Passed Pawn

@passedpawn

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52 Followers

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#SPX put skew is as cheap as it gets. Two recent comps: 1. Pre-GFC: very low VIX, Fed on hold, low macro vol, Fed put 2. During GFC: VIX exploded >40 so skew naturally flattened as high vol priced into all strikes None of these conditions exist today. Skew seems too cheap. https://i.imgur.com/TfOi6wG.jpg

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Almost $21B flew into equities for the Santa Claus rally. So far not working out. We'll see if they've been naughty or nice this coming week. https://i.imgur.com/XMxAiHw.jpg

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It’s very unusual for wage inflation to fall substantially without unemployment rising first. https://i.imgur.com/4Zx23GN.jpg

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Housing is in big trouble. Buyer traffic index has fallen to near COVID lockdown level. https://i.imgur.com/d7O0KhI.jpg

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Retail inventories excluding autos are WAY above trend. Everyone over-ordered due to strong demand in 2020-21 and lack of supply. Now they're stuck with it. Demand is falling and margins will follow. This is not a good setup for a solid chunk of the global economy. https://i.imgur.com/mg3HPaB.jpg

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My take on Powell is that he was less hawkish than he's been. 1. He didn't really push back vs easier financial conditions. 2. He opened the window slightly to engineering a soft landing. 3. He embraced two-sided risk management. No change in policy, but friendlier tone.

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Even the 2001-02 recession led to a 30% decline in earnings. 2023 estimates are +6%. 🤔 https://i.imgur.com/waOvWQn.jpg

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If you put people in a position where lots of money is flowing through their business, a certain portion of them will commit fraud. That's just the reality. The type of business is irrelevant.

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Happy Thanksgiving!

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Some non-crypto things I enjoy: - ice hockey - macroeconomics - chess - psychology - studying animals - weightlifting - surfing

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Next year’s earnings estimates are pure fantasy. Orders have collapsed and unemployment is set to rise next year. The profit cycle is coming, unfortunately. https://i.imgur.com/Ssu7sED.jpg

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The bond market is speaking. Curve inversions are usually signs of impending recession. -76 bps in 2s/10s is below the lows of the past few decades. https://i.imgur.com/DV2zJ9B.jpg

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The dollar is back up today, having stopped out a lot of longs over the past couple of weeks. Last week many turned bearish, but there really isn't a good reason except that it's gone up a lot. Liquidity is tightening into a global economic slowdown. That's bullish #USD.

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Amazing that with all the failures and de-leveraging, crypto prices are still up significantly from 2019. Either the liquidity bubble was/is larger than we can imagine or there has been real progress in crypto since 2019. I think both.

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Hard to believe this massive liquidity bubble unwinds fully without the VIX even breaching 40. The risk is it actually spikes much higher than that. https://i.imgur.com/YCQSUTz.jpg

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Investors are still mostly underestimating the impact of being able to earn >4% in treasury bills right now.

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Tech is leading the rest of the economy in layoffs while services remain strong for now. I expect 2023 will see broader unemployment pick up. https://i.imgur.com/uyeJNWD.jpg

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Just joined, excited to be here!

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