Monetary Matters with Jack Farley

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Inside the Secret World of Prop Traders | Noel Smith of Convex Asset Management Dec 17, 2024

Show notes

Noel Smith, founder of Convex Asset Management has spent most of his career outside of the world of managing other people’s money. Instead, he traded his own capital as a proprietary trader. Prop traders are famed for generating staggering rates of return, but because they have no interest in raising money, their secrets and strategies generally remain behind closed doors. However, he has decided to bring these strategies to the hedge fund world at Convex Asset Management and while they don’t scale to produce the same level of returns their lack of availability outside the prop world gives him differentiation in the product marketplace. In this interview, Smith explains why props can make so much more money, how much harder capital raising is than he anticipated, and why he ranks relationships and likability higher than performance when it comes to hedge fund success.

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Timestamps:

00:00 Intro

01:16 What is Prop Trading?

10:51 Moving to the Hedge Fund World

16:36 The Hedge Fund Popularity Contest

23:04 Volatility Trading Strategies

27:27 Extracting Information From The Options Market

32:09 Scaling Prop Strategies

34:44 Alpha Degradation

39:31 Being Good Is Not Enough

48:03 Dealing With Extreme Performance

53:28 Long-term Vision For Convex Asset Management

The Treacherous Last Mile of Inflation | Vincent Deluard on France, 2025 U.S. Fiscal Drag, COLA Pain, and the U.S. Healthcare Price Spiral Dec 15, 2024

Show notes

Vincent Deluard, director of global macro for StoneX, joins Monetary Matters to share why he thinks there is a perfect storm of macro headwinds that in April to May of 2025 may put a halt to the relentless rise in U.S. stocks.

Deluard argues that the lower inflation of 2024 will result in a lower cost-of-living-adjustment (COLA) adjustment for 2025 U.S. government programs such as Social Security. He thinks a strong U.S. dollar could dent corporate profits and that state and local governments plan to actually shrink expenditures in 2025.

Deluard, a Frenchman, shares his detailed view on political chaos in France and its macroeconomic consequences. Recorded on December 11, 2024.

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20% Decline In Stocks By First Quarter 2025? Felix Zulauf on a Bubble In S&P 500, Yen Carry Trade, and Bond Market Rollercoaster Dec 12, 2024

Show notes

Today’s episode is brought to you by the Teucrium Wheat Fund. War, weather, inflation—even monetary policy—drive wheat prices. See disclaimers below. Explore the opportunities at: https://bit.ly/Teucrium

Felix Zulauf, renowned macro investor and founder of Zulauf consulting, joins Jack on Monetary Matters to share his current views on stocks, bonds, and commodities. Zulauf expects a >1000 point correction in the S&P 500 in early 2025, and warns that a strengthening Japanese yen could unleash a wave of liquidations from investors involved in the Yen carry trade. Under such a risk-off scenario, Zulauf expects U.S. Treasury yields to decline, however he thinks the secular bear market in bonds will ultimately continue. Zulauf is not ready to call an end to the secular bull market in U.S. stocks. Recorded on December 9, 2024.

Felix Zulauf website: https://www.felixzulauf.com/

Felix Zulauf email: info@felixzulauf.com

Zulauf Consulting on LinkedIn: zulauf-consulting

Zulauf Consulting YouTube Channel: @zulaufconsulting

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___

Disclaimers for Teucrium sponsorship:

This material must be preceded or accompanied by a prospectus. Please read the prospectus carefully before investing. To obtain a current prospectus visit www.teucrium.com. The Teucrium Wheat Fund is a commodity pool regulated by the Commodity Futures Trading Commission and is not a mutual fund registered under the Investment Company Act of 1940 and is not subject to regulation under such Act. Commodities and futures generally are volatile and are not suitable for all investors.

Futures investing is highly speculative and involves a high degree of risk. An investor may lose all or substantially all of an investment in the Fund. Investing in commodity interest subject the Fund to the risk of its related industry. Brokerage commissions and exchange-traded fund expenses will reduce returns.

Teucrium Trading, LLC serves as the Sponsor of the Teucrium Wheat Fund. PINE Distributors LLC is the Marketing Agent for the Fund, and is not affiliated with Teucrium Trading, LLC, or any of its affiliates.

Music from #InAudio: https://inaudio.org/

Track Name: Cinematic Piano [Cinematic Music] by MokkaMusic / Soul

Active Management Still Matters in Emerging Markets | Jamie Carter Dec 10, 2024

Show notes

Jamie Carter, Partner and Managing Director at Variis Partners has spent much of his career focused on the world of long-only emerging-market investment boutiques. In this interview with Max Wiethe, Carter discusses the huge differences between building a long only business and a hedge fund business, why launching fund vehicles out of the UK has become more difficult, the differences in raising capital in the US, UK, and Europe, and why he thinks emerging markets are the last hold outs for fundamental active managers. He also explains why EM investors and allocators are holding their collective breath waiting to see how the Trump administration’s policies will impact global markets.

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You can learn more about Variis Partners on their website: https://www.variispartners.co.uk

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Rumors of Job Market Demise Have Been Greatly Exaggerated | Jack Farley & Max Wiethe Dec 08, 2024

Show notes

Jack Farley welcomes Max Wiethe, his business partner and host of the Other People’s Money podcast, for a conversation about the job market, the stock market, and the recent central banking conference they attended. Recorded on December 6, 2024.

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The Macroeconomic Malaise | Juliette Declercq on Debt, Tariffs, Immigration, and Yield Curve Dec 04, 2024

Show notes

A stalwart of the “no recession” camp for many years, Juliette Declercq of JDI Research joins Jack to argue why she thinks that recession is now the greater risk than inflation for 2025 and beyond. Declercq argues that U.S. economy has been growing beyond organic levels by relying upon debt growth and immigration. She explains her bullish view on the dollar, the two-year note, and her views on stocks and bonds. Recorded on December 2, 2024.

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The Investor Up 1000% With No Down Years | Chris Brown of Aristides Capital Dec 03, 2024

Show notes

Since Aristides Capital’s inception in August 2008, Chris Brown has returned over 1,000% for their investors with a stunning 16-year track record of no losing years. In this interview with Max Wiethe, Brown explains how they’ve been able to sustain these results and grow their business to over $300m in AUM all while operating far from the typical financial centers where hedge funds cluster. They discuss how accumulating a plethora of lower capacity strategies, hiring and working with “well intentioned nerds,” and maintaining rigorous processes for post-hoc analysis and feedback have been some of the keys to their investment success. They also touch on asset gathering from both HNW and institutional investors, attracting talent, and the reality that for small funds being in the top quartile or even decile of performance is a near necessity for reaching critical mass.

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Financial Markets Remain Abnormal | Andy Constan on Flat Yield Curve, Expensive Stock Market, and MicroStrategy Dec 01, 2024

Show notes

Andy Constan joins Monetary Matters to explain why he thinks financial markets are abnormal. With credit spreads extremely tight, the yield curve flat, and an expensive stock market, Andy estimates that all assets are expensive to cash and that financial markets are required to return to normal in order for inflation to return to normal. Recorded on November 26, 2024.

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Joseph Wang & George Goncalves on Rates, Tariffs, Fed’s Balance Sheet, and Yen Carry Trade Nov 27, 2024

Show notes

Jack is joined by George Goncalves, Head of US Macro Strategy at MUFG Securities Americas Inc, and Joseph Wang, publisher at FedGuy.com and former senior trader for the New York Fed, to probe the challenges the Federal Reserve faces at its December meeting and the new year. Recorded on November 25, 2024.

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Joseph’s website: https://fedguy.com/

Joseph’s book: https://www.amazon.com/Central-Banking-101-Joseph-Wang/dp/0999136747

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The Easiest Way to Launch a Hedge Fund | Understanding Fund Spinouts with Farid Guindo Nov 27, 2024

Show notes

Ask anyone and they will tell you it has never been harder to start a hedge fund. That’s why so many of the most successful launches of late have been funds emerging from a prior firm with the backing of the big boss, otherwise known as spinouts. Julian Robertson’s Tiger Cubs are the perhaps most famous spinouts, but it is still an extremely popular trend today. Farid Guindo, CIO and founder of Drill Capital Management is taking advantage of these dynamics to launch his new fund with the backing of his mentor and former boss at Bornite Capital, Dan Dreyfus. In this interview with Max Wiethe, Guindo discusses the ins and outs of fund spinouts, the importance of transparency and relationship building with bosses and mentors, and how his experience working at Tiger Cubs and other spinouts solidified his belief that this was the right path for Drill Capital after deciding it was best to be a separate vehicle outside of the Bornite umbrella.

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