Hello fellow hive members 🐝, @Nick Correa and I are back at it again, probably with the best edition of "The Breakdown" we've ever done. We explore the treasure trove that is @Jason Buck's interview with Meb Faber of Cambria Investments, and define what "tail risk" is, its uses, and how various assets such as bonds, gold, real estate, and foreign stocks perform during immense drawdowns of the S&P 500. We explore Meb's Tail Risk ETF ($TAIL) and break down how its various holdings help achieve its mandate of negative correlation with the S&P 500 with not too much "bleed" during normal times.

We had fun with this one and hope you do too! (charts below)

Link to the original interview:

https://www.realvision.com/shows/the-interview/videos/meb-faber-a-framework-for-outperformance

@Jeremiah S @John Ahearn @Jaymes Rosenthal @Moritz Heiden @Matt Daniell @Craig P @Bradley Snyder @Sam Colt @Theodore Boydston @thomas cullis @Aneil Pokharel @Dennis Jarvis @Konrad Zawadzki @Joseph J @James J P Mulholland @Xavier Mejido @Master Of Money @Tom Catternan @Kewal Mistry @Jehan Hiramanek @Sean Morgan @Sam Mitchell @John Ahearn @Dan Little @Matthew Lansing @Matthew Lansing @Adam Toth-Fejel @Theodore Freysen @Seahyung Park @Sean Morgan @Bryce G @Dean W @ALLEN AZAR @Oliver Anderson @Andreas Niederberger @Cristofer Atiencia @Lemony Snicket @Brian Caputo @Brian Lee @brian barry @bill foord @Georgii Verbitskii @Max Wiethe @Stefan Clulow @John Fadool @Collin Velarde @James Clark @Daniel Olarte @Paul LaRue @Chris Clark @Roo Larson @Lars Andersson @Matthew Larkin @Larry Lawhorn @Larry Stein @larry cooper @Christian Petersen @Philip Peterkin @David Douglas @David Lack @David Sharp @David Douglas @Marc Liron @Ted Boydston 

Performance of various assets during 10 worst months for the S&P 500 (source:https://www.cambriainvestments.com/wp-content/uploads/2017/10/TAIL-Final-10.03.17-B.pdf, page 11):

$TAIL holdings:

$TAIL performance (note how it shoots up during times of stress for the S&P 500, such as March 2020):

A "bonus" chart about how buying at all-time highs is not actually the worst strategy (source: https://mebfaber.com/2019/11/04/is-buying-stocks-at-an-all-time-high-a-good-idea/):

Hi, if you enjoyed my interview with real estate developer Nick Halaris (link: https://www.realvision.com/shows/the-interview/videos/hidden-inflation-rears-its-head-in-housing),
here are some of his reports on real estate, hidden inflation, the Fed, gold, and bitcoin.

The one we discussed most is called "Profit 2."

Note that provisions for loan losses are recorded as losses to net income, so, if they are negative, they are booked as profit.

From their Q121 earnings presentation and supplement
 

original link to the Daily Briefing:
https://www.realvision.com/shows/daily-briefing/videos/signs-of-trouble-in-the-bank-earnings-blowout-plus-coinbases-debut

 

I'm interviewing banking expert Chris Whalen on the RVDB today. It's perfect timing as the Goldman and JPM release their earnings that day.

What do you want me to ask him about? 

In the first ever ORIGINAL episode of The Breakdown, @Nick Correa and I tackle the VIX and VXX and ask the question, why would investors ever enter a trade that is practically guaranteed to lose them money??

@Jeremiah S @John Ahearn @Jaymes Rosenthal @Moritz Heiden @Matt Daniell @Craig P @Bradley Snyder @Sam Colt @Theodore Boydston @thomas cullis @Aneil Pokharel @Dennis Jarvis @Konrad Zawadzki @Joseph J @James J P Mulholland @Xavier Mejido @Master Of Money @Tom Catternan @Kewal Mistry @Jehan Hiramanek @Sean Morgan @Sam Mitchell @John Ahearn @Dan Little @Matthew Lansing @Matthew Lansing @Adam Toth-Fejel @Theodore Freysen @Seahyung Park @Sean Morgan @Bryce G @Dean W @ALLEN AZAR @Oliver Anderson @Andreas Niederberger @Cristofer Atiencia @Lemony Snicket @Brian Caputo @Brian Lee @brian barry @bill foord @Georgii Verbitskii @Max Wiethe @Stefan Clulow @John Fadool @Collin Velarde @James Clark @Daniel Olarte @Paul LaRue @Chris Clark @Roo Larson @Lars Andersson @Matthew Larkin @Larry Lawhorn @Larry Stein @larry cooper @Christian Petersen @Philip Peterkin @David Douglas @David Lack @David Sharp @David Douglas @Marc Liron @Ted Boydston 

CHARTS

VIX spikes when stocks plummet... that is something that's very valuable as it's an asset that generates cash when all your other assets are in turmoil (note: you can't own spot VIX. if you could, it would be the world's greatest trade...) 

Equities are very positively correlated to the S&P 500

Treasury Bonds are generally negatively correlated (at least in this current regime), and they generate yield - that's why they are thought of as a "positive-carry put."

BUT VIX is the kingpin when it comes to negative correlation

@Nick Correa and I are back at it again, this time breaking down several key terms and ideas from my interview with @Michael Nicoletos which are critical to understand Michael's bull case for the dollar.

We cover:

- what "dovish" 🕊️and "hawkish" 🦅mean 

- how to pronounce "bund" (the right answer: BOOOOND)

- why would investors ever own a negative-yielding bond?

- what inflation "base effects" are, and why measuring a year-over-year change relative to a deflationary spiral of March / April 2020 might not give a complete picture 

- why differences in sovereign bond yield curves exist, and what they indicate about the expectations of the currencies in which they're denominated 

- at the very end we touch on the mechanics of yield differentials such as forward points, cross-currency basis swaps, etc.

Enjoy!
 

Original interview with Michael Nicoletos:
https://www.realvision.com/shows/the-interview/videos/is-the-dollar-headed-higher?source_collection=8e80b18fdb074555bdd47d97e73fbe91 

CHARTS

 

Yield curve differentials - why do they exist?

If you bought "negative yielding" bonds, you would've done just fine:

Bonus charts
Spread:

Forward Points:

For more on forward points:

https://corporatefinanceinstitute.com/resources/knowledge/trading-investing/forward-points/

For more on forward curves:
https://www.chathamfinancial.com/insights/what-is-an-fx-forward-curve

For a deep-dive on cross-currency basis swaps:
https://www.bis.org/publ/qtrpdf/r_qt1609e.pdf
 

IMPORTANT
Goes without saying but I am NOT an expert in any of this. This series is intended to serve as a primer, as a step on your journey of learning rather the journey itself. Do your own research before entering buying/shorting the DXY, TLT, etc., let alone a swap contract with an investment bank (I hear they treat their clients great 😃) 

In the immortal words of Marc Cohodes: the market is not a game, the market is not a casino, it's a serious thing for serious people, and if you're wrong, be prepared to lose.

@Jeremiah S @John Ahearn @Jaymes Rosenthal @Moritz Heiden @Matt Daniell @Craig P @Bradley Snyder @Sam Colt @Theodore Boydston @thomas cullis @Aneil Pokharel @Dennis Jarvis @Konrad Zawadzki @Joseph J @James J P Mulholland @Xavier Mejido @Master Of Money @Tom Catternan @Kewal Mistry @Jehan Hiramanek @Sean Morgan @Sam Mitchell @John Ahearn @Dan Little @Matthew Lansing @Matthew Lansing @Adam Toth-Fejel @Theodore Freysen @Seahyung Park @Sean Morgan @Bryce G @Dean W @ALLEN AZAR @Oliver Anderson @Andreas Niederberger @Cristofer Atiencia @Lemony Snicket @Brian Caputo @Brian Lee @brian barry @bill foord @Georgii Verbitskii @Max Wiethe @Stefan Clulow @John Fadool @Collin Velarde @James Clark @Daniel Olarte @Paul LaRue @Chris Clark @Roo Larson @Lars Andersson @Matthew Larkin @Larry Lawhorn @Larry Stein @larry cooper @Christian Petersen @Philip Peterkin @David Douglas @David Lack @David Sharp @David Douglas @Marc Liron @Ted Boydston 

There simply was too much going on with this Archegos blow-up, so after today's Daily Briefing with @Max Wiethe (link below), @Weston Nakamura and I took another bite at the apple. Weston goes in greater detail on:

-the mechanics of Friday's sell-off (block trades, Goldman, comparison to "Lehman weekend")

-the fine workings of the derivatives Archegos was using (certificates for differences and total return swaps)
- is it too dramatic to compare to Long-Term Capital Management? (we conclude it probably is)
-why yield curve control (YCC) from the Bank of Japan is an "implicit" form of YCC for the U.S. Treasury market

For those "Exchange-heads" (thinking of you, @Jaymes Rosenthal) that missed today's Daily Briefing (this is a follow-up to that), here is the link:
https://www.realvision.com/shows/daily-briefing/videos/archegos-unwinds-as-sp-500-flirts-with-4000

And here is Weston's previous work on this:
https://exchange.realvision.com/post/archegos-capital-blowup-explained-because-still-ongoing-6061b7eae987396792e7e81d

and this:
https://exchange.realvision.com/post/archegos-blowup-update-long-scumbags-short-naive-mufg-underwriters-60632d48975fad18b2b5f682

CHARTS

Stocks caught in the liquidation ("owned" by Archegos):

How the different banks have traded:

Credit default swaps for Nomura and Credit Suisse:

Nick "The Dream" Correa and I are at it again - this time breaking down two key concepts from my interview with financial historian Jamie Catherwood: short selling and dividends.

Jamie regaled me with stories about Isaac Le Maire, who waged the first activist campaign against the Dutch East India Company, selling their stock short after they fired him for embezzling funds (allegedly). This campaign worked and let to the company paying the world's first dividend (in nutmeg).

@Nick Correa has two questions for me: 1) what is short selling? and 2) what is a dividend? He and I quickly go beyond the basics as you will see... enjoy!
 

If you like the video, please SMASH that like button and follow "The Breakdown" as a topic
@Jeremiah S @John Ahearn @Jaymes Rosenthal @Moritz Heiden @Matt Daniell @Craig P @Bradley Snyder @Sam Colt @Theodore Boydston @thomas cullis @Aneil Pokharel @Dennis Jarvis @Konrad Zawadzki @Joseph J @James J P Mulholland @Xavier Mejido @Master Of Money @Tom Catternan @Kewal Mistry @Jehan Hiramanek @Sean Morgan @Sam Mitchell @John Ahearn @Dan Little @Matthew Lansing @Matthew Lansing @Adam Toth-Fejel @Theodore Freysen @Seahyung Park @Sean Morgan @Bryce G @Dean W @ALLEN AZAR @Oliver Anderson @Andreas Niederberger @Cristofer Atiencia @Lemony Snicket @Brian Caputo @Brian Lee @brian barry @bill foord @Georgii Verbitskii @Max Wiethe @Stefan Clulow @John Fadool @Collin Velarde @James Clark @Daniel Olarte @Paul LaRue @Chris Clark @Roo Larson @Lars Andersson @Matthew Larkin @Larry Lawhorn @Larry Stein @larry cooper @Christian Petersen @Philip Peterkin @David Douglas @David Lack @David Sharp @David Douglas @Marc Liron @Ted Boydston 

Additional sources

My original interview with Jamie:
https://www.realvision.com/shows/the-interview/videos/500-years-of-speculation-learning-from-prior-market-manias?source_collection=8e80b18fdb074555bdd47d97e73fbe91

Jamie's post on Isaac Le Maire and short selling on his blog, "Investor Amnesia":
https://investoramnesia.com/2021/01/24/activists-short-squeezes-the-masses/

"Isaac Le Maire and the early trading in Dutch East India Company shares" (h/t Jamie):
https://www.sfu.ca/~poitras/ch2_lemaire.pdf

The letter to Nicholas Biddle demanding a healthy dividend (from my paper on the Second Bank of the U.S.):
 

1. Joined by special guest Max "I Left My Heart in Cleveland" Wiethe, @Nick Correa and I investigate Harley Bassman's view of the yield curve, which he shared with Mike Green in his latest interview. @Max Wiethe explains why an inversion of the yield curve can be a portent of a recession. We also broach other topics like: maturity, convexity, mortgage-backed securities, and quantitative easing. "Jack's cola" may or not make an appearance.
   
   Hope you enjoy! @Jeremiah S @John Ahearn @Jaymes Rosenthal @Moritz Heiden @Matt Daniell @Craig P @Bradley Snyder @Sam Colt @Theodore Boydston @thomas cullis @Aneil Pokharel @Dennis Jarvis @Konrad Zawadzki @Joseph J @James J P Mulholland @Xavier Mejido @Master Of Money @Tom Catternan @Kewal Mistry @Jehan Hiramanek @Sean Morgan @Sam Mitchell @John Ahearn @Dan Little @Matthew Lansing @Matthew Lansing @Adam Toth-Fejel @Theodore Freysen @Seahyung Park @Sean Morgan @Bryce G @Dean W 
    

Here is a link to the original interview:

https://www.realvision.com/shows/mike-green-in-conversation/videos/the-right-price-for-bonds-demographics-and-inflation-and-cheap-bets-on-volatility?source_collection=8e80b18fdb074555bdd47d97e73fbe91
 

And here are some of Harley's charts that we discuss: