught in the carry block as well because there was a lot of, you know, levered carry in OATs as well. The problem, I think, for the market or for OAT holders right now, is that there's a timeframe mismatch with all this political stuff, all moving and super slow motion and spreads widening 20 basis points a day. And just to put it in perspective, like, like you said, in the, in the, at the peak of the blow up in 2012 or 2011 right before drugie came in, France got to 185 and did not stay there for very long. And basically was other than a couple of days was never above 150. And that was the time when, you know, there was a legitimate fear that the euro was going to break up. Everyone was going to re-denominate. There was going to be Mark French and Mark Lyra and Mark Spain again. And that was like a real thing. It wasn't like some phony, I'm phony crisis like right now, which this feels a little bit more phony than that. That was like legitimately, you know, rating agencies were pricing re-denomination risk and people were buying boons because they knew they were going to be priced in Deutschmarks when the euro broke up. And now we're talking about French spreads at the same level as that. So you can either say, like, okay, that's absurd. And I want to be long, you know, I want to play for compression. Or you can say like, wow, if this is just the start of it, this could get absolutely insane. Because, you know, like you said, the political machinery is very slow. And then you have the ECB, I wrote a big long boring piece about TPI yesterday, because sometimes you just have to talk about the boring stuff. And people are very familiar with OMT and with PEP, but TPI, which was the replacement for PEP that came in 2022 is a bit less well known because it hasn't been used. But essentially it's a program where the ECB can buy French debt. If there is sort of fragmentation going on in the ECB monetary policy. Because what they want to do is have one monetary policy that influences the economy of Europe in a somewhat equal way. They don't want to have 20 different monetary policies where all the different bomb markets are setting all these different yields. But the problem is right now is that really it's only France that's blowing up. So the TPI is really for fragmentation when a lot of different countries are blowing up at the same time. So you don't really have the political solution just that that is going to help right now. You don't really have the ECB that's going to help. And there's a buyer strike because because actually there's a still blow up in progress of people that that were playing the levered compression trade or the levered carry trade. So again, this is one of those ones where other than just watching the price action and taking your shot. It's very hard to know like what's going to save the day here other than just picking your levels to go the other way. And it's important because Euro dollar and Euro Swiss have both been trading pretty much tick for tick off French spreads now. So like I said, when core PCE came out, Euro went up for about 30 seconds and then it crashed because of French spreads. So even more important than US data right now for the dollar is it is a performance of global bonds and especially French bonds. And to me, I don't really see like an end, particularly at this moment, I think it's one of those things where it has to get worse before it can get better because once it gets worse, the, you know, people will start squawking either policy makers will be working on some more emergency type of budget type stuff. Or the ECB will start squawking about TPI and saying, okay, we, the conditions have been met and we may need to intervene. Yeah. And not much to add on France. I'm looking very closely at what Le Pen decides to do about the proposal of the budget from Le Corneux. It will show a lot to the market about facts rather than statements, right? Is she a physical destroying person yesterday? No, in this situation. Last comment, the convexities, you know, it is the wider we go in spreads, Brent. And the faster we go wider, the more the pressure just goes up for policy makers to be because at the moment, we can't say the ECB doesn't care and we can't say French politicians don't care. But if you start, if you start widening ten basis point a day, they will care very well. And then, and then your forward returns being long ago, it is look very attractive at that point because the care is better, the people are worried, the policy makers are worried, it takes a lot of guts to be longer that point, but actually, the forward return and the forward expected value is pretty good. Yeah. And honestly, like, I think I forget who said this, but it's a pretty common thing for people to say is that taking the other side of a crisis can be an absolutely massive way to make money. It's just obviously, it's a difficult thing to do because it's usually hard to risk manage the trade because volatility is extremely high at that point. But I would definitely be on on the lookout for reasons or opportunities to go the other way. I just don't think we're quite there yet. It's, it's a sort of a circular thing where once it gets bad enough, then that's actually the time when it'll start to get better because then people will start to shit their pants in Europe. We always have this is approaching. You'll first have to get very bad. And then, and then, then we can maybe think about doing something about it. brand, I know you need to go two minutes on effects. And actually, I have to, that's why I'm not prolonging this is what I want your opinion. And on a scale of one to 10, how much are we stretching out the dollar value? Three, five, seven, nine. Yeah, it depends on the currency because I think euro can keep going. I mean, this, I've had a sort of a more medium-term bearish view on euro simply because we're coming into the French election stuff and the energy crisis potential with low supplies. And the crazy thing is like it's only October hasn't even got cold yet. So I think there's still room for the politics and the energy story to play out in a bearish way for euro. But I do feel like dollars kind of getting quite overextended against things like Canada and Mexico. So my my views is more mixed like I would say still bearish euro, but much less bullish dollar against almost anything else. Like I would be more bearish dollar and dollar CAD and dollar max. Bearish dollar max, that's what I was going to go because max the culprit of this carry blowout pretty much, right? I mean, what I see on the screen now is fantastic. You see dollar max going up value standard deviation. And despite this, you see dollar max risk reversal in favor of dollar digicles being bid on the upside. So it's like people are basically they see dollar max blowing up to the upside and they say, and now I prefer having cold overputs. Okay, so probably you're blown up as you say selling top side and now you have to cover that's literally what's happening probably in dollar max. And this tends to inform me that we are getting there. But now the question is I'm asking you how close are we to getting there? Like dollar max, what is it? Is it the seven out of ten, ten out of ten, nine out? If you was ten out of ten, you'll tell me I'm short, but you're not. I'm more like in on high alert looking to for either technical setup or some kind of new setup to be short dollar max. But I think we're in like if a baseball game has nine innings, we're in the seventh inning. Seven's ining out of nine. Okay, to be clear. This was an amazing episode. Ben, very, very happy that you're back and we can chat. And a lot is going on. So people, you should expect us to do some other podcasts next week. Sounds good. Promise made. Got this kept. All right. Thanks. Thanks, self. The content provided on the macro trading floor podcast is for general information purposes only. No information or other content provided in this podcast should be considered as investment advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decision. Always perform your own due diligence. (upbeat music)