GM 78: The Market Risk Nobody’s Watching ft. Dave Dredge & Cem Karsan
Top Traders Unplugged
Niels Kaastrup-Larsen
4.8 • 670 Ratings
🗓️ 22 January 2025
⏱️ 92 minutes
🧾️ Download transcript
Summary
Today, we take you into the complexities of the current financial landscape, emphasizing the crucial theme of positioning in an environment marked by rising interest rates and shifting market dynamics. We explore how recent structured product issuance is significantly impacting market structure, particularly in the U.S., where the volume of callable bonds and equity-linked products has surged. They highlight the risks associated with reliance on historical correlations, which may not hold in times of market stress, and the implications for investors navigating these turbulent waters. The conversation also touches on the potential for a significant monetary regime shift, akin to what was seen in the late '90s, driven by geopolitical tensions and domestic economic policies. You will gain valuable insights into how to recognize and adapt to these evolving risks, to become well prepared for the challenges ahead.
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Episode TimeStamps:
01:34 - A quick catch up since last conversation
02:13 - Dredge's key takeaways from 2024
08:58 - When did things really start to move for Dredge?
15:41 - Cem's analysis of the recent global macro environment
22:51 -
Transcript
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| 0:00.0 | The good outcome is a recession, because then people will buy the bonds. |
| 0:11.0 | But if you keep trying to avoid the recession, and you cut interest rates too early, people won't |
| 0:16.7 | buy the bonds. |
| 0:17.5 | Because the guys who bought them all when the price was wrong bought them because |
| 0:22.2 | they were regulated to do so with an incentive to pay themselves for annual accrued income |
| 0:28.2 | while they destroyed capital generation for somebody else's money. And those guys are full. |
| 0:34.7 | They're full. They're not buying. |
| 0:38.0 | Imagine spending an hour with the world's greatest traders. |
| 0:41.9 | Imagine learning from their experiences, their successes, and their failures. |
| 0:46.3 | Imagine no more. Welcome to Top Traders Unplugged, the place where you can learn from the best |
| 0:52.5 | hedge fund managers in the world so you can take your manager, due diligence, or investment career to the next level. |
| 0:59.0 | Before we begin today's conversation, remember to keep two things in mind. |
| 1:03.0 | All the discussion we'll have about investment performance is about the past, and past performance does not guarantee or even infer anything about future performance. |
| 1:11.7 | Also understand that there's a significant risk of financial loss with all investment strategies, |
| 1:16.0 | and you need to request and understand the specific risks from the investment manager about their product |
| 1:21.4 | before you make investment decisions. |
| 1:23.8 | Here's your host, veteran hedge fund manager, Niels Kostrup Larson. |
| 1:33.8 | Thanks so much for staying late in the office, which is always the case when you join |
| 1:38.2 | Jem and I for these wide-ranging conversations, and we very much look forward to discussing |
| 1:43.5 | what lies ahead of us in 2025. |
| 1:46.5 | How have you been since I saw you a few months ago in Singapore? |
| 1:49.4 | Great, busy, did a little bit of traveling right after I saw you, literally right after I saw |
... |
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