Forward Guidance

Latest Episodes:

It’s “Game Over” For The Everything Bubble, Says George Noble, Peter Lynch’s Protégé May 09, 2022

Show notes

George Noble has seen many bubbles in his storied career: the 2008 Great Financial Crisis, the Dotcom Bubble of 2000, and the Japanese mega-bubble which he rode on the way up and down. But no prior period of speculation compares to what Noble sees now: a mega bubble of epic proportions, fueled primarily by a wave of central bank liquidity that has taken non-profitable technology stocks to previously unimaginable heights.

Noble argues that inflation has been popping this bubble and that equities are “toast” and that goldilocks is “dead.” Noble sees overvaluation problems not only in the “ARKK” stocks but also darlings of the S&P 500 such as Amazon, Apple, and Netflix.

As a warning to viewers, Noble shares words from the legendary investor Peter Lynch (his mentor): “know what you own.”

George Noble on Twitter https://twitter.com/gnoble79

Jack Farley on Twitter https://twitter.com/JackFarley96

Blockworks on Twitter https://twitter.com/Blockworks_

Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletter/

BCB is Europe’s leading provider of business accounts and trading services for the digital asset economy. With a dedicated focus on institutional payment services, BCB Group provides business banking, cryptocurrency and foreign exchange market liquidity for some of the world’s largest crypto-engaged financial institutions.

For more information, please visit https://bcbgroup.com/jack

Timestamps

(00:00) Introduction

(00:51) Background

(06:55) The Everything Bubble

(13:36) The Powell Pivot

(20:58) ARKK

(25:43) BCB Ad

(26:32) Inflation Is Popping The Bubble In Long-Duration Assets

(39:50) Are Bonds A Hedge For Stock Sell-offs? (Answer: No)

(41:12) How Low Can Stocks Go?

(43:22) Netflix and Amazon

(50:10) "Peter Lynch Would Not Be Buying Apple Right Now"

(52:50) Energy

(59:30) Crypto

(1:02:50) Noble's Twitter Spaces

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.

The Food & Energy Crisis Has Only Just Begun | Doomberg May 05, 2022

Show notes

On today’s episode of “Forward Guidance,” Jack Farley is joined by the mysterious green chicken known only as “Doomberg,” a research publication on energy, food, and fertilizer.

Doomberg argues that the ongoing surge in oil and natural gas prices is due to key policy errors that, if they continue, will ensure that price shock will turn into a full-blown energy and food crisis that will push many countries to the brink of recession, particularly Europe and frontier market nations.

Doomberg breaks down the frightening dependence of Europe on Russian energy and explains how, in the case of Germany, a rejection of nuclear power by so-called “environmentalists” led to its embrace of coal.

Follow Doomberg on Twitter https://twitter.com/DoombergT

Follow Jack on Twitter https://twitter.com/JackFarley96

Follow Blockworks: https://twitter.com/Blockworks_

Subscribe to Doomberg https://doomberg.substack.com/

Subscribe To The Blockworks Newsletter: https://blockworks.co/newsletter/

Bit.com is a full-suite cryptocurrency exchange launched by Matrixport, an integrated financial services firm headquartered in Singapore. Since August 2020, Bit.com has been online supporting the spot, perpetual, futures, fixed income and options products, with a particular highlight being pioneers to launch BCH options. Bit.com is the second-largest in the BTC and ETH options market.

Call to action: For any further enquiry, please contact vip@bit.com.

App download URL: https://bit.ly/3xer6uI (edited)

(00:00) Intro

(00:33) The Start of Doomberg

(05:27) Core Energy Thesis

(12:00) How Germany's Rejection of Nuclear Led To Its Embrace Of Coal

(14:32) The Weaponization of Russia's Natural Gas

(19:40) Europe's Dependence on Russian Energy

(34:00) Bit.com Ad

(34:30) Nuclear Power

(39:20) Farmers On The Brink

(47:30) Oil

(54:57) Renewables

(01:08:36) Questions From Audience

Fed Chair Powell Says Goodbye To Era Of Easy Money | Jim Bianco & Joseph Wang May 05, 2022

Show notes

Follow Jim Bianco https://twitter.com/biancoresearch

Follow Joseph Wang https://twitter.com/FedGuy12

Follow Jack Farley https://twitter.com/JackFarley96

Follow Blockworks https://twitter.com/Blockworks_

Timestamps:

(00:00) Opening Thoughts

(08:05) Powell's "Codewords"

(15:10) The Balance Sheet: Stock vs. Flow

(22:10) Is The Fed No Longer Credible?

(27:32) When Is Inflation Going to Peak?

(47:15) Worst Bond Market Sell-Off Since George Washington Became President

(51:30) Systemic Risks For The Financial Systems

(53:00) Are Rate Hikes Good for Commercial Banks?

(1:01:04) How Far Can The Fed Go?

A Dilemma Of The Fed’s Own Making | Danielle DiMartino Booth & Joseph Wang May 02, 2022

Show notes

Danielle DiMartino Booth, founder and CEO of Quill Intelligence, joins Jack Farley and former senior Fed trader Joseph Wang to share her outlook on this week’s FOMC meeting. Booth argues that the Federal Reserve’s lateness to fight inflation has caused it to lose a lot more credibility, and makes the case that it risks to lose even more credibility if it fails to recognize that the economy is slowing rapidly. Booth notes that credit spreads are widening rapidly and argues that it will be a credit market blow-up, not an equity market drawdown, that forces the Federal Reserve to change course. Wang and Booth discuss how rising mortgage rates will deter the Fed from shrinking its holdings of mortgage-backed securities (MBS), and they each give their take on the continued sell-off in Treasury bonds.Follow Danielle DiMartino Booth on Twitter @DiMartinoBooth

Follow Joseph Wang on Twitter @FedGuy12

Follow Jack Farley on Twitter @JackFarley96

If you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter

Why The Repo Market Will Need The Fed’s Cash Yet Again | Scott Skyrm & Joseph Wang Apr 29, 2022

Show notes

Scott Skyrm, Executive Vice President in fixed income & repo at Curvature Securities, joins former senior Fed trader Joseph Wang and host Jack Farley to share his insights from deep within the repo markets. Skyrm explores whether the Fed’s forthcoming balance sheet runoff will agitate repo markets like last time in September 2019, when repo rates spiked higher. Skyrm (@ScottSkyrm) and Wang (@FedGuy12) weigh important considerations, such as the Fed’s involvement with the market and what current repo rates indicate about the level of bond shorting.

Skyrm tells Farley (@JackFarley96) that the trillions of Treasury collateral that the market will have to absorb over the next year will drain the ~$1.8 Trillion in Fed’s reverse repo facility, yank repo rates higher, and eventually cause the market to rely once again on the Fed’s standing repo facility.

For more information, please visit https://bcbgroup.com/jack

The “Short Everything” Trade | Teddy Vallee Apr 28, 2022

Show notes

Jack’s next guest is someone who has timed this cycle better than literally anyone he knows in macro.

Since the beginning of the year, the elusive Teddy Vallee has been short almost everything, stocks but in particular U.S. government bonds, which are in the midst of their most vicious sell-off in almost 40 years. But very recently, Teddy has closed his short in government bonds and has actually entered a massive long position in Treausurys. Teddy tells Farley why he expects growth and inflation to slow rapidly as the Federal Reserve tightens monetary policy.

A note on the title: up until very recently, Vallee had “the everything short” (short stocks and bonds) on. But now that he is long bonds, he no longer does.

Filmed on Tuesday, April 26.

Follow Teddy Vallee on Twitter: https://twitter.com/TeddyVallee

Follow Jack Farley on Twitter: https://twitter.com/JackFarley96

Follow Blockworks on Twitter: https://twitter.com/Blockworks_

Call to action: For any further enquiry, please contact vip@bit.com.

App download URL: https://bit.ly/3xer6uI

Timestamps:

(00:00) Introduction

(00:51) Teddy's Successful Bond Short in Early 2022

(04:20) Teddy's Successful Equity Short in Early 2022

(05:43) The Economy Is Slowing Rapidly

(07:58) The Fed's Key Error

(11:05) Chinese Lockdowns Destroying Economic Growth

(16:06) Going From Short to Long The Bond Market

(23:33) What If The Fed Remains Hawkish

(26:14) Bit.com Ad

(26:46) Oil & Bretton Woods 3

(28:46) Confidence Levels Of Long Bond Trade

(30:12) Quantitative Tightening's (QT) Impact on Bond Yields

(38:35) When Will Powell Pivot?

(41:30) Gold

(42:25) Crypto

If you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter

Can Europe's Economy Handle Russian Sanctions? | Frances Coppola Apr 25, 2022

Show notes

Frances Coppola, Economist, Author & banking expert, joins Forward Guidance to give an update on how the West's new sanctions on Russia are playing out. Coppola explains how key commodities such as Russian natural gas and oil continue to flow to Western countries, and she makes an impassioned case for why a ban on Russian energy is necessary to thwart the imperial ambitions of Russian President Vladimir Putin.

Follow Frances Coppola on Twitter: https://twitter.com/Frances_Coppola

Follow Jack Farley on Twitter: https://twitter.com/JackFarley96

Follow Blockworks on Twitter: https://twitter.com/Blockworks_

For more information, please visit https://bcbgroup.com/jack

(00:00) Introduction

(00:58) Overview of Sanctions on Russia

(07:08) Oil & Natural Gas

(09:30) Wheat

(14:20) Demand Destruction and Recession Risk

(18:00) When Will We Hit Peak Inflation?

(21:20) Central Bank Response Function

(27:01) The European Central Bank (ECB) And Inflation

(32:02) BCB Ad

(35:45) The Dollar's Surge

(1:20:36) Breton Woods III

Expect a 30% Correction in Stocks, Says Godfather Of Global Liquidity | Michael Howell Apr 21, 2022

Show notes

“Liquidity” is a critical concept in markets that many may have heard, but few truly understand. Michael Howell, managing director at Cross Border Capital, is the global liquidity flows. He breaks down what liquidity is and he explains to Jack Farley how the tide of liquidity that has lifted asset prices over the past two years is reversing very quickly.

Howell argues that, since 95% of central banks are tightening at the same time, the short-term risk/reward for stocks is poor, and he thinks a further 20% correction is ahead for the equity market. Howell explains the complex yield curve dynamics, and explains why the ongoing liquidity collapse might finally make long-term government bonds attractive once again.

Filmed on Tuesday, April 19, 2022. A note on the title: Howell’s expectation of a 30% in stocks is from peak-to-trough, and since equities are down nearly 10% already, that would equate to a further fall of 20% from current levels (not 30% from current levels).

Follow Cross Border Capital on Twitter @crossbordercap

Follow Jack Farley on Twitter @JackFarley96

Follow Blockworks on Twitter @Blockworks

_____

Call to action: For any further enquiry, please contact vip@bit.com.

App download URL: https://bit.ly/3xer6uI

If you like this episode be sure to subscribe to our newsletter at https://blockworks.co/newsletter

Timestamps

(00:00) Introduction

(00:45) What Is Liquidity?

(10:59) The Turbulence Zone

(21:06) What Will Be The First To Break?

(23:58) Why Are Stocks And Credit Still So Richly Priced?

(26:35) But What About Inflation?

(32:24) Bit.com Ad

(43:32) Can China Save the Day?

(47:05) Why Falling Liquidity Causes A Dollar Squeeze

(50:33) How High Oil Prices Further Deteriorate Liquidity

(53:04) History of Global Liquidity

(56:28) Capital Wars and Bretton Woods III

(1:08:25) Is The Yield Curve Signaling A Recession?

(1:09:56) How Far Will The Fed Get With QT? (Bagehot's Dictum)

Commercial Banks Taper Treasury Purchases | Joseph Wang & DC Analyst Apr 20, 2022

Show notes

DC Analyst joins Joseph Wang and Jack Farley for a discussion about commercial banks, treasuries, and bearishness on banks.

DC on Twitter: @AnalystDC

Joseph Wang on Twitter: @FedGuy12

Jack Farley on Twitter: @JackFarley96

Blockworks on Twitter: @Blockworks_

Links

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Liberty Street Economics, "The Fed’s Balance Sheet Runoff and the ON RRP Facility":

https://libertystreeteconomics.newyorkfed.org/2022/04/the-feds-balance-sheet-runoff-and-the-on-rrp-facility/

Bullard's Triple Rate Hike Comment: https://www.bloomberg.com/news/articles/2022-04-19/last-resort-fed-hike-enters-debate-as-bullard-invokes-1994-move

DC's substack: https://dcchartbook.substack.com/p/chartbook-15?s=r

Joseph Wang's writings: https://fedguy.com/draining-the-rrp/

(00:00) Introduction To DC Analyst

(02:01) Why Are Banks Buying Fewer Treasuries?

(14:30) Implosion Of The Japanese Yen

(20:40) Who Will Buy The Treasuries?

(31:20) What If Banks Don't Lend More?

(37:30) Bearish For Banks? (No)

(42:47) Quantitative Tightening - Will The Fed Be Forced to Sell?

(46:57) Mortgage-Backed Securities

(57:40) Bullard's Comments on Triple-Hike

Think Rising Rates Are Good For Banks? Think Again! Apr 18, 2022

Show notes

An oft-cited fact is that rising rates support the profitability of the commercial banking system. Chris Whalen, veteran banker, chairman of Whalen Global Advisors & Author of The Institutional Risk Analyst begs to differ. Whalen explains to Farley that banks make money by the spread between their yield on their loans and their cost of funds, and that while rising rates do increase loan yields, they also increase banks’ cost of funds. Whalen also explains why he thinks the Federal Reserve will be unable to do Quantitative Tightening because it will be stuck with mortgage-backed securities (MBS) for many years.

For more information, please visit https://bcbgroup.com/jack

Timestamps:

(00:00) Introduction

(12:35) Inflation

(18:13) The Problem The Fed Faces with Mortgage-Backed Securities (MBS)

(21:08) Can the Federal Reserve Become Insolvent?

(24:57) Mortgage Lending At Commercial Banks27

(27:32) BCB Ad

(28:20) Are Rising Rates Good For Banks?

(31:54) Why A Recession Is Likely?

(34:51) Outlook on Bank Stocks and U.S. Treasuries

(44:00) Biggest Risk: Non-Bank Lenders