Forward Guidance

Latest Episodes:

Thomas Majewski on CLOs, Private Credit, and Bank Capital Relief Trades Dec 19, 2023

Show notes

Thomas Majewski, founder of Eagle Point Credit, joins Forward Guidance to share his insights from the somewhat opaque world of Collateralized Loan Obligations (CLOs). Majewski explains why he perceives that CLO equity enjoys a series of structural advantages, and he also shares his thoughts on the worlds of private credit and bank capital relief transactions. Filmed on December 11, 2023.

Please note that any past performance discussed in this presentation is not indicative of, or a guarantee of, future performance.

To reference performance and the discussion about Eagle Point Credit Company, please visit the website: https://www.eaglepointcreditcompany.com/

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Timestamps:

(00:00) Introduction

(00:11) What Are CLOs (Collateralized Loan Obligations)?

(19:00) A Look Back At CDOs And 2008

(31:42) Impact Of Rising Rates On Companies' Ability To Service Debt Loads

(40:14) How Would "The CLO World" Handle A Potential Recession?

(43:06) Banks Are Selling Credit Risk (i.e. Buying Insurance) Via "Regulatory Capital Relief" Credit Linked Notes (Are They Similar To Credit Default Swaps?)

(54:15) Private Credit - Golden Age Or Biggest Bubble In The World?

(01:00:13) Liability Structure of BDCs (Business Development Corporation)

Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

Kathy Jones: The Bull Case For Bonds, And The Need For “Caution” on Private Credit & Leveraged Loans Dec 12, 2023

Show notes

Kathy Jones, Chief Fixed Income Strategist at Schwab, joins Forward Guidance to share her outlook on interest rates, credit spreads, the economy, and the Federal Reserve. Filmed on December 5, 2023.

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Timestamps:

(00:00) Introduction

(07:45) Inverted Yield Curve Is Here To Stay

(10:01) Term Premia Will Decline

(14:12) Bond Market Does Not Always Track Nominal Growth

(17:21) Can't Rule Out That This Is A Counter-Trend Rally

(20:56) How Does Bond Supply Affect Price?

(29:02) The Days Of Quantitative Tightening (QT) May Be Numbered

(31:33) Mortgage-Backed Securities (MBS)

(34:09) Investment Grade (IG) Corporate Bonds

(37:22) We Are Not Enthusiastic About CLOs and Private Credit

(46:40) Sentiment and Positioning In Fixed Income

(48:50) Views on Europe and Japan

(53:32) Bull Case For The Dollar

The Banking System Is Healing | Dan Siciliano & Michael Ericson Dec 11, 2023

Show notes

This week, Michael Ericson President of the Chicago Federal Home Loan Bank & Dan Siciliano Chair of the Council of FHLBs and independent director of the San Francisco FHLB join the show for a discussion on the current health of the banking system.

At the end of the year in 2023, 9 months after the March banking panic, Dan & Michael make a case that the U.S banking system if more healthy & stale than earlier this year. We deep dive into the collapse of SVB, how the FHLB operates & what to expect looking ahead to 2024. To hear all this & more, you'll have to tune in!

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Timestamps:

(00:00) Introduction

(01:09) What Is The FHLB?

(04:12) Strength Of The Banking System

(17:27) Does The FHLB Have Credit Risk?

(28:04) The Collapse Of SVB

(37:24) Role Of The FHLB vs The Fed

(47:05) Bank Credit Worthiness

(01:03:40) Lessons Learned From The March Bank Panic

(01:08:48) Silvergate Bank

(01:16:02) Silicon Valley Bank

(01:19:50) Operational Expenses Of The FHLB

Felix Zulauf: The End Of The Liquidity Cycle Approaches Dec 07, 2023

Show notes

Felix Zulauf, renowned macro investor and CEO of Zulauf Consulting, returns to Forward Guidance to apply his framework for understanding markets to make several big calls for 2024 and beyond. Zulauf expects the rally in stocks and bonds to continue to Q1 2024, but then he argues both will struggle as the liquidity cycle enters its final phase. FIlmed on December 5, 2023.

More info about Zulauf Consulting can be found here: www.felixzulauf.com

Felix Zulauf is the Founder and CEO of Zulauf Consulting, a boutique research and consulting firm that offers investment advisory services to institutional investors and family offices. Felix has over 40 years of experience in financial markets and asset management and has served as a member of the Barron’s Roundtable for 30 years. He started as a trader with Swiss Bank Corporation in the early 1970’s and received training in research and portfolio management thereafter with several investment banks in New York, Zurich, and Paris. Mr. Zulauf joined UBS in 1977 as a Portfolio Manager of global mutual funds and became Global Strategist of UBS in 1982 and the head of the institutional portfolio management group in 1986. Felix served as a member of the Executive Board of Clariden Bank from 1988-1990 and founded Zulauf Asset Management AG in 1990, a Swiss-based asset management company. Mr. Zulauf sold the majority of the firm and spun off a Family Office in 2009.

LinkedIn @zulauf-consulting

YouTube Channel @zulaufconsulting

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Timestamps:

(00:00) Introduction

(00:13) Counter-Trend Rally In Bonds May Continue, But The Bond Bear Market Likely Isn't Over

(12:47) Magnificent 7 Stocks Are "Excessively Overpriced

(29:31) Transition To Bear Market

(35:25) Has U.S Economy Dodged A Recession?

(37:23) Some Economic Statistics Could Not Be Accurate To Reality

(40:27) Will Inflation Reaccelerate

(42:01) Geopolitical Risk Is Not Being Taken Seriously By The Market

(46:07) U.S.-China Relations

(50:34) Waiting On China's Economic Recovery

(53:53) Will Bull Market In Japanese Stocks Continue?

(56:34) Tactical Bullish View On U.S. Dollar Relative To Some Other Currencies

Dr. Barry Eichengreen & Joseph Wang on Dollar Dominance, “Problematic” Levels of Government Debt, Modern Monetary Theory (MMT), and Central Bank Digital Currencies Dec 04, 2023

Show notes

Dr. Barry Eichengreen, George C. Pardee and Helen N. Pardee Professor of Economics and Political Science at University of California, Berkeley, joins Forward Guidance alongside Joseph Wang, CIO of Monetary Macro and writer at FedGuy.com, to discuss his paper at the Federal Reserve’s 2023 Jackson Hole symposium, “Living with High Public Debt.” Professor Eichengreen also shares his findings on the U.S. dollar’s role as a global reserve currency (“dollar dominance”), financial repression, and central bank digital currencies (CBDCs), and he also shares his views on Modern Monetary Theory (MMT). Filmed on November 28, 2023.

Dr. Eichengreen’s 2023 Jackson Hole paper, “Living With High Public Debt”: https://www.kansascityfed.org/Jackson%20Hole/documents/9749/Living_With_High_Public_SA_Sep_2_2023.pdf

Complete agenda for 2023 Jackson Hole Symposium: https://www.kansascityfed.org/research/jackson-hole-economic-symposium/jackson-hole-economic-policy-symposium-structural-shifts-in-the-global-economy/

More information on Dr. Eichengreen’s work: https://eml.berkeley.edu/~eichengr/

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Timestamps:

(00:00) Introduction

(01:33) High Levels of Debt Relative to GDP Are Problematic

(06:07) Ways By Which Debt-to-GDP Ratios Can Be Lowered

(14:08) Will Artificial Intelligence (AI) Lead To A Productivity Miracle?

(19:58) How Bad Does It Have To Get Before A Global Reserve Currency Gets Dethroned?

(26:31) Central Banks Are Buying More Gold

(30:31) What Could Erode Dollar's Dominant Position In The World

(40:39) Dr. Eichengreen's Views On Modern Monetary Theory (MMT)

(46:05) Is Central Bank Independence Something That's Here To Stay?

(49:16) Central Bank Digital Currencies (CBDCs)

(59:49) Dr. Eichengreen's Future Work On China's Economic Slowdown

Pain In Commercial Real Estate Will Be Worse Than In 2008 Great Financial Crisis, Argues Veteran Office Investor Anthony Dilweg Dec 01, 2023

Show notes

Anthony Dilweg, veteran real estate investor and Founder & CEO and of Dilweg, joins Forward Guidance to share shocking information from the world of commercial real estate (CRE) in general and office in particular. Dilweg, whose firm owns over 5.5 million square feet of real estate, mostly located in the Southeast United States, argues the challenges CRE will contend with may be greater than those faced during the 2008 Great Financial Crisis (GFC). Dilweg’s base case is that office as an asset class is structurally broken as the trends of remote and hybrid work are here to stay. He expects over a billion square footage of U.S. office space will be rendered obsolete in the coming years. With all these challenges notwithstanding, Dilweg is optimistic that there will be great investment opportunities for well capitalized players who can take advantage of market distress. Filmed on November 29, 2023.

About Dilweg: https://www.dilweg.com/

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Timestamps:

(00:00) Introduction

(00:19) Dilweg's Background in Football and Real Estate

(04:10) Dilweg's Start In Real Estate: "Ready, Fire, Aim"

(09:00) Office Is The Most Capital-Intensive Sector Of Real Estate

(12:15) Interest Rate Surge Has Been A "Jolt To The System"

(20:30) Office Is Structurally Broken Right Now

(34:10) It's A Lot Worse Than The Headlines

(43:10) Lease Term: Comparison To "Duration" In Bond World

(44:10) Interest Rate Hedging In The Real Estate Business (Public REITs and Private Investors)

(45:00) Are Office Rents Going Down?

(50:35) Dilweg's Forward Outlook On Returns

(53:10) A Lot Of Properties Will Go Back To Banks

(01:09:00) Dilweg's Outlook on Commercial Real Estate (CRE) Other Than Offices

(01:14:50) The Rise Of Experiential Hospitality

(01:17:50) WeWork & Adam Neumann

(01:23:00) Dilweg's View on Office Markets In Big U.S. Metropolitan Cities

(01:29:10) The Work-From-Home Debate

(01:46:00) The Rise of Private Credit

Marko Papic: Russia-Ukraine War Is Effectively Over, Israel-Hamas War Unlikely To Have Large Market Impact Nov 29, 2023

Show notes

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Timestamps:

(00:00) Introduction

(00:18) Geopolitical Risks Are Often Mispriced

(09:20) Papic's Outlook on Russia-Ukraine War

(13:30) Blank Checks For Ukraine Are Getting Very Politically Expensive For Western Politicians

(23:11) Military Alliances Can Be Dangerous

(25:41) Papic on Israel-Hamas War: "Palestinian Issues Have Never Had A Market Impact"

(27:31) Papic Believes That Conflict "Will Be Contained To Israel"

(34:29) Gold's Recent Rally As Central Banks Diversify Away From U.S. Dollar

(37:16) The Market Has Become Aware That World Is Increasingly Multipolar

(42:39) Analogy To World War 1 and World War 2

(48:00) What Makes A Great Power?

(52:19) What Are China's Global Ambitions As A Great Power?

(59:35) China & Taiwan

(01:06:58) U.S.-China Economic Relations (Flow of Trade and Capital)

(01:11:05) There Will Be A Huge Buying Opportunity In China Over Next 12-18 Months

(01:13:27) U.S. Presidential Election

(01:16:47) I Think There's No Way In Hell The Fed Raises Rates Over The Next Twelve Months

(01:19:43) American Elites Are Not Very Smart

Jens Nordvig: Interest Rates Have Peaked, The U.S. Dollar Is Overvalued Nov 24, 2023

Show notes

Jens Nordvig, founder of Exante Data and Marketreader Inc., returns to Forward Guidance to provide a quantitative update on currency and bond markets. Jens makes the case that interest rates all across the yield curve are likely headed lower as the Federal Reserve’s last hike is in the rearview mirror, and he argues that the U.S. dollar could depreciate against “risk-off” currencies such as the Swiss Franc, Japanese Yen, and even gold. Filmed on November 22, 2023.

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(00:00) Introduction

(00:25) It's Been A Busy Year

(02:29) Interest Rate Sensitivity Of U.S. Economy

(13:06) Will There Be A Recession In 2024?

(15:44) Jens' Bull Case For Rates

(22:27) Fed Will Be "Much More Relaxed" If Services Inflation Continues To Moderate

(28:41) Potential For "Big Cuts"

(31:07) An Extraordinary Summer In FX

(34:34) Jens' Bear Case For Dollar Against Gold and Risk-Off Currencies Such As Swiss Franc

The World’s Greatest Carry Trade May About To Be Unwound | Nicholas Glinsman Nov 21, 2023

Show notes

Nicholas Glinsman, veteran macro investor and co-founder at Malmgren-Glinsman Partners, returns to Forward Guidance to update his views on fixed-income and the economy. He argues that shorting the yen // buy non-yen-denominated assets trade, the “greatest carry trade in the world,” may be unwound as the Bank of Japan steers away from yield curve control and potentially will raise interest rates. This would have massive implications on global markets, which Glinsman expounds on in depth. Filmed on November 20, 2023.

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Timestamps:

(00:00) Introduction

(09:19) The Deficit Will Probably Increase, Not Decrease

(11:05) U.S. Election

(15:21) Crypto & European Sovereign Debt Crisis

(26:13) Germany's Fiscal Situation

(31:51) Geopolitics in Middle East

(35:26) The "Biggest Carry Trade In The World"

(56:03) Stock Market

(01:07:27) U.S. China Relations Are Improving

Jason Shapiro: It’s Too Early To Get Long Bonds Nov 16, 2023

Show notes

Jason Shapiro, veteran trader and founder of Crowded Market Report, returns to Forward Guidance to discuss his philosophy for trading markets. Shapiro explains that while the only position he currently has on is being long the Swiss Franc, he still thinks stocks will likely outperform bonds based on positioning and sentiment. Filmed on November 16, 2023.

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Timestamps:

(00:00) Introduction

(10:51) Stock/Bond Correlation

(14:39) Hindsight Is 20/20, Show Me The P&L

(16:30) Gold & Oil

(21:55) Narratives Are Cheap

(26:36) Investing Vs. Trading

(32:37) Banks & Commercial Real Estate (CRE)