The Macro Trading Floor transcript – 26 July 2024

Alf: Benvenuti everyone. This is Alf speaking. Yes. Every show, I’m going to throw a new Italian word at you. That’s how it works here. This is the Macro Trading Floor and with me, my good friend, Brent Donnelly. How are you Brent?

Brent: I’m good, Alfonso. How’s it going?

Alf: Very good on my side, as well.

Brent: You know what, I mentioned last week that I’m reading Dante’s Inferno and one interesting aspect of it, just this is sort of an Italian thing I’m trying to segue from your Italian comment is that a little known fact is that the actual ninth circle of hell in Dante’s Inferno is ice, not hot.

It’s not hot. It’s ice. It’s a lake of ice. Yeah. I found that interesting.

Alf: Very, very cool. Okay, so let’s talk about something else, which is cold, which is NVIDIA tech stocks, AI, very, very cold. I mean, big, big sell off over the last week. I think if I’m not mistaken, the momentum ETF MTUM is down 7 percent over the last seven trading days.

If it doesn’t sound impressive, 7 percent drawdown in seven trading days is a 1 percent probability event. So we’re talking like a three standard deviation plus drawdown here in anything that smells momentum, carry, anything like that, completely slaughtered. And now today, this morning, I got a ping on my phone, Bloomberg, the yen acceleration speaks about macro tectonic shifts, something along the line of that.

So we should, I guess, answer the big question. Is this a macro shift or is it something else?

Brent: So it’s interesting because I think we actually disagree on this a little bit. And normally I feel like most of the time we kind of agree more than disagree. But I think you can make pretty good arguments both ways.

So like, I’m guessing, I won’t speak for you, but I’m guessing you feel it’s more of like a degrossing, endogenous kind of unwind event. I think I feel like. That obviously is part of it, and there’s a lot of degrossing and a lot of position unwinding and a lot of shit hitting the fan.

But I think it’s partly driven by some external things, which are, I think, Biden dropping out, puts a little bit of question marks or puts a few question marks around the sort of infinite debasement trade. So just to elaborate quickly on that it, now the risk of overlaying two things is that sometimes you just overlay two things that are both going up and then it looks like they’re, they’re moving together and they’re correlated, but.

If you overlay Trump’s odds and QQQ, there’s actually, looks like there is a little bit of two way correlation. Like, when his odds were pulling back, then QQQ was pulling back, and I think there is some underlying logic to that, which is that Trump is almost guaranteed to continue an MMT like policy of very loose fiscal, probably tax cuts, or very low tax rates.

and no regard whatsoever for the deficit. Whereas I feel like the Democrats have been hurt pretty badly by the inflation of 2021. They’ve been scarred a little bit. And then the signature move that Trump made in 2017 was the tax cut and jobs act, the TCGA. And most of the provisions of the TCGA expire at the end of 2025.

So if markets are forward looking, which they are, and Trump’s odds are dropping, then there should be some reprice of the debasement trade or of the MMT trade in my mind. So I don’t know, I think, I think that’s part of it. I think that’s part of it. And then I also think something we’ll probably talk about later is that the AI narrative Has shifted.

And there’s this funny thing about narratives where, and I experienced this as a writer, as a newsletter writer, is that when everyone’s the same way, it’s scary to write things that are the other way. So if everyone’s talking about bullish AI. It’s scary to say something bearish about AI because the risk is you look stupid in the face of like a raging momentum consensus.

But once a couple people, smart people, say that the other thing, the opposite view, then a lot of times the floodgates open and everyone just says it. So, I think Goldman Sachs piece on AI, questioning whether it can be monetized, I think kind of opened the door for other people to start questioning. And then you saw some stories this week that like open AI is losing five yards or 5 billion a year and has 12 months of cash.

And you know, of course they can raise, but anyways, those kinds of stories just weren’t making the rounds before. And I think it’s because there’s been this narrative shift. And those narrative shifts tend to be, have some reflexivity and they’re kind of self feeding because once a couple people call bullshit on AI, then it’s safer from a career risk point of view for other people to call bullshit.

That is, that is very right. So

Alf: That is very right. So I think the move is mostly a big fat momentum unwind. Let me try and take your angle and see whether I could be wrong. Definitely if Biden drops out and Kamala Harris, apparently in the polls has a slightly better standing that Biden had, this means that the chance of, especially the Republican sweep are lower now.

Now, if the chance of a Republican sweep are lower than certain trades needs to be repriced. So especially the upside in gold and in Bitcoin and any debasement trade needs to be repriced fair. And I can follow why the dollar would need to depreciate versus a basket of currencies that wouldn’t particularly explain why the yen is doing specifically great, but maybe it’s a bank of Japan story.

So we can maybe leave it for a second, but then there is one thing I don’t, I can’t square with this. If this is some sort of a macro trade, let’s say let’s first cover the Trump part of it. Why is the curve steepening? If the Republican sweep odds are going down, the wooden, I can’t square this part with, with the Trump explanation or the Harris explanation or only.

And the second part is what if instead, Brent, it would be a broader macro trade, where you have the curve steepening and the yen rallying, your typical defensive higher recession odds type of trade, right? It would make sense. The yen rallies, the curve steepens, bull steepens, right? But then other correlations aren’t matching.

I mean, if it’s a recession trade of some sorts, Would you expect the Russell to overperform the NASDAQ? No, I wouldn’t. Would you expect gold to go down that fast in a recession trade? Not really. So all in all, I can’t fully square it. Let me say with some sort of macro narrative, and that tells me that it’s mostly a momentum unwind, but again we’re just debating proper, this is proper macro blubbering, what we’re doing now, you know, just show up and say, Hey, I looked at that.

Oh, did you look at that though? So there is not going to be a judge that says yes or no. We will discuss in the podcast a bit, I guess what do we look at as a framework to understand whether this could turn into a macro trending trade or it’s a momentum or a carry on wind. And most importantly, how do we trade it?

I think that’s the most important part of it.

Brent: Well, and the interesting thing is that, if it’s a position unwinds… so I think it’s both. So, I mean, I guess that’s probably both of our answers is there’s a little bit of both, but I just think it’s a little bit more about Harris and a little bit less about position unwinds, but then it’s both.

But the weird thing is though, that the steepener thing doesn’t fit either explanation because I would say steepeners is one of the most crowded trades in the world as well. So it’s a weird one because you, you would think under my explanation and your explanation, you would see flattening and you didn’t.

So I don’t know. That’s just like a weird thing that’s going on that I don’t know. I feel like that one, no, no sort of like universal theory of everything explains everything that’s going on right now. Sometimes you can do it. Like if, if recession odds go way up. then everything makes sense. But right now I don’t think you can do it.

Alf: I have an explanation. If you want me to fit ex-post a momentum unwind narrative on this, including the steepener. Okay. We are unwinding momentum and carry that carry has been unwound massively already. Look at the Brazilian real, look at what happened to the Mexican peso. But now we’re unwinding momentum.

And I think we’re also unwinding some residual of the carry trades. And a flattener is a positive carry trade.

Brent: Oh, that makes sense. That makes sense.

Alf: When you unwind that, you’re basically like some sort of symptoms of unwinding a carry trade. We’re mostly unwinding momentum right now, I would say, but carries another a low vol type of trade, both momentum and carry require lower and lower vol to getting the participation from CTAs, vol targeting funds and other people targeting risk premia. The lower the vol, the more they will be interested into it. So when it vol increases, you will be unwinding a mix of carry and momentum and flatteners are positive carry. So when you unwind them, you get a steepening of the curve.

Again, I’m just fitting ex-post a narrative Brent. So I could be completely wrong.

Brent: No, I mean, I guess that does actually fit the, as a universal theory then, And, you know, a couple of currencies that Have been popular that are, so the, the things that got destroyed were the things that were both positive carry and super popular.

So like the yen trade and surprising, I’m surprised how big the move has been in Swiss as well. So like short Swiss was a popular trade, but then people got bored of it, I think, and kind of got out, but it just shows you how big the just underlying machine, like CTA bulk, just, I’m going to do carry in every single thing we re because like the move in Euro Swiss, it didn’t need to be this big. That’s a really big move.

I mean, I would encourage people that don’t trade FX to just bring up some charts of like Aussie yen, Euro Swiss. It’s the perfect description, visual description of what people call carry, which is like picking up nickels in front of a steamroller or like up the escalator, down the elevator, this has been such a textbook carry unwind.

And then I guess, hopefully setting you up here, Alf. I’m not sure, but the question becomes, there’s a few ways to decide when it’s over. And I will say that I think picking up the pieces after blowups. Is an incredibly profitable trading strategy when it works – because you’re capturing, you know, like large moves in a high vol market. And you can be pretty selective with your entry points. Sometimes like the way that I do it is like taking shots with pretty high leverage and relatively tight stops. Although the stops can’t be too tight given the level of vol.

And I think it was Michael Platt that said all the money he’s made, sorry if this is a misquote, but all the money he’s been made has been. Going through the rubble after explosions or something like that. I should have Googled it before I said it, but something like that. So I think it’s, it’s a useful thing to think about is when stuff is blowing up, when can you step in and take the other side?

Because usually there’s a lot of overshoots because it becomes shoulder tap type situation where it’s margin calls and risk managers. just saying, Hey, you know, you’re down 4 percent this month, cut everything. And people then – it’s unconditional selling. They, you just hit any bid and then that creates opportunities and overshoots.

So how do you think about trying to find the timing or the strategy to take the other side?

Alf: So I’m going to have to ask you the same question because this is an incredibly important discussion to have, and anyone will be looking at different things. Okay. So somebody will be looking at technicals, someone else will be looking at valuations as an entry point.

And I instead look at market dynamics, let’s say. So I am backtesting a strategy that effectively tries to identify when something has blown up, right? And blown up means over two standard deviation move in the asset class and not seeing other correlated assets do the same thing. Okay. So it’s like a specific idiosyncratic blow up.

It’s a stop. It’s something that is mechanically driven by a bunch of bar shocks and stops being hit. Okay. So what happens after the proverbial Michael Platt’s explosion, right? So I’m trying to wonder, like, if I go back in the past and identify a hundred of these situations. Can I identify some features that allow me to have a positive expected value when fading the blow up?

I am not done yet with the backtesting, but the initial evidence you get are two things. The first is You can never catch the bottom. So if you want a positive expected value thing that is consistent across all this fading of blow ups, you have to give away the first 20 percent of the mean reversion at least.

So forget about picking the bottom. That’s not going to happen. Positive expected value comes from, it seems. A) waiting for a specific number of trading days for things to stabilize. So you have an explosion, there is still smoke around, you don’t walk blindly through the smoke trying to pick the pieces, you wait a bit for the dust to settle, that will require you to lose a bit of the of the of the potential upside.

Okay, it’s a trade off, you can’t avoid it. And the second is, this works because, The CTAs and the other investors that are targeting volatility as one item, they need their models to be fed in recent data that is consistent with the risk taking. So they want low vol, low realized, low implied, or at least converging towards levels that allows them to lever up and go and buy these assets.

Okay. And to do that, you need a certain specific number of days and a certain specific level of volatility coming down. If you have these two, it seems that you can get a pretty good positive expected value strategy by fading these blowups.

In short, I would say you are patient. You don’t catch the bottom. So you are willing to give away 20 to 25 percent of the upside recovery. So you wait a specific number of training days and you wait for vol to come down. So you can measure the intraday vol range and see whether things have calmed down a bit. And if you have that evidence, generally that will help taking good decision on the other way. And what about you?

Brent: Well, that’s interesting cause it fits in some ways to what I do, but it doesn’t fit in other ways because my time horizon is so much shorter than yours. But the, the one thing that definitely fits is my experience is: When vol is high, but it’s falling, you want to sell vol and when vol is low and it’s rising, you want to buy it, but you don’t want to just buy vol because it’s low or sell vol because it’s high.

Like those tend to be just shitty trades that, that because vol clusters and because vol tends to be persistent, you know, just trying to sell vol because it’s up, isn’t good enough. So I agree like you, cause essentially fading these things is kind of short vol synthetically. So what you want to do is, is identify that vol has peaked somehow, which is what you’re describing and then sell vol or take the other side in the asset.

The part I disagree with, but I think it’s just because of my time horizon being shorter is I do think there’s value sometimes in trying to pick the turn. And I’m going to brag right now because I’ve been trading terrible, like for a decent part of this year, so it’s not really a brag – even though it is a brag – but like today I sent out my note and I bought dollar yen and Aussie yen based on some metrics that I use, which are essentially looking for like max oversold, max volume, and Technicals all converging at the same time.

So the way that you’re describing volatility and you’re trying to identify like, okay, vol is going down or it’s stabilizing. You can do that with volume as well. So say your stock is collapsing and it normally trades a million shares a day. And it makes a three standard deviation move on 15 million shares.

And then tomorrow it trades 6 million. And the day after that, it trades 3 million, but it’s still bouncing along the bottom. That’s another indicator I would use of like, okay, the panic may be over because a lot of times the panic in the price coincides with the panic and the volume. And so you can track volume along with volatility sometimes to get a clue.

But then the other thing I use is just very simple measures, like the one that I use in FX mostly is how far is the thing from its moving average. So you can kind of consider like a moving average to be kind of like an anchor of the, you know, it’s the average price that it’s been trading at for a while. So there’s some stickiness or like some limit to how far in theory, the thing can go.

Now that’s not actually true. Cause like things, you know, you can get 20 standard deviation moves in, in things. But what you tend to see is that certain things tend to peak or trough at similar levels around the moving average.

So like say dollar Canada, which is pretty mean reverting, doesn’t very often go more than 1 to 1.2 percent away from its 100 hour moving average. And the specifics aren’t important, but I’m just saying… sometimes if you see, okay, it’s the elastic band is stretched, and it tends to always snap back from around this level. And then ideally you have like a volume spike and then you also have maybe a bunch of technical levels like dollar Yen today, there’s like a crazy dollar Yen level at one 52 and we’re hitting all these other metrics, right when we were at like 152 30/50.

So in that case, I’m willing to take a shot. And the beauty of that is that you can say like, okay, my stop doesn’t have to be that far away because I’m essentially saying this is either the bottom or it’s not. And if it’s not like I’m wrong and I’ll stop out. But if, if it is sometimes you can like risk two to make six or risk two to make five.

And as someone who tends to overtrade and be very impatient, these trades are perfect for me because it’s, you’re either right or wrong pretty much within a couple of days. And those are the best trades for me because then I don’t get bored of it and cut for no reason.

Alf: Yeah, I really love this angle.

So for full disclosure, I think that looking at distance from moving average, when it comes to a proxy for how far the blow up has gone, really, it’s also an interesting variable. So I’m going to take a look and back test it in the strategy. Thanks for the hint. And the second one is the beauty of this is that once you can identify, once you identify the blowups and you say, I want to fade it because my strategy says that with these features, whatever it is, volume, whatever I mentioned before, I have a positive expected value.

You can really risk two to make six basically, because you should put your stop in a way that if the trend continues even a little further, you’re proven wrong Brent. You are not in the positive expected value environment you think, because Sorry, mate, most likely this is a blow up that is turning into a trend.

So it’s not a mean reversion anymore. It’s gone. It might be something you have overlooked in your macro explanation. And so you want to stop relatively fairly soon at that point, but you can make six because if you mean revert properly, you actually are getting a pretty decent entry at positive expected value.

So the point is you can be 50, 50 right or wrong on this blow up fading events. But because the payoff structure is the one we described, you actually might have a pretty decent expected value in fading these blowups. Problem is, they don’t happen very often. So you need to be very patient if you have a strategy like this, right?

And you need to really see that a blowup is happening, otherwise it probably won’t work.

Brent: You know what, the other thing too is that you have to have a real framework because I remember in 2008 if you were just the kind of person that was like, this is ridiculous, I’m going to fade it. Then, you know, those people lost their jobs in 2008. But if you’re, if you have a framework of like, okay, when X, Y, and Z all happen at the same time, then I’m going to purchase the asset and put my stop 1.6 days ranges away.

That’s completely different from just saying like. This has gone too far too fast, so I’m going to be short all the way up or long all the way down. So I feel like having like an actual, especially having the plan ex ante and not like scrambling to find metrics that, that are confirming your bias, which is to fade it.

But having some sort of ex ante framework of like, okay, this is what I do when stuff blows up. And this is how I fade it. And this is how I control my risk is, is the way.

Alf: So just to one last thing on this topic, which we are discussing at length, because this podcast is mostly about new Italian words you learn and also about frameworks, right? We want to discuss frameworks rather than being right or wrong on a certain trade idea or macro positioning.

In 2012, 2013, so soon after the European debt crisis, if you had some over collateralized covered bonds, so it means those are bonds that have as collateral mortgages basically, but they are over collateralized.

Okay. So the collateral is even worth more, actually it’s more than collateralizing the bond. Okay.

If you would post them and say, hello, who wants this super AAA rated over collateralized bonds, I need some cash back. Okay. You were asked to pay risk free rate PLUS a hundred basis points. So you’re giving them a security that is triple A rated over collateralized, and the market would be like, yeah, I still would like to have my cash. So if you really want my cash in exchange of this, it’s a hundred basis point of a risk free.

So things can go really nuts, basically brand just to validate your point in any type of market, it’s important that you have a framework that you can apply ex ante, not to, to twist during the the moments when blow ups happen, because if they turn into a trend or a property leveraging event, then all bets are off really.

So now talking about next week we have the bank of Japan, we have the fed. We have the U. S. labor market report, if I’m not mistaken, on Friday next week. Should be the first Friday of August. Mm hmm. Is there something we should consider for next week when it comes to risk taking and what we are discussing of fading the blow up?

Brent: Well, yeah, so the interesting thing is that if you’re fading the yen move, which I am currently as we speak, as we record this on Thursday you have to be worried about the Bank of Japan next week. It’s, it’s late Tuesday in New York or early Wednesday in, in Asia. I think it’s a really interesting moment for them because there’s a lot of factors.

There’s always kind of a lot of factors that would allow them to hike, but If the government is getting annoyed with the weekend, the MOFs intervening, you know, wages are going up. There’s a, there’s a pretty long list of, of macro reasons why you could justify a rate hike. I don’t know if I want to be short yet into that.

I’ll probably be flat into that because I think it’s just the perfect moment for them to just drop the hammer a little bit and try to sound a little bit hawkish and get the normalization going to kind of help the MOF and help the government and, and do what’s needed on the yen. So I think the BOJ to me is probably one of the most interesting.

It’s a weird setup because it’s like 70 percent priced for a hike. But if you go to the economist forecast, only six out of 43 are calling for a hike, which is strange. You don’t usually see that big of a divergence between the economists and the market, but maybe the economists just aren’t updating their calls.

And then bank of England actually is 50, 50 as well. You have any view on bank of England?

Alf: Gun to my head, I think they go for it because they have proven even in the face of sticky services inflation and some wage growth dynamics not being very friendly, that they are willing to talk dovish on top of this data.

So if I have to lean on it, I’ll take the 50 where they go. Also, they have covered from basically all major central banks by now who have gone. So, you know, they could just follow, but again, I don’t see much positive expected value in taking the 50 percent odds there, Brent.

Brent: Yeah. It’s interesting. The bank of Canada cut this week. And so they’ve cut twice. So there’s all these like common knowledge things that aren’t always true. Like one of them is that the Bank of Canada always follows the Fed and just simply is not true. Like, yeah, of course the economies are correlated and they move generally together, but that’s not true. The other one is like, there’s no such thing as a soft landing. Not true. So anyways, I’m always a fan of these myths that aren’t true. I find them interesting, but anyways.

So I think in for the BOJ, I think the smart money is betting on a hike, even though the economists aren’t calling for it. Bank of England is like you said, it’s kind of a coin toss and then FOMC… I suppose, like I don’t, Goldman had put out a thing saying that they could go in July. The fed seems to push back on that. So I suppose they can tee up September, which is already priced in anyways. I feel like the fed isn’t that interesting right now because you have September, like at exactly 100 percent odds of a cut.

And it just seems like that’s like a no brainer. It’s almost guaranteed regardless of the data. And then you have like no visibility whatsoever after that, because the election will be coming and then you have no idea what fiscal is going to be like. And I do feel like there is a pretty big wedge between what Trump’s fiscal is, could look like and what Harris fiscal would look like.

So I think that’s a meaningful consideration for the fed given how fiscal has dominated over monetary policy. So I feel like the fed is almost like not in play because September is, is a done deal and everything after that is just contingent on who wins the election.

Alf: So for me, BOJ hike is the highest expected value.

If you really want to bet on binary events next week, which I’m not a big fan of in the first place, but if you really want to, then a BOJ hike UK probably they cut, I think, but I’m not very happy to take 50, 50 odds there. And the market is pricing it 26 percent odds of the Fed acting next week, 26%.

I don’t think they cut well. Yeah, it’s that high. Yeah. Yeah, it’s that high. But I don’t think they take the 25% odds. Again, not a great fade to be frank. It’s like four to one odds to fade. Not a big fan of that either. I don’t think they do cut, but still. And then I think the central bank, which is the most interesting one, which is really priced the way right now is Norway.

Sorry, sorry, not Norway Australia. Australia is priced as the highest probability of hiking at the next meeting or rather than cutting. I want to repeat it. The RBA is priced as more likely to hike at the next meeting than they are to cut. I don’t think they do either of that, but just to tell you what the skew of the market pricing is right there, which is completely opposite to any other economy which has been experiencing some sort of a GDP per capita retail sales per capita type of slowdown, like Canada, for example, or housing market heavy economies like Sweden, for instance, you know, or Norway actually, where we’re seeing the market price very dovish.

Australia is on the other side of it, which I don’t think can go on for very, very long.

Brent: Yeah. Australia is super interesting because they kept real rates way, way lower than the, all the other central banks. This week is CPI and retail sales in Australia on Tuesday and the CPI is a weird one because they have a monthly release now, but it’s not the same as the quarterly release.

So the quarterly release is the historically the one that people cared about. But I think that’ll be really interesting because Bullock from the RBA has been sounding relatively hawkish and it feels like they kind of like are willing to hike in, even though everyone else is cutting. I don’t like, I don’t have a strong view, whether they will, but I think my view would change on the CPI. If CPI stays strong, then I think that it will be meaningful for the currency and for rates. So that’s an interesting one to watch.

I make this calendar at the start of like I published it on Friday. So I made it today and Holy cow, there’s so much stuff going on. Like we didn’t even talk about the treasury refunding stuff and the, and then you have corporate month end, you have a month end on the 31st to probably be some crazy rebalancing, given the size of the moves in bonds and equities. German CPI, there’s so much going on next week. So nobody’s allowed to go on vacation.

Alf: Yeah. So we can be smart and talk about things ex post. That’s the best profession for a macro guy.

Just talk about things that already happened. Are you still with us guys? If you still are after 35 minutes, congratulations. Well done. And you haven’t fallen asleep yet. So wake up because I have a small announcement for you. A while ago, I think a couple of months ago, I anticipated on this podcast that I was about to launch my macro fund.

So yes, it’s happening. And I just want to extend an invite to anybody who’s listening to this. In case you want to have a chat with me about it, just to know what the hell I’m doing, I will put a form in the show notes here. So you go there, fill the form, you say, hello, I’m this and that, and it takes two minutes.

I receive it and I will reach out. And that’s it, announcement over.

Brent: So we don’t have a ton of time to talk about this, but it is an interesting time to launch a fund, given that macro has been difficult for the last 12 months, I feel like generally macro tends to accumulate money when it’s at the more profitable times. And so to me, it’s a great time to launch a fund.

But anyways one other thing I wanted to mention Is I just find this absolutely fascinating. So there’s this concept of good news, bad price, which basically is that if good news comes out for security and the security can’t go up, that is a big yellow flag or red flag, and we saw it on the last CPI. Nasdaq made an all time high literally for about two minutes. So like at 8 32 AM, after the thing came out, it made an all time high. And then now we’re almost 20 percent lower.

And the exact same thing happened in October, 2022. We had a really, really hot CPI. And that was the absolute low in, in the NASDAQ. It was 10, it trade at 10, 000 or so that day, and then it doubled. So I find that whole concept interesting. It was the same when they, when they killed bin Laden in 2011, it was viewed as bullish because it was kind of like the end of the terrorist threat or something like that. And that was actually the high in stocks as well, and we dropped 20%.

I always find it fascinating because. Almost by definition, you make highs on good news, which is kind of counterintuitive.

Alf: I mean, the importance of a narrative, right? We discussed a little bit before the podcast. I find this really, really crucial because when you speak to people, they will always say, Hey, I think this will go up because I think this macro thing will turn out to be like that.

And then actually it might be that they are right. But the narrative was so prized in and everybody, their mothers, their dogs, their cats were already on the same narrative that you might be right, actually the data will prove you right, but there is no marginal buyer to come and buy after the Nth data that proves the narrative that everybody’s already long about.

So there is this very weird thing in market where, as my mentor used to say, Do you want to be right? Or do you want to make money? Those two things are sometimes not the same. So this is a very, very, very mental game here reading.

Brent: Yeah. And it’s interesting. I guess essentially the message was that on July 11th or whenever CPI was the immaculate disinflation, soft landing trade was fully priced.

And then we got a soft data and NASDAQ went up whatever, 40 points or 40 handles. And then it went down a thousand. So fascinating stuff.

Alf: Very much. So I would say I don’t have anything more, no stupid, no fun stuff to say. I already shilled my, my thing for the, for the podcast today, brand. I don’t have anything smart else to say.

Do you want to fill in people with some word of wisdom before we leave?

Brent: I’ll give a 60 second smart thing this week. So there’s this paper that I read, I’ll put that, put it in the show notes. Or sorry, not a paper, it was just a short blog post. It’s called how to read an econometrics paper.

And it sounds really boring, but actually it’s super useful and it’s short. So I’ll put it in the show notes. And I think there is a lot of value in reading academic papers. But people tend to find them too jargon filled and too boring, but there is a technique to reading them where you sort of extract what’s useful without getting bogged down in a lot of the BS.

And this, this blog post, which I did not write, but someone else wrote I think captures the best way to read these, these academic papers.

Alf: Okay, guys, so it’s almost August. Next week is the last one where Italians are allowed to work because it crosses on August, but it’s not August yet. So from the week after Italians are not allowed to work anymore.

It’s full August. So it’s like a law in Italy. Italy doesn’t work in August. Just kidding. We’re still going to be here. Most likely doing some podcasts. And the other time we stopped for two weeks. you guys had some sort of withdrawal symptoms and we got 50, 100 messages. Where are you guys? We’re still here.

So next time we go away for a couple of weeks, we’ll let you know before. Okay. Deal. All right. It’s been a pleasure as always. Arrivederci. Wow. Brent, you’re picking up solid stuff. Your Italian might soon be better than my English, which is not very complicated anyway. Ciao guys.

Brent: Ciao. See ya.