Speaker 1the macro trading floor with me alfonso peccatillo founder of the macro compass and former head of investments at the large european bank and
Speaker 2i am brent donnelly president of spectrum 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
Speaker 1everybody and welcome back to the macro trading floor alf and brent with you again this week if i sound tired i am have you looked at the market it's complete mayhem going on so uh where do we want to start brent should we start from the fact that i looked at some of the measure of dislocations in credit markets and some stuff believe me or not is as dislocated as march 2020. the peak of the covet crisis cash versus cds basis other things when i look in in credit market there is definitely somebody getting punched in the face there and the leveraging a hundred percent there is news now out it's arini it's sauna it's some one of these big credit funds but wow that is that is definitely hurting the narrative that ai capex can continue forever and that's no problem and the credit market is going to hold it and yeah and that's one then there is france then there is the tech part and there is more so where do we want to start this week
Speaker 2yeah it's funny that you say that because as you were about to hit record i was thinking where do we start here there's so many things going on and that is what has made it a bit challenging for people that kind of look at cross-market relationships and especially in fx you know you have a lot of different things going different ways because oil is actually still going up as well but then i guess i'll start with the oil versus bonds because i think last week you said oil was um or sorry bonds were oil now bonds are kospi and i think that was a decent observation uh a week ago because it's still true this week we have oil going up and yields actually went down so there's two ways you can read that one is just that like oils kind of reached a point where extra two dollars here and there doesn't really make a difference we all kind of get it that you know diesel and oil are high and and they're squeezing the consumer or you could argue that we're at a point where further rises in oil are actually going to trigger a growth scare in conjunction with all this other stuff that we'll talk about and so the more oil goes up now the more it squeezes and the more the future growth story gets a little bit more concerning and you know the parallel would be 2008 when oil was ripping and then all of a sudden it wasn't inflationary it was actually viewed as a growth scare situation because not only does oil itself cause you know problems in the economy but then the central banks are hiking into it so you're kind of seeing a little bit of the similarity there that you have you know tech or high beta down oil up and actually strangely energy stocks not trading well but and then you know yields lower and credit the whole credit situation so there was this argument as yields went up that the forward returns on ai capex are basically infinite or you know they're 25 percent or there's something very high so ultimately yields don't matter but what's actually how the reality is that you know there's a lot of risk there's a lot of risk there's a lot of risk but what's actually the reality is that it's not necessarily so much about the price of credit it's the availability it seems like the ability of these companies to borrow is being questioned and you know will they be able to do their ipos you had the big biggest ipo in australia cancelled a couple well i guess that was a week and a half ago was kind of a harbinger of all this and now you have meta in there so in order to create a new market for the share class in order to create a new class of shares to as a workaround basically for zuckerberg they had to create a special committee because zuckerberg can't vote on that and in that special committee they said the availability of capital is becoming a problem as hyperscalers are all trying to borrow and issue equity at the same time and therefore it's incumbent on meta to do this new way in order to basically beat the rush so even meta who's probably got like one of the best you know profiles for raising money of any company in the world is saying the window might shut and then ultimately that's the question right is that okay we're spending an absolutely absurd amount of money for an unknown future return which will probably not really be visible until 2028 2029 and then it's that gap in between so we're in 2026 how do you get to 2028 without dropping the baton and i guess that's what the market's trying to figure out right now indeed so on the credit side
Speaker 1of things this is reflexivity at work pretty much so if share prices are higher and credit spreads remain relatively tight then all of a sudden the fundamentals of these companies look good and therefore they can borrow more and it's a reflexive cycle where more capex leads to more earnings and everything is great the moment that share prices drop that's the very same thing as saying fundamentals are coming down and which is not it shouldn't work this way but it is what it is the fact that credit spreads keep whining the fact that meta comes through and says look we basically know that if we announce additional capex additional spending commitments i think they were at seven hundred billion of future spending commitments they're now the 825 billion that's one company guys one company is committing to spend a hundred and eight hundred and twenty five billion over time of course but it's a huge spending for one company the fact that they up this brand despite knowing that if they would say this openly and not massage the message the market would widen the market would sell their shares there is one school of thought that says they don't care because they're they have an asymmetry of information the school of thought says they know that the return on equity the forward return on equity that is subsequent to this cup expanding is so high that they couldn't care less if they have to borrow at eight percent or nine percent rather than seven they couldn't care less if their share price goes down twenty percent in the short term because the insider holding the shares think the return on equity out of this investment is so high so the school of thought here says hey we just need to look for a new equilibrium level okay they've announced it's like thinking um it's like thinking there is a currency with high carry the carries the drift is what i can expect this currency to deliver if i buy the policies of these countries are not great so now we look for a new level for the turkish lira we found a new level for the turkish lira and now the carry can deliver basically in this case it could be that the school of thought thinks the same way hey we are repricing the collateral we are repricing credit spreads we're repricing yields we're repricing share prices but at some point this repricing allows the drift the perceived return on equity to overcome any fears right and this school of thought says if you believe that the return on equity will be high if you believe that meta and google and amazon know what they're doing you should at some point step in and buy you should because the perceived forward return at these valuations is so high that you should participate and believe them the second school of thought is uh um interesting too it says share prices are going down credit spreads are going wider the more they try the more they don't listen to the market the way i would phrase it is instead of bond vigilantes we have capex vigilantes pretty much yeah the capex vigilantes are telling them guys shut up you can't do the spending commitments unless you're ready to pay wider and wider credit spreads we're going to dump your shares and if they keep doing it they will be punished more and more until they have to basically throw in the towel right and the mathematics of this doesn't work anymore in that school of thought you basically have to buy bonds and sell shares and structurally so because they will throw in the towel on capex the first guy that goes out of the door will lead everyone else to go out of the door and we are talking about a completely different cycle i am school of thought one uh yeah i think i lean a little bit more that way sorry go ahead no i just just trying to finish my my rambo here i am school of thought one although my uncertainty window around this is pretty big because again we are not talking about assessing the fundamentals of a country we're talking about assessing the fundamental of a credit cycle of ai capex which again is is much more uncertain it's much more difficult to assess in my opinion but still school of thought one if i have to choose what about
Speaker 2you yeah i think i'm more agnostic but i will say that i think a lot of the credit side is built on faith as much as reality because there's just no way to know like i was saying what what the payoff is going to be and the payoff isn't we're not going to have visibility in two months or whatever so there is a certain amount of faith embedded in and that's i think the nature of credit crises is that you go from you know faith to to lack of faith and just going to what you were you were saying about reflexivity, I think the sort of scary backdrop to all this is that the U.S. economy has been driven by AI CapEx to a major extent. It's not the only thing that's working. Obviously, the consumer has been strong, but then you can even argue that the consumer has been strong because of the wealth effect. And the wealth effect is circular too, because people are saying, oh, you got to buy the stocks because earnings are so strong. But some component of those earnings is reval on things like anthropic and things like that. So if a company, one of the mag seven owns a chunk of anthropic, and it went from zero to a trillion, there's some earnings impact there. So that could be negative earnings impact. So there is some sort of pro cyclical or circularity within the whole system where if stocks go down, then consumers spend less because of the wealth effect and companies have trouble raising. So then companies spend a little bit less or they delay. There's still a lot of room to delay these projects because. Trey Lockerbie : It's so much pie in the sky. And I guess, I would be like, if I had to be a little bit more one way, I would be a little bit more on the skeptical side just because I look at all these products and they just look like a bunch of commodities to me. I use Claude a lot more, so I do believe Claude is superior for what I'm doing. But a lot of queries, I just put them in Gemini, ChatGPT and Claude and get essentially the same answer for a lot of things. So they're becoming increasingly commoditized. As soon as someone launches something, all the other ones just copy it. And is Muse that exciting? I don't know. Trey Lockerbie : I mean, it did get a lot of fanfare, but a lot of these things generate a lot of fanfare on announcement day. And then I personally don't know anyone that uses Muse. Obviously, that doesn't. Trey Lockerbie :. mean anything. It's anecdotal. But what I'm saying is if you think back to all the product launches of Claude, Claude's launching the plugin and then the software stocks fell 20% or whatever, it does seem like the market really has absolutely no clue where the revenue is going to come from. Trey Lockerbie : It's probably going to benefit the world in tremendous ways. But are those companies like OpenAI ever going to pay back their commitments to Oracle or whatever? I don't know. Trey Lockerbie : I don't know. It seems very sus to me. And then the real question isn't whether OpenAI will make $500 billion or whatever it needs to make to pay off all these commitments. The question is whether they'll even ever have the chance or will the market just call the bluff at some point and then all these companies struggle to raise, and then you have a bit of a shit show.
Speaker 1Trey Lockerbie : What about sentiment right now, Brent? Because you called pretty much the top in NASDAQ crazy stuff. You also were to be blamed by the gods for taking profits too early because this thing is coming down, but well done. It was a very good trade. And at the end, there are no regrets there. Now, how do you think, or how do you assess the sentiment here after the rallying rates? I mean, in 10s, we have moved from 535 to 495. That's 40 basis points. It's quite a rally back. Yeah, it's a big move, right? And equities have also dropped. It's not huge at an index level, but there is a visible drop. And below the hood, there is a lot going on, right? I mean, certain sectors. I saw yesterday somebody telling me the Goldman Sachs high beta momentum basket is now flat. It was up 70% year to date in June. 70% is now flat. I actually looked at it and I said, "What do you mean it's still flat? I mean, this thing should have been destroyed." And it is been destroyed, but from up 70% before situational awareness fell. Trey Lockerbie : So how do you judge local sentiment? I mean, do you feel the vibes and the indicators as that, that we are close to a local trough or don't you think we're even there yet?
Speaker 2I think honestly, so it's a bit of a boring answer, but I do feel like, so I want to preface it by, I think most of the time positioning and sentiment doesn't really matter that much. So only at the super extremes do I really care about it. Here, I feel like there's definitely obviously a lot more bears than there were at the highs, but retail has actually been buying the dip like crazy as well, which always is a bit scary because that opens up like the shaft, the elevator shaft move potentially. But I will say my base case, which once I squared up my short, I was writing this week, basically 29,000, 30,000 range in NASDAQ because, and actually we did get to 30,000 on Wednesday and now we're at 29,000. So I would be more of a buyer here, simply not really a fundamental thing. It's more that a garden variety correction between five and 10% can just happen all the time for no reason. Like you can always have one of those and you sure there'll always be some reason in hindsight or whatever, but they just happen as a regular course of business in the stock market. And we're getting close to that. I think we're at seven or eight now, maybe eight and a half or something. And to me that just generally is like the really basic kind of buy the dip time. And then support wise, there's a ton of support here in the NASDAQ between essentially from here to 28,800, which is super close. And then we're getting close enough to the midterms. I don't know if we want to talk about that, but I really feel like there's so much been written about the midterms. I just don't feel like it's a really a major market event. You know, Trump's policies on trade and foreign policy and trade policy have bypassed Congress. And, you know, obviously he's just breaking the law and then going to the Supreme court. And then the Supreme court tells him he did something that he can't do and, or, or it tells him he, he can go ahead. And so there's no, you know, Congress has is doing absolutely nothing in this second Trump term. So I don't, I'm not a big believer. Obviously I know they can start doing prosecutions and investigations and all that kind of stuff potentially, but for the economy, I don't really think the elections matter. So I think you have a little bit of like nervousness here into the elections and a sell-off that, you know, you could back fit some stories, but you know, with yields actually now we're back down at 495, maybe the pressure with a bit of a delayed reaction, the pressure comes off. And, you know, I think we probably stabilize somewhere around here. So that would be like 7,600 and S and P 29,000 NASDAQ. And, you know, I, I will keep an open mind that this is something bigger, but my intuition is that this is just another random correction. That's we'll, we'll soon be forgotten.
Speaker 1So you are school of thought number one, then you are agnostic, but you are more school of thought one than you are two. Otherwise you would tell me I am, you
Speaker 2know, Well, it's a different time horizon. So I do feel like eventually the bill will come due and some of these frontier models won't be able to pay the bills, but that's just a story for another day. And I don't, I don't trade that time horizon. I think honestly, I think it's not forecastable that this, that question of will AI pay off. I just don't think a human being
Speaker 1can forecast that. Fair enough. Um, let's chat about, uh, central bank reaction functions brand. I think it's quite interesting because yesterday at the peak of the, uh, sell-off NASDAQ, uh, the chances of the federal reserve delivering a hike in December went below 65%. So less than two out of three chances. Now it is well understood by the market that the federal reserve has an inclination to hike. Uh, it has been telegraphed that even the centrist of the committees think that there were two hikes. Needed since is which of the fed one has been delivered. The other one was to be December. So when I see these odds going below two out of three, it makes me question whether the market is even willing to attack this very likely outcome of the federal reserve has to hike, even for credibility purposes, again, in December, then there is DCB, which has the French situation, which we should chat for a second about. And there the market seems a little bit more open to think they might, they might skip December if financial conditions are getting tighter because of France. I mean, the question is if the central banks decide to take a step back here while inflation still runs well above target. I mean, that hasn't changed to be honest energy prices, by the way, they're not front and center of your commentary anymore. Not your, I mean, in general or of any commentary, but the front future contract of, uh, of crude oil is above a hundred dollars. I mean, in the meantime, that is still going on. That hasn't been nearly solved. So what do we think of the fed and DCB reaction functions? Let's chat a little bit about energy and also about France, I guess, and then maybe we can close with a dollar.
Speaker 2Sure. Yeah. It's crazy how many different things are going on. Um, so France is interesting because it looked like we had kind of a blow off a couple of weeks ago to what the spread went to 160 basis points, which is getting up there towards like the Eurozone crisis highs. Um, and then things stabilize and stabilize for a couple of weeks. And then I don't know if you want to blame the protests. I don't know if you want to blame the protests. I don't know if you want to blame the protests because it didn't really move right away. But anyways, we went back to one 40 and now we're at one 71, and the real issue there that makes it so difficult is there isn't really like an obvious fix in the ecb tpi where they intervene is really not it's not going to be happening very easily and i guess the scary thing really is like the numbers are really bad in france like they've just been spending for so long so much for so long that the debt's big the deficit's big you know the economy is really big that's the thing too is that it's not like greece where it's like this little thing you know france is absolutely massive economy so you know i don't really honestly know what to make of it it it feels like the path of least resistance is that it keeps on widening um and and then in terms of the central banks i do find it really interesting that there's this issue with like the bank of canada is a good example and even if you don't care about canada it's it's relevant because what you have there is headline inflation is so they run a two to three percent inflation target band uh headline is above the top of the band and core is below the bottom of the band and that's kind of like what's going on in a lot of places you have a very high headline and pretty low core and you know what central banks really should be looking at is second round effects and how long do you wait before you say okay there's no second round effects and you know oil at this level is actually not contractionary or is non-inflationary because of the contractionary impact on demand and all that and so far most of the central banks are just saying okay we gotta we have to hike into this but it does leave a lot of scope for really big reversals in the future so i think it's really important to look at that and i think it's really important to look at it in the future as well because you know there's a lot of potentials in the front end if either the central banks or like either the central banks announce like make the statement or that the market just comes to the conclusion that hey this is that they shouldn't be hiking into this there's so much room for for things to go the other way uh but in the meantime i don't know i'm not as convinced that the fed is actually hawkish what i feel like is they've been kind of shamed into trying to establish credibility because worse is new and you know the fed has lost so much credibility with all the trading front like front running their own policy in the trading world and then you know missing on inflation buying mortgage-backed securities in 2022 when inflation was seven percent like just so many obvious things to criticize and so i feel like warsh kind of has no choice but to say hey we're gonna get the credibility back but then you know hiking once every six months or whatever isn't going to do that and that's all they seem to really be doing so i think it's important to think about how they seem to really be willing to do as soon as you know as soon as they hiked you you're rolling out three guys saying don't worry don't worry we're not going to hike in october we promise so i don't know i i feel like it's just the same old fed like the yellen and powell where they have a in their dna is a dovish uh a dovish bias and like they'll hike if they're absolutely forced or embarrassed into hiking but they really don't want to hike so like i i could see that they're going to be like they're like they're going to see you know another eight percent in equities and they won't even hike in december so so to me it's just very up in the air i i feel like the bar to stop hiking is super super low because especially with you can always look at trimmed mean and things like that any kind of super core measure like that and have an excuse if you if you really need it to be
Speaker 1dovish yeah so uh it is true obviously that the title of the book tightening in foundation in financial conditions is something that central banks are aware of actually the warship and mentioned the own financial condition index from the federal reserve so i looked at it in one of my last research pieces and to be honest even after the sell-off it's still relatively loose i mean it is still not tight so that is an argument by which you can say nah this sell-off is not enough to derail them but obviously if the sell-off gets worse the financial condition index will tighten to a point where it's debatable whether central banks they're already telling you also in europe they're telling you that the market is doing the work for them and that the fact that spreads are widening and yields are going up is already tightening per se so they don't need to double down on that right so i think you are right i think also on the other side brent it's a very convex situation because i think i think on the other side if i look at the private sector balance sheet fundamentals they are very strong like even in the uk in europe not to talk about that but the fact that the private sector leverage has come down aggressively over the last 10 to 15 years means that the the private sector can take a lot more because the government gives them money in the first place and plus their balance sheet is already healthier than it was 10 years ago and that means they can take a lot more and so these high energy prices are unlikely to derail growth per se alone if you then of course add high energy prices for a year plus tightening of financial conditions then you will have an impact but you have to be prepared for a situation where hey this tech situation stops or france finds somehow a way to muddle through then you go back to to only the driver being high energy prices but high energy prices with this balance sheet of consumers being so healthy and deficits in my opinion means hikes are likely to continue so it's a very like for rates in my opinion here a lot depends on how this exogenous tightening of financial the credit situations evolve basically the ai credit or france those are the two big credit situations at the moment they are determinant but the underlying fundamentals i want to be clear my stance is the private sector can absolutely take more hikes no problem at all i don't believe in the growth scare part only coming from crude oil at a hundred dollars basically i don't see how that feeds into the consumer balance sheet yeah and
Speaker 2i mean they're most of the time they're going to be going to be likely scenario i guess is that we do stabilize they hike in december and then you kind of see what happens with with growth in 2027. uh just going to fx uh that's been an interesting situation because you had a really strong correlation basically where yields were going up and oil was going up and things like something like dollar yen was going up and now it's really people are super confused because the old model of you know equities down is normally by dollars as a safe haven sort of i mean not always but that's not really working because if people are massively overweight the us then u.s equities going down is actually bearish the dollar so you have all these different time horizons you almost have like three time horizons where initially people sell dollars on equity weakness because you know sell usa kind of trade and then if liquidity really is getting sucked out of the system and like things like bitcoin and silver and gold are falling then you get these waves of dollar buying because it's just like a liquidity story and then the more that things fall then bonds start to fall and rate differentials start moving and then people start selling dollars again so it's been really difficult to trade and you know the net of all that is really euros unchanged this week so the the move is interesting because dalian's gone nowhere for a while everyone's been waiting for gpf to start buying domestic bonds and there's some evidence that maybe that's going on uh it's been a very difficult trade because you know i would say people that are short are probably short around here but you're you are paying a lot of carry to be short which is super annoying when it goes nowhere for for three weeks and then the the more cyclical and uh sort of like risky currencies we're going to have to look at we're going to have to look at what we're going to have to do to do that and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about we're going to have to think about what's going to happen and what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's going to happen and we're going to have to think about what's now because the back end of the oil curve is moving so much. So Canada is benefiting from that. But I actually think that Canada is maybe a little bit overpriced. So I think there's a chance they actually pass at this meeting, even though it's almost fully priced. So we'll see on that. But it is interesting. So I guess the broad takeaway for people that don't trade FX or for people that do trade FX is that whatever you had in your head as a correlation matrix for FX, you basically can rip it up and start building a new one because all the old correlations essentially are pretty much gone. The only thing that just always matters in the bigger picture is interest rate differentials. But even interest rate differentials appear to be like a small piece of the puzzle because, for example, euro dollar, because of the big move in US rates, that would say euro should be way higher because German rates haven't moved as much. But then you have France widening, which says euro lower. And actually, if you put those two lines on a chart, which I'm staring at right now, if you so the green line is is uh interest rate differentials which is going up the red line is french spreads which is going down and then my black line is euro dollar and it's literally the average of the like it's right in the middle of those two things so it's pretty complicated in fx right now there there's no clear dollar direction there's really not a big positioning story and so ultimately like many of these things it's how this ai capex wobble sorts itself out that's going to determine whether we've peaked in the dollar now or are we going to go into like an energy slash political crisis in europe and europe goes to 105 i'm pretty agnostic right here yeah
Speaker 1basically the credit stories in france and ai capex will be explanatory of what happens to a lot of assets going forward i mean and this is it's funny because it used to be that before you had to predict the cost p then you have to predict oil then now you have to predict the credit cycles in ai and france it is what it is one quick word before we leave is about brazil it's going to have elections second round of elections this weekend there's a lot of stuff going on there my summary is the following there is it's very difficult to have an edge in markets in general something i've noticed is that a lot of people are very interested in what happens over the next month or two weeks right so for me it's funny to see because we have had positions for the brazilian elections for five five months now when we deemed it appropriate and now i'm like okay like i have my position i know what happens or don't doesn't happen to my book and i see a lot of commentary in my sales chat all over the place about ah the risk reversal here is there and people are selling and the poll is now one point tighter which is statistically relevant by the way on that sample size so something interesting is that i'm not saying this is alpha it's not but it is definitely a differentiating way of looking at markets if you're able to size and hold positions for a very long time horizon simply because you're doing something different than most people are that's just you know a little nugget there from my side the other thing i would like to say about brazil is there is a lot of options that have been struck with rkos or erko's which basically means in plain english that people are positioned delta wise to belong to brazilian real they will make money if bolsonaro wins and then they will their options will be zeroed if the brazilian real appreciates beyond the scale of their own options their options will be zeroed if the brazilian real appreciates beyond a certain point their options will be zeroed if the brazilian real appreciates beyond a certain point that's what it means those that's what it means those that's what it means those barrier options basically work like that barrier options basically work like that barrier options basically work like that i have the feeling that if bolsonaro wins i have the feeling that if bolsonaro wins i have the feeling that if bolsonaro wins there's gonna be a lot of people that are there's gonna be a lot of people that are there's gonna be a lot of people that are happy and then very soon unhappy because happy and then very soon unhappy because happy and then very soon unhappy because the brazilian rally in my opinion might the brazilian rally in my opinion might the brazilian rally in my opinion might rally a lot more viciously than they rally a lot more viciously than they rally a lot more viciously than they thought thought thought and then their options will be worth zero and then their options will be worth zero and then their options will be worth zero because the barriers are hit that's a because the barriers are hit that's a because the barriers are hit that's a bit what i think but brent what do you bit what i think but brent what do you
Speaker 2bit what i think but brent what do you think yeah i guess one of the most think yeah i guess one of the most think yeah i guess one of the most interesting things because our business interesting things because our business interesting things because our business is is in options and we've seen so much is is in options and we've seen so much is is in options and we've seen so much flow in brazil flow in brazil flow in brazil is i haven't really seen a market blow is i haven't really seen a market blow is i haven't really seen a market blow up like this in a long time because up like this in a long time because up like this in a long time because people got kind of complacent after people got kind of complacent after people got kind of complacent after round one and it's like okay round one and it's like okay round one and it's like okay everything's good and then as the polls everything's good and then as the polls everything's good and then as the polls started to tighten started to tighten started to tighten you know we saw one week trading on a you know we saw one week trading on a you know we saw one week trading on a 50 handle which is you know a lot of times fx vol is one digit times fx vol is one digit times fx vol is one digit so one week trading at 50 something 57 so one week trading at 50 something 57 so one week trading at 50 something 57 is pretty epic is pretty epic is pretty epic and and and obviously that ball is going to collapse obviously that ball is going to collapse obviously that ball is going to collapse regardless of what happens at the end of regardless of what happens at the end of regardless of what happens at the end of the next round the next round the next round but it is interesting because if you look but it is interesting because if you look but it is interesting because if you look at the pricing and options at the pricing and options at the pricing and options there's a lot of forced buying of there's a lot of forced buying of there's a lot of forced buying of options and so there's a pretty big options and so there's a pretty big options and so there's a pretty big disconnect between poly market disconnect between poly market disconnect between poly market um which is still around 77 um which is still around 77 um which is still around 77 for flavio for flavio for flavio and the options market which is just and the options market which is just and the options market which is just you know pricing you know pricing you know pricing way higher odds of the tail simply way higher odds of the tail simply way higher odds of the tail simply because no one will actually sell the because no one will actually sell the because no one will actually sell the tail so there's an interesting sort of tail so there's an interesting sort of tail so there's an interesting sort of setup there setup there setup there i mean to me it just it seems like we i mean to me it just it seems like we i mean to me it just it seems like we are gonna probably have a flavio and are gonna probably have a flavio and are gonna probably have a flavio and then then then we'll flatline pretty quickly because we'll flatline pretty quickly because we'll flatline pretty quickly because there isn't enough there isn't enough there isn't enough over like if if we're in a super carry over like if if we're in a super carry over like if if we're in a super carry environment then environment then environment then i think brazil could trend again but if i think brazil could trend again but if i think brazil could trend again but if you look at what mexico is doing and you look at what mexico is doing and you look at what mexico is doing and what ai is doing and cosby and all that what ai is doing and cosby and all that what ai is doing and cosby and all that it's not the kind of world where people it's not the kind of world where people it's not the kind of world where people are just going to go limit long are just going to go limit long are just going to go limit long carry just because flavio won i don't carry just because flavio won i don't carry just because flavio won i don't think the delta of the policies is is think the delta of the policies is is think the delta of the policies is is big enough i mean it's big but it's not big enough i mean it's big but it's not big enough i mean it's big but it's not big enough i mean big enough i mean big enough i mean the fiscal deficit and everything is the fiscal deficit and everything is the fiscal deficit and everything is still going to be still going to be still going to be still going to be still going to be still going to be lurking so i think it's really lurking so i think it's really lurking so i think it's really interesting from a options point of view interesting from a options point of view interesting from a options point of view and the elections this weekend so i and the elections this weekend so i and the elections this weekend so i guess by the time people are listening guess by the time people are listening guess by the time people are listening to this we'll probably know the answer
Speaker 1to this we'll probably know the answer to this we'll probably know the answer fair enough fair enough fair enough there won't be a podcast next week i'm there won't be a podcast next week i'm there won't be a podcast next week i'm traveling there will be a podcast a week traveling there will be a podcast a week traveling there will be a podcast a week after that so we can talk about whether after that so we can talk about whether after that so we can talk about whether ai blew up or whether ai blew up or whether ai blew up or whether it was time to buy those stonks as it it was time to buy those stonks as it it was time to buy those stonks as it was the case for two years every time was the case for two years every time was the case for two years every time there was a drawdown anywhere close to there was a drawdown anywhere close to there was a drawdown anywhere close to five or ten percent from the peak five or ten percent from the peak five or ten percent from the peak we will find out we are agnostically we will find out we are agnostically we will find out we are agnostically trying not to blow up ourselves that's trying not to blow up ourselves that's trying not to blow up ourselves that's brent and i please do the same it's very brent and i please do the same it's very brent and i please do the same it's very important to still have a seat important to still have a seat important to still have a seat otherwise you don't get the chance to otherwise you don't get the chance to otherwise you don't get the chance to play the game again
Speaker 2play the game again play the game again don't blow up and have fun don't blow up and have fun
Speaker 1don't blow up and have fun ciao guys talk soon ciao guys talk soon ciao guys talk soon see ya thanks the content provided on see ya thanks the content provided on see ya thanks the content provided on the macro trading floor podcast is for the macro trading floor podcast is for the macro trading floor podcast is for general information purposes only general information purposes only general information purposes only no information or other content provided no information or other content provided no information or other content provided in this podcast should be considered as in this podcast should be considered as in this podcast should be considered as investment advice investment advice investment advice seek independent professional seek independent professional seek independent professional consultation in the form of legal consultation in the form of legal consultation in the form of legal financial and fiscal advice before financial and fiscal advice before financial and fiscal advice before making any investment decision making any investment decision making any investment decision always perform your own due diligence
PodcastTranscript AI