Musings: Memes and Violence, India on the Ropes, and Vol Talk

Alex here with your latest Friday Macro Musings. 

Latest Articles — 

A Monday Dozen [CHART PACK] – In this week’s Monday Dozen I take a look at anxious markets and discuss the fuss over the inverted yield curve, plus we check in on liquidity, sentiment, and relative valuations and end with a sector that has all three going for it. 

How To Identify The Consensus – I share a passage from one of my favorite little known trading books, The Way of the Dollar, which discusses the process in how which one can work to be an effective contrarian. 

MO Podcast: Bonds, Metals, Value, Politics, NO DOLLAR – This week Chris D. and I sat down and talked macro and stuff. 

Articles I’m reading — 

Earlier this year I discovered the work of French philosopher and former professor at Stanford, Rene Girard. And I fell deep down the Girard rabbit hole, exploring his work on mimetic desire, violence and scapegoating, and differentiation and discrimination. His ideas are literally eye-opening stuff. Peter Thiel describes them as such (quote via David Perell):

“[Girard’s ideas are] a portal onto the past, onto human origins, and our history. It’s a portal onto the present and onto the interpersonal dynamics of psychology. It’s a portal onto the future in terms of where we are going to let these Mimetic desires run amok and head towards apocalyptic violence… It has a sense of both danger and hope for the future as well. So it is this panoramic theory… [It’s] super powerful and extraordinarily different from what one would normally hear. There was almost a cult-like element where you have these people who were followers of Girard and it was a sense that we had figured out the truth about the world in a way that nobody else did.”

For those of you interested in digging into Girard’s work (and I highly suggest doing so) I recommend starting with the book Rene Girard’s Mimetic Theory by Wolfgang Palaver. It’s a good overview of the meat and potatoes of Girard’s philosophy. And before ordering that you can start with this excellent summary by Alex Danco, which is one of my new favorite blogs. It’ll take you at least 30-minutes to get through but it’s a half-hour well spent, trust me. Here’s a section from the piece and h/t to @jposshaughnessy for alerting me to this one. 

“Human beings are creatures of mimicry. We are evolutionarily supercharged to do one thing better than anyone else: learn by watching and copying others. And the most important thing we learn is how to want.  

As we grow up and live our lives, we watch others and learn what it is we ought to want. Aside from the basics, like food, water, shelter and sex, our desire for any particular object or experience is not hard-coded into our DNA; we’ve learned to want it by watching other people. But what is hard-coded into our DNA and hard-wired into our brains is the desire to be; and to belong. The true root of all desire, Girard and others argue, is never in the objects or the experience we pursue; it’s really about the other person from whom we’ve learned to want these things.”

Another favorite blog and twitter follow of mine is Macro Charts by @MacroCharts. If you like charts then he’s a must follow. His latest post on a potential bottom forming in emerging markets is a good short read. Here’s the link and his summary from the post. 

I agree. While I’ve noted that EM faces structural growth challenges (explanation here), positioning and sentiment suggest there’s real potential for a decent bull rally. We just need the dollar to crack… 

Lastly, for those of you interested in staying abreast on where the high level monetary and policy discussion is headed, give this recently published whitepaper written by Blackrock and Stanley Fischer a read (link here).

Charts I’m looking at—

If a recession is indeed around the corner as all the major newspapers and financial pundits would have us believe, well then someone should tell the labor market because it seems to have not gotten the memo yet. 

Video I’m Watching —

This is a really good Ted Talk given by Jeff Bezos all the way back in 2007. It’s titled The Electricity Metaphor. Bezos lays out the similarities and more importantly, the dissimilarities, between the late 90s internet bubble and the gold rush. He goes on to explain that the creation of the internet is a lot more like the invention of the electricity, which spawned decades of revolutionary “apps” such as the washing machine and toasters. Also, notice how much dweebier he looks then versus now. It’s amazing what $100bn will do for you. Here’s the link. Oh, and h/t to Patrick O’Shaughnessy’s book club for the find. 

Podcast I’m listening to —

I gave a new podcast a try this week and I’m glad I did. Corey Hoffstein’s Flirting with Models latest interview with volatility trader Benn Eifert is excellent. If you’re at all interested in options or vix trading then this interview is a must-listen. Here’s the link.

Book I’m reading —

I just got Alchemy: The Dark Art of Creating Magic by Rory Sutherland in the mail so I’ve only recently cracked it open. But after seeing a number of people on the twitters call it the best book they’ve read this year, I’m excited to dive in and see what all the fuss is about.

Trade I’m Considering —

I shared this chart of India’s NIFTY 50 parabolic rise a while back. Well, it looks like its trendline is about to crack for the first time in 16-years (chart is a weekly). 

In addition to the growing geopolitical risk in that corner of the world, the data has also been coming in extremely weak. Our Composite Leading Indicator shows that India’s economy is clearly is downturn territory.

And earnings momentum has taken a nose-dive.

I have no position yet but watching this one closely.

Quote I’m pondering —

Traders in all markets are divided into those who know what they are doing and those who do not. That doesn’t mean that those who know what they are doing are right: they just know what they are doing. The rest operate by chance; and, it must be said, the rest are in the great majority. Those who have a system to which they adhere consistently know what they’re doing. Of this small knowing minority, a largish proportion are chartists, or at least rely more or less on price history. ~ John Percival, The Way of the Dollar

If you’re not already, be sure to follow me on Twitter: @MacroOps. I post my mindless drivel there daily.

Have a great weekend.

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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.


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.