The Jury Remains Out

Published on: March 7th, 2019

The Federal Reserve has signalled a pivot towards a more accommodative interest rate policy and ending QT. This is potentially reflationary. But several weeks into their new regime and (beyond the narrow focus of US equities) the market jury remains out. I examine the mixed signals from equities, currencies, commodities, and bonds.


  • LD
    Lance D.
    11 March 2019 @ 15:38
    hehehe is there anybody out there
    • LD
      Lance D.
      11 March 2019 @ 15:41
      ask some questions plz i need to learn ... then i could stop eating fish finger sandwiches
    • JM
      Jason M.
      11 March 2019 @ 22:11
      Iance - you are absolutely right - how can there be such apathy during the current USD debate raging in markets and inside Julian's big brain?
    • LD
      Lance D.
      13 March 2019 @ 15:08
      Agree its crackers .. Julian & Raoul have some big brains BUT you know what they say about blokes with big brains eh? (wink wink) Maybe folks are just trying to decipher the info (this is the case with me) All the B/S this QT/QE that Rate cuts Rate hikes pause. WOW the brain is close to cutting out, its near on impossible to have my mind store in an orderly manner. Just when i think i am on the verge of having it in some sort of order something comes along to scramble it all up for me be some thing on Twitter, TV,China saying they will keep currency stable, China Stimulus, Articles RE central banks buying gold hand over fist- only to see gold falls straight out of bed $ stays solid, markets rally etc... I'm just left thinking to myself wtf......(Thankfully i have a sense of humour) because its my sense of humour that allows me to 'square the circle' for the fed - it goes like this- I imagine i am the 'gaffer' at the Fed after months of QE/QT this BS that talk. I wake up in the middle of the night say to myself its enough is enough - 9am @ the office, demand every body in the meeting room. make clear theres to be no interrupting me! and at the end of my rant they get up calmly leave the room and go execute my instructions - which are- cut the fukn rates so theres a recession and then sit back and watch the economy recover. Pretty sure a strong economy in the future is all anybody wants? OR have i got this 'arse about tit' so much i get home to find the missus and kids have been kid knapped - bloody hell its just occurred to me i need a job at the Fed in order get some piece and quite. ANYWAYS hope folks can keep asking the question like Jason.M it really helps to see and read the more experienced asking question for........the Small opps... I'm mean the 'Big Brains to answer. Right GOOGLE is in my sell zone so I'm off to short it ( wonder how many dirty looks the the missus is going to give me this time next week that is how i mange risk - a dirty look = hold your nerve...dirty look followed immediately with an insult = Cut the position Immediately -and Dinner on the table = add to the position ...( I'm wasting away)
    • KJ
      Keith J.
      13 March 2019 @ 15:30
      It is surprisingly quiet on here. Perhaps everyone just wishing they had BTFD.
    • MW
      Marco W.
      14 March 2019 @ 06:54
      Julian's title "The Jury remains out" as well as the inside contents are simply marvellous and perfect. The report not only discussed the current market condition but also the market philosophy. I am speechless after reading so that I didn't ask questions. And I will just wait for further development as Julian suggested and not seek for certainty at this moment.
  • se
    scott e.
    13 March 2019 @ 18:12
    Julian I can see the Fed can't cut rates while tightening but with political pressures mounting, what would be the downside if they decided to end QT and cut rates fairly soon thereafter ?
  • JM
    Jason M.
    9 March 2019 @ 08:37
    Julian: In the Stanford speech tonight, Powell made it pretty clear (at least on my read) that he is nowhere near a rate cut and left door open to hikes by just using neutral language....his focus remained on QT ending later this year. Maybe there was a bit more detail on that but seemed like a lot of it was expected. I assume we'll get more detail on March 20th FOMC. If you mostly agree with the above, my question would be - Q1: Will QT fully ending be enough to tip the USD over later this year? 2nd Question: Q2: Is it correct to assume that if its not actually stopping in any way for, say, 6 more months, US and EMs aren't going to happy? (esp with the current state of the Euro). Tough question but you are the best man I know that can help on the interplay btw USD and Fed B/S. Thanks, Jason
    • JB
      Julian B. | Contributor
      11 March 2019 @ 19:15
      Hi Jason and sorry for the delay. You have correctly nailed the dilemma i.e. if the Fed continue hiking albeit after a pause and only slow but continue with QT (the talk is that they will reduce the run-off in half but continue the programme into Q2 next year) then how the hell do we get a lower $, which is so necessarily to global reflation? The simple answer is we won't and this current risk rally will falter yet again. PS. that's why my current tactical or short term bet. However, perversely if we do get that weakness, especially if it is accompanied by an acceleration lower in the economic data (my models are forecasting horrible manufacturing data) it actually makes me more bullish. Why? Well at that point, I believe the Fed will stop with the dovish talk and actually deliver dovish policy i.e. end QT, cut rates and even possibly deliver QE. That’s when I see the $ turning lower and we should get a true 2016 style reflationary risk rally. PS. That when you look for the next leg up in Treasury yields.
    • JM
      Jason M.
      11 March 2019 @ 21:39
      thanks Julian - I could see the US economy muddling through over the next few quarters at around 1.5% growth and this might not be enough to get a rate cut so soon after Powell was essentially embarrassed into stopping. Not an easy call, but I could see things in the US looking better after the comps get easier towards year-end. So here is another question - Q3: Is there any scenario where you see the Fed going with a QT(stop) to QE(start) without even touching rates? Just leaves rates where they are or even gives u a token Powell (cue inflation fighting face) hike in 4Q....but the real action is all in the Fed B/S??....after all that has been your assertion all along. (correctly) With Europe and Japan and China essentially abandoning balance sheet normalization, isn't the Fed better off going this route as they don't lose credibility (they are simply off the charts in normalization versus their peers) and its almost certainly a quicker path to a weaker USD...which might be required if EUR and/or RMB keep sliding. The "bond market QE rumor" on Bbberg today is essentially all about this question although it might be totally wrong-headed. If the rumor is actually right...the rally is justified (cough, cough) - esp for non-US cash flows. Wanted your thoughts. I believe strongly in your view that Feb B/S can move the international markets far more. I also believe that this slowdown is not "the big one" for the US and as such Powell should be trying to keep as much DOMESTIC ammo in his gunbelt (I think interest rate cuts probably are the biggest tool he'll have - especially if he somehow gets to 2.75-3.0%. Fed Funds before "the big one". Of course, this analysis might assume too Powell is politically neutral. If he just wants to get Trump re-elected he should cut rates hard I guess this year. Thanks again.
    • JB
      Julian B. | Contributor
      11 March 2019 @ 23:09
      Jason you may be right that we muddle through. Although, I would caution that given the excesses in housing/equity prices created by QE and Yellen's policy of Optimal Control achieving a soft-landing is rather hard. I firmly, believe that asset prices now dictate the economic cycle and not the other way around i.e. the tail wags the dog. Hence, if stocks and house prices languish too long (let alone fall) it sets off a vicious circle of faltering corporate spending, job losses, falling business/consumer confidence and ultimately a tightening of the credit cycle. That is why, I believe the Fed needs to ease and the sooner the better. In terms of how they do it, which is the core of your question. I believe that before we see renewed QE the Fed will at least start by cutting rates. Why not rely fully on QE as you suggest and save rate cuts for the big one? Well first off, the Fed is still struggling with the link between asset prices and the balance sheet. Yes they see the flow through in terms of relative movements but don't get the mechanics. Secondly, jumping straight into QE and driving asset prices higher in the current political environment with its focus on inequality probably isn't acceptable. So I see the sequence as ending QT, some rate cuts and then QE. PS. I believe ending QT should pressurise the $ and QE certainly will. But cutting rates and narrowing the rate differential to other currencies should also achieve the same outcome. Don't forget that the ECB is essentially powerless to match the Fed's cuts.

Mark Yusko

Morgan Creek Capital Management, Co- Founder, CEO, & CIO

Mark Yusko is the Founder, CEO and Chief Investment Officer of Morgan Creek Capital Management. He is also the Managing Partner of Morgan Creek Digital Assets.

Morgan Creek Capital Management was founded in 2004 and currently manages close to $2 billion in discretionary and non-discretionary assets. Prior to founding Morgan Creek, Mr. Yusko was CIO and Founder of UNC Management Company (UNCMC), the Endowment investment office for the University of North Carolina at Chapel Hill. Before that, he was Senior Investment Director for the University of Notre Dame Investment Office. Mr. Yusko has been at the forefront of institutional investing throughout his career. An early investor in alternative asset classes at Notre Dame, he brought the Endowment Model of investing to UNC, which contributed to significant performance gains for the Endowment. The Endowment Model is the cornerstone philosophy of Morgan Creek, as is the mandate to Invest in Innovation.

Mr. Yusko is again at the forefront of investing through Morgan Creek Digital Assets, which was formed in 2018. Morgan Creek Digital is an early stage investor in blockchain technology, digital currency and digital assets through the firm’s Venture Capital and Digital Asset Index Fund.

Mr. Yusko received a BA with Honors from the University of Notre Dame and an MBA in Accounting and Finance from the University of Chicago.

Anthony Scaramucci

SkyBridge Capital, Founder & Co-Managing Partner

Prior to founding SkyBridge in 2005, Scaramucci co-founded investment partnership Oscar Capital Management, which was sold to Neuberger Berman, LLC in 2001. Earlier, he was a vice president in Private Wealth Management at Goldman Sachs & Co. In 2016, Scaramucci was ranked #85 in Worth Magazine’sPower 100: The 100 Most Powerful People in Global Finance. In 2011, he received Ernst & Young’s “Entrepreneur of the Year –New York” Award in the Financial Services category. Anthony is amember of the Council on Foreign Relations (CFR), vice chair of the Kennedy Center Corporate Fund Board, a board member of both The Brain Tumor Foundation and Business Executives for National Security (BENS), and a Trustee of the United States Olympic & Paralympic Foundation. He was a member of the New York City Financial Services Advisory Committee from 2007 to 2012. In November 2016, he was named to President-Elect Trump’s 16-person Presidential Transition Team Executive Committee. In June 2017, he wasnamed the Chief Strategy Officer of the EXIM Bank. He served as the White House Communications Director for a period in July 2017. Scaramucci, a native of Long Island, New York, holds a Bachelor of Arts degree in Economics from Tufts University and a Juris Doctor from Harvard Law School.

Michael Saylor

MicroStrategy, Co-Founder

Mr. Saylor is a technologist, entrepreneur, business executive, philanthropist, and best-selling author. He currently serves as Chairman of the Board of Directors and Chief Executive Office of MicroStrategy, Inc. (MSTR). Since co-founding the company at the age of 24, Mr. Saylor has built MicroStrategy into a global leader in business intelligence, mobile software, and cloud-based services. In 2012, he authored The Mobile Wave: How Mobile Intelligence Will Change Everything, which earned a spot on The New York Times Best Sellers list.

Mr. Saylor attended the Massachusetts Institute of Technology, receiving an S.B. in Aeronautics and Astronautics and an S.B. in Science, Technology, and Society.

Alex Saunders

Nugget's News, Founder & CEO

Alex Saunders is the founder and CEO of Nugget’s News, a digital media company focused on all things crypto. Alex has been captivated by cryptocurrency since 2012 and in 2017 he began educating globally on the benefits of cryptocurrency and how to safely acquireit. Nugget’s News has been listed as a top-20 podcast by Business Insider, ShapeShift and Lifehacker and has over 120k YouTube subscribers with 9 million total views.Alex is also heavily focused on his cryptocurrency education platform Collective Shift which currently serves over 4,500 members. provides his unique perspectives by utilising his expertise in fundamental analysis, technical analysis and market sentiment. He is working towards his mission of making it easier for everyone to understand the financial world.

James Putra

TradeStation Crypto, Inc., Sr. Director of Product Strategy

James helped launch TradeStation Crypto’s offering which utilizes a true online brokerage model that self-directed investors and traders have come to expect for equities, futures, and foreign currency markets. He is a reputed crypto asset specialist and blockchain thought leader focused on helping people find innovative ways to participate in this space. He is active in the blockchain community with speaking engagements, TV appearances and mentoring. James has over 15 years of experience in the Fintech industry.

Raoul Pal

Real Vision, Co-Founder & CEO

Raoul Pal is the Co-Founder and CEO of Real Vision, the world’s pre-eminent financial media platform, which helps members understand the complex world of finance, business, and the global economy.

Real Vision members also have access to Real Vision Crypto, a cryptocurrency and digital assets video channel watched by over 80,000 people. In addition, Raoul has been publishing Global Macro Investor since January 2005 to provide original, high quality, quantifiable and easily readable research for the global macro investment community hedge funds, family offices, pension funds and sovereign wealth funds. It draws on his considerable 31 years of experience in advising hedge funds and managing a global macro hedge fund. Global Macro Investor has one of the very best, proven track records of any newsletter in the industry, producing extremely positive returns in eight out of the last twelve years.

He retired from managing client money at the age of 36 in 2004 and now lives in the tiny Caribbean island of Little Cayman in the Cayman Islands. Previously he co-managed the GLG Global Macro Fund in London for GLG Partners, one of the largest hedge fund groups in the world. Raoul moved to GLG from Goldman Sachs where he co-managed the hedge fund sales business in Equities and Equity Derivatives in Europe. In this role, Raoul established strong relationships with many of the world’s pre-eminent hedge funds, learning from their styles and experiences.

Other stop-off points on the way were NatWest Markets and HSBC, although he began his career by training traders in technical analysis.

Peter McCormack

What Bitcoin Did, Journalist

Peter McCormack is a full time journalist/podcaster covering topics such as Freedom, Human Rights, Censorship and Bitcoin. Peter created and hosts the What Bitcoin Did Podcast, a twice-weekly Bitcoin podcast where he interviews experts in the world of Bitcoin development, privacy, investment and adoption. Launched in November of 2017, the podcast has grown to over 100 episodes with a guest list that is a testament to the diversity of knowledge and opinions that represent the broader Bitcoin community. Expanding his growing list of human interest recordings, documentaries and films Peter has recently launched the Defiance podcast and DefianceTV.

Caitlin Long

Avanti Financial Group, Founder & CEO

22-year Wall Street veteran who has been active in bitcoin and blockchain since 2012. In 2018-20 she led the charge to make her native state of Wyoming an oasis for blockchain companies in the US, where she helped Wyoming enact 20 blockchain-enabling laws. From 2016-18 she jointly spearheaded a blockchain project for delivering market index data to Vanguard as chairman and president of Symbiont, an enterprise blockchain start-up. Caitlin ran Morgan Stanley’s pension solutions business (2007-2016), heldsenior roles at Credit Suisse (1997-2007) and began her career at Salomon Brothers (1994-1997). She is a graduate of Harvard Law School (JD, 1994), the Kennedy School of Government (MPP, 1994) and the University of Wyoming (BA, 1990).

Hunter Horsley

Bitwise Asset Management, CEO

Hunter Horsley is Chief Executive Officer of Bitwise Asset Management. Prior to Bitwise, he was a product manager at Facebook, working on advertiser products including the multibillion-dollar sponsored content ecosystem and ad breaks in videos. Before Facebook, Horlsey was a product manager at Instagram, responsible for multiple advertising products generating several hundred million dollars of revenue. He is a graduate of the Wharton School at the University of Pennsylvania, with a B.S. in economics. Recently, Horsley was named a member of Forbes’ 2019 “30 Under 30” list.

Luke Gromen

Forest For The Trees, Founder & President

Luke Gromen has 25 years of experience in equity research, equity research sales, and as a macro/thematic analyst. He is the founder and president of macro/thematic research firm FFTT, LLC, which he founded in early 2014 to address and leverage the opportunity he saw created by applying what clients and former colleagues consistently described as a “unique ability to connect the dots” during a time when he saw an increasing “silo-ing” of perspectives occurring on Wall Street and in corporate America.

FFTT caters to institutions and sophisticated individuals by aggregating a wide variety of macroeconomic, thematic and sector trends in an unconventional manner to identify investable developing economic bottlenecks for his clients. Prior to founding FFTT, Luke was a founding partner of Cleveland Research Company, where he worked from 2006-14. At CRC, Luke worked in sales and edited CRC’s flagship weekly thematic research summary piece (“Straight from the Source”) for the firm’s clients. Prior to that, Luke was a partner at Midwest Research, where he worked in equity research and sales from 1996-2006. While in sales, Luke was a founding editor of Midwest’s widely-read weekly thematic summary (“Heard in the Midwest”) for the firm’s clients, in which he aggregated and combined proprietary research from Midwest with inputs from other sources.

Luke Gromen holds a BBA in Finance and Accounting from the University of Cincinnati and received his MBA from Case Western Reserve University. He earned the CFA designation in 2003.

Meltem Demirors

CoinShares, Chief Strategy Officer

Meltem Demirors is Chief Strategy Officer of CoinShares, an investment firm that manages billions in assets on behalf of a global investor base, and is a trusted partner to investors and entrepreneurs navigating the digital asset ecosystem. Meltem oversees the firm’s managed strategies group and its New York office and leads corporate development.

Previously, she was part of the founding team of Digital Currency Group. As a veteran investor in the digital currency space, she has invested in over 250 companies in the ecosystem.

Meltem is passionate about education and advocacy, and teaches the Oxford Blockchain Strategy Programme and co-chairs the WEF Cryptocurrency Council.