Post-QRA/FOMC Outlook to Election Day (and May 15, 2026)
Upcoming Xwitter Space: Tuesday February 6, 2023 @ 1pm EST
For more information about The Macro Club see here.
Discussion
On Tuesday February 6 at 1pm EST I will host a Xwitter Space (link here) with Warren Pies of 3Fourteen Research (Xwitter handle: “@WarrenPies”), Vincent Deluard of StoneX (“@VincentDeluard”), anonymous financial plumbing expert “Bill” (“@wabuffo”), and Cem Karsan of Kai Volatility Advisors (“@jam_croissant”).
Warren, Vincent, Bill and I have now done a couple of Xwitter Spaces (June 22 and August 8), and sort of by happenstance the four of us have formed the nucleus of what has proven to be a valuable ~quarterly get-together to discuss and debate the outlook for financial markets, the economy, and government policy. I have known Warren and Vincent for a number of years now, originally via Ned Davis Research and now through their own services and Xwitter; while Bill and I have gotten to know each other over the last 18 months via Xwitter. These three are absolutely stellar thinkers and operators, and their processes are highly complementary to my own - an excellent dynamic that fosters robust and respectful discussion and debate.
I have gotten to know Cem Karsan via Xwitter over the last year, and as regular readers of The WOTE know his work in the VOL space is of tremendous interest to me and my process, as it is an area well outside of my direct expertise. But not only is Karsan a VOL expert, he has a tremendously nuanced, long-term oriented view of the global macro landscape that adds great context to his short- to medium-term tactical views of financial markets. He is going to be an excellent complement to Warren, Vincent, and Bill, and it is my job to construct and moderate a well-organized agenda and conversation framework that allows for a high-powered, value-add discussion.
Agenda
Introduction: I’ll very briefly introduce the Space, the speakers, and a bit of the background discussed above.
Discussion Framework: Before kicking off the first panel discussion I’ll provide an overview of the discussion framework in order to level-set the panel and audience. (See Discussion Framework section below.)
Panel Discussion #1: Outlook to Election Day
Panel Discussion #2: Outlook to May 15, 2026
Discussion Framework
Panel Discussion #1
Four scenarios looking out to 12/31/2024:
Recession: FED cuts to 300-325 by 12/31/24.
Current Pricing: Five rate cuts to 400-425.
December SEP: Three cuts to 450-475.
No Landing: FED holds at 525-500 for all of 2024.
Pick a scenario, explain your outlook, and provide your target range for the S&P 500, 10-year US Treasury (UST) yield, and the 10-2 UST curve.
Panel Discussion #2
Given the breakout in Transports vs. Utilities, Banks vs. Utilities, and Discretionary vs. Staples, the abysmal relative strength of Defensive sectors versus the S&P 500, Chair Powell’s commentary on January 31 that suggested anecdotal FED data points to a pick-up in economic activity is underway, and then finally the blowout January NFP report, the weight of the evidence suggests the US economy is reaccelerating into a “no landing”. Recent commentary by FED Governor Waller and Chair Powell strongly suggests the Fed will hold off on rate cuts in a “no landing” scenario.
How are the economy and markets likely to unfold in this “no landing” scenario over the course of 2025 ahead of the end of FED Chair Jerome Powell’s term as chair on May 15, 2026?
Recent Panelist Media
Cem Karsan
Vincent Deluard
Warren Pies
Other Discussion Material
Governor Waller: January 16
Barry Sternlicht: January 30
Chair Powell: January 31
David Zervos: February 1