Forward Guidance

Latest Episodes:

The Era of American Stock Dominance Is Over | Kevin Muir Jan 09, 2023

Show notes

In December 2021, Kevin Muir, veteran trader and author of The Macro Tourist, came on Forward Guidance and made a series of bold predictions all of which came true. Now, with a red carpet rolled out for him, Kevin returns to Forward Guidance to share his predictions for 2023.

Kevin argues that U.S. stocks will underperform foreign equities, that 2023 will be far more “boring” than investors expect, and that deep trouble is brewing in private markets (venture capital, private equity, and private debt). Kevin also contends that the economy might fare better than many anticipate, and that bank stocks will do well.

Filmed the afternoon of January 6th, 2023.

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Kevin Muir’s newsletter, The Macro Tourist, can be found here: https://themacrotourist.com/

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Kevin’s interview on Forward Guidance in 2021: https://www.youtube.com/watch?v=gJkEokqqaKM&t=400s

This episode is sponsored by Curve. Curve is unlike any other credit card. It gives you the power to connect multiple credit and debit cards into one, convert your cashback into crypto rewards, Go Back in Time ®, create Smart Rules, and more. Apply now through https://link.curve.com/forward_guidance, you’ll earn $20 in Curve Cash after your first transaction. So sign up today! Terms and conditions apply.

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Timestamps:

(00:00) Introduction

(00:27) The Fed

(05:43) When Will Recession Come (If At All)?

(13:32) 2023 Will Be More Boring Than People Expect

(18:09) The Bond Market Pain Might Continue

(25:01) Where Is The Terminal Rate?

(29:25) Curve Ad

(30:26) The Era of U.S. Equity Outperformance Is Over

(47:42) There Will Be Trouble In Private Markets

(01:00:54) The Tide Is Out, Who Will Be Left Swimming Naked?

(01:08:06) The Banks Will Do Fine

(01:13:57) Outlook on Crypto

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.

Crypto’s 2023 “Health Check” | Vance Spencer Jan 06, 2023

Show notes

Vance Spencer, co-founder of Framework Ventures, a venture firm that invests exclusively in digital assets, joins Jack to look back on crypto’s rough 2022 and look forward to what is on the horizon. Spencer shares his framework for valuing digital assets, explains why he thinks the vast majority of crypto projects are unsuitable for this valuation methods, and offers his reasoning for why he is very bullish on Ethereum above all else.

Filmed on December 21, 2022.

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Timestamps:

(00:00) Introduction

(02:36) The Seeds of A Bear Market

(10:10) Why Vance Is Skeptical On Solana

(12:57) Crypto Health Check in 2023

(16:17) How Does Macro Impact Crypto?

(24:53) Permissionless Ad

(25:53) Big Tech

(27:38) Genesis And The Grayscale Bitcoin Trust

(32:10) Crypto "Yield" And Its Many Problems

(35:59) Bitcoin

(41:08) Valuation of Eth

(45:24) Contagion Risks Within Crypto

(48:25) Tether

(50:48) Investment Strategies In A Bear Market

(52:33) Crypto Gaming & The Metaverse

(59:57) Who Had Accounts At FTX?

(01:01:48) Why have prices been rangebound over the past month?

(01:03:11) Non-Ethereum Projects That Vance Likes

“Nightmare Scenario” For The Fed | Felix Jauvin Jan 05, 2023

Show notes

Felix Jauvin, macro analyst at Reflexivity Research, joins Jack Farley to share his outlook on liquidity, the Fed, and inflation. Jauvin argues that the liquidity that the Federal Reserve is removing from the financial system via quantitative tightening (QT) is being sterilized by the draining of the Fed’s reverse repo facility (RRP) - in other words, the Federal Reserve is removing money with one hand and adding money back with another. Jauvin shares his outlook on assets such as bonds, stocks, commodities, the dollar, and crypto.

Filmed on December 20, 2022.

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Timestamps:

(00:00) Introduction

(00:29) Liquidity In 2023

(15:30) Reverse Repo & Treasury General Account (TGA)

(20:59) What's Going To Break?

(30:05) A "Nightmare Scenario" For Powell And The Fed

(34:16) Pivot And Yield Curve Control

(37:07) Views On Inflation

(43:57) Commodities Outlook

(48:57) Equities

(56:03) Crypto

A Masterclass In Central Banking | Professor Jane Knodell Jan 02, 2023

Show notes

Jane Knodell, professor of economics at the University of Vermont and author of "The Second Bank of the United States: Central banker in an era of nation-building" joins the show for a masterclass in financial history. Taking us back to the founding of the First & Second Bank of the United States, Knodell discusses the origins of banking, central banking and everything in between, taking us on a tour from the late 1700's to present day. To hear all this and more, you'll have to tune in!

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Timestamps:

(00:00) Introduction

(01:02) The First Bank In The United States

(04:29) The Coinage Act Of 1790

(08:37) The Financing Of The Revolutionary War

(14:40) How Successful Was The First Bank?

(17:14) The Second Bank of the United States: “Central” Banker in an Era of Nation-Building

(24:50) The Mechanics of "Discounts, Exchange & Treasury Debt"

(29:05) The Panic Of 1819

(33:02) The Panic of 1825 & The Role Of "Central" Banking

(40:12) Did The Second Bank of the United States Closing In 1836 Have Any Effect On The Panic Of 1837?

(46:29) The Panic Of 1907: The J.P. Morgan Bailouts

(53:55) The Financial System's Plumbing

(57:54) The Financing of WWI

(01:02:34) The Great Depression

(01:07:47) Can The Federal Reserve Print Money?

(01:11:13) Bretton Woods

(01:15:35) The Treasury-Fed Accord

(01:19:15) The FTX Fallout

All You Ever Wanted To Know About Interest Rates | DC Analyst Dec 29, 2022

Show notes

Interest rates are a key measure of the price of money, but as the plural suggests, there is one more than just one interest rate. Today Jack dives deep into the interest rate structure with whiz kid Kemen Linsuain, known commonly as DC Analyst, who knows a thing or two about the many different kinds of risk-free rates that punctuate the financial system.

Kemen tells of the Federal Funds rate, which is the nominal overnight rate that the Federal Reserve controls, to other rates within the Fed’s remit such as the interest on reserve balances (IORB) and the reverse repo rate (RRP). Kemen and Jack then discuss overnight interest rates not within the Fed’s control such as the Secured Overnight Financing Rate (SOFR), the London Interbank Offered Rate (LIBOR), and then other rates and derivatives such as Treasury bill futures and swap rates.

Note: the vast majority of rates discussed in this conversation are short-term rates with minimal amounts of credit risk, and should not be confused with corporate bond yield, mortgage rates, or commercial banking rates. Lastly, Kemen shares his thoughts on crypto, and tells Jack about his latest venture into crypto as a content creator at Gauntlet.

About Gauntlet: https://gauntlet.network/

DC Analyst blog: https://dcchartbook.substack.com/

Latest chartback from DC Analyst: https://dcchartbook.substack.com/p/chartbook-17

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Timestamps:

(00:00) Introduction

(01:08) Interest Rate Mayhem in 2022

(14:19) Repo Markets

(21:08) Curve Ad

(22:14) Secured Overnight Financing Rate (SOFR)

(37:03) Interest Rate Derivatives Market

(41:39) LIBOR to SOFR Transition

(50:14) Spread Between EFFR & SOFR (Effective Fed Funds Rate & Secured Overnight Financing Rate)

(55:26) Overnight Index Swaps (OIS) and Forward Rate Agreements (FRA)

(56:50) Negative Swap Spreads

(59:48) Term Premium

(01:02:12) Thoughts On The Fed

(01:06:53) Crypto & DeFi

(01:13:34) Where Did The (Crypto) Yield Come From?

The Fed Will Tighten "As Far As They Can" Into 2023 | Joseph Wang & George Goncalves Dec 26, 2022

Show notes

Today Jack welcomes George Goncalves and Joseph Wang to share their 2023 outlook on the Federal Reserve and inflation. Goncalves, Head of U.S. Macro Strategy at MUFG Securities, argues that inflation is slowing rapidly and the Federal Reserve is nearly done with raising interest rates. Joseph Wang, former senior trader for the New York Fed, contends that 2023 will be the year that “transitory will die” and that the Federal Reserve will tighten as far as it can as inflation stays high.

Wang and Goncalves also discuss the housing market, quantitative tightening, yield curve inversions, and their outlook on risk assets.

Follow George Goncalves on Twitter: https://twitter.com/bondstrategist

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Get top market insights and the latest in crypto news. Subscribe to Blockworks Daily Newsletter:

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Timestamps:

(00:00) Introduction

(00:59) A 2023 Global Macro Outlook

(09:33) The Tightening of Financial Conditions

(13:37 Forecasting The Fed Terminal Rate Into 2023

(20:33) Curve Ad

(21:36) A Classic Boom/Bust Cycle?

(29:12) Lagarde Is Undoubtedly Hawkish

(31:26) Should We Listen To The Fed's Forward Guidance?

(36:58) The Cycle of Financial Conditions

(47:19) Stocks, Bonds & The Wealth Effect

(49:54) 2023 Outlook For Risk Asset's

(56:37) Analysing The Effects Of Quantitative Tightening

(01:03:12) George & Joseph's Final Thoughts & Outlook For 2023

(01:12:00) The Outlook For Bonds Throughout 2023

Private Markets To Implode As Fed Hikes to 7% | Bilal Hafeez Dec 22, 2022

Show notes

Bilal Hafeez, CEO of Macro Hive, is a veteran of macro analysis and he joins today’s interview with some truly bold calls. Hafeez argues that a severe recession is coming but the Federal Reserve will continue to hike interest rates to 7 or even 8 percent in order to destroy inflation. Hafeez tells Farley that he thinks private markets (venture capital but in particular private equity) will perform poorly as earnings fall and financing costs rise sharply. Hafeez also shares his outlook on China, Energy, the U.S. Dollar, and crypto.

To get 40% off on an annual subscription to Macro Hive Prime, go to https://macrohive.com/become-a-member/?add-to-cart=6308 and use promotional code “JACK.” Offer ends on January 6th, 2022.

Macro Hive Prime membership includes cross market strategy, economic analysis, central bank policy analysis, equity insights and trade ideas, crypto flow frameworks, and academic paper summaries. To get a sense of the quality of Macro Hive’s analysis, check out Bilal’s piece on asset allocation: https://macrohive.com/hive-exclusives/asset-allocation-update-cash-wins-2022/

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Timestamps:

(00:00) Introduction

(00:42) Macro Outlook For 2023

(05:32) Severe Recession Incoming

(10:20) Complete Implosion" of Private Markets Is Gray Swan For 2023

(22:55) Venture Capital Is Already Feeling The Pain

(25:38) Other Grey Swans: TikTok & World Peace

(31:16) China

(38:15) Can China Print Its Way Out Of Its Mess?

(42:08) Bond Market Outlook

(49:39) Energy

(54:21) Is Europe In A Recession?

(55:51) How High Will Central Banks Raise Interest Rates?

(57:35) Discount To Macro Hive Prime

(01:00:24) The U.S. Dollar

(01:09:59) Crypto

Bank of Japan’s Capitulation Perturbs Global Bond Market | Weston Nakamura Dec 20, 2022

Show notes

The Bank of Japan (BOJ) has stunned markets by raising the cap on its 10-year government bond and there’s no one Jack would rather speak to than, Weston Nakamura, macro analyst and BOJ aficionado.

Weston tells Jack that the BOJ’s decision to allow Japanese government bonds (JGBs) to trade with a higher yield was not, as some westerners might presume, to fight inflation or even necessarily to defend the yen. Rather, the Bank of Japan is seeking to restore order to the JGB market, which has been steadily deteriorating throughout this year.

Weston argues that if Japanese investors with capital abroad repatriate their capital and sell foreign assets, the U.S. Treasury market could be in for a wild ride, one similar to the chaos in U.K. gilt market in September. Filmed the afternoon of December 20, 2022.

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The Technicals Are Bearish | Katie Stockton Dec 19, 2022

Show notes

Katie Stockton, founder and managing partner of Fairlead Strategies and portfolio manager of the $TACK ETF, joins Jack Farley to share her analysis of the charts of stocks, bonds, and commodities. In the first technical analysis interview on Forward Guidance, Stockton explains and incorporates indicators such as moving average convergence divergence (MACD), Ichimoku clouds, moving averages, and stochastic oscillators. She tells Jack that in the short-run, the technicals remain bearish for the S&P 500, and she also offers her reading on oil, gold, and the 10-year Treasury yield. Filmed on Friday, December 16, 2022.

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Timestamps:

(00:00) Introduction

(01:23) Key Concepts In Technical Analysis (TA)

(05:30) Support And Resistance

(11:06) Combining Different Indicators To Draw Conclusions

(24:02) Curve Ad

(25:08) Moving Average Convergence Divergence (MACD) Explainer

(33:02) Outlook on S&P 500

(35:36) Outlook on Oil

(44:48) Gold

(46:47) Treasury Yields

(50:24) Sector Analysis

(54:18) Common Mistakes In Technical Analysis

China’s Economic House Of Cards | Kyle Bass & Nick Glinsman Dec 16, 2022

Show notes

Today’s interview is something unlike any other that’s ever appeared on Forward Guidance. It concerns China, a country that once was the engine of global economic growth, but now is in the middle of its worst recession in over 20 years. Can China’s economy emerge stronger than ever? Let’s just say that today’s guests, Kyle Bass and Nick Glinsman, are not optimistic. Kyle Bass is the chief investment officer of Hayman Capital and Nick Glinsman is the founder of Malmgren Glinsman & Partners.

An important disclaimer: a guest today makes serious allegations that are solely his own opinion. Blockworks does not necessarily agree with these claims, some of which are unverified or unverifiable, and in no way endorses them. As always, 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.

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Timestamps:

(00:00) Introduction

(01:06) Kyle Bass’ 2023 Macro Outlook

(04:20) Will A Global Recession Curb Energy Prices?

(13:10) China's Economy