The Fed, PTJ, And 12 Rules For Life

Tyler here with this week’s Macro Musings.

As always, if you come across something cool during the week, shoot me an email at tyler@macro-ops.com and I’ll share it with the group.

Our August Macro Intelligence Report (MIR) is coming out next week! Find out what value stocks Alex thinks will skyrocket in the final bull move of this record economical cycle by clicking here. We have a 60-day money-back guarantee, so there’s literally no risk for you to check out our favorite plays. Click here and scroll to the bottom of the page to sign up for the MIR.


Recent Articles/Videos —

Value Investing Is Dead, Long Live Value Investing – Alex explains how quantitative value stocks have floundered, while qualitative value has flourished.

Euro Short Case Study — A quick video covering how we shorted the Euro.

Trading The Facebook Drop — AK covers an interesting trade in FB.

Investing Or Gambling? — AK talks about how too many investors confuse the two.


Articles I’m reading —

Tim Duy’s Fed Watch is our go-to place for quick and concise analysis on the latest policies of the FOMC. I like it because he tries to make data dependent views instead of resorting to incessant Fed bashing. He shares his most recent thoughts on the Fed here.

We agree with his “bottom line” view that the Fed has no reason to slow down the hiking process, despite the trade war overhang. Excerpt below:

Bottom Line: For now, the economy continues to grow at a pace that allows the Fed to stick with the path of gradual rate increases. Powell & Co. would like to see evidence that the economy is stabilizing at a more moderate pace of growth before entering into a period of extended pause. That evidence has not yet materialized, but we can tell a story in which it does materialize by the end of this year or early next year. Until it does, expect the Fed to keep the pressure on the breaks.


Video I’m watching —

One of our Collective members sent this over to me last week. It’s a video of Goldman Sachs’ CEO Lloyd Blankfein interviewing the Michael Jordan of macro trading aka Paul Tudor Jones.

In the first 20 minutes of the interview PTJ talks about his beginnings in the trading game, the 1987 crash, and his latest thoughts on US monetary and fiscal policy. From there the conversation segways into his philanthropic efforts and his new JUST ETF which invests in socially responsible corporations.

PTJ thinks that the US’s monetary policy is completely unsustainable overtime. He cites that a “normal” 10-year real rate is 200 basis points and right now we’re around negative 30 or negative 40 basis points. The “normal” short-term real rate is 100-120 basis points and we’re sitting at negative 40. In PTJ’s eyes this flavor of monetary policy will lead to a high inflation environment similar to the 70s. He sees the long-term price of financial assets much lower, but admits that in the short-run the Fed and the US government are pouring fuel on a hot fire that can send prices higher still.


Chart I’m looking at —

The trend towards passive continues and it shows no signs of stopping. Fidelity just came out with two index funds that have 0 fees. (Link here)

After 9 long years of higher prices the financial advisory business has been turned into a administrative role rather than an investment strategy role.

It will be interesting to see if the business changes back to strategy after the cycle turn or if no-cost robo allocated investing will dominate retiree’s savings plans.


Podcast I’m listening to —

My relationship with James Altucher’s content has been hot and cold. I dislike a lot of his stuff, especially the obnoxious crypto peddling, but at the same time he will bang out a great interview with an interesting guest.

A few days ago, Altucher interviewed Roy Niederhoffer (Link here), brother to Victor Niederhoffer who’s famous for trading under Soros as well as blowing up accounts in spectacular fashion.

Roy shares the same talent Victor had for speculation, but he’s been able to learn from Victor’s mistakes on position sizing. Roy’s still in the hedge fund business today and has managed over a billion dollars for clients.

The interview extends beyond trading and ventures into the future of currency, book recommendations, methods to stay motivated and many other topics.


Book I’m reading —

12 Rules For Life  by Jordan Peterson has been on my nightstand the last few weeks. Peterson’s a clinical psychologist who became overnight internet famous after this interview he gave on gender pay gaps.  

The book is a philosophy, psychology, and self-help book all in one that makes for a nice casual read. It’s set up in a way that allows you to pick and choose the principles that apply to your life while discarding those that don’t.

The book is also the most read non-fiction title on Amazon right now and has over 3100 reviews with an average of 4.7 stars. So it’s a pretty safe bet for your attention. It’s added a lot of value for a lot of readers.


Quote I’m pondering —

In times of change learners inherit the earth; while the learned find themselves beautifully equipped to deal with a world that no longer exists.  ~ Eric Hoffer

As technology progresses faster and faster, we must also increase the rate at which we learn. If you’re not learning new things everyday you’re falling behind.

That’s it for this week’s Macro Musings.

If you’re not already, be sure to follow us on Twitter: @MacroOps and on Stocktwits: @MacroOps. Alex posts his mindless drivel there daily.

Here’s a link to our latest global macro research. And here’s another to our updated macro trading strategy and education.

 

 

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Brandon Beylo

Value Investor

Brandon has been a professional investor focusing on value for over 13 years, spending his time in small to micro-cap companies, spin-offs, SPACs, and deep value liquidation situations. Over time, he’s developed a deeper understanding for what deep-value investing actually means, and refined his philosophy to include any business trading at a wild discount to what he thinks its worth in 3-5 years.

Brandon has a tenacious passion for investing, broad-based learning, and business. He previously worked for several leading investment firms before joining the team at Macro Ops. He lives by the famous Munger mantra of trying to get a little smarter each day.

AK

Investing & Personal Finance

AK is the founder of Macro Ops and the host of Fallible.

He started out in corporate economics for a Fortune 50 company before moving to a long/short equity investment firm.

With Macro Ops focused primarily on institutional clients, AK moved to servicing new investors just starting their journey. He takes the professional research and education produced at Macro Ops and breaks it down for beginners. The goal is to help clients find the best solution for their investing needs through effective education.

Tyler Kling

Volatility & Options Trader

Former trade desk manager at $100+ million family office where he oversaw multiple traders and helped develop cutting edge quantitative strategies in the derivatives market.

He worked as a consultant to the family office’s in-house fund of funds in the areas of portfolio manager evaluation and capital allocation.

Certified in Quantitative Finance from the Fitch Learning Center in London, England where he studied under famous quants such as Paul Wilmott.

Alex Barrow

Macro Trader

Founder and head macro trader at Macro Ops. Alex joined the US Marine Corps on his 18th birthday just one month after the 9/11 terrorist attacks. He subsequently spent a decade in the military. Serving in various capacities from scout sniper to interrogator and counterintelligence specialist. Following his military service, he worked as a contract intelligence professional for a number of US agencies (from the DIA to FBI) with a focus on counterintelligence and terrorist financing. He also spent time consulting for a tech company that specialized in building analytic software for finance and intelligence analysis.

After leaving the field of intelligence he went to work at a global macro hedge fund. He’s been professionally involved in markets since 2005, has consulted with a number of the leading names in the hedge fund space, and now manages his own family office while running Macro Ops. He’s published over 300 white papers on complex financial and macroeconomic topics, writes regularly about investment/market trends, and frequently speaks at conferences on trading and investing.

Macro Ops is a market research firm geared toward professional and experienced retail traders and investors. Macro Ops’ research has been featured in Forbes, Marketwatch, Business Insider, and Real Vision as well as a number of other leading publications.

You can find out more about Alex on his LinkedIn account here and also find him on Twitter where he frequently shares his market research.