Markets Are Sending a Bullish Message Nobody Believes | Jason Shapiro
Summary
Market Sentiment: The guest highlights a rapid shift in crowd positioning driven by escalating war concerns and implications for oil prices and equities.
Fixed Income: He views fixed income as the most important market to watch, focusing on long-end bonds, rising yields, and the risk of spreads widening.
Monetary Policy: Discussion centers on the potential for renewed QE and the limits of the Fed put, noting a critical test if markets reject policy support.
Precious Metals: Despite war-related uncertainty, gold and silver have underperformed; crowding and poor tape action make him cautious even though he would be fundamentally bullish.
AI Funding: The capital needs for AI are surging, with large tech firms (e.g., Meta) moving from cash-rich to tapping debt markets, reinforcing AI as a must-fund priority.
Inflation & Data: A hotter PPI and softer GDP contrast with relatively resilient equities, fueling debate over whether the tape signals underlying strength or complacency.
Positioning: He is largely on the sidelines in equities due to a lack of extreme crowding, but currently holds a short Canadian dollar trade given crowded long positioning and weak reaction to bullish news.
Key Risks: A sharp move higher in yields alongside widening credit spreads could force policy intervention and trigger significant market volatility.
Transcript
Investors seem to be changing sides right now. What is happening in markets? Are they buying bonds? Are they buying the dollar? Why are they selling gold and silver? Wasn't that supposed to be the safe haven investment for all of us? Or is it just a fact that they're sitting on massive profits in the precious metals and the mining stocks in particular, and they are selling them now and taking money off the table while there's so much uncertainty out there. We're recording this on uh Wednesday, March 18th, ahead of the Fed meeting. And uh is that maybe the reason why the market markets are so skittish? Although it seems very predictable what the Fed will do here today. I don't expect any big surprises. Maybe my guest does. His name is Jason Shapiro. He's with the Crowded Market Report. He's the author. He's the brain behind the Crowded Market Report. And I'm really looking forward to catching up with him because he can tell us where is the herd going, where's the herd headed, and where's the herd or where's the crowd of investors perhaps wrong. So, lots to discuss, very short time. Hit that like and subscribe button. We tremendously appreciate it and uh we just like it. Thank you so much. Now, Jason, thank you so much for coming back on. Very timely to have you back. How are things? >> Yeah, can't complain. And you know, as I say, even if I did, no one would care. So, >> we're doing okay. >> Ah, people care. At least the five people that will tune in to this, right? So, um that should be fair. But Jason, maybe we we'll start at the very top. You just put out a video today or 15 hours ago, 16 hours ago. So that was yesterday, Tuesday, talking about how crowds are changing sides. The question is from what side to what side? Are they changing? What what is market sentiment right now? >> Yeah, I mean it seemed to me that when the the war first broke out, um there wasn't really a lot of concern. It didn't seem to me. uh you know because I think the last time that there was a a thing with Iran, it lasted like 12 days and was kind of not that big of a deal. You know, it's kind of recency bias type of stuff, right? And then obviously the the latest thing that the US had with Venezuela was over in a day and it was the easiest thing they ever did. And um so therefore, I think when the this Iran thing broke out, there wasn't really very much really long-term worry. Nobody really believed that oil prices were going to stay up and therefore no one really believed that stocks were going to stay down. Um, and that worried me at the time, but I think uh now that's kind of switched. Um, now we're hearing a lot of people talk about how the war is getting worse and not looking like it's going to get any better and how that bad that's going to be for oil prices and then all of the the follow-ups to what what higher oil means, lower stocks, you know, higher inflation, all that. And now all of a sudden everybody seems to be in just two weeks um totally going the other way. Um, so clearly the and strangely enough, as they've gone the other way, now the stock market is acting better. So, um, that's kind of how the sentiment looks to me right now. Sentiment clearly is not going to determine every single thing, but it does help to determine what is being discounted into the markets. you know, I mean, clearly if, god forbid, someone were to set up an atomic bomb, then uh the sentiment that I'm talking about is not going to make a difference, right? The markets are going to get crushed. >> But just from a general perspective, uh sort of how things have looked in typical times, um I think that there has been a shift in that in that sentiment. >> Absolutely. Which brings me sort of to the I wouldn't say the next topic, maybe just a followup as well. Um it's really about the Fed put. Is is the market just expecting to be saved by the Fed? QE has already started despite it only being a minuscule amount just just $40 billion. Um but is is the market maybe expecting to be saved again? Maybe private debt market is the example here. >> I think that that's a good thesis as well. you know, um we have a lot of things going on obviously um in the debt markets that can be seen as as troublesome, right? Uh like you say, the private credit thing is kind of uh it's causing a problem. Clearly the um the government, not just the US government, but the global need, China, US, Europe, everywhere for capital by these governments. uh it does nothing but grow. Interest payments do nothing but grow. That can't be stopped, right? The need for um capital to fund the AI thing is growing um as these companies like Meta and whoever who at one time not too long ago had so much cash on their balance sheets that it seemed like it could never be drained. Um the big thing was what were they going to do with all that cash? Well, I guess they have found what they're going to do with all that cash. Um and and now and and then some. Right now they're actually going to the markets. It seems unheard of just a few years ago. Those companies are going to the market to borrow money. >> You know, Meta is firing 20% of their staff to try and save money because they need it for this AI. So you have that capital need. Um, and now of course you have a war which I don't know $2 billion a day or whatever that number is, right? Um, so there's clearly a lot of issues there and you can't not fund the war. You can't not fund AI because it's the future and national defense depends on it. Everything depends on it. You can't not fund the the governments. So there's issues potential issues there and like you say if there's a problem which to this point there hasn't really been but if there suddenly becomes a problem and spreads are widening and and you get sort of that then they're going to come in you know they have to and I think that should we get to that point um should this dislocation start showing up in the markets in particular fixed income markets and should the Fed or then have to come in and and start to do more QE and and all this then you know that that's when it gets super interesting because I've been saying for years and it's never happened but um that's there there is a limit at some point um we have no idea what it is we have no idea if this is it we have no idea if it's in 20 years and 50 years or whatever but at some point there's a limit and if we do reach that limit um then clearly we're in a hell of a lot of trouble and we'll know um because the markets will tell us you know if they come in and do QE in a big way to solve these other issues and the markets don't respond well to that well then we got a problem right if the markets reject that if the dollar rejects that if the bond markets reject that then we have a serious problem the biggest problem that we will come across us in our lives. But we have to get there first. A we have to get to the point where the markets lock up. B we have to see if they well they will but when they come out and and create this this QE or however they handle it and then three how the markets respond to it. We got a while to figure those things out but I think that those are without a doubt the important things to be watching for here. >> Well there's a famous saying the market is always right until it's wrong. Right. And it feels like the market is right. There's no as as you pointed out exact at the beginning there seemed to be complacency about the Iran war perhaps and uh the question is like when will the market completely shift momentum? Do you do you think there will be a single trigger um that'll set off the crowd moving in another direction? Like I'm looking at the dollar. I'm looking at the bond market. Nothing is really breaking there in either direction, up or down, right? S&P is a little weaker, but it's nothing again nothing to be nervous about. 2 3% lower, no problem. Um the only like pressure I see is really in the precious metals, but uh like how wrong is the market right now? Like you're you're the perfect person to ask because you write the crowded market report. You usually go to places where where the crowd is not. Uh, so what will maybe trigger that move back? >> Who the hell knows? You know what I mean? I I never really know what's going to trigger. >> Yeah. >> Um, in fact, I people always when I do by coincidence get something right, get a market right, I'm long and it ends up going up. Um, I hear all the time, "Oh, well, you never could have known that this was going to happen, you know. you know, I get long, some bullish thing happens, the market goes up. Oh, you never could have known that was going to happen. And I agree. I never could have known that those things were going to happen. You know, I approach it from a riskreward point of view. Um, where if people are way too short, I'm looking to get long. And then, hey, if something bullish does happen, you get a big move the other way. A because it was bullish, and B, because people are caught short. >> So, I get a big move in my favor. Doesn't happen with every trade, but hopefully it happens with more trades and, you know, and all that. So, um I don't know what the trigger could be, but I I don't see the positioning here as as as too one-sided either way, by the way, which means that like in stocks, for examp I don't have any positions here because I I don't really see a lot of crowdedness going on, which is quite frankly why I think the market is just whipping around and going nowhere because there's there's no real positioning or to to force it to go one way or the other. Um the only real sort of majorly crowded positioning I see which could be seen as dangerous is uh in in the long bond people have gotten uh I've gotten pretty extended long in the 30-year bonds. So that could be dangerous because obviously then we get some news. We could get a big move down and that would be a big move up in interest rates and and then we got, you know, the possibility of a problem here. But other than that, I'm not seeing a lot of extended positioning. Um, the metals, look, the metals have been seen now as kind of the no-brainer trade for a while, right? Gold and all that. Um, and you would think that that would in a way, you could argue be the no-brainer idea of where you want to belong if we go into an extended war. And yet it's gone nowhere but down during the war. Um, but you know, sometimes uh often times the the no-brainer trade um turns out to be uh not the no-brainer trade, right? >> And that's probably what's what's going on with gold here. I personally would would would be bullish gold, but um I don't play alongside of markets that act terribly, you know? >> I I was going to ask maybe as a follow-up, do the markets make sense to you right now? Are they behaving rationally or completely irrational? Are they off the rails or is it just difficult to make sense? >> I I I don't know. In some way it's it's like I feel like the markets always are active rationally but at the same time they always kind of act. This is what they do. They don't they don't make sense. They're not so not making sense makes sense you know because the markets aren't meant to make sense because they're discounting method mechanisms of an unknown future >> and the future changes every day you know so the markets have to adjust to that. So, a and if they made sense, well, then it'd be it'd be pretty simple to to to make money over time doing it, right? Um, and that's the whole thing about crowding and and psychology and why I try to fade it because if it made sense, everyone would see what made sense. They would all pile into something and therefore the market would go the other way being a discounting mechanism. So, um, or at least the riskreward would go the other way. So I I think it's it's pretty typical, you know, of of what what always goes on, which is you can argue every side you want, you know, depending on which way you feel, you know, what what I have noticed a lot with this and and you know, I I spent a lot of time reading stuff and listening to people that are experts and all that. And it it just goes to where I think society is now, you know, which is so divided politically um that I find I I I read these things about the war or or watch an interview with somebody about the war and they seem very very well researched, very well written. the person doing it seems very intelligent and they um are very bearish because they think the war is going to get a lot worse. And to no coincidence, that person has always been a Trump hater. And then I read something that's the opposite from someone who sounds very intelligent and very well researched and very well read and you know all this and they're very bullish because they think that the war is going to end and oil prices are going to, you know, it's going to save the world. this whole thing and and of course that person has always been a big Trump supporter, right? So you you can make either argument and and people tend to make the argument right down that political line now with everything. So therefore I I find it all net net to be useless because it's all biased. You know what good is biased analysis? You know >> um >> let's look at some data, Jason. Like we we we got a bit of data. The US GDP number for example that's been revised twice now I believe down 2.7 for Q4 just about 20 minutes ago we got the PPI number the produ producer price index for February Jason uh 3.4% 4% above expectations of 2.9%. So inflation is spiraling out of control again or spiraling higher. Not out of control yet. Um let's let's not go that far. But um let's use these hard data points like and yes they can all be manipulated. We shouldn't trust them. The CPI lie or whatever they call it the CP lie, right? Um but th those are numbers we've been provided. Those are the numbers I have to work with here because I don't go from house to house and ask what the produ how much their grocery bill was last week versus this week, right? So yeah, um I I'll have to rely on that. But like if given this data that we have here, what should the market be doing if it was rational? Jason, >> I mean, we had worst GDP number. We had a worse PPI number. We had news overnight of worsening war stuff. Iran was saying some pretty mean stuff about what their plans are. The S&Ps are down 20 points. They haven't even given up yesterday's gains. Now, the day is not over. I understand, but you know, um, the market continues to act better and and I'm not the only one that says, everyone's saying this, and it's the same thing. It's like, gee, the stock market is acting very well relative to the news. Why is that? And the bulls will say because it's giving the message. And 99% of the time, that's what I would say. I go with what the tape says, right? um it's because the the market knows that that it's going up and it's that's why it's fighting off this bad news. And of course the bears will say, well, because people in the market don't realize what the hell is going on here, they're overly optimistic, which was my view at first. Like I said, um I didn't think people were were discounting in enough issues. Um which one is it? That's the big question here, right? I uh was of the opinion that the market was missing it, which is rare for me at first, but I have now kind of I'm switching over to the idea of the market is giving us a message um that it's a lot stronger than people think and that's bullish. But, you know, the the the net net of it is that the market has gone nowhere >> for a very long time. You know, it really hasn't gone anywhere since October. Um, and that's probably the most likely scenario here is that we're going to continue to just whip around and and just and and just mess people up, >> right? We had a nice bull market obviously um for the last four plus years that one could argue was strictly based on money liquidity pumping. um which we've really had since 08, since the whole crisis when they pumped all that money and then we had the COVID when they pumped all that money and then you know we've had pumping since. So that's sort of done now and so now we're just kind of going back to sort of an efficient market. You know, you have so many people involved in the markets now. um with Robin Hood and and all this that I I would argue the more people that get involved the more efficient it becomes, you know, um and therefore the less net movement there is. >> That's what I would argue. But like you mentioned, there might come another time soon that they're going to pump again >> and maybe that's the next leg or maybe the market just rejects it totally and we're screwed. I again am not here to predict which one of those things there is. Unfortunately, I wish I could predict the future. I can't. But fortunately, I can watch how the market reacts to these things and that can help me decide what to do in terms of that. >> Absolutely. No, I really appreciate that clarification there, Jason. And uh you you you touched on the bond market earlier as a topic I wanted to touch on with you as well because I'm looking at the 10-year yield and just from midFebruary to mid-March now, midFebruary, we're at the same level we're at today. We've dipped down to 4% on the 10-year yield. Now we're back up to 4.23 as we speak here. Doesn't sound like much, but there's a massive dent in the bond yield chart. Um I'm just curious like what what is the the the chart or what what what are the bond what is the bond market telling you right now? Um maybe I'm I'm trying to read the tea leaves here. I'm just looking for any signs of uh maybe struggle or cracks in the system and or signals perhaps. Jason, that's why I'm fishing here with you. um to to understand or help me understand what what is really happening in the background. >> So like you say it doesn't look like much because rates had come down and bonds had gone up you know quite a bit um from sorry I'm just looking at the chart here but from early February to early March uh rates had come down quite a bit and now that whole thing's been reversed. Um, so it doesn't look like net net for that whole period. It's nothing, right? They went down, then they came back up to where they were, but the move in the last few weeks is is not pretty to me. Um, and like I say, there are some pretty serious risks out there um as to the needs um the capital needs that that that all these these entities need. And if that results in in much higher yields, then we're in trouble. And uh and that could be the case, you know, that that could very well be the case. In particular, like I say, with so much crowding going on on the long end in 30 years. Um it could be that could be I think that's the whole thing quite frankly. That's the thing to be watching. Not just the net the yield, but the spreads and how they're doing. you know, how are the corporate spreads doing and whatnot? Are they widening? If we get yields going up and spreads widening, we have a problem. We have a problem. And and and it would make sense to use your word um if that happened because of all these these needs. So, and it would also make sense if they were going to eventually do a new QE, they need to be forced to do that new QE. Um, and that would force them to do it. you know, if if yields and spreads started blowing out, um, they're going to have to come in and and do something, you know, and this, quite frankly, is what makes it so hard to be short anything, bonds, stocks, or whatever, because if they come in, they're most likely going to be a squeeze higher and everything. So, you're short for the right reason and then they come in and everything gets squeezed and and your short position gets squeezed. >> Um, which makes it very hard to be short. And look, maybe that's the problem here, right? Maybe nobody wants to be short because nobody wants to be caught up in that. Maybe that's the problem. It's a very difficult puzzle here, you know? >> Yeah. You don't want to be caught on the wrong side of the trade. That's for sure. Right. Yeah. Um because that Fed put like I think that's the term everybody uses these days in a newspaper is okay when does the Fed step in. Yield curve control is the other buzzword. I think we we got BS bingo here in a second as well with the next word I guess. But uh >> um we we'll get all of them uh in there in this 30-minute conversation Jason. But yes um I I fully agree yield curve control. Um is there a magical mark? One of my guests mentioned 5% before um on on the yields especially long end. Do you have any magic number in mind? I don't know. Okay. I I never I never believe in magic numbers, but a lot of people talking 5%. >> Um it's a round number, you know. >> Um >> Yeah. >> Fair enough. We don't, >> you know, people do tend to benchmark to uh to to round numbers. >> Yeah. >> Um so that in a way makes sense, but it ain't my thought that matters. Clearly, it's uh it's the Fed's thought and the Treasury's thought and and I unfortunately um they don't take my calls. So, >> yeah, I'm really curious what the economic outlook is going to be from the Fed today once it's released here. So, in in a few short hours. Um but Jason, let's talk about some more fun stuff, maybe more positive um commentary as well as just where are you positioned? Where do you see the opportunity? Where's where you as Wayne Gretzky put going? Where's the puck going to be? Jason, >> I mean, quite frankly, I have one trade on right now, which is short the Canadian dollar. I had been short the Russell >> from before the war. Um, and that was covered um just because the data and the psychology kind of changed this week. That was covered um Friday on the close when my data came out. So, that's the only position I have on right now. Um, which I'm not unhappy about because, um, clearly it's not a a great environment here. Um, it's not a great environment for the type of trading that I do. It might be a great environment for day traders because there's some good volatility, I guess. So the day trader can make the argument that there's some it's a good environment, but for what I do, which is picking sort of major turning points in the market, >> it's not really a great environment. What's the major turning point? You know, >> uh so I'm just kind of sitting waiting in the in the in the in the weeds. >> Yeah. What's your thesis for short Canadian dollars? Because my assumption I had a discussion with somebody actually yesterday. Um I I would think Canada oil energy rich country the U the Canadian dollar should be I wouldn't say getting stronger but at least be stable. Um what's your thesis? I'm curious. >> There it is. >> It should be that and yet it's weakening. So you know the way I trade is first of all it gets too crowded there. People are too crowded to the long side. So, I'm looking to get short and then it stops reacting well to news that should have it reacting well. Um, which is what it's done as you just said. So, that's what got me short. >> Let's talk about your mindset a little bit for further here because you've said before that or you just said it it's a difficult trading year. It's it's really difficult to do anything. Um, how do you control your emotions and not get involved? Meaning like you put a trade on long, short, like how do you stay out of it? How do you manage to control your emotions there, Jason? >> I have a process that I trade >> if uh if I don't get the signal via that process to do something, I I don't do something. It's very simple for me now because I've been doing this for a very long time. Um and I am quite frankly allocated money by clients who are allocating money to me for the very specific reason of they are looking for the return stream that I provide. Um and I provide that return stream by following my process. So if my process is saying don't do anything then I I I don't do anything. It's it's fine. I've been doing this long enough to realize that there are times when there's nothing to do, you know, no one to hold them, no one to fold them, that whole thing. Um, c >> can you elaborate on some of the markers? >> I always I always say that like, hey, I've been running my process now for 26 years. I've never had a down year. That's true, but it's not to say there haven't been some singledigit years in there. 2% 4% you know and if this happens to be one of those well then well truthfully the the down year for me it is coming one of these days unfortunately um I just hope that it's small you know if I keep my risk right then it will be small but even if it's not a down if I'm up two or three or four or 5% you know I've had plenty of those in in 26 years as well so I I my expectations, I think, over the years have become realistic, I guess, is the way to say it. So therefore, I don't feel the need to trade. If I do, well, I have a a retirement account that I can do stupid things in if that's what I feel like doing, you know, 10% of my retirement account sits there. >> Um, and I can I can do stupid things there if that's what I want to do. >> Yeah. Uh, last six months or 12 months even, is there anything that made you think or rethink your process or even adjust adjust a couple variables? any anything like that? >> No, I I haven't changed my process in 26 years. >> Okay. Like Okay. Can Can you give us without giving away the secret sauce though, Jason? It's like any any parameters you look at. Obviously, when it's a crowded trade, I'm guessing volume is a factor, but uh anything else? >> The commitments to traders report is what I look at to determine if things are crowded in the futures market. Um that and then like I say, I do a lot of reading and a lot of listening to hear what people are saying and what what they're doing. I watch a lot of people that talk about what they're doing um to get a value for that. It's about positioning in coot. It's about the psychology and listening and reading and then it's about the uh the market action which I just observe. You know, is it up when it should be down? Is it stronger than you would think? Is it weaker than you would think? You know, it's those three things that that that's all I do. That's all I do. Do I sit here and build macro thesis and all that? Yes. But I don't trade off of any of them. I just find that part interesting. >> Um because I I have a degree in economics and all that and I like to follow it and I like to just like a lot of people I like to build these thesises thesises thesis I don't know but um but I don't trade off of them because I lose money doing that and I would prefer not to lose money. >> Yeah. Now, if we if we speak again in six or 12 or six months, six months time here, Jason, what what is the one topic or one market we're going to talk about that will might keep us both busy for the last six months then? >> I think fixed income is the most important thing here. >> Fair enough. >> That's the thing I think that we'll be talking about. >> Awesome. Jason, I really like your process and how you present uh you know your your strategy as well. Where can our audience follow more of your work? crowdedmarketreport.com. Um, you don't even have to go there. Just go on YouTube and do crowdedmarket report. I have a lot lot lot of free videos on there, hundreds of them >> that talk a lot about my process and trading in general and mistakes and that I see a lot of people make trading and good habits, bad habits, all all that type of stuff I go into. >> Fantastic. Awesome. Jason, a half hour just flew by. tremendously appreciate you joining us here and can't wait to do this again in 6 months and see if if it was fixed income that kept us busy for 6 months and whether that was the trade or the market that we should have been following or whether the eye of mortar should have been looking elsewhere. Right. Absolutely. Fantastic. Jason, stay on for a second. Thank you so much. And to everybody else, thank you so much for tuning in. Really enjoyed the conversation here with Jason. If you did as well, go check out his website. Go check out his YouTube videos. They're hugely informational. Uh they're short, 7, 8, 10 minutes long sometimes, so really easily digestible as well. And if you haven't done so, hit that like and subscribe button here as well on our channel. We tremendously appreciate it. Helps us get phenomenal guests like Jason onto the program. And uh it's we we just appreciate it. I said that before. So, thanks so much. Take care and uh don't let the emotions run your investment strategy. Take care.
Markets Are Sending a Bullish Message Nobody Believes | Jason Shapiro
Summary
Transcript
Investors seem to be changing sides right now. What is happening in markets? Are they buying bonds? Are they buying the dollar? Why are they selling gold and silver? Wasn't that supposed to be the safe haven investment for all of us? Or is it just a fact that they're sitting on massive profits in the precious metals and the mining stocks in particular, and they are selling them now and taking money off the table while there's so much uncertainty out there. We're recording this on uh Wednesday, March 18th, ahead of the Fed meeting. And uh is that maybe the reason why the market markets are so skittish? Although it seems very predictable what the Fed will do here today. I don't expect any big surprises. Maybe my guest does. His name is Jason Shapiro. He's with the Crowded Market Report. He's the author. He's the brain behind the Crowded Market Report. And I'm really looking forward to catching up with him because he can tell us where is the herd going, where's the herd headed, and where's the herd or where's the crowd of investors perhaps wrong. So, lots to discuss, very short time. Hit that like and subscribe button. We tremendously appreciate it and uh we just like it. Thank you so much. Now, Jason, thank you so much for coming back on. Very timely to have you back. How are things? >> Yeah, can't complain. And you know, as I say, even if I did, no one would care. So, >> we're doing okay. >> Ah, people care. At least the five people that will tune in to this, right? So, um that should be fair. But Jason, maybe we we'll start at the very top. You just put out a video today or 15 hours ago, 16 hours ago. So that was yesterday, Tuesday, talking about how crowds are changing sides. The question is from what side to what side? Are they changing? What what is market sentiment right now? >> Yeah, I mean it seemed to me that when the the war first broke out, um there wasn't really a lot of concern. It didn't seem to me. uh you know because I think the last time that there was a a thing with Iran, it lasted like 12 days and was kind of not that big of a deal. You know, it's kind of recency bias type of stuff, right? And then obviously the the latest thing that the US had with Venezuela was over in a day and it was the easiest thing they ever did. And um so therefore, I think when the this Iran thing broke out, there wasn't really very much really long-term worry. Nobody really believed that oil prices were going to stay up and therefore no one really believed that stocks were going to stay down. Um, and that worried me at the time, but I think uh now that's kind of switched. Um, now we're hearing a lot of people talk about how the war is getting worse and not looking like it's going to get any better and how that bad that's going to be for oil prices and then all of the the follow-ups to what what higher oil means, lower stocks, you know, higher inflation, all that. And now all of a sudden everybody seems to be in just two weeks um totally going the other way. Um, so clearly the and strangely enough, as they've gone the other way, now the stock market is acting better. So, um, that's kind of how the sentiment looks to me right now. Sentiment clearly is not going to determine every single thing, but it does help to determine what is being discounted into the markets. you know, I mean, clearly if, god forbid, someone were to set up an atomic bomb, then uh the sentiment that I'm talking about is not going to make a difference, right? The markets are going to get crushed. >> But just from a general perspective, uh sort of how things have looked in typical times, um I think that there has been a shift in that in that sentiment. >> Absolutely. Which brings me sort of to the I wouldn't say the next topic, maybe just a followup as well. Um it's really about the Fed put. Is is the market just expecting to be saved by the Fed? QE has already started despite it only being a minuscule amount just just $40 billion. Um but is is the market maybe expecting to be saved again? Maybe private debt market is the example here. >> I think that that's a good thesis as well. you know, um we have a lot of things going on obviously um in the debt markets that can be seen as as troublesome, right? Uh like you say, the private credit thing is kind of uh it's causing a problem. Clearly the um the government, not just the US government, but the global need, China, US, Europe, everywhere for capital by these governments. uh it does nothing but grow. Interest payments do nothing but grow. That can't be stopped, right? The need for um capital to fund the AI thing is growing um as these companies like Meta and whoever who at one time not too long ago had so much cash on their balance sheets that it seemed like it could never be drained. Um the big thing was what were they going to do with all that cash? Well, I guess they have found what they're going to do with all that cash. Um and and now and and then some. Right now they're actually going to the markets. It seems unheard of just a few years ago. Those companies are going to the market to borrow money. >> You know, Meta is firing 20% of their staff to try and save money because they need it for this AI. So you have that capital need. Um, and now of course you have a war which I don't know $2 billion a day or whatever that number is, right? Um, so there's clearly a lot of issues there and you can't not fund the war. You can't not fund AI because it's the future and national defense depends on it. Everything depends on it. You can't not fund the the governments. So there's issues potential issues there and like you say if there's a problem which to this point there hasn't really been but if there suddenly becomes a problem and spreads are widening and and you get sort of that then they're going to come in you know they have to and I think that should we get to that point um should this dislocation start showing up in the markets in particular fixed income markets and should the Fed or then have to come in and and start to do more QE and and all this then you know that that's when it gets super interesting because I've been saying for years and it's never happened but um that's there there is a limit at some point um we have no idea what it is we have no idea if this is it we have no idea if it's in 20 years and 50 years or whatever but at some point there's a limit and if we do reach that limit um then clearly we're in a hell of a lot of trouble and we'll know um because the markets will tell us you know if they come in and do QE in a big way to solve these other issues and the markets don't respond well to that well then we got a problem right if the markets reject that if the dollar rejects that if the bond markets reject that then we have a serious problem the biggest problem that we will come across us in our lives. But we have to get there first. A we have to get to the point where the markets lock up. B we have to see if they well they will but when they come out and and create this this QE or however they handle it and then three how the markets respond to it. We got a while to figure those things out but I think that those are without a doubt the important things to be watching for here. >> Well there's a famous saying the market is always right until it's wrong. Right. And it feels like the market is right. There's no as as you pointed out exact at the beginning there seemed to be complacency about the Iran war perhaps and uh the question is like when will the market completely shift momentum? Do you do you think there will be a single trigger um that'll set off the crowd moving in another direction? Like I'm looking at the dollar. I'm looking at the bond market. Nothing is really breaking there in either direction, up or down, right? S&P is a little weaker, but it's nothing again nothing to be nervous about. 2 3% lower, no problem. Um the only like pressure I see is really in the precious metals, but uh like how wrong is the market right now? Like you're you're the perfect person to ask because you write the crowded market report. You usually go to places where where the crowd is not. Uh, so what will maybe trigger that move back? >> Who the hell knows? You know what I mean? I I never really know what's going to trigger. >> Yeah. >> Um, in fact, I people always when I do by coincidence get something right, get a market right, I'm long and it ends up going up. Um, I hear all the time, "Oh, well, you never could have known that this was going to happen, you know. you know, I get long, some bullish thing happens, the market goes up. Oh, you never could have known that was going to happen. And I agree. I never could have known that those things were going to happen. You know, I approach it from a riskreward point of view. Um, where if people are way too short, I'm looking to get long. And then, hey, if something bullish does happen, you get a big move the other way. A because it was bullish, and B, because people are caught short. >> So, I get a big move in my favor. Doesn't happen with every trade, but hopefully it happens with more trades and, you know, and all that. So, um I don't know what the trigger could be, but I I don't see the positioning here as as as too one-sided either way, by the way, which means that like in stocks, for examp I don't have any positions here because I I don't really see a lot of crowdedness going on, which is quite frankly why I think the market is just whipping around and going nowhere because there's there's no real positioning or to to force it to go one way or the other. Um the only real sort of majorly crowded positioning I see which could be seen as dangerous is uh in in the long bond people have gotten uh I've gotten pretty extended long in the 30-year bonds. So that could be dangerous because obviously then we get some news. We could get a big move down and that would be a big move up in interest rates and and then we got, you know, the possibility of a problem here. But other than that, I'm not seeing a lot of extended positioning. Um, the metals, look, the metals have been seen now as kind of the no-brainer trade for a while, right? Gold and all that. Um, and you would think that that would in a way, you could argue be the no-brainer idea of where you want to belong if we go into an extended war. And yet it's gone nowhere but down during the war. Um, but you know, sometimes uh often times the the no-brainer trade um turns out to be uh not the no-brainer trade, right? >> And that's probably what's what's going on with gold here. I personally would would would be bullish gold, but um I don't play alongside of markets that act terribly, you know? >> I I was going to ask maybe as a follow-up, do the markets make sense to you right now? Are they behaving rationally or completely irrational? Are they off the rails or is it just difficult to make sense? >> I I I don't know. In some way it's it's like I feel like the markets always are active rationally but at the same time they always kind of act. This is what they do. They don't they don't make sense. They're not so not making sense makes sense you know because the markets aren't meant to make sense because they're discounting method mechanisms of an unknown future >> and the future changes every day you know so the markets have to adjust to that. So, a and if they made sense, well, then it'd be it'd be pretty simple to to to make money over time doing it, right? Um, and that's the whole thing about crowding and and psychology and why I try to fade it because if it made sense, everyone would see what made sense. They would all pile into something and therefore the market would go the other way being a discounting mechanism. So, um, or at least the riskreward would go the other way. So I I think it's it's pretty typical, you know, of of what what always goes on, which is you can argue every side you want, you know, depending on which way you feel, you know, what what I have noticed a lot with this and and you know, I I spent a lot of time reading stuff and listening to people that are experts and all that. And it it just goes to where I think society is now, you know, which is so divided politically um that I find I I I read these things about the war or or watch an interview with somebody about the war and they seem very very well researched, very well written. the person doing it seems very intelligent and they um are very bearish because they think the war is going to get a lot worse. And to no coincidence, that person has always been a Trump hater. And then I read something that's the opposite from someone who sounds very intelligent and very well researched and very well read and you know all this and they're very bullish because they think that the war is going to end and oil prices are going to, you know, it's going to save the world. this whole thing and and of course that person has always been a big Trump supporter, right? So you you can make either argument and and people tend to make the argument right down that political line now with everything. So therefore I I find it all net net to be useless because it's all biased. You know what good is biased analysis? You know >> um >> let's look at some data, Jason. Like we we we got a bit of data. The US GDP number for example that's been revised twice now I believe down 2.7 for Q4 just about 20 minutes ago we got the PPI number the produ producer price index for February Jason uh 3.4% 4% above expectations of 2.9%. So inflation is spiraling out of control again or spiraling higher. Not out of control yet. Um let's let's not go that far. But um let's use these hard data points like and yes they can all be manipulated. We shouldn't trust them. The CPI lie or whatever they call it the CP lie, right? Um but th those are numbers we've been provided. Those are the numbers I have to work with here because I don't go from house to house and ask what the produ how much their grocery bill was last week versus this week, right? So yeah, um I I'll have to rely on that. But like if given this data that we have here, what should the market be doing if it was rational? Jason, >> I mean, we had worst GDP number. We had a worse PPI number. We had news overnight of worsening war stuff. Iran was saying some pretty mean stuff about what their plans are. The S&Ps are down 20 points. They haven't even given up yesterday's gains. Now, the day is not over. I understand, but you know, um, the market continues to act better and and I'm not the only one that says, everyone's saying this, and it's the same thing. It's like, gee, the stock market is acting very well relative to the news. Why is that? And the bulls will say because it's giving the message. And 99% of the time, that's what I would say. I go with what the tape says, right? um it's because the the market knows that that it's going up and it's that's why it's fighting off this bad news. And of course the bears will say, well, because people in the market don't realize what the hell is going on here, they're overly optimistic, which was my view at first. Like I said, um I didn't think people were were discounting in enough issues. Um which one is it? That's the big question here, right? I uh was of the opinion that the market was missing it, which is rare for me at first, but I have now kind of I'm switching over to the idea of the market is giving us a message um that it's a lot stronger than people think and that's bullish. But, you know, the the the net net of it is that the market has gone nowhere >> for a very long time. You know, it really hasn't gone anywhere since October. Um, and that's probably the most likely scenario here is that we're going to continue to just whip around and and just and and just mess people up, >> right? We had a nice bull market obviously um for the last four plus years that one could argue was strictly based on money liquidity pumping. um which we've really had since 08, since the whole crisis when they pumped all that money and then we had the COVID when they pumped all that money and then you know we've had pumping since. So that's sort of done now and so now we're just kind of going back to sort of an efficient market. You know, you have so many people involved in the markets now. um with Robin Hood and and all this that I I would argue the more people that get involved the more efficient it becomes, you know, um and therefore the less net movement there is. >> That's what I would argue. But like you mentioned, there might come another time soon that they're going to pump again >> and maybe that's the next leg or maybe the market just rejects it totally and we're screwed. I again am not here to predict which one of those things there is. Unfortunately, I wish I could predict the future. I can't. But fortunately, I can watch how the market reacts to these things and that can help me decide what to do in terms of that. >> Absolutely. No, I really appreciate that clarification there, Jason. And uh you you you touched on the bond market earlier as a topic I wanted to touch on with you as well because I'm looking at the 10-year yield and just from midFebruary to mid-March now, midFebruary, we're at the same level we're at today. We've dipped down to 4% on the 10-year yield. Now we're back up to 4.23 as we speak here. Doesn't sound like much, but there's a massive dent in the bond yield chart. Um I'm just curious like what what is the the the chart or what what what are the bond what is the bond market telling you right now? Um maybe I'm I'm trying to read the tea leaves here. I'm just looking for any signs of uh maybe struggle or cracks in the system and or signals perhaps. Jason, that's why I'm fishing here with you. um to to understand or help me understand what what is really happening in the background. >> So like you say it doesn't look like much because rates had come down and bonds had gone up you know quite a bit um from sorry I'm just looking at the chart here but from early February to early March uh rates had come down quite a bit and now that whole thing's been reversed. Um, so it doesn't look like net net for that whole period. It's nothing, right? They went down, then they came back up to where they were, but the move in the last few weeks is is not pretty to me. Um, and like I say, there are some pretty serious risks out there um as to the needs um the capital needs that that that all these these entities need. And if that results in in much higher yields, then we're in trouble. And uh and that could be the case, you know, that that could very well be the case. In particular, like I say, with so much crowding going on on the long end in 30 years. Um it could be that could be I think that's the whole thing quite frankly. That's the thing to be watching. Not just the net the yield, but the spreads and how they're doing. you know, how are the corporate spreads doing and whatnot? Are they widening? If we get yields going up and spreads widening, we have a problem. We have a problem. And and and it would make sense to use your word um if that happened because of all these these needs. So, and it would also make sense if they were going to eventually do a new QE, they need to be forced to do that new QE. Um, and that would force them to do it. you know, if if yields and spreads started blowing out, um, they're going to have to come in and and do something, you know, and this, quite frankly, is what makes it so hard to be short anything, bonds, stocks, or whatever, because if they come in, they're most likely going to be a squeeze higher and everything. So, you're short for the right reason and then they come in and everything gets squeezed and and your short position gets squeezed. >> Um, which makes it very hard to be short. And look, maybe that's the problem here, right? Maybe nobody wants to be short because nobody wants to be caught up in that. Maybe that's the problem. It's a very difficult puzzle here, you know? >> Yeah. You don't want to be caught on the wrong side of the trade. That's for sure. Right. Yeah. Um because that Fed put like I think that's the term everybody uses these days in a newspaper is okay when does the Fed step in. Yield curve control is the other buzzword. I think we we got BS bingo here in a second as well with the next word I guess. But uh >> um we we'll get all of them uh in there in this 30-minute conversation Jason. But yes um I I fully agree yield curve control. Um is there a magical mark? One of my guests mentioned 5% before um on on the yields especially long end. Do you have any magic number in mind? I don't know. Okay. I I never I never believe in magic numbers, but a lot of people talking 5%. >> Um it's a round number, you know. >> Um >> Yeah. >> Fair enough. We don't, >> you know, people do tend to benchmark to uh to to round numbers. >> Yeah. >> Um so that in a way makes sense, but it ain't my thought that matters. Clearly, it's uh it's the Fed's thought and the Treasury's thought and and I unfortunately um they don't take my calls. So, >> yeah, I'm really curious what the economic outlook is going to be from the Fed today once it's released here. So, in in a few short hours. Um but Jason, let's talk about some more fun stuff, maybe more positive um commentary as well as just where are you positioned? Where do you see the opportunity? Where's where you as Wayne Gretzky put going? Where's the puck going to be? Jason, >> I mean, quite frankly, I have one trade on right now, which is short the Canadian dollar. I had been short the Russell >> from before the war. Um, and that was covered um just because the data and the psychology kind of changed this week. That was covered um Friday on the close when my data came out. So, that's the only position I have on right now. Um, which I'm not unhappy about because, um, clearly it's not a a great environment here. Um, it's not a great environment for the type of trading that I do. It might be a great environment for day traders because there's some good volatility, I guess. So the day trader can make the argument that there's some it's a good environment, but for what I do, which is picking sort of major turning points in the market, >> it's not really a great environment. What's the major turning point? You know, >> uh so I'm just kind of sitting waiting in the in the in the in the weeds. >> Yeah. What's your thesis for short Canadian dollars? Because my assumption I had a discussion with somebody actually yesterday. Um I I would think Canada oil energy rich country the U the Canadian dollar should be I wouldn't say getting stronger but at least be stable. Um what's your thesis? I'm curious. >> There it is. >> It should be that and yet it's weakening. So you know the way I trade is first of all it gets too crowded there. People are too crowded to the long side. So, I'm looking to get short and then it stops reacting well to news that should have it reacting well. Um, which is what it's done as you just said. So, that's what got me short. >> Let's talk about your mindset a little bit for further here because you've said before that or you just said it it's a difficult trading year. It's it's really difficult to do anything. Um, how do you control your emotions and not get involved? Meaning like you put a trade on long, short, like how do you stay out of it? How do you manage to control your emotions there, Jason? >> I have a process that I trade >> if uh if I don't get the signal via that process to do something, I I don't do something. It's very simple for me now because I've been doing this for a very long time. Um and I am quite frankly allocated money by clients who are allocating money to me for the very specific reason of they are looking for the return stream that I provide. Um and I provide that return stream by following my process. So if my process is saying don't do anything then I I I don't do anything. It's it's fine. I've been doing this long enough to realize that there are times when there's nothing to do, you know, no one to hold them, no one to fold them, that whole thing. Um, c >> can you elaborate on some of the markers? >> I always I always say that like, hey, I've been running my process now for 26 years. I've never had a down year. That's true, but it's not to say there haven't been some singledigit years in there. 2% 4% you know and if this happens to be one of those well then well truthfully the the down year for me it is coming one of these days unfortunately um I just hope that it's small you know if I keep my risk right then it will be small but even if it's not a down if I'm up two or three or four or 5% you know I've had plenty of those in in 26 years as well so I I my expectations, I think, over the years have become realistic, I guess, is the way to say it. So therefore, I don't feel the need to trade. If I do, well, I have a a retirement account that I can do stupid things in if that's what I feel like doing, you know, 10% of my retirement account sits there. >> Um, and I can I can do stupid things there if that's what I want to do. >> Yeah. Uh, last six months or 12 months even, is there anything that made you think or rethink your process or even adjust adjust a couple variables? any anything like that? >> No, I I haven't changed my process in 26 years. >> Okay. Like Okay. Can Can you give us without giving away the secret sauce though, Jason? It's like any any parameters you look at. Obviously, when it's a crowded trade, I'm guessing volume is a factor, but uh anything else? >> The commitments to traders report is what I look at to determine if things are crowded in the futures market. Um that and then like I say, I do a lot of reading and a lot of listening to hear what people are saying and what what they're doing. I watch a lot of people that talk about what they're doing um to get a value for that. It's about positioning in coot. It's about the psychology and listening and reading and then it's about the uh the market action which I just observe. You know, is it up when it should be down? Is it stronger than you would think? Is it weaker than you would think? You know, it's those three things that that that's all I do. That's all I do. Do I sit here and build macro thesis and all that? Yes. But I don't trade off of any of them. I just find that part interesting. >> Um because I I have a degree in economics and all that and I like to follow it and I like to just like a lot of people I like to build these thesises thesises thesis I don't know but um but I don't trade off of them because I lose money doing that and I would prefer not to lose money. >> Yeah. Now, if we if we speak again in six or 12 or six months, six months time here, Jason, what what is the one topic or one market we're going to talk about that will might keep us both busy for the last six months then? >> I think fixed income is the most important thing here. >> Fair enough. >> That's the thing I think that we'll be talking about. >> Awesome. Jason, I really like your process and how you present uh you know your your strategy as well. Where can our audience follow more of your work? crowdedmarketreport.com. Um, you don't even have to go there. Just go on YouTube and do crowdedmarket report. I have a lot lot lot of free videos on there, hundreds of them >> that talk a lot about my process and trading in general and mistakes and that I see a lot of people make trading and good habits, bad habits, all all that type of stuff I go into. >> Fantastic. Awesome. Jason, a half hour just flew by. tremendously appreciate you joining us here and can't wait to do this again in 6 months and see if if it was fixed income that kept us busy for 6 months and whether that was the trade or the market that we should have been following or whether the eye of mortar should have been looking elsewhere. Right. Absolutely. Fantastic. Jason, stay on for a second. Thank you so much. And to everybody else, thank you so much for tuning in. Really enjoyed the conversation here with Jason. If you did as well, go check out his website. Go check out his YouTube videos. They're hugely informational. Uh they're short, 7, 8, 10 minutes long sometimes, so really easily digestible as well. And if you haven't done so, hit that like and subscribe button here as well on our channel. We tremendously appreciate it. Helps us get phenomenal guests like Jason onto the program. And uh it's we we just appreciate it. I said that before. So, thanks so much. Take care and uh don't let the emotions run your investment strategy. Take care.