1 year ago

Blockworks Macro
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Today Jack welcomes Andy Constan, macro investor and publisher of The Damped Spring Report, and Joseph Wang, former senior Fed trader and author of Fedguy.com, to discuss how the Fed’s reduction of its balance sheet via quantitative tightening (QT) is impacting market liquidity and future returns.

Constan argues that favorable market conditions that allowed risk assets to rise during the summer are no longer present, and that this “false dawn” is over. Wang argues that QT will drain the banking system of reserves and the Fed may have to plug “leaks” in the financial plumbing.

Filmed on September 7, 2022.

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Follow Andy Constan on Twitter https://twitter.com/dampedspring
Follow Joseph Wang on Twitter https://twitter.com/FedGuy12
Follow Jack Farley on Twitter: https://twitter.com/JackFarley96
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Read Joseph's latest piece on "The Reserve Gap": https://fedguy.com/the-reserve-gap/
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00:00 Introduction
00:44 Quantitative Tightening's (QT) Impact on Markets
10:38 Equity & Bond Market Flows Over The Past Few Months
15:46 Volatility (Vol) Targeting
24:18 Equity Risk Premium Model
32:13 The "False Dawn" In Asset Prices
38:28 Joseph Wang on Treasury Issuance
43:58 Joseph on "The Reserve Gap"
53:50 The Fed's Ample Reserve Regime
57:11 Andy Constan's Outlook on Bonds
1:02:02 How Far Can The Fed Go In Hiking Rates?
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Disclaimer: Nothing discussed on Forward Guidance should be considered as investment advice. Please always do your own research & speak to a financial advisor before thinking about, thinking about putting your money into these crazy markets.

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